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Brian Grete, Pro Farmer, says grains saw a healthy correction on profit taking after hitting chart resistance.
May corn futures ran up into the 62% retracement level on the charts and consolidated under that level with May soybeans hitting the same wall at around $10.50 and soft red winter wheat at the $5.50 level.
Grains all ended higher for the week with corn up $.30, soybeans up over $.65 and wheat was $.10 to $.30 cents higher in the three classes and were likely due for a correction as they were reaching overbought status.
The markets showed resilience in the face of the escalation of the trade war with China and Grete thinks the market has traded the worst of the tariff news now.
Soybeans were the most surprising with the reliance on Chinese exports, but their buying has already shifted to Brazil so this won’t be a demand issues until the fall.
Plus, Grete says positive talk regarding the new blending mandates for biofuels in the Renewable Fuels Standard are also supportive.
The market was also removing some weather premium, at least in the case of hard red winter wheat as there are rains forecast for those areas in the 7 day models.
The lower wheat also drug down the corn market and capped the early gains in soybeans.
However, are $5 corn and $11 soybeans still possible?
Grete isn’t ruling those levels out, but says the correction last week was the easier lift for the market and getting to those next benchmarks will be more difficult with the headwinds coming from trade uncertainty.
Money flow and headlines are still driving the action in the commodity sector and will be closely watched by fund traders.
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