Technically Speaking

Minneapolis new-crop September wheat futures have closed lower for 13 of the past 14 trading days. Just since the end of May, Minneapolis has plunged nearly $1.25 per bushel. Pressure came from the June WASDE's higher wheat production estimate, the very good early crop ratings for spring wheat at 74% good to excellent, and from the freefalling EU wheat futures market. The U.S. market has fallen despite the ongoing drought issues for Black Sea wheat areas, which is likely to drop Black Sea wheat production by close to 14 million metric tons (mmt) to 15 mmt.

The market is getting very oversold, with the momentum indicators for Minneapolis new-crop September at the lowest level in many months. That doesn't necessarily mean the market should rally right away, but it is ripe for some sort of correction -- likely soon. It is very possible that between Ukraine and Russia wheat production could fall as much as 14 mmt to 15 mmt compared to a year ago, and that should be a positive for U.S. wheat high-protein demand down the road. Look for Minneapolis to at least stabilize in the near term.

Just since the end of May, November soybeans have plunged more than 90 cents. The market is becoming oversold and there appears to be a good support area just a dime below where November is trading early Monday morning. There is still quite a spread on Brazilian production estimates between CONAB and USDA. If Brazil's crop should fall toward the 147-mmt production estimate which CONAB holds, that could bode well for U.S. demand. Look for November soybeans to find support at $11.25 on a further break.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, 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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