Technically Speaking

Weekly Analysis: Grain Markets

The NCI.X is loosely following the same path seen in 2009-2010. (Source: DTN)

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.58, down 10 cents for the week. While the secondary (intermediate-term) trend remains down the NCI.X continues to hold above initial support at $3.47. This price marks the 33% retracement level of the uptrend from $2.81 through the high of $3.80, itself a test of resistance pegged at $3.84. Given the neutral to slightly bearish view of underlying fundamentals indicated by the carry in the March to May futures spread the NCI.X could eventually test support at the 50% retracement level of $3.31.

Corn (Old-crop): The March contract closed 13.25cts lower at $3.87. While the secondary (intermediate-term) trend remains down the March futures contract was able to rally off its test of support at $3.73 3/4. This price marks the 50% retracement level of the previous uptrend from $3.30 1/2 through the high of $4.17. Given that the carry in March to May futures spread continues to weaken, reflecting a neutral to slightly bearish commercial outlook, the 50% retracement level should continue to hold. However if noncommercial selling intensifies, Friday's CFTC showed this group reducing their net-long position by 7,890 contracts, it is possible March corn could test the 67% retracement level near $3.59 1/4.

Corn (New-crop): The December contract closed 6.75cts lower at $4.14 3/4. While the secondary (intermediate-term) trend remains down the December contract was able to rally off its test of support at $4.03 1/2. This price marks the 50% retracement level of the previous uptrend from $3.64 1/4 through the high of $4.40. Given that the carry in the December 2015 to March 2016 futures spread reflects a neutral commercial outlook, this support at the 50% level should hold the winter sell-off. If the spread starts to turn more bearish, Dec corn could test the 67% retracement level of $3.91 1/2.

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Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.40, down 59 cents for the week. Technical indicators show the NSI.X remains in a sideways trend though it fell below support at $9.56, the 33% retracement level of the rally from $8.50 through the high of $10.08. Next support is pegged at the 50% retracement level of $9.29. The weak carry in the futures forward curve continues to reflect a neutral to bullish commercial outlook indicating the 50% retracement level should hold.

Soybeans (old-crop): The March contract closed 60.50cts lower at $9.91 3/4 last week. Increased noncommercial pressure pushed the March contract well below expected support at $10.05 1/4, the 50% retracement level of the rally from $9.20 3/4 through the high of $10.89 3/4, to a test of the 61.8% retracement level near $9.81 1/4. Friday's CFTC Commitments of Traders report showed this group (noncommercial traders) reducing their net-long holdings by 19,263 contracts, through an increase in their short futures position of 14,475 contracts. The weak carry in the March to May futures spread continues to indicate a neutral to bullish commercial outlook.

Soybeans (new-crop): The November contract closed 44.25cts lower at $9.75 1/4. Despite the sharp sell-off the secondary (intermediate-term) trend remains sideways. However Nov beans fell below expected support near $9.92 1/4, a price that marks the 50% retracement level of the rally from $9.27 1/2 through the high of $10.56 3/4. Last week's low of $9.67 3/4 was a test of the 67% retracement level near $9.70 1/2. While the carry in the November 2015 to January 2016 futures spread strengthened 1-cent to a Friday close of 6 cents, the commercial outlook remains neutral to bullish.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.03, down 30 cents for the week. After leaving a bearish gap to start the week the SR.X extended its secondary (intermediate-term) downtrend, closing at its weekly low of $5.03. Next support is pegged at $4.91, the 67% retracement level of the previous uptrend from $4.25 through the high of $6.23. Weekly stochastics remain bearish indicating continued pressure is likely.

SRW Wheat (old-crop): The March Chicago contract closed 31.00cts lower at $5.32 3/4 last week. The secondary (intermediate-term) trend remains sideways to down. However March Chicago wheat fell below expected support at $5.46 3/4, the 67% retracement level of the previous rally from $4.80 through the spike high of $6.77. Characteristic of wheat, this could be a head fake (to the downside) meaning next week's action could take the contract back above technical price support. Pressure continues to come from noncommercial traders with Friday's CFTC Commitments of Traders report showing this group reducing their net-long futures position by 544 contracts, though they also covered 6,546 contracts of their short-position. The weak carry in the March to May futures spread continues to indicate a bullish view of underlying fundamentals.

SRW Wheat (new-crop): The July Chicago contract closed 34.25cts lower at $5.38 1/4 last week. The secondary (intermediate-term) trend remains sideways to down though the July contract fell below 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. As with the old-crop March contract, this could be a technical head-fake (to the downside) with next week's activity leading to a move back above technical price support.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, January 13.

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