Corn: The July contract closed 3.00cts lower. A bearish crossover by weekly stochastics above the overbought level of 80% last week indicates the secondary (intermediate-term) trend has turned down. However, the major (long-term) trend on the monthly chart remains up. Given the neutral to bullish commercial outlook indicated by old-crop futures spreads the expected sell-off in the more active July contract should find support between $4.90 and $4.73, prices that mark the 33% and 50% retracement levels of previous uptrend from $4.21 3/4 and last week's high of $5.24 1/4.
New-crop Corn: The December contract closed 7 1/2 cents lower. A bearish crossover by weekly stochastics above the overbought level of 80% indicates the secondary (intermediate-term) trend has turned down. The neutral carry in the new-crop futures spread implies a possible 50% retracement of the previous uptrend from $4.35 through last week's high of $5.17 puts the downside target at $4.76.
Soybeans: The July contract closed 7.75cts lower. While weekly stochastics indicate old-crop soybeans could move into a sideways trend, this same technical study (stochastics) is nearing a bearish crossover above the overbought level of 80%. Given the weakening commercial outlook and continued noncommercial long-liquidation shown in weekly CFTC Commitments of Traders reports, the July contract could soon test support between $13.86 3/4 and $13.35. These prices mark the 33% and 50% retracement levels of the previous uptrend from $11.80 and $14.90. Major (long-term) resistance on the monthly chart at $14.75 3/4 has held so far.
New-crop Soybeans: The November contract closed 6 3/4 cents higher. The secondary (intermediate-term) trend remains up, though weekly stochastics are well above the overbought level of 80% as the contract tests resistance between $12.10 3/4 and $12.39 1/2. This combination increases the contract's likelihood of establishing a top in the near future. The new-crop November to January futures spread has seen its carry strengthen slightly, though last week's close of 5 1/2 cents remains on the border of a bullish level of total cost of carry. If the contract does establish a secondary downtrend, support is pegged between $11.85 1/2 and $11.61 1/4.
Wheat: The new-crop July Kansas City contract closed 12.50cts lower. Weekly stochastics show the secondary (intermediate-term) trend remains sideways to up. The July KC contract dipped below initial support at $7.29 1/2, a price that marks the 33% retracement level of its previous rally from $5.99 through the recent high of $7.94 1/2, though this could prove to be nothing more than a normal (for wheat futures) head fake. If so, look for a return rally back to a test of resistance at $7.77 3/4. However, the trend in the July to September futures spread has turned down, reflecting an increasingly bearish and counter-intuitive commercial outlook. If the contract does move lower, next support is at the 50% retracement level of $6.96 3/4.
Cotton: The July contract closed 2.22cts lower. Bearish weekly stochastics indicate the secondary (intermediate-term) trend remains down with the July contract testing initial support between 90.43 and 89.49, the 33% and 38.2% retracement levels of the previous uptrend from 77.74 through the recent high of 96.76. However, given the sharp downtrend (strengthening carry) in the old-crop May to July futures spread, the July contract should test support at the 50% retracement level of 87.25 and possibly the 67% retracement level of 84.07. Seasonally the futures market tends to trend down through late July, dropping an average of 24% from early April (weekly close only).
New-crop Cotton: The December contract closed 1.55cts higher. The secondary (intermediate-term) trend remains up. However, weekly stochastics are near 90% or higher indicating a sharply overbought situation as the contract tests resistance at 91.89. This price marks the 61.8% retracement level of the previous downtrend from 86.00 through the low of 75.25. While the weekly CFTC Commitments of Traders reports showed noncommercial interests liquidating some of their net-long futures position (in cotton in general), the strengthening inverse in the new-crop December to March futures spread indicates continued support from commercial traders. This could push the Dec contract to a test of resistance at the 67% retracement level of 82.42, if not beyond.
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Live Cattle: The June contract closed 0.975 higher. Despite the higher close for the week the secondary (intermediate-term) trend remains down. If the contract continues its rally, resistance is between $135.90 and $136.675, the 33% and 50% retracement levels of the initial sell-off from $139.00 through last week's low of $134.35. The structure of the market is showing a divergence with noncommercial traders adding to their net-long futures position while the weakening June to August futures spread reflects a less bullish commercial outlook. Eventually this should lead to a test of secondary support between $133.20 and $130.275, roughly the 33% and 50% retracement levels of the previous uptrend from $121.575 through the high of $139.00.
The most recent CFTC Commitments of Traders report was for positions held as of Tuesday, April 8.
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