February 16, 2017
The grains have continued to attract decent fund buying interest. The grain analysts tell us this is due to a mix of anti-inflationary hedging and the fact that they (or at least corn and wheat) have been struggling around historical lows, therefore just look cheap to some fund managers. Fundamentally, corn and wheat still need to deal with record global stocks, but Chinese and broader global bean demand is still supportive in soy.
As we suggested last week, NOLA urea needed to hold above the $243 level, otherwise, the gap down to the next support at $225 came into play. The market did push through $243 earlier in the week, it looked like that gap may get filled yesterday but we encountered support in the low $230’s which thus far seems to be holding. If we can push back up through $243, we re-enter a bullish zone which suggests a return to the mid 250’s is possible.