Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 04/20/14

Ag Markets: Weekly Analysis

Corn: The July contract closed 4.00cts lower. The previous week's bearish crossover by stochastics indicated a move to a secondary (intermediate-term) downtrend, setting the stage for last week's sell-off. Initial support is pegged between $4.90 and $4.73, prices that mark the 33% and 50% retracement levels of previous uptrend from $4.21 3/4 and the recent high of $5.24 1/4. The major (long-term) trend of the corn market remains up on the continuous monthly chart.

New-crop Corn: The December contract closed 2.50cts lower. The secondary (intermediate-term) trend remains down on the contract's weekly chart. However, the neutral carry in the new-crop December to March futures spread implies a possible 50% retracement of the previous uptrend from $4.35 through the recent high of $5.17 puts the downside target at $4.76.

Soybeans: The July contract closed 55.00cts higher. The contract extended its secondary (intermediate-term) uptrend last week, posting a new high of $15.21. This despite weekly stochastics approaching the sharply overbought level of 90%. Support continues to come from a bullish commercial outlook, as indicated by the strong uptrend in both the July to August (old-crop) and July to November (old-crop to new-crop) futures spreads. Next major (long-term) resistance on the monthly chart is near $14.49 3/4, a price that marks the 61.8% retracement level of the previous major downtrend from $17.89 (September 2012) through the low of $11.62 1/2 (August 2013).

New-crop Soybeans: The November contract closed 24.50cts higher. The secondary (intermediate-term) trend remains up. However, the spot-month contract is testing price resistance between $12.39 1/2 and $12.51 1/2, prices that mark the 61.8% and 67% retracement levels of the previous downtrend from the high of $13.33 through the low of $10.88 1/2. At the same time, weekly stochastics are approaching 90% indicating the market is sharply overbought.

Wheat: The new-crop July Kansas City contract closed 39.00cts higher. Weekly stochastics show the secondary (intermediate-term) trend remains sideways to up. The July KC wheat contract is approaching resistance between $7.77 3/4, a price that marks the 67% retracement level of its previous downtrend from $8.67 through the low of $5.99, and its recent high of $7.94 1/2. Given weekly stochastics near the overbought level of 80%, the contract could soon establish a double-top formation. However, if July KC wheat is able to make a substantive move above its previous high it would imply a possible test of the contract high of $8.67 (November 5, 2012).

Cotton: The July contract closed 1.89cts higher. Despite the higher weekly close the secondary (intermediate-term) trend remains down. Initial support is at near the four-week low of 89.71, a price that is itself a test of support at 89.49. This price marks the 38.2% retracement level of the previous uptrend from 77.74 through the high of 96.76. Weekly stochastics remain bearish.

New-crop Cotton: The December contract closed 0.47cts higher. The secondary (intermediate-term) trend remains up. However, weekly stochastics are above 90% indicating a sharply overbought situation as the contract tests resistance between 81.89 and 82.42, prices that mark the 61.8% and 67% retracement levels of the previous downtrend from 86.00 through the low of 75.25. The strengthening inverse in the new-crop December to March futures spread indicates continued support from commercial traders.

Live Cattle: The June contract closed 1.400 lower. The secondary (intermediate-term) trend remains down. Initial support remains near $133.20, a price that marks the 33% retracement level of the previous uptrend from $121.575 through the high of $139.00. The trend in the June to August futures spread is also down, reflecting a less bullish commercial outlook. If this continues it could lead to a 50% retracement in the futures market, putting the target near $130.30.

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Posted at 8:10AM CDT 04/20/14 by Darin Newsom
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