Technically Speaking

DECEMBER SOYBEAN MEAL:

Although there are certainly some fundamental reasons for the recent surge in soybean meal futures, December is now approaching an area of solid resistance just above the market. Momentum indicators are becoming very overbought, signaling not if, but when soymeal could correct to the downside. The $375 to $383 area on December should be an attractive area for speculators and commercials to place sell orders. That figures about $10 per ton above Monday morning's price. Soybean oil is correcting to the downside, helped by the recent plunge in crude oil, as impending higher interest rates suggest a slowing economy at some point. Soybean oil's inclusion in rising biofuel production has fueled its meteoric rise, and with it, led the funds to a large, long bean oil/short meal spread. That spread has been pretty much covered by now and will likely take pressure off bean oil and pressure meal. However, should meal correct, there is likely to be support at $345.

DECEMBER CRUDE OIL FUTURES:

Since mid-August, crude oil futures have been on a tear to the upside, but finally stopped in its tracks as it met long-term monthly chart resistance in the $85 to $90 per barrel area on December. Crude oil futures have slowed that rapid ascent, and in fact corrected in the past few weeks, with perhaps a double-top high. The impetus behind the fade in prices appears to be concern over slowing economies, as inflation has soared, and a possible interest rate increase becomes more real. With the recent surge in COVID cases again in parts of Europe, including Germany, those countries are once again considering temporary lockdowns or new restrictions. If that were to occur, it would certainly sap some demand for gasoline and hence crude oil. It would appear December crude oil may not be done with the correction, but a further fall should find solid support first at $75 per barrel, and then major support at $72 to $73. We could get there, but that area should be one of solid support.

DECEMBER 2022 CORN FUTURES:

New-crop (2022) corn futures have been on an upward move since early July, fueled by the surge in fertilizer prices, suggesting corn acres could be compromised. The market continues to move higher, with only modest corrections. Currently, December 2022 futures are less than a dime from the recent high, and the market is far from being overbought. It would appear a rally and close above $5.60 could lead to further gains for new-crop corn futures. The market seems to be rising to stimulate demand for more corn acres in the coming year. Right now, it would appear the new-crop corn bull trend is far from over, unless we see a collapse in old-crop corn futures.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grain and soybean futures involve substantial risk and are not suitable for everyone.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow Dana on Twitter @mantini_r

(c) Copyright 2021 DTN, LLC. All rights reserved.