After Tuesday’s strong price action, it appeared that a short-covering rally may be in the offing. The lack of followthrough in the remainder of the week, and a scorching hot jobs report Friday morning, put the kibosh on those hopes. Friday morning’s jobs report blew expectations out of the water, and sent the dollar index soaring higher – which sent grains crashing lower. Corn, soybeans, and wheat all had lower closes for the week. Soybeans were the biggest loser, settling less than 2 cents off their lows, and face additional headwinds this weekend with rains expected in South America.

Corn

The slog in March corn futures persists for yet another week. After making new lows overnight on Tuesday, the contract rallied 11 ¾ cents off the lows to ultimately settle the session at 448 ¼. Though we settled slightly higher Wednesday, that was about the end of the good feelings in corn. Thursday’s export sales report was a non-event with sales coming in as expected, but Friday’s explosive move higher in the dollar index was enough to take the wind out of the bull’s sails. Fundamentally, not a lot has changed, but fund positioning cannot be discounted. Managed money funds hold their largest net-short position in corn since March of 2019, which now totals 279,648. While the risk of a short-covering rally is ever present, corn bulls will have to give bears a reason to cover those shorts. For further context, that is 164,097 long positions compared to 443,645 short positions. Next week, bulls will have to defend the recent contract lows and 2-star support between 435 and 436 ½ in order to open the door for short-covering. 

Soybeans

Soybeans wore the proverbial dunce cap this week. Tuesday’s strong price action gave bulls hope, but the rest of the week stomped on it. Thursday’s export sales came in at a marketing year low of 6 million bushels, which were well below traders’ expectations. To add insult to injury, Friday’s explosive move higher in the dollar index sent March soybeans to new lows. For the week, March beans settled 20 ¾ cents lower at 1188 ½ – just 1 ¾ cents off the lows. As in corn, there’s not a lot to be bullish about fundamentally. Technically speaking, however, Friday’s new lows mark the 4th consecutive instance of bearish divergence on the standard 14-day RSI, and the ADX line is flat. Could that be enough to push prices higher? Funds certainly wouldn’t agree, as they added another ~5k contracts to their net-short which now totals 101,598 contracts – 42,993 longs vs. 144,591 short positions. In short, the fundamental outlook remains bleak, but the technicals are providing indications that a bottom may be in range. 

Wheat

Wheat remains the most constructive component of the grain complex, and this week’s price action was indicative of that. Despite the bleed across corn and soybeans, March wheat prices managed to close just ½ cent lower for the week to settle at 599 ¾. While settling below the 600 handle doesn’t feel great, one must keep in mind that we’re 33 ½ cents off of the lows. Over the past 3 weeks, wheat prices have moved cautiously higher on a closing basis, but the trading ranges have been wide. If bulls can stage multiple closes next week above 2-star resistance between 608 ½ and 611, it opens the door to test 4-star resistance between 618 and 622. It would not be surprising to see a short-covering rally across the grain markets ignite if it’s led by March wheat. Managed money funds actually decreased their net-short position in wheat by nearly 2.5k contracts this week, which now totals 67,689 contracts. Broken down, that is 72,371 longs compared to 140,060 short positions.