Technically Speaking

Chart Analysis: US Cash Grain Prices

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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DTN's index of cash corn prices is holding fairly firm in spite of heavy selling from managed futures funds (green line), now holding their largest net-short position on record of 326,887 contracts. This puts funds in a vulnerable predicament as corn prices are fundamentally cheap, with the uncertainty of a new season ahead. (DTN ProphetX chart)

Corn:

The DTN National Corn Index was down a penny last week to $3.37 a bushel. USDA's estimate of U.S. ending corn stocks is back above 2.0 billion bushels (bb) again, now at 2.035 bb. Supplies have not changed much the past three years, and if USDA's February new-crop estimates are close, U.S. corn supplies won't change much in 2019-20. Managed futures funds, however, are heavily bearish, holding their largest net-short position on record of 326,887 contracts. In spite of the heavy selling, corn prices have held remarkably firm, while traders wait to see how planting goes in 2019. Technically, corn prices are holding roughly sideways with managed funds in a vulnerable predicament -- heavily short at a low price that doesn't offer them much advantage.

Soybeans:

The DTN National Soybean Index fell 31 cents last week to $7.98, matching its lowest price in over three months. The sudden recent drop in prices is another reflection of concerns about how quickly U.S. soybean supplies have increased, while China continues to hold a 25% tariff. Commercial net-longs continue to lend their support and seasonally it usually doesn't pay to be swayed by price trends in April as little is known yet about the new-crop season. Technically a close below $7.86, if it happened, would be considered bearish and could trigger more noncommercial selling.

KC Wheat:

The DTN National HRW Wheat Index dropped 14 cents last week to $4.08 on Friday, back near its lowest prices in over a year. A poor pace of U.S. wheat exports over the winter has taken wheat prices down in what looks like a technical correction of the up move from the fall of 2017 to the summer of 2018. Two possible candidates for support are the 2018 low of $3.80 or the 62% correction mark at $3.89. Fundamentally it remains difficult to believe in higher wheat prices with no significant weather problems reported. However, It is early yet, with plenty of growing season ahead.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grains and grain futures involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman

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