Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 07/06/14

Ag Markets: Weekly Analysis

Corn: The September contract closed 32.75cts lower. The secondary (intermediate-term) trend remains down. The contract moved to a new low of $4.09, a test of major (long-term) support on the continuous monthly chart at the January 2014 low of $4.06 1/4. Weekly stochastics are well below the 20% level indicating a sharply oversold market situation. Also, the September contract is now priced in the lower 22% of the 5-year distribution range. Fundamentally the market is growing more bearish, as indicated by the downtrend (strengthening carry) in the September to December futures spread.

New-crop Corn: The December contract closed 27.00cts lower. The secondary (intermediate-term) trend is down. The contract posted a new low of $4.14 1/2 before closing for the week near that low at $4.15 1/4. This price puts the December contract in the lower 22% of the market's 5-year price distribution range. Weekly stochastics remain below 20%, indicating an oversold situation. However, the downtrend (strengthening carry) in the December to March futures spread reflects an increasingly bearish commercial view of fundamentals and could keep traders on the defensive.

Soybeans: The August contract closed 78.25cts lower. The secondary (intermediate-term) trend remains down. The August (old-crop) contract is moving toward a test of support at $12.83 1/2, a price that mars the 61.8% retracement level of the previous rally from $11.75 through the high of $14.59. Weekly stochastics are nearing the oversold level of 20%. Support from a still bullish commercial view of supply and demand, as indicated by the strong inverse in the August to November futures spread, could start to spark renewed buying interest.

New-crop Soybeans: The November contract closed 94.50cts lower. The secondary (intermediate-term) trend remains down. The November contract has fallen below support at $11.51 3/4, a price that marks the 67% retracement level of rally from $10.88 1/4 through the high of $12.79 indicating a test of the previous low is possible. Fundamentally the market is growing less bullish, as indicated by the downtrend (strengthening carry) in the November to January futures spread.

Wheat: The September Chicago contract closed 14.25cts lower. While the secondary (intermediate-term) trend remains down, the contract continues to hold above its previous low of $5.65 1/2. Weekly stochastics are well below the oversold level of 20%, indicating a bullish crossover is possible in the near future. If so this would show a bullish change in trend. At Thursday's weekly close the contract was priced in the lower 24% of the 5-year distribution range.

Cotton: The December contract closed 2.79cts lower. The secondary (intermediate-term) trend remains down. Last week saw the contract poste a new low of 71.52, pulling weekly stochastics below the oversold level of 20%. This technical factor, combined with renewed buying from commercial traders (as indicated by the potential move to an uptrend by the December to March futures spread) could signal a bottoming formation in the near future for the market.

Live Cattle: The August contract closed $3.875 higher. The secondary (intermediate-term) trend remains up. The contract (the cattle market in general) is in a sharp uptrend with no indication of where a top might occur. The August contract closed at $155.00, near its new high (set last week) of $155.325.

Posted at 9:03AM CDT 07/06/14 by Darin Newsom
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