Market Overview: Strength Emerging as Key Levels Hold
As February comes to a close, grain markets are stabilizing, with key futures contracts recovering from recent pullbacks. The latest Commitment of Traders (COT) report shows that funds have been reducing short positions in corn and wheat, while soybeans remain under pressure from Brazil’s record harvest [CFTC, 2025].
In my opinion, the softening U.S. dollar has helped support U.S. grain exports, increasing competitiveness on the global market [Trading Economics, 2025]. Shifting fund positioning, weather risks, and global trade flows are now shaping price action.
Let’s break down the technical and fundamental outlook for each grain market.
Corn: Holding Support for Continued Uptrend
Technical Levels & Market View:
- The March corn contract (ZCK25) recently tested support at 495 on 2/25/25 and broke through.
- Key level to watch: The market must close above 500 to confirm the continuation of the uptrend.
- Upside targets: If support holds, I see potential moves toward 525 and beyond.
COT Report & Market Sentiment:
- Funds have been net short in corn but are starting to unwind positions, which could add upside momentum [CFTC, 2025].
- China remains a steady buyer of U.S. corn, supporting demand [USDA, 2025].
- Ethanol production remains firm, adding another layer of price support [EIA, 2025].
Outlook:
In my opinion, corn is positioned for a move higher, but bulls need to see continued buying pressure above 500 to sustain momentum.
Wheat: Bulls Need to Defend 590 for a Trend Move Higher
Technical Levels & Market View:
- ZWK25 (May Wheat): Market must stay above 590 to maintain an uptrend.
- Upside targets: If price holds, we could see a move toward 625 and 643.
- Bearish trigger: A close below 590 could lead to further fund selling.
COT Report & Market Sentiment:
- Funds remain heavily net short in wheat, which could fuel a short-covering rally if global supply concerns grow [CFTC, 2025].
- Russia’s winter wheat crop is struggling, raising concerns about global supplies [Reuters, 2025].
- India’s wheat prices hit record highs, which could increase global demand for U.S. wheat [Bloomberg, 2025].
Outlook:
Wheat is setting up for a potential breakout, and if speculative shorts begin to unwind, we could see a strong rally in the coming weeks.
Soybeans: Pullback Within a Larger Uptrend
Technical Levels & Market View:
- ZSK25 (May Soybeans): Currently in a pullback phase but remains in an uptrend.
- Tested support at 1041, held above it, and closed higher—a bullish signal.
- Must stay above 1055 for the uptrend to remain intact.
- Upside targets: 1066 and 1088 if support holds.
Soybean Meal (ZMK25):
- Consolidation phase: Recently tested support at 300 and is now building strength.
- Buy signal above 306, with upside targets at 321-322 and 338.
COT Report & Market Sentiment:
- Funds have been net sellers in soybeans, driven by Brazil’s record harvest [USDA, 2025].
- China’s soybean purchases remain uncertain, as imports have increasingly shifted to Brazil [Reuters, 2025].
- Soybean meal demand remains strong, which has helped support prices [CME Group, 2025].
Outlook:
In my opinion, soybeans are at a critical level—if 1055 holds, we could see a recovery, but Brazil’s production remains a major headwind.
Soybean Oil: Confirmed Bearish Move
Technical Levels & Market View:
- ZLK25 (May Soybean Oil): Triggered a downside move at 46.30 on 2/25.
- Bearish targets: 45.25 and 44.00 in the near term.
- Weak demand from the biodiesel sector is weighing on prices.
COT Report & Market Sentiment:
- Funds have been reducing long positions in soybean oil, signaling declining bullish sentiment [CFTC, 2025].
- Biodiesel demand is soft, as alternative biofuels gain market share [EIA, 2025].
Outlook:
In my opinion, soybean oil remains weak, and unless demand shifts higher, we could see further downside pressure.
Key Market Drivers to Watch
1️⃣ Fund Positioning:
- The COT report shows funds are still net short in wheat and corn, meaning a short-covering rally could spark significant upside [CFTC, 2025].
2️⃣ U.S. Dollar Trends:
- A weaker dollar improves U.S. export competitiveness, which has helped stabilize grain markets [Trading Economics, 2025].
3️⃣ Export Demand:
- China’s soybean and corn purchases remain key factors—any increased buying could shift sentiment bullish [USDA, 2025].
4️⃣ Weather Risks:
- Argentina’s dryness and Russia’s wheat issues could fuel volatility in the months ahead [Bloomberg, 2025].
Final Thoughts
In my opinion, the grain markets are at an inflection point:
✅ Corn and wheat have upside potential if fund positioning shifts.
✅ Soybeans need to hold key levels to maintain strength.
✅ Soybean oil remains weak, with downside risk unless demand strengthens.
If global supply concerns rise or funds unwind short positions, we could see a strong rally in grains over the next few weeks.
Until next time, may your trades be strategic, your risks well-managed, and your vision ever forward.
John S. Simpson Jr.
Senior Market Strategist, Walsh Trading
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