Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 08/17/14

Grain Markets: Weekly Analysis

Corn: The DTN National Corn Index (NCI.X, national average cash price) closed at $3.46, up $0.13 for the week. National average basis weakened slightly, coming in at 20 cents (rounded) under the September futures contract. Seasonally the cash corn market tends to rally into the end of August before posting a new low in early October (10-year) and early December (5-year). The NCI.X has tested major (long-term) support between $3.44 and $3.18. Cash corn found renewed buying interest after two consecutive weekly closes in the lower third of the 10-year price distribution range ($3.33).

New-crop Corn: The December contract closed 13.50cts higher. Dec corn posted a bullish key reversal on its weekly chart, in conjunction with a bullish crossover by weekly stochastics. This combination indicates the secondary (intermediate-term) trend has turned up. The initial upside target is $4.18 3/4, a price that marks the 38.2% retracement level of the previous downtrend from $5.17 through last week's low of $3.58. Note that this retracement would also close the bearish gap between $4.14 1/2 (low the week of June 30) and $4.10 1/2 (high the week of July 7). The initial rally could be limited to the 38.2% level by the downtrend (strengthening carry) in the Dec to March futures spread.

Soybeans: The DTN National Soybean Index (NSI.X, national average cash price) closed at $11.69, down $0.26 for the week. This price puts the NSI.X in the lower 31% of the 5-year distribution range while national average basis at $1.17 over the November contract continues to run well above the 5-year high. Seasonally (both 5-year and 10-year) the NSI.X tends to rally through the end of August before posting a low in early October (both 5-year and 10-year). Major (long-term) support is pegged near $11.16, then $9.67.

New-crop Soybeans: The November contract closed 32.75cts lower last week, establishing a bearish outside weekly pattern in the process. This would indicate the secondary (intermediate-term) trend remains down, though weekly stochastics are now in single-digits indicating a sharply oversold market. Fundamentally, the November to January futures spread is testing support at the 9-cent carry level, equaling the strongest this carry has been (weekly close chart, week of July 7). If this spread continues to see a stronger carry the November contract could fall to a test of major (long-term) support between $9.91 1/2 and $9.82 1/4.

Wheat: The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.19, up $0.01 for the week. National average basis was calculated Friday at 32 cents under the September Chicago contract, unchanged for the week. Major (long-term) support remains near $5.14.

SRW Wheat: The September contract closed 2.00cts higher. Weekly stochastics continue to indicate the secondary (intermediate-term) trend is up. Initial resistance is pegged near $5.97 1/4, a price that marks the 33% retracement level of the previous downtrend from $7.51 3/4 through the recent low of $5.20 1/4. While the long-term commercial outlook remains bearish, a factor that could limit the retracement to only 33%, support continues to come from noncommercial short-covering. Friday's weekly CFTC Commitments of Traders report showed this crop reducing their short futures position by 9,189 contracts.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, August 12.

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

Posted at 7:59AM CDT 08/17/14 by Darin Newsom
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