Technically Speaking

Some optimism that the latest peace talks between Ukraine and Russia on Monday could lead to progress sent futures lower again. However, this conflict appears to be far from over, and sitting just below the Monday morning low is what appears to be an area of big support. On April crude, there is a minor uptrend line at about $95, which coincides with an area of major support between $90 and $95 per barrel. In the event of a further break in crude oil, I would expect this level to hold the market. Below that, the $80 level would be the next tier of support. One would have to think on a further escalation of Russia's attack on Ukraine, we could see a significant bounce back, as Russian oil is shunned by world importers, tightening the available supply.

Although there is little at this moment that is bearish for corn futures, new-crop December appears to be showing some signs of slowing the ascent. December corn hit a new contract high on Sunday night but has backed off on word of a bit more optimism regarding the Russia-Ukraine crisis. It remains to be seen if this optimism is warranted, as Russian forces continue their assault. December corn momentum indicators are flashing overbought signals and, depending on Monday's close, could have what is called a bearish engulfing bar reversal chart pattern at the end of Monday trade. The jury is still out on that. Corn demand has the prospect to garner additional export business while Ukraine exporters have been shut down, but that would likely impact nearby, rather than deferred corn futures. Should the war continue, and Ukraine seeding is hampered, one would have to think that all bets are off on a new-crop correction. Fertilizer prices and availability are also providing a bullish tailwind for new crop.

As crude oil goes, so goes world veg oil markets. Early Monday, with crude oil down as much as $8 per barrel, both Palm oil (down 5.7%), and bean oil futures are under pressure. May bean oil futures appear to have a potential bullish flag chart pattern, with a solid break above 77 cents leading to another leg higher. However, on a closing break under 72 cents, look for a potential break to the 66 to 67-cent area. Bean and palm oil fundamentals remain solidly bullish, with tight world veg oil supplies, and the expectation that renewable biodiesel production should escalate in the next year.

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.

Dana Mantini can be reached at Dana.Mantini@DTN.com

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