Technically Speaking

Weekly Analysis: Grain Markets

July corn continues to show a sideways trend. (Source: DTN ProphetX)

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.41, unchanged for the week. The secondary (intermediate-term) trend remains sideways with the NCI.X continuing to hold above major (long-term) support at $3.31. The minor (short-term) daily chart shows the NCI.X is in Wave 2 of a 5-wave uptrend with pegged at $3.38. This price marks the 61.8% retracement level of the Wave 1 rally from $3.32 through the high of $3.47.

Corn (Dec futures): The December contract closed 2.25cts lower at $3.75. While the secondary (intermediate-term) trend remains sideways, Dec corn posted a bearish outside week indicating additional selling could be seen short-term. Support is at the last week's low of $3.65 1/2, then the recently established contract low of $3.57 1/2. Pressure continues to come from both noncommercial and commercial interests, the latter indicated by the strengthening carry in the December to March futures spread.

Corn (July futures): The July contract closed 1.50cts lower at $3.97 1/2. Despite the contract posting a bearish outside week, the secondary (intermediate-term) trend remains sideways. Initial support is at last week's low of $3.88, then the recently established contract low of $3.80 1/2. The December to July futures spread (green line on chart) closed at a carry of 22 1/2, a neutral 53.1% of calculated full commercial carry. Friday's weekly CFTC Commitments of Traders report showed noncommercial interests reducing their net-long futures position in corn to 151,460 contracts (blue histogram).

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $8.74, down 10 cents for the week. While the NSI.X did close lower again, it was calculated Friday at its weekly high and still above support at the major (long-term) low of $8.50 (October 2014). Given its gap lower last week and bullish close it is possible cash soybeans could establish an island bottom. However, it will need to gap higher Monday and hold that area through next Friday's settlement.

Soybeans (Futures): The November contract closed 4.00cts lower at $8.85 1/2. While Nov beans did close lower for the week the contract was well off its new low of $8.55. It could be argued this established a spike reversal, though weekly stochastics remain neutral-to-bearish and the nearby November to January futures spread turned down reflecting renewed commercial selling. It's possible that Nov beans could post a bullish gap Sunday evening, but would need to open above last week's high of $8.89 1/2.

SRW Wheat (Cash): The DTN SRW Wheat National Index (SR.X, national average cash price) closed at $4.20, down 22 cents for the week. Cash SRW went to a new 5-year low last week pulling both monthly and weekly stochastics further below the oversold level of 20%. Major (long-term) support is pegged between $4.25 and $3.73.

HRW Wheat (Cash): The DTN HRW Wheat National Index (HW.X, national average cash price) closed at $4.17, down 11 cents for the week. The HW.X closed at its new 5-year low of $4.17 pulling both weekly and monthly stochastics further below the oversold level of 20%. Major (long-term) support is all the way down at near $3.42, the low from June 2010.

HRS Wheat (Cash): The DTN HRS Wheat National Index (SW.X, national average cash price) closed at $4.49, down 6 cents for the week. The move to a new low of $4.49 extended both the secondary (intermediate-term) and major (long-term) downtrends. Next major support on the monthly chart is pegged at the September 2009 low of $4.45. Weekly and monthly stochastics are below the oversold level of 20% indicating the cash market is sharply oversold.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 25.

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