Technically Speaking

Weekly Analysis: Cash Grain and Oilseed Prices

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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Early July is the typical time for a seasonal high in wheat prices, but 2018 is looking like an atypical year. DTN's national average of cash soft red winter wheat prices is holding firm while milling wheat prices are making new highs in France -- a situation which also offers bullish influence to corn. (DTN ProphetX chart)

DTN National SRW Wheat Index: DTN's index of cash SRW wheat prices was up 18 cents last week to $4.89, not far from its highest prices of 2018. When world wheat conditions are generally favorable, wheat prices typically peak by early July and trade lower the rest of the year, but 2018 is not looking like the typical bearish pattern that we have come to expect. So far, SRW wheat prices are not showing signs of breaking lower and noncommercials have stayed consistently bullish for 12 weeks. Wheat prices are also getting help from milling wheat prices in France, trading at their highest level in three years, and from USDA expecting the lowest exportable supplies since 2012-13. This should have bullish influence for corn prices.

DTN National Corn Index: DTN's index of cash corn prices performed an about-face last week, closing up 15 cents at $3.26 and leaving behind a low for 2018 at $3.09. The bullish change of direction punctuated seven weeks of falling prices and had help from hot and dry conditions in the southwestern Corn Belt and a modest drop in USDA's crop ratings. The turn also came, however, at a time when we were looking for corn to find support above last year's lows as USDA's outlook for lower ending world corn stocks should offer support. Weather is still key, but the $3.09 low may be close to -- if not the low of -- 2018.

DTN National Soybean Index: DTN's index of cash soybean prices closed up 31 cents at $7.89 last week, its second weekly bounce in July and well-deserved after prices fell to a new nine-year low the previous week. Unlike corn, we can't say this was a significant change in downward momentum for soybeans, but in the big picture, we have to recognize that a new nine-year low for the crop with the strongest pace of world demand is an unusually cheap opportunity that commercials have recognized at least and turned net long. The reason for the cheap soybean price of course, has a lot to do with the tariff war with China, which shows no sign of being resolved yet and has discouraged many from the long side of U.S. soybean prices.

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

(AG)

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Sam Hardwick
7/28/2018 | 8:04 AM CDT
If China dose not charge itself the tariff on soybeans that its puts in the China National Soybean Reserve as has been reported. Doesn't that mean because of Trump's tariff we have subsidies China's filling of the Chinese National Bean Reverse by the loss of price of the beans on the Chicago Board of Trade? Just a thought.