Daily Grains Analysis – Corn and Soybeans Tumble as Risk Aversion Perpetuates

Grain prices continued to drop in early North American trade on Monday as risk of perpetuated throughout the market. Equity prices are tumbling, and the dollar is gaining traction weighing on grain prices. Hedge funds continue to reverse short positions in futures and options, which was likely the catalyst for the rise.

Corn Prices

Hedge fund traders exited short positions in futures and options and added to long position according to the latest commitment of trader’s report. According to the CFTC, managed money reduced short position in futures and options by 57K contracts while increasing long position in futures and options by 31K contracts.

Corn prices are dropping as risk off weighs on the commodity space. Corn is testing the first level of support which is seen near the 10-day moving average at 3.58. A break of this level would lead to a test of the January 2018 lows at 3.45 per bushel. Resistance is seen near the February highs at 3.62. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black but the trajectory of the MACD histogram has turned negative which reflects consolidation.

Soybean Prices

Soybean prices continued to drop on Monday as risk aversion accelerated. Prices are poised to test target support near the November9.59.  Resistance for soybeans is seen near the 10-day moving average at 987 per bushel. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices for soybeans.

Wheat Prices

Wheat prices continued to drop on Monday, dropping as risk aversion continued. Traders’ reduced both long and short position in futures and options according to the latest commitment of trader’s report released for the date ending January 30, 2018.  According to the CFTC, managed money reduced long position in futures and options by 5.6K contracts which reducing short position in futures and options by 19K contracts. Support on wheat futures prices is seen near the former breakout level at 4.30 per bushes. Resistance is seen near former support near the 10-day m442. Momentum is poised to turn negative but remains neutral. The MACD histogram is printing in the black with a declining trajectory which points to consolidation.