Technically Speaking

New-Crop Corn Turns Bearish Early in 2020

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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The weekly chart of December 2020 corn fell to a new contract low Friday and is off to a bearish start after USDA estimated 94.0 million acres of plantings this spring and higher U.S. ending corn stocks. (DTN ProphetX chart)

DECEMBER 2020 CORN

December corn was only down 2 3/4 cents last week, but that was enough of a drop to send prices to a new contract low of $3.86 after USDA estimated 94.0 million acres (ma) of corn plantings in 2020 and U.S. ending stocks of 2.647 billion bushels (bb) for 2020-21. The new-crop estimate is more bearish than the current estimate of 1.892 bb of ending stocks for 2019-20 and sets an early bearish expectation for new-crop corn prices, even though we don't yet know how planting season will go this spring. Technically speaking, cash corn prices are holding steady, but the trend in December corn has turned down with last year's low of $3.52 offering distant support.

NOVEMBER 2020 SOYBEANS

November soybeans dropped a nickel last week to $9.17 1/2, holding within a narrow sideways range in February. USDA's early supply and demand view for soybeans was actually bullish for 2020-21 with U.S. ending soybean stocks expected to fall from 425 million bushels (mb) this season to 320 mb in the new-crop season. By the time we get to the May World Agricultural Supply and Demand Estimates (WASDE) reports, USDA's opinion could change but at least the early view supports higher prices ahead. Technically speaking, November soybeans may struggle to hold support at $9.09 1/2, but the bigger picture looks bullish with commercials lightly net long in soybeans as of Feb. 18, while managed futures funds are net short nearly 96,000 contracts -- a big, risky bearish bet that leaves funds vulnerable to short-covering. For now, the weekly stochastic still shows downward momentum.

KC WHEAT

March KC wheat ended up 3 cents last week at $4.68 1/2, a small gain clung to after prices closed up over 20 cents Tuesday. Like soybeans, wheat prices received a bullish vote of confidence from USDA at last week's Ag Forum. USDA estimated U.S. ending wheat stocks will fall from 940 mb this season to 777 mb in 2020-21. It's an early guess and there are plenty of unknowns for the year ahead, but it may help keep March KC wheat supported above the 100-day average at $4.54. Technically speaking, prices may have difficulty holding support as the weekly stochastic has turned down, showing a bearish change in momentum. If March KC wheat breaks below $4.54, noncommercial net longs will come under increased pressure to liquidate.

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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