Technically Speaking

Monthly Analysis: Grain Markets

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $2.73, down 32 1/2 cents for the month. The NCI.X fell to a new major (long-term) low of $2.73 in August, dipping below the October 2014 bottom of $2.81 1/2. While the market looks bearish because of this, it could still be argued that the major trend is sideways between support at the combined lows and resistance between the peaks of $4.05 3/4 (July 2015) and $4.00 1/2 (June 2016). It will be important to see what the NCI.X does in September, with monthly stochastics well below 20% indicating the market is sharply oversold.

Corn (Futures): The December contract closed at $3.15 1/2, down 27 1/4 cents on the monthly chart. Trend patterns are similar to what was described in the cash corn analysis. For now the major (long-term) could be classified as sideways, with action in September being key to the long-term outlook of the market. With monthly stochastics below 20%, support is now the rough double-bottom between $3.18 1/4 (October 2014) and $3.14 3/4 (August 2016). Resistance is between $4.54 1/4 (July 2015) and $4.39 1/4 (June 2016).

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.09, down 62 1/4 cents for the month. The NSI.X remains in a major (long-term) 5-Wave uptrend with the ongoing secondary (intermediate-term) downtrend a Wave 2 move. August saw the NSI.X test support at $9.07 1/4, a price that marks the 67% retracement level of Wave 1 from $8.05 (March 2016 low) through the double-top high of $11.12 (June 2016, July 2016). A normal Wave 2 tends to produce a deep retracement of Wave 1, meaning continued pressure could be seen. However, weekly stochastics are already sharply oversold indicating a bullish turn could soon be seen.

Soybeans (Futures): The November contract closed at $9.43, down 50 cents on the monthly chart. While the market remains in a major (long-term) 5-Wave uptrend the secondary (intermediate-term) trend of the November futures contract is down. However, August may have seen the Wave 2 low posted at $9.38. This was a test of support pegged at $9.30 1/4, a price that marks the 76.4% retracement level of Wave 1 from $8.44 1/4 (November 2015) through the high of $12.08 1/2 (June 2016). Remember that a normal Wave 2 sees a deep retracement of Wave 1.

SRW Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.31 3/4, down 41 cents for the month. The major (long-term) trend remains down as the SR.X approaches a 100% retracement of its previous uptrend from $3.12 1/4 (December 2008) through the high of $9.14 1/2 (July 2012). Monthly stochastics are deep in single digits indicating the SR.X is sharply oversold and nearing a possibly bullish turn.

SRW Wheat (Futures): The December Chicago contract closed at $3.88 1/4, down 19 1/2 cents for the month. The major (long-term) trend remains down as December Chicago posted a new low of $3.86 3/4, its lowest price since the $3.76 3/4 from August 2006. Monthly stochastics are deep in single digits indicating the market is sharply oversold, meaning the market could soon see at least a secondary (intermediate-term) rally.

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