Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 08/31/14

Grain Markets: Weekly Analysis

Source: DTN ProphetX

Corn: The DTN National Corn Index (NCI.X, national average cash price) closed at $3.39, down 8 1/4 cents for the week. National average basis (NCI.X minus the futures market) closed out the 2013-2014 marketing year by weakening 2 cents to 20 cents under the September and 25 cents under the December. The NCI.X is priced in the lower 14% of its 5-yerar distribution range (weekly close only) and the lower 37% of its 10-year distribution range.

New-crop Corn: The December contract closed 6.75cts lower. The secondary (intermediate-term) trend is sideways. Resistance is at the 4-week high of $3.81 while support is at the recent low of $3.58, creating a range of 23 cents. Using this range to establish price targets: a bullish breakout (above the 4-week) high would project to $4.04, just short of a 33% retracement of the previous downtrend from $5.17 (week of April 7) through the recent low near $4.11. On the other hand, a move to a new low would project a downside target of $3.35. Weekly stochastics are neutral to bullish below the oversold level of 20%, while the December contract closed in the lower 11% of the market's 5-year price distribution range.

Soybeans: The DTN National Soybean Index (NSI.X, national average cash price) closed at $11.80, down $0.20 for the week. National average basis (NSI.X minus the futures market) weakened by about 3 cents, but still at $1.55 over the November futures contract. The NSI.X is priced in the lower 32% of its 5-year distribution range (weekly close only). Seasonally the NSI.X has a strong tendency to trend down through the close the first week of October, with both the 5-year and 10-year seasonal indexes showing similar patterns.

New-crop Soybeans: The November contract closed 17,75cts lower. The secondary (intermediate-term) trend remains down, despite weekly stochastics well below the oversold level of 20%. Using the price gap between $11.32 and $11.29 1/2 (red circle on attached chart, weeks of June 30 and July 7) as a measuring gap results in a downside target of $9.85. Interestingly enough this would create a test of major (long-term) support at $9.91 1/2, a price that marks the 61.8% retracement of the previous major uptrend from $4.98 1/2 through the high of $17.89. The weak carry in the new-crop forward curve continues to indicate a neutral market view of supply and demand.

Wheat: The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.15, down 3 cents for the week. National average basis was calculated Friday at 48 cents under the December Chicago contract, 4 cents weaker for the week. Major (long-term) support remains at the July low of $4.89. Weekly stochastics show the trend to be sideways to up, with initial resistance at the 4-week high of $5.37. Seasonally the SR.X tends to trend down from the close the first week of August through the first week of October. However, the market's contra-seasonal downtrend could be followed by a contra-seasonal uptrend.

SRW Wheat: The December contract closed 1.25cts higher. The secondary (intermediate-term) trend is sideways. While the argument could be made for an uptrend given the bullish crossover by weekly stochastics below the oversold level of 20% (week of August 4), the spike high by the futures contract to $5.91 looks to be a characteristic (for wheat) head-fake. Still, if the market does work higher initial resistance is pegged near $6.16 1/2, a price that marks the 33% retracement level of the downtrend from $7.65 through the recent low of $5.42 1/4.

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

Posted at 12:27PM CDT 08/31/14 by Darin Newsom
Comments (1)
I am slowly learning the value of the numerical challenges that different sides of the trade use to make decisions. While I don't always agree with their strategy, I am so thankful you break down the hieroglyphics and present it to us simple farmers. :-) Stephen
Posted by Unknown at 4:39PM CDT 08/31/14
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