Technically Speaking

Weekly Analysis: Outside Markets

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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Just one month ago, December crude oil was nearing its highest prices in four years, driven by several supply concerns around the globe and concerns about sanctions on Iran. It now looks like the 13-month uptrend has ended and prices are testing support at the June low of $62.32 (DTN ProphetX chart).

December Crude Oil: December crude oil prices dropped $4.45 last week to $63.14 and were down nearly $10 a barrel in October. It was the biggest monthly drop in three years, but unfortunately for corn and soybean growers, it probably came too late to help this fall's harvest fuel costs. Not that harvest has gone quickly, but because many likely fueled up before October when prices were near their highest in four years. It now looks like the uptrend in crude oil is over and noncommercials remain heavily net long and vulnerable to further losses, should prices break below support at $62.32.

Shanghai Composite Index: China's Shanghai Composite Index closed up 78.48 points or 3% last week at 2,676.48, showing some positive response to Thursday's tweet from President Trump that trade discussions with China are "moving along nicely." There is no reason to believe that Shanghai's stock prices have any more insight to what is actually happening on trade than we do here in the U.S., but technically speaking, it is suspiciously bullish that China's index reversed course on Oct. 19 after reaching its lowest prices in nearly four years, and the weekly stochastic has now turned higher.

December Copper: December copper closed up 6.6 cents per pound last week to $2.807, helped by higher prices on Thursday and Friday in the aftermath of the president's tweet on Thursday morning. Like gold and crude oil, copper correlates well with grain prices and also offers clues about China's economic health. We can't say with confidence that a trade agreement with China seems likely anytime soon, but it is interesting that December copper has held sideways since August, near its lowest prices in over a year. Sustained trading above $2.89 a pound, if it happened, would turn the trend up in December copper.

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

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

Follow him on Twitter @ToddHultman

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