Corn, soybeans, and Chicago wheat all put in key reversals yesterday. Below are the charts for each with the reversals circled. A key reversal is when a market opens below the prior day close, trades lower than the prior day, and then reverses and closes higher than the prior day high.
So what does this mean? The markets were oversold, the funds are very short, and a lot of the bearish cards coming out of the deck have already been priced in. My gut tells me we are putting in a short term low at the very least. This could turn into a seasonal bottom if demand picks up at these lower prices. Planting is not too far away, we could see lower acres overall this year, and seasonally the market puts in weather risk from Jan to May.
The most likely scenario is the market trades in range for a while as the bulls and bears don't have very convincing arguments to push the market either higher or lower for a while. The S. American crop should be decent but smaller than originally thought, demand is weak, US acres may be smaller than we thought back in the fall, global wheat export stocks are falling but global export corn and soybean stocks are rising. There are a lot of mixed signals and the next real catalyst for grains and oilseed will be acreage.
The Ag Forum will be Feb 15-16. The USDA will release their estimates for acres, yield, and demand. This is the next big report that can potentially be a catalyst for grain and oilseeds. Traders will continue to keep an eye on S. American production estimates and export demand. Neither are much of a surprise lately. There is a lot of debate about acres right now in the US and depending on the mix, it has the potential for big price swings this spring and summer.
CORN
SOYBEANS
WHEAT
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