Soybeans Tech Update
Grain Market Commentary
Wednesday, March 7, 2018
by Jacob Christy, Freedom Program Trader
The soybean complex saw a bit of profit taking today heading into the USDA and CONAB crop reports tomorrow. Old-New spreads in both beans and meal were a feature as managed money took profits on front loaded long positions. Though solely timing based, the slight sell off today did do some damage to the charts, but nothing trend changing. With the amount of open interest in the markets, along with the near record length from the fund crowd, tomorrow’s post report trade will be critical.
Even with front end beans finishing the day down 11c and at session lows, it was a mere dent to the overall trend that has May18 futures up $1.26 since the January low. Now if there’s follow through selling after the report tomorrow the situation will change as the upward trend channel will most likely be broken, leaving a large fund long out to dry. With that said, similar pre-report sell-offs have occurred in each of the past two reports which were followed up by the market closing much higher on post-report bargain buying.
Looking at the chart, major support doesn’t come in until the old contract highs at 1050 with the 20-day moving average at 1039 below there. While the upside is anyone’s guess if the funds continue to pour in, the psychological importance of the 1100 mark could keep an explosive reaction contained.
Beans have been riding a wave of money flow for the past 45 days. Momentum is unquestionably higher even with today’s sell-off. The short term direction of beans is almost entirely dependent on the markets, and more specifically the managed moneys, interpretation of the data tomorrow. With funds so highly leverage, and the market extremely overbought, expect a big reaction either way.