Technically Speaking

Weekly Analysis: Grain Markets

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.69, up 6 cents for the week. Despite the higher close the secondary (intermediate-term) trend of cash corn remains down with an initial target of $3.47. This price marks the 33% retracement level of the previous uptrend from $2.81 through the high of $3.80, a test of longer-term resistance at $3.84. Given the neutral to slightly bearish commercial outlook indicated by the carry in the futures market's forward curve the NCI.X could extend its downtrend to the 50% retracement level of $3.31.

Corn (Old-crop): The March contract closed 4.50cts higher at $4.00 1/4. While the secondary (intermediate-term) trend remains down the March futures contract was able to post an inside week last week. The contract continues to hold above initial support near $3.88 1/4, a price that marks the 33% retracement level of its previous uptrend from $3.30 1/2 through the high of $4.17. Commercial buying, indicated by the weakening carry in the market's forward curve, combined with noncommercial short-covering was seen last week. Given that the futures spreads remain neutral to bearish an extension of the downtrend to test the 50% retracement level of $3.73 3/4 would not be surprising.

Corn (New-crop): The December contract closed 2.00cts higher at $4.21 1/2. While the secondary (intermediate-term) trend remains down, Dec corn rallied off its test of support near $4.15 1/2 to close higher for the week. Support continues to come from commercial buying, with the carry in the December 2015 to March 2016 futures spread (a weekly close of 8 1/4 cents) reflecting a neutral commercial outlook. Eventually the contract could test support at $4.03 1/2, a price that marks the 50% retracement level of the previous uptrend from $3.64 1/4 through the high of $4.40.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.99, up 46 cents for the week. The cash soybean market remains an interesting mix of technical signals with weekly stochastics bullish, indicating a secondary (intermediate-term) uptrend, while the NSI.X itself moves sideways. Friday's calculated close of $9.99 is a test of the high side of its range near $10.00, hinting at a bullish breakout next week. While the week carry in the futures market forward curve reflect a neutral to bullish commercial outlook, the NSI.X has not been able to extend its uptrend to test its expected target of $11.74. This price marks the 50% retracement level of the downtrend from $14.97 through the low of $8.50. Given that weekly stochastics are approaching the overbought level of 80% the NSI.X may top out near the 33% retracement level of $10.66.

Soybeans (old-crop): The March contract closed 44.75cts higher at $10.52 1/4 last week. The secondary (intermediate-term) trend remains sideways. March soybeans continue to test resistance near $10.60 3/4, a price that marks the 38.2% retracement level of the previous secondary downtrend. The contract threatened to establish a bullish outside week, a pattern that would have reestablished its seasonal uptrend, but came up short of the previous week's high of $10.68 1/4. Still, slightly bullish weekly stochastic and neutral to bullish futures spreads indicate the contract should see an upside breakout that could eventually lead to a test of the 50% and 61.8% retracement levels near $11.04 and $11.47 1/2.

Soybeans (new-crop): The November contract closed 26.25cts higher at $10.19 1/2. The secondary (intermediate-term) trend remains sideways with support near $9.92 1/4 and resistance between $10.29 and $10.43 3/4. The latter prices mark the 33% and 38.2% retracement levels of the previous downtrend from $12.32 through the low of $9.27 1/2. Given that weekly stochastics remain bullish and the weak carry in the November 2015 to January 2016 futures spread (weekly close of 5 cents) reflects a neutral to bullish commercial outlook, the Nov contract could resume an uptrend that eventually tests resistance at the 50% retracement level of $10.79 3/4.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.33, down 19 cents for the week. Though weekly stochastics did not see a bearish crossover above the oversold level of 80% the week of December 22, indicating the secondary trend had turned sideways, the SR.X moved to a new 4-week low last week and in position to test support at $5.24. This price marks the 50% retracement level of the uptrend from $4.25 through the high of $6.23, itself a test of longer-term resistance at $6.17 (a price that marks the 67% retracement level of the previous downtrend from $7.11 through the $4.25 low). Given that the weak carry in the March to May futures spread (weekly close of 4 cents) reflects a bullish commercial outlook, the SR.X should hold support at the $5.24 level.

SRW Wheat (old-crop): The March Chicago contract closed 17.50cts lower at $5.63 3/4 last week. The secondary (intermediate-term) trend remains sideways to down with the March futures contract in position to slide to a test of support near $5.46 3/4. This price marks the 67% retracement level of the previous rally from $4.80 through the high of $6.77, itself a test of resistance near $6.77 1/2 (a price that marks the 67% retracement level of the previous downtrend from $7.76 through the low of $4.80). Most of the pressure continues to come from noncommercial selling while the commercial side remains bullish, as indicated by the weak carry in the March to May futures spread (weekly close of 4 cents).

SRW Wheat (new-crop): The July Chicago contract closed 16.50cts lower at $5.72 1/2 last week. The secondary (intermediate-term) trend remains sideways to down as the July contract moves toward support near $5.53. This price marks the 67% retracement level of the rally from $4.96 1/2 through the high of $6.66. Support continues to come from the commercial side of the market, as indicated by the uptrend (weakening carry) of the new-crop July 2015 to September 2016 futures spread. This spread closed last week at a 6 1/2 cent carry, 3/4-cent weaker than the previous Friday's settlement.

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

P[] D[728x170] M[320x75] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .