Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 07/20/14

Grain Markets: Weekly Analysis

Corn: The DTN National Corn Index (NCI.X, national average cash price) closed at $3.51, down 9.00cts for the week. This is the lowest weekly close for the NCI.X since the week of July 26, 2010. National average basis (NCI.X - September futures) was calculated at 20cts under Friday evening, continuing to run below the 5-year average and 2 cents weaker for the week. The combination of weak national average basis while the futures market trades in the lower 17% of the 5-year price distribution range reflects a continued bearish old-crop supply and demand situation. Technically the NCI.X is nearing old support between $3.50 and $3.10 set from February 2010 through July 2010.

New-crop Corn: The December contract closed 6.25cts lower. The secondary (intermediate-term) trend remains down. Friday saw the contract close near its new low of $3.78, with weekly stochastics deep in single digits indicating a sharply oversold situation. The close of $3.78 1/2 has the December contract priced in the lower 17% of the market's 5-year distribution range. Friday's weekly CFTC Commitments of Traders report showed noncommercial traders trimming another 19,970 contracts from their net-long holdings. The December to July forward curve shows a bearish level of carry (67% of total cost of carry) reflecting an increasingly bearish view of supply and demand. Major (long-term) support in the futures market is between $3.45 and $3.25.

Soybeans: The DTN National Soybean Index (NSI.X, national average cash price) closed at $12.05, down $0.23 for the week. The NSI.X posted its lowest weekly close since the week of February 6, 2012 and priced in the lower 36% of the 5-year distribution range. National average basis weakened by about 5 cents last week, though results could start to be skewed by the rolling of bids from the August contract to the November. The cash market is oversold technically meaning it could soon find renewed buying interest.

New-crop Soybeans: The November contract closed 10.25cts higher. Despite the higher weekly close the secondary (intermediate-term) trend remains down. However, the November stabilized above its recent low of $10.65 while weekly stochastics continue to move toward the oversold level of 20%. Friday's close of $10.85 1/4 put the November contract in the lower 23% of the market's 5-year price distribution range. The forward curve (November 2014 through July 2015 contracts) remains neutral at approximately 50% of total cost of carry. Major (long-term) support on the continuous monthly chart is between $9.91 1/2 and $9.28 1/4, the 61.8% and 67% retracement levels of the previous major uptrend from $4.98 1/s through the high of $17.89.

Wheat: The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.02, up 1.00ct for the week. Despite the higher close the SR.X remains in a price level not seen since the week of July 6, 2010. National average basis was calculated at 30 cents under Friday, just below the strongest basis has been the last five years at 24 cents under. However, the 30 cents under was 5 cents weaker than the previous Friday's settlement.

SRW Wheat: The September contract closed 6.25cts higher. The secondary (intermediate-term) trend remains down, though could turn sideways if the contract is able to hold above last week's low of $5.24 1/4. Weekly stochastics are deep into single digits indicating a sharply oversold market, while the September contracts weekly close of $5.32 1/4 puts it in the lower 18% of the market's 5-year price distribution range. However, noncommercial traders continue to add to their net-short futures position with Friday's Commitments of Traders report showing an increase of 3,054 contracts. Major (long-term) support on the continuous monthly chart is at the June 2010 low of $4.25 1/2.

The most recent CFTC Commitments of Traders report was for positions held as of Tuesday, July 15.

Posted at 9:15AM CDT 07/20/14 by Darin Newsom
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