Technically Speaking

A Look at Three DTN Indices of Cash Grain

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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DTN''s National Corn Index closed at $6.21 Friday, continuing to correct lower since the May 7 high of $7.48, while traders track weather developments and try to estimate the size of the 2021 corn crop (DTN ProphetX chart).

DTN National Corn Index: DTN's index of over 3,100 cash corn bids from around the U.S. settled at $6.21 Friday evening, down a dime from the previous Friday and slightly below the 100-day average at $6.25. The index has been chopping gradually lower since the $7.48 high posted on May 7 and, so far, it is difficult to tell if prices will hold support at the July 9 low of $6.08 or break to new lows and spur more noncommercial selling. Friday's CFTC report showed 311,529 noncommercial net longs in the market, a sizeable bearish risk, if new lows are to be made. Much at this point depends on weather and crop conditions moving forward. Technically speaking, corn prices are hanging on to support by a narrow margin. A close below $6.08, if it happened, would be potentially bearish, taxing the will of bullish speculators.

DTN National Soybean Index: DTN's index of over 2,700 cash soybean bids from around the U.S. closed at $13.86 Friday, down from $14.41 a week ago. The index is down $2.61 from the May 12 peak of $16.47, a substantial drop for a market that is estimated to have the tightest supplies in seven years. Friday's Commitments of Traders report shows noncommercial net longs have been reduced by more than half since their November peak. The remaining 137,679 net longs are enough, however, to still represent a sizeable bearish threat, if traders suspect more ending soybeans in the new season than the 155 million bushels USDA currently estimates. As with corn, weather is the primary factor for soybeans at the moment and China's demand is the other major unknown factor. Technically speaking, the uptrend in DTN's National Soybean Index has been broken, but there may be support near $13.00, while traders keep an eye on weather.

DTN National HRS Wheat Index: DTN's index of over 300 cash HRS wheat bids closed at $8.61 Friday, down from $8.88 the previous Friday and after hitting a new eight-year peak of $9.01 on Monday, July 19. USDA has given the spring wheat crop a good-to-excellent rating of 11%, the lowest since 1988 as the northwestern U.S. Plains are plagued with severe to exceptional drought conditions. If that were not enough, the seven-day forecast remains mostly dry for the region and temperatures are expected to stay hot most of this week. Trading at its highest prices in eight years, traders may be reluctant to push prices even higher. Technically speaking, however, the trend remains up in DTN's National HRS Wheat Index and there is no sign yet of a significant change in upward momentum.

Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman1

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