Technically Speaking

Weekly Analysis: New-Crop Corn, Soybeans and Chicago Wheat

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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The weekly chart of September Chicago wheat showed a bounce at the end of the week, which kept prices above the 2017 midline of $3.84 1/2. Noncommercials were lightly net long as of June 26, while the world's fundamentals continue to look bearish. (DTN ProphetX chart)

Corn: December corn prices finished the week ending June 22 down 6 3/4 cents at $3.71 1/4. Friday's close was down 14% from the May peak, but still well above the 2017 low of $3.35 1/4. Corn's trend is still down, but we have to note better progress among noncommercials liquidating their net longs, now down to 181,349 as of June 26. Noncommercial net longs remain a bearish concern for corn prices, but on the other hand, USDA's estimated world ending corn stocks-to-use ratio of 14% is the lowest since 1995-96 -- an important factor that should help corn prices stay above last year's low.

Soybeans: November soybean prices dropped 36 1/4 cents on the week ending June 29 to $8.80, its lowest weekly close in over two years. The trend is clearly down and the question now is: How low will prices go? Friday's Todd's Take made some guesses in that regard, but Friday afternoon's CFTC data added a more bullish piece to the puzzle after they showed commercials turned net long in soybeans on June 26, holding 28,998 net longs. That doesn't mean soybeans can't go lower -- they surely can. But it does suggest that prices are getting cheap enough to interest the market sector that knows demand the best. While the trend remains down, we will keep an eye out for more signs of support.

SRW Wheat: September Chicago wheat was down 3 cents to $5.01 1/4 the week ending June 29, having survived a dip to $4.80 1/4 earlier in the week. The interesting thing about the rebound was that it kept prices above the 2017 midline of $4.84 1/2 and offered some hope that Chicago wheat prices may not be ready to break lower just yet. Recent commercial buying in the July contract is an unexpected jolt of demand, but is likely a short-term problem as so far, it looks like wheat supplies will still be plentiful at the end of 2018-19. Friday's CFTC data showed noncommercials net long 15,625 contracts as of June 26 and we have mentioned before they don't have a good track record when long.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grains and grain futures involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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