The soft commodities sector ended the week in bullish mood, with March corn futures leading the way 9 cents per bushel higher on the day, and ending the week at 596.40 cents per bushel, just failing to breach the psychological 600 per bushel level, last seen in early November. The technical picture for corn remains positive as we continue to hold above all three short term moving averages, and with both the 9 and 14 day averages now crossing above the 40 day moving average, this is adding further to the bullish picture at present. In the short term, a break and hold above the 610 price point will signal a further leg up in the current bullish trend, and in the longer term we can expect corn futures to continue higher, breaking out into new high ground in due course. The fundamental news helped the commodity higher today, on expectation that demand will remain strong for corn based ethanol, and this is likely to be one of the key features in the longer term, which can only help the commodity continue its upwards momentum.
Unlike corn, wheat futures have seen a retracement in the last two weeks, as we move below the short term 9 and 14 day moving averages on the daily chart, although in today’s trading session, the March futures contract closed higher at 756.60 per bushel, up 7 cents on the day and recovering from an intra day low of 742 per bushel. The key feature from a technical perspective for corn, is now the 40 day moving average which sits at the 735.40 per bushel price point, and provided this indicator is not breached, then this should provide the necessary platform of support for a bounce higher, and retest of the highs of two weeks ago in the 800 per bushel area. To the upside , the key price level remains the resistance area at 780 per bushel, and if this is broken in any recovery, then expect to see the commodity break higher once again, and with the platform of support below, to re-establish the upwards direction once more. Indeed the fundamental picture may dominate wheat prices in the next few weeks as we look towards the Spring crop, which has struggled due to unseasonably dry weather on the US plains, and should these look weak, then growers may simply plough these in, and establish alternative crops.
Despite a relatively quiet week, March soybean futures continue to remain bullish, with today’s price action ending as a narrow spread up candle, but continuing to hold above all three moving averages once again. Indeed both the 9 and 14 day moving averages have provided excellent platforms of support this week, confirming once again the positive sentiment for the commodity as we close this evening at 1310.40, up 10 cents on thee day. The key price level on the daily chart remains the high of mid November at 1345, and once we see a test and clearance at this level then we can expect to see a continuation of the longer term rally for the commodity, and significantly higher prices next year. The key fundamental driver in today’s price action were concerns over the growing conditions in Argentina with forecasts still suggesting hot dry conditions, with little chance of rain. Demand continues to remain strong from China, and in additon deferred month contracts added to the bullish sentiment, with talk of acreage battles in 2011 re-emerging once again on the trading floor.