Crop Damage Concerns Push Corn and Soybean Futures Higher

August 14, 2020 11:24 AM
RJO grains and soybeans update

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Friday Ag Roundup

Corn

The corn market chopped around its lows the first 3 days of the week, testing them multiple times before finally exploding to the upside on Thursday. Growing concerns over a large portion of Iowa’s corn crop having damage done to it, mixed with an exceptionally large “net short” position held by funds, was the main catalyst for the move higher. I expect the gap around $3.43 to finally go and get filled, before stalling out or potentially starting to move back lower. Today we are seeing corn basically unchanged, which to me is just a “breather” before going to fill the gap. Keep an eye on RSI levels reaching overbought while filling the gap, and this can be an opportunity to try playing the downside.

Corn Dec ’20 Daily Chart

Source: RJO Futures Pro

Soybeans

Soybean futures broke a major downward trend line yesterday while also touching the 200-day moving average. They closed above the trend-line which is a bullish technical development, but today are testing these same levels on a pull back. Strong demand talks from China and concerns over crop damage have been the main stories supporting the grains, while there are also now talks of La Nina weather event in the fall, right when South America will be planting soybeans. Pullbacks that test these trend lines can be looked at as buying opportunities.

Soybeans Nov ’20 Daily Chart

Source: RJO Futures Pro

If you are interested in discussing the potential opportunities in grains, contact Tony directly at tcholly@rjofutures.com.

About the Author

Tony Cholly is a senior market strategist at RJO Futures. Tony's primary focus is on technical analysis in the grain, metals, and energy markets.