Nevertheless, AgResource shifted its trading mentality in the grain markets last week from bearish to slightly bullish.
CBOT corn ended the week slightly lower after touching harvest lows at midweek. AgResource views the collapse as mostly driven by money flow and chart patterns. Speculators were spooked into liquidation after all major moving averages were breached. A range trade is expected going forward.
Without weather threats in Brazil in the next 45 days and in the Central U.S. this summer, global corn production will increase 35-40 million metric tons in 2023. However, it is premature for the market to adjust to growing supplies.
AgResource sees corn values caught in a broad trading range until more is known about 2023 Northern Hemisphere weather patterns.
Spot Chicago wheat touched a new 17-month low before finding support just below 7 U.S. dollars. The catalyst for the break was ongoing weak Russian FOB offers, with both interior and FOB markets scoring new seasonal lows. Weakness in the global wheat market during February is seasonally rare. Wheat markets worldwide were forced to reset.
AgResource sees the world wheat market as undervalued. The growing season begins in the next few weeks in Northern Hemisphere, and there is a lingering drought in the U.S. Plains and Western Europe. Meanwhile, Indian weather must be closely monitored for a second consecutive year.
The overall structure of the wheat market is one of tight supply and demand. The price of 8 dollars reflects very overhead resistance with support below 7 dollars. A recovery to 7.40-7.60 dollars for May wheat contract is projected. Wheat should be close to scoring an early seasonal low.
Soybean futures were nearly unchanged at Friday’s close. U.S. soybean export inspections fell sharply last week, and the data added fuel to the early week sell-off. However, U.S. cash markets held firm on the CBOT break, and a strong recovery unfolded in the last half of the week.
U.S. soybean exports are slowing as Brazilian shipments accelerate. Key support at the CBOT has been established below 15 dollars. Broad-ranging trade looks to unfold ahead of the U.S. growing season with support at 14.75 dollars and resistance at 15.75 dollars for May soybean futures.