Technically Speaking

Weekly Analysis: Outside Markets, Related to Ag

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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With China's stock market showing bearish pressure from changes in U.S. trade policy, China announced last week that they are sending a delegation of officials to Washington to talk trade. (DTN ProphetX chart)

Shanghai Composite Index vs. Dow Jones Industrial Average: While the Dow Jones Industrial Average cruised to another higher close last week, China's Shanghai Composite Index fell 126.34 to 2,669.10, the lowest close in over two years as increased tariffs from the U.S. continue to take a toll on China's economy. Last week, China announced they were sending a delegation of officials to Washington to talk trade and both soybeans and lean hogs traded higher on the week with renewed hope that better trade terms may be on the way. The obvious bearish pressure on China's stock market is an important factor bringing China to the negotiating table.

Spot Copper: Another indicator of economic weakness in China is the falling price of copper. September copper dropped 10.80 cents last week to $2.6245 a pound, a new one-year low and was related to concerns that construction and manufacturing activity is slowing in China, the world's largest consumer of copper. Technically, this is the first new one-year low for spot copper since its rally began in early 2016. That raises doubts about the strength of the global economy in light of this year's higher tariffs.

Spot Crude Oil: Energy futures are one sector where prices are still holding relatively firm, helped by a variety of production concerns around the world. Economic troubles in Venezuela, conflict in Libya, renewed sanctions against Iran and Saudi Arabia's conflict with Yemen are all helping crude oil prices stay supported. On the bearish side, China, the world's largest crude oil buyer, is under economic pressure and the U.S. dollar index is on the rise with more U.S. rate hikes likely. September crude oil fell $1.72 to $65.91 last week, staying above important support at $62.99, its June low.

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

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

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