Corn and Soybean Futures Move In Opposite Directions

Grain futures market update

Grain futures market update

Corn 

Corn futures has posted lower highs and lower lows every day this week, and now has given back all but 5 cents of their gains from June 30 USDA report. Corn has sold off in the face of fairly strong demand out of China. They had their largest single day purchase ever and Corn mustered a 3-cent rally, to me this is showing there is a lot of weakness in corn still. The weather outlook remains favorable but be sure to keep an eye on central and western Iowa, where they badly need to get some rain. Iowa is a major corn producer and if yields are lowered in these areas, it can potentially hurt the overall yield unless other areas make up for this.

At the end of the day, I think corn can struggle to trade near or under $3.00 in the December contract, but I wouldn’t be surprised to see new contract lows if weather remains favorable, especially if those dry areas get much needed rain heading into pollination. Monday’s Crop Progress Report will most likely set the tone for next weeks trade. Technically speaking there’s still that gap sitting up around $3.43 that eventually should get filled, but if we see those levels, I think you need to be trying to sell there, especially if you are a producer needing to lock in prices.

Source: RJO Futures Pro

Soybeans 

Soybean futures have been mainly trading the charts in my opinion. They touch the top end of the channel and almost immediately back off to test the lower end. This has been happening since about mid-May, except for the June 30 report where we broke out and hit longer term resistance at $9.10-$9.15 level, then dipped right back into the channel, where we remain today. The fundamentals are still torn between good weather and strong demand, with demand somewhat winning this battle, which is why the market remains in this upward channel. I expect this to continue until the fundamentals give the market a reason to break out, whether it be higher or lower remains to be seen.

Source: RJO Futures Pro

If you are interested in discussing the potential opportunities in grains, contact Tony directly at tcholly@rjofutures.com.

About the Author

Tony Cholly is a senior market strategist at RJO Futures. Tony's primary focus is on technical analysis in the grain, metals, and energy markets.