Grains end mixed on Wednesday.
Corn, soybeans and bean oil see a short covering technical bounce according to Ted Seifried, Zaner Ag Hedge.
Funds are short in corn, and they are technical traders so with it reversing that was a buy signal. “We had a reversal day that closed above the cluster of moving averages, the 20-day, the 10-day and the 50-day, could be a catalyst to get more of these guys to cover their shorts,” he adds.
He says it was impressive considering the implosion in crude oil futures, but corn may have also been adding some risk premium with weather forecasts looking wetter for the corn belt on the noon models.
“I think corn may be trying to put in a little bit of weather premium but as we put in weather premium that gives reason for a short covering rally. So, I think the two of those could go hand in hand. You know we’ve been talking about planting delays for corn and even though we’re on top of the five-year average but what is going to look like when we see Monday’s crop progress? I think most of us are expecting very little advancement over this last week,” he says.
Soybeans and soybean oil also saw a technical correction after bean oil hit contract lows this week.
Meal was lower after a couple of up days tied to the Argentina workers strike at processing plants and now the market is watching to see how big the crop is there with the rain slowing the soybean harvest.
Wheat corrects with rain the forecast for dry HRW areas and wheat areas of Russia.
So, is it routine profit taking or is the rally about over?
He says, “We had a about an 83-cent short covering rally in KC wheat that culminated last week and this week we’ve taken about a third of the move back. We also ran up to resistance at the 100 -day moving average took it out and then closed back above it.”
Seifried says the market was due for a correction and the next move will depend on not only U.S. but global weather.
