Technically Speaking

Grain Markets: Weekly Analysis

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.02, down 10 3/4 cents for the week. The secondary (intermediate-term) trend remains down, in line with the market's seasonal index through the first week of October. The next major (long-term) price target remains the December 2008 low of $2.69. National average basis (NCI.X minus the futures market) was calculated at about 29 cents under the December contract, 3 cents weaker for the week. Weekly price distribution studies (close only) show the NCI.X nearing the 5-year low of $2.92, the lower 24% of the 10-year, the lower 15% since the beginning of corn's demand market with the 2005-2006 marketing year, and the lower 30% of the range since total domestic demand climbed above 10 bb during the 2003-2004 marketing year.

Corn (Futures): The December contract closed 7.00cts lower. The secondary (intermediate-term) remains down with the contract moving below its floor price of $3.35. This sets the stage for a move to the next major (long-term) price target of $2.90, the December 2008 low. Both the 5-year and 10-year seasonal indexes show the futures market tends to trend down through the first weekly close in October.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.55, down $1.25 for the week. The NSI.X remains in its seasonal downtrend that tends to last through the first weekly close in October. The next major (long-term) target is near $9.05, a price that marks the 67% retracement level of the major uptrend from $4.85 (February 2005 low) through $17.48 (August 2012 high). National average basis (NSI.X minus the futures market) was calculated at $0.02 under the November contract, 97 cents weaker for the week. The NSI.X is now priced in the lower 13% of the market's 5-year distribution range. However, buyers could stay on the sidelines given the markets strong seasonal tendency (both the 5-year and 10-year indexes) to trend down through the first weekly close in October as newly harvested beans are sold.

Soybeans (Futures): The November contract closed 28.25cts lower. The secondary (intermediate-term) trend remains down following the establishment of another new low of $9.56. Next major (long-term) support on the continuous monthly chart (most active contract) is at $9.28 1/4, a price that marks the 67% retracement of the uptrend from $4.98 1/2 (February 2005 low) through $17.80 (September 2012 high). Seasonally the futures market tends to trend down through the first weekly close in October.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.28, down 29 cents for the week. National average basis was calculated Friday at 47 cents under the December Chicago contract, 2 cents weaker for the week. The trend (both major and secondary) of SR.X remains down, in step with its 5-year seasonal index that shows a tendency to post a low the first weekly close of October. Next major (long-term) support could be near $3.73, the low from March 2010.

SRW Wheat (Futures): The December Chicago contract closed 28.00cts lower. The secondary (intermediate-term) trend remains down. Major (long-term) support on the continuous monthly chart (most active contract) is at $4.25 1/2, the low from June 2010. Friday's close of $4.74 1/2 put the December contract in the lower 7% of the market's 5-year price distribution range. The 5-year low weekly close is $4.35 3/4.

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