Technically Speaking

Monthly Analysis: Grain Markets

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.34 3/4, down 1/2 cent for the month. The major (long-term) trend of the NCI.X remains difficult to classify. The best description could be a long-term sideways trend between the low of $2.81 1/2 (October 2014) and $4.10, a price that marks the 23.6% retracement level of the previous downtrend from $8.26 1/4 (August 2012). The NCI.X posted an outside monthly (above the previous month's high, below the previous month's low) below closing fractionally lower for the month. This is a bearish sign that would indicate a possible test of major (long-term) support. However, the NCI.X did post a new 4-month high of $3.48 indicating a test of resistance should be the next move. Continue to watch the cash corn market closely.

Corn (Futures): The September contract closed at $3.81, up 1 cent on the monthly chart. Corn's monthly chart highlights one of the problems of using futures versus cash (see the analysis above for the DTN National Corn Index). The roll from the July futures to September, with a solid carry in the spread, led to a higher close following an outside price range. Without the roll, this would be considered bullish. July corn's monthly chart shows a slightly lower close while September and December each showed small monthly gains. With technical factors split nearly 50/50, anything seems possible heading into July. The overriding factor would seem to be the July contract hitting a new 4-month high of $3.91 3/4 before the roll to September. This would be considered bullish.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $8.80 3/4, up 30 1/2 cents for the month. The NSI.X looks to be resuming its 5-wave major (long-term) uptrend. The extended secondary (intermediate-term) 3-wave downtrend from the June 2016 high of $11.12 through the June 2017 low of $8.80 3/4 looks to be Wave 2 of the major uptrend, complete with a 76.4% retracement of Wave 1 from the March 2016 low of $8.05 through the June 2016 high. Monthly stochastics near the oversold level of 20% with the last major signal a bullish crossover below 20% at the end of March 2016.

Soybeans (Futures): The more active November contract closed at $9.54 3/4, up 38 3/4 cents on the monthly chart. Analysis for the futures market is similar to that above for the DTN National Soybean Index (national average cash price). Futures look to have completed a 3-wave secondary (intermediate-term) downtrend within a major (long-term) uptrend. After posting a low of $9.00 1/4 the November contract was able to close above support at $9.30 1/4, a price that marks the 76.4% retracement level of Wave 1 from the November 2015 low of $8.44 1/4 through the June 2016 high of $12.08 1/2.

HRS Wheat (Cash): The DTN National HRS Wheat Index (SW.X, national average cash price) closed at $7.30 1/4, up $1.97 1/2 for the month. Cash spring wheat remains in a strong major (long-term) uptrend that began in early October 2016, supported by commercial buying indicated by the inverted forward curve seen in the futures market. With monthly stochastics approaching the overbought level of 80%, the next target for the SW.X is $7.83 1/2. This price marks the 50% retracement level of the previous major downtrend from $11.37 through the August 2016 low of $4.30.

HRS Wheat (Futures): The September Minneapolis contract closed at $7.71 3/4, up $1.99 3/4 cents for the month. The major (long-term) uptrend that began back in in August 2016 exploded in June 2017, resulting in a test of resistance at $8.00 1/4 (high for the month was $7.92 3/4). While the next target is up at $9.08 the market is dealing with monthly stochastics nearing the overbought level of 80%. However, as long as the market's forward curve remains inverted spring wheat should continue to find buying interest.

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