Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 05/11/14

Ag Markets: Weekly Analysis

Corn: The July contract closed 8.00cts higher. The secondary trend is sideways despite weekly stochastics remaining bearish. The latter established a bearish crossover the week of April 6 but has failed to generate increased noncommercial long-liquidation. The July contract is holding near technical price resistance at $5.06 1/2, a price that marks the 33% retracement level of the previous downtrend from $6.76 through the low of $4.21 3/4. As for breaking out of its sideways trend, the range is between the four-week high of $5.24 1/4 and the four-week low of $4.90 3/4.

New-crop Corn: The December contract closed 4.75cts higher. The secondary trend remains sideways with the contract holding between the four-week high of $5.17 and the four-week low of $4.87 1/2. Weekly stochastics remain bearish following the establishment of a crossover the week of April 7. Longer-term resistance remains near $5.03 1/2, a price that marks the 38.2% retracement level of the previous downtrend from $6.14 through the low of $4.35. The 50% retracement level is at $5.24 1/2.

Soybeans: The July contract closed 16.25cts higher. Despite the higher weekly close, technical signals continue to indicate the secondary trend has turned down. The previous week saw the July contract establish a bearish reversal and a double-top formation with the recent high of $15.21 1/2. At the same time, weekly stochastics established a bearish crossover above the overbought level of 80%. Noncommercial traders continue to liquidate a portion of their net-long futures position with Friday's report showing a decrease of 28,439 contracts. This means the market is holding solely on buying interest from commercial interests. Technical support remains near $14.07 1/2, then $13.50 1/2. These prices mark the 33% and 50% retracement levels of the previous uptrend from $11.80 through the high of $15.21.

New-crop Soybeans: The November contract closed 3.75cts higher. Weekly stochastics continue to indicate the secondary (intermediate-term) trend has turned down following a bearish crossover established at the close the week of April 28. Initial support is pegged between $11.95 3/4 and $11.68 3/4, prices that mark the 33% and 50% retracement levels of the previous uptrend from $10.88 1/4 through the high of $12.49 1/4. The latter was a test of longer-term price resistance at $12.51 1/2, the 67% retracement level of the downtrend from $13.33 through the low of $10.88 1/4.

Wheat: The new-crop July Kansas City contract closed 7.00cts higher. While weekly stochastics continue to indicate the secondary (intermediate-term) trend is up, the contract appears to be losing bullish momentum falling well off its new high of $8.55 1/2. If the contract sees a bearish crossover by weekly stochastics this week, initial support would be pegged at $7.70. This price marks the 33% retracement level of the uptrend from $5.99 through this past week's high.

Cotton: The July contract closed 1.96cts lower. The secondary (intermediate-term) trend remains down. Initial support is pegged at 90.43, a price that marks the 33% retracement level of the previous uptrend from 77.74 through the high of 96.76. Next support would be the 50% retracement level of 87.25.

New-crop Cotton: The December contract closed 0.23ct lower. Last week's lower close coincided with a bearish crossover by weekly stochastics above 90%, indicating the secondary (intermediate-term) trend has turned down. However, the strong uptrend in the December to March futures spread (reflecting a strengthening inverse) indicates the commercial outlook is growing more bullish. This could limit the downtrend to a test of support at 81.58, a price that marks the 33% retracement level of the previous uptrend from 75.25 through last week's high of 84.74.

Live Cattle: The June contract closed unchanged. The secondary (intermediate-term) trend remains sideways. Weekly stochastics established a bearish crossover above the overbought level of 80% back at the week of March 17, though the contract has continued to trend sideways to up. However, the June to August futures spread has moved into a strong downtrend, indicating a bearish change in commercial outlook. This could lead the June contract to a test of initial support near $133.83, a price that marks the 33% retracement level of the previous uptrend from $121.575 through the recent high of $139.95. The four-week low of $133.925 is also near this price support level.

The most recent CFTC Commitments of Traders report was for positions held as of Tuesday, May 6.

To track my thoughts on the markets throughout the day, follow me on Twitter: www.twitter.com\DarinNewsom

Posted at 8:55AM CDT 05/11/14 by Darin Newsom
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