As mentioned in last weeks weekly recap, the story for both corn and soybeans lately has been focused on China demand and lower ending stocks from the September 30th USDA update. As harvest progresses, we should continue to get more accurate information regarding harvested acres, yields, and of course ending stocks.
Good rains in Brazil are expected this week and this is looked at as a bearish development, as they needed rains to help the crop move along smoothly. This fundamentally bearish factor, coupled with technical indicators being “overdone”, is a good reason to believe we may see some “back and fill” action this week in both corn and beans.
For soybeans, I would look for a close below the channel up trend we are currently in, this will signal further downside. Multiple times now we have seen soybeans trade below the channel but eventually closing back within the trend. Corn on the other hand has been stuck within this channel for nearly 15 trading sessions. With the RSI reaching over 75, along with Brazil rains and a large managed fund “net long” position, it won’t take much bearish news to potentially spark a profit taking sell off for corn.