The grain markets continue to show resilience, with key contracts maintaining strength despite ongoing volatility. The underlying drivers remain a mix of supply-side concerns, geopolitical tensions, and shifting demand expectations.
Wheat
Wheat futures extended their recent strength, supported by dry conditions in key U.S. growing regions and ongoing concerns over Black Sea exports. The market has been closely watching Russian and Ukrainian shipments, as any disruption could further tighten global supplies. The USDA’s latest projections did little to shake the bullish sentiment, with U.S. export demand seeing incremental improvements. While technical resistance levels are in play, the underlying fundamental picture suggests continued strength in the near term. I have previously mentioned being long on wheat, and my mid-term target remains at $6.33, with an uptrend still intact.
Corn
Corn markets maintained their footing, with prices trading near recent highs. Domestic demand remains firm, particularly from ethanol producers, while South American weather remains a key variable. Brazil’s second corn crop is entering a critical development phase, and any weather-related concerns could provide further support. Meanwhile, export sales data has been mixed, with China’s purchasing patterns remaining a wildcard for traders. The market is approaching key resistance levels, and a breakout could bring another leg higher. Today’s rally in the corn market has been nothing short of impressive, aligning with my previous targets of $5.10 and potentially $5.30 looking into mid-to-late summer.
Soybeans
Soybean futures saw a pullback as weather concerns in Brazil continue to underpin prices. While recent rainfall has helped alleviate some stress, key growing regions remain at risk for yield losses. Chinese demand remains inconsistent, leading to some caution among traders. The crush margins in the U.S. continue to support domestic demand, providing a floor for the market. Any additional weather disruptions in South America could push prices toward the upper end of the recent trading range. For March soybeans, the continued uptrend hinges on maintaining support above $10.31, with my target at $11.00 for mid-to-late summer. In soybean oil, my next upside target is $47.00, with an extended move towards $50.00 if momentum persists.
Soymeal
March soymeal remains a problem for the market, as it continues to trade in a choppy, whipsaw range. Given these conditions, I prefer to stay out of this market until a clearer trend emerges.
Commitments of Traders (COT) Report
The latest COT report shows that funds have continued to adjust their positions in response to market fluctuations. Managed money traders increased their net long positions in wheat, reflecting growing concerns over supply constraints. Corn saw a slight reduction in speculative longs, indicating some profit-taking after recent strength. Meanwhile, soybean positioning remains mixed, with traders hesitant to commit heavily amid uncertain Chinese demand and South American production variables. These positioning shifts suggest that market sentiment remains cautiously bullish but subject to rapid shifts based on new developments.
Technical Outlook
- Wheat: Holding above key moving averages, with potential for further upside if resistance levels are breached. Target remains $6.33.
- Corn: Consolidating near resistance; a breakout could trigger fresh buying interest. Targeting $5.10 and potentially $5.30 mid-to-late summer.
- Soybeans: Range-bound, but fundamental support remains intact. Needs to hold $10.31 to maintain the uptrend towards $11.00.
- Soybean Oil: Targeting $47.00, with potential for $50.00 if momentum sustains.
- Soymeal: Still appears weak and remains in a whipsaw range—better to stay out for now.
Final Thoughts
As always, this is just my opinion and should not be considered as financial advice. Market conditions can change rapidly, and it’s essential to stay informed and manage risk accordingly.
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John S. Simpson Jr.
Senior Market Strategist
Walsh Trading
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