Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 06/22/14

Ag Markets: Weekly Analysis

Corn: The July contract closed 6.25cts higher. Despite the higher weekly close, the secondary (intermediate-term) trend remains down. However, the contract appears to have found support above its previous low of $4.21 3/4. Most of this support came from commercial traders, as indicated by the renewed uptrend in the July to September futures spread and likely tied to the July contract trading into the lower-third of its 5-year price distribution range. Friday's CFTC Commitments of Traders report showed noncommercial traders reducing their net-long futures position by another 9,852 contracts.

New-crop Corn: The December contract closed 4.50cts higher. The secondary (intermediate-term) trend remains down. However, the contract continues to find buying interest near its previous low of $4.35 (this past week saw Dec corn post a low of $4.36 1/4). Seasonally the Dec contract tends to post its low weekly close between the last week of June and the first week of July. This factor, along with weekly stochastics near the oversold level of 20%, would indicate new-crop corn could be nearing a bullish turn.

Soybeans: The August contract closed 8.00cts lower. The secondary (intermediate-term) trend remains down. However, the contract continues to find support near $13.50 1/2, a price that marks the 38.2% retracement level of the previous uptrend from $11.75 through the high of $14.59. Weekly stochastics are growing more bearish indicating an extended downtrend to the 50% retracement level of $13.17 is likely. Friday's weekly CFTC report showed noncommercial traders reducing their net-long futures position in soybeans by 32,644 contracts.

New-crop Soybeans: The November contract closed 10.25cts higher. Weekly stochastics indicated the trend of the market remains down. The consolidation above support near $12.15 1/2, a price that marks the 33% retracement level of the previous uptrend from $10.88 1/4 through the high of $12.79 (week of May 19), looks to be a possible bearish flag formation. A breakout of this pattern could lead to an extended sell-off to near $11.51 3/4, the 67% retracement level of the previous uptrend.

Wheat: The July Kansas City contract closed 7.50cts higher. The Kansas City wheat market sent mixed signals at the end of last week. Stochastics (momentum indicator) show the secondary (intermediate-term) trend remains down, while the July to September futures spread posted a strong rally into an inverted situation. The bottom line is that the July contract is indicating recent lows near price support at $6.97 should hold, though a test of these lows should take stochastics below the oversold 20% level and set the stage for a move to an uptrend.

Cotton: The July contract closed 1.18cts higher. Despite the higher close the secondary (intermediate-term) trend remains down. The contract has posted a strong rally off its test of support at 84.07, a price that marks the 67% retracement level of the uptrend from 77.74 through the high of 96.76. Resistance is pegged between 88.79 and 90.31. The contract should slip back to a test of its recent low of 83.86, pulling weekly stochastics below the oversold 20% level and setting the stage for a move to a seasonal uptrend.

New-crop Cotton: The December contract closed 0.67ct lower. The secondary (intermediate-term) trend remains down. Weekly stochastics remain bearish, though nearing the oversold level of 20%. The commercial view of the market remains bearish as indicated by the strong carry in the December to March futures spread. Given its structure the contract would be expected to test its low of 75.25 in coming weeks, setting the stage for a seasonal uptrend that normally begins in early August.

Live Cattle: The August contract closed $0.30 lower. The secondary (intermediate-term) trend is up. The contract (the cattle market in general) remains in a runaway rally with no indication of where a top might occur. However, after posting a new high of $148.025 the contract did close lower for the week, activity that could possibly be viewed as somewhat bearish. Weekly stochastics show the contract (market) is overbought, a factor that continues to be offset by strong commercial buying reflecting in the uptrend of the August to October futures spread.

The most recent CFTC Commitments of Traders report was for positions held as of Tuesday, June 17.

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

Posted at 7:48AM CDT 06/22/14 by Darin Newsom
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