The grains complex has been quite volatile after what traders considered a confusing USDA report. When the report was released the prior week, it came out extremely bullish, but the grains went the opposite way causing net long funds to liquidate and try to make sense of the overall market direction. China has been also adding a lot of confusion into the markets as they are trying to adjust their currency and interest rate. Since China is one of the biggest importers of US grains, prices are heavily influenced by their fiscal policies.

On Monday Corn opened with an expandable limit of $0.45 cents due to its limit down settlement on Friday. With a limit down offer settlement, it would seem reasonable for follow through selling to occur, but that wasn’t the case to start the week. Corn was the most active as it rallied out of the gates and was able to trade above Friday’s trading range breaking upside resistance levels. Tuesday, markets opened extremely weak on follow though selling pressure from the overnight session. Soybean and Corn turned around from prior day’s gains and traded limit down during the mid-morning session, while wheat sold off but was unable to hit their limit prices. Even though Soybeans and Corn didn’t settle limit down, the drastic turn in the markets started to make traders second guess the overall trend of the markets, and reconsider holding positions overnight as there were huge swings happening in that session.

There was no follow through selling the next couple of days which caught the shorts off guard. The grain complex posted on the positive side of the ledger until Friday when they were met with sellers wanting to push Soybeans and Corn below weekly support levels. Soybean and Corn were heavily pressured down as sellers kept adding to their position on any small rally they saw. Towards the closing of the week, bulls gave up and let the bears push Soybean and Corn prices below their weekly support prices causing Corn to close at their lowest levels in seven weeks. Soybeans closed at their lowest levels in four weeks, and Wheat had the weakest close in sixteen weeks. Starting Monday, Corn and Wheat will roll over into the March (H) contract.

To learn more from Pratik and the guys at The Futures Room, visit their site at TheFuturesRoom.com