Technically Speaking

December futures are still in an overall uptrend, which began with a gap higher opening on July 22 and was further solidified by another gap higher in late August, and the crossover of the 20-day moving average of the 50-day moving average to the upside. Early Monday, Dec corn is facing a possible five-day losing streak and hovers right at the intersection of the 20- and 100-day averages. Despite the recent September WASDE's bullish reduction of yield, production, and ending stocks, there are a host of bearish factors that could impact corn in the short run.

With a mostly warm-and-dry forecast ahead for corn into the month of October, and no frost threat on the horizon, we should see harvest pressure pick up steam, as corn prices remain at multi-year highs. Also adding pressure to corn is the uncompetitive stance of U.S. corn, being undercut by both Argentina, Brazil, and Ukraine, which is rushing to sell as much corn as they can before the safe corridor agreement ends on Nov. 22. Adding even more bearishness is the perception -- and reality -- of a weakening global economic landscape. The bad economic news from China recently, along with the foregone conclusion of yet another sharp interest rate increase on Wednesday, has cast a bearish pall on demand, including that of the crude oil market, which is nearing recent lows.

Even so, at this very moment, Dec corn does remain in a bullish trend, but is on the precipice of that changing. The next several days of price action will likely tell the story.

Just like new-crop corn futures, new-crop KC wheat futures last week showed the promise of breaking out to the upside of a seven-week long sideways trading range. However, early Monday, July is trading down hard, and right back into that sideways trend, despite what appears to be another two weeks of mostly hot and dry conditions for the southwestern Plains. The area of the hard wheat belt that remains in exceptional drought includes parts of Oklahoma, Colorado, Kansas, and Nebraska.

KC July, despite the weakness to begin the new week, still appears to be in a mostly sideways trend. However, if it is able to remain above the 50-day moving average at $8.74, it has a solid chance to move higher, as the weather forecast remains bullish and world wheat supplies remain historically tight.

Spot October soybean meal remains in a bullish trend, setting a new contract high just six days ago, and is sharply higher again to begin the new week. Rising moving averages and the look of a potential bull-flag chart pattern suggest higher prices still might be ahead. Even though U.S. soybeans have recently been undercut by South American beans, soon the U.S. should be the primary origin for world bean importers and that should help meal demand as well. The meal chart looks impressively strong at this point.

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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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