Technically Speaking

The market appears to be getting oversold and close to what should be some solid support around the $9.80 level, with additional chart support down to $9.60. In addition, as the Russian-Ukraine conflict has heated up, Russia has been bombing both grain storage facilities and, over the weekend, shipping ports, including the major port of Odessa. That may extend the time in which Ukraine can once again ship exports of wheat, giving the U.S. a chance to pick up some of the lost Black Sea business.

There does not appear to be much in the way of solid resistance until Chicago May gets to $10.50 per bushel, leaving a lot of potential to the upside.

With three consecutive new contract highs, December corn appears to be on the move higher and may have room for more upside. Last week's bullish USDA report, which featured a larger than expected (3.9 million acres) drop in planting intentions for corn, and Monday's huge corn sale to China for 42.6 million bushels, were both bullish factors for a continuation of the bull move higher. Corn export demand has been stellar and U.S. corn is picking up some of the lost Ukraine exports. Monday's split old- and new-crop sale of corn to China could be replacing some of the roughly 6 million metric tons (mmt) (236 mb) of sales from Ukraine to China that may not be shipped.

A note of caution is that December corn is approaching the overbought level, but not quite there, and it appears that the impact to Black Sea exports may be more long term than originally thought, requiring world corn importers to look elsewhere.

It appears July bean oil has recovered from breaking through the 50-day moving average last week and has turned back up again. Spot crude oil futures have also bounced, rallying nearly $6 per barrel from the recent low, and looks to be resuming its uptrend.

With world vegetable oils tight already, and with the loss of sunflower oil exports from Ukraine, and the larger use of veg oils in renewable biofuels should increase demand for U.S. soy oil. Also, crush margins in the U.S. remain very attractive, and demand for soybeans will continue to rise when coupled with the loss of production in Brazil and Argentina. Argentina remains too dry for developing soybeans, perhaps leading to more losses in the world's number one soy oil exporter.

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

Dana Mantini can be reached at Dana.Mantini@DTN.com

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