Grain Market Commentary for July 19, 2017

Commodity Period Price Weekly Movement
Corn CBOT September 3.82  03 cents
Soybeans CBOT November 10.12  25 cents
Wheat CBOT September 5.03  32 cents
Wheat Minn. September 7.75  06 cents
Wheat Kansas September 5.00  44 cents
Chicago Oats September 2.93  11 cents
Canadian $ September 0.7950  1.00 points

Corn

Needless to say, it was a volatile week for the corn. We tried to negate the first significant downtrend line at the $4 area on the September chart, only to be turned back by the flood of sell orders. We reversed and plunged 30 cents per bushel on the futures contract within a two day period. We will not give up that quickly, as I’m sure there will be another attempt on the trend-line. What I am not willing to say is whether or not we will be successful. If we were successful, our next challenge would be an attempt at the all-important $4.40 level on the lead month futures contract, which could tip the scales and turn this market northward going forward.

Initial support on the September futures is seen at $3.65 on the September futures, while overhead resistance is still at $4, also on the September contract.

Short term indicators are neutral and the primary trend is still down.

Soybeans

This week has been exactly as forecast: a retreat from the stiff resistance as indicated in our reports at the $10.50 level on the November new crop contract. This corrective phase should continue a while longer and we should find at least temporary support at the $9.60 level on November. I do expect another upside move over the coming weeks, but we will have to wait and see how the chart patterns develop. The charts have a friendlier tone since we received the red buy signal on July 3, and I expect a run at the $10.50 level again, and possibly even the $10.80 level if we manage to stay above the $9.50 level on our daily closing prices.

Like the other crops, this one could be very sensitive to weather issues over the next few weeks.

Short term indicators are still positive, but for now the primary trend is still down.

Wheat

It was another corrective week, as the September Minneapolis lost another 6 cents overall since our last report. Prices retreat under low volume, but it is obvious that this is a wait and see situation as the weather driven crops needs more fuel to further advance prices. The main trend indicator is still on the red buy signal, although we have minor sell signals on the short term chart which is to be expected in a corrective mode. Support is seen at $7.45 on September futures while another support level which may be tested on a larger pullback would be the $7 mark.

Chicago futures closed the gap at the $5.25 level, and they are now at our $5 support as indicated in last week’s commentary. If this area cannot hold the stress, we will be looking at the next support line of $4.80-$4.90 and another at the $4.60 level on the September futures.

Our red buy signal is still intact on long term charts, and although we are losing most of the gains in July, the indicators are still suggesting we have a major trend change to the upside.

Short term indicators are neutral but the main trend is still up.

Harvest 2017 prices as of the close, July 19 are as follows:
SWW @ $218.72/MT ($5.95/bu), HRW @ $218.72/MT ($5.95/bu),
HRS @ $289.01/MT ($7.87/bu), SRW @ $217.90/MT ($5.93/bu).

Grain Market Commentary for July 12, 2017

July 12, 2017

Commodity Period Price Weekly Movement
Corn CBOT September 3.85  07 cents
Soybeans CBOT November 10.35  45 cents
Wheat CBOT September 5.37  13 cents
Wheat Minn. September 7.82  38 cents
Wheat Kansas September 5.44  25 cents
Chicago Oats September 2.82  04 cents
Canadian $ September 0.7850  1.30 points

Corn

This week, we will focus on the July 12 USDA report that was released at noon today.

Global carryout for the 2017/2018 corn is projected to be 2325 million bushels, up more than 200 million bushels since the June report. This was construed as bearish, as the September futures failed to close above our major trend line at the $4 level once again. The day charts also show a 5 point reverse wave, suggesting this is a corrective wave.

Initial support on the September futures is seen at $3.75 on the September futures, while overhead resistance is still at $4, also on the September contract.

Short term indicators are neutral and the main trend is still down.

Soybeans

As for the report numbers, the carryout for 2017/2018 crop year is estimated at 460 million bushels, compared to 495 million bushels shown in the June report.

As for the charts, we left the $9 support level last week, and we hit our resistance line at $10.50 area on the September all in one week (as indicated in last week’s commentary). We are now getting conflicting signals: a red short term buy signal, coupled with two gaps and a nose bump into our resistance line after the report. The red signal suggests higher prices in the near term, but it has yet to confirm a trend change. A close above the $10.75 level could do the job. Meanwhile, like the corn, we need to regroup before another assault ensues. Overhead resistance is still seen at that $10.50-$10.75 level on the September contract, while support is now at the $10 level and again at $9.60, all based on the November futures contract.

Like the other crops, this one could be very sensitive to weather issues over the next few weeks.

Short term indicators are still positive, but for now the primary trend is still down.

Wheat

Chicago: Old crop ending numbers increased by 23 million bushels to match June numbers, but the new crop production was down 64 million bushels. This again is termed bearish by the fundamentalists. Of course, the weather still has a say in this market going forward. As a believer in trends, I do believe that the unusual weather will not only continue but intensify over the next couple of years.

The September contract traded into the gap as we anticipated. If we close below the gap at $5.25, we will be looking at our first support level being tested at the $5 mark on the September futures.

Minneapolis was the front runner on the recent rally, and it should be the dollar leader on the correction as well. Last week, we pinned the target resistance at $8.75, and we reached $8.70 on September futures. Close enough. If this is indeed the corrective stage of our rally, our initial support at the $6.75-$7 price points on the September chart at this time. The trend is up in both markets, but we have to expect volatility going forward as this is a weather market.

Support on Minneapolis is seen at the $7.40 level, and again at the $7 level basis September.

All indicators are positive and the primary trend is up.

Harvest 2017 prices as of the close, July 12 are as follows:
SWW @ $237.07/MT ($6.45/bu), HRW @ $237.07/MT ($6.45/bu),
HRS @ $281.96/MT ($7.67/bu), SRW @ $236.14/MT ($6.43/bu).

Grain Market Commentary for July 5, 2017

July 5, 2017

Commodity Period Price Weekly Movement
Corn CBOT September 3.92  35 cents
Soybeans CBOT November 9.95  75 cents
Wheat CBOT September 5.60  85 cents
Wheat Minn. September 8.19  110 cents
Wheat Kansas September 5.69  89 cents
Chicago Oats September 2.86  27 cents
Canadian $ September 0.7710  0.20 points

Corn

With all the excitement in the wheat market, corn has barely managed to crawl back to the $3.90 – $4 resistance level that has been our main resistance preventing this market from turning bullish. According to the charts, I would expect this area to continue to be our main point of resistance until the technicals tell us differently.

Initial support on the September futures is seen at $3.50, while overhead resistance is still at $4, also on the September contract.

Short term indicators are neutral and the main trend is still down.

Soybeans

Our $9 support continued to hold and finally we are getting some action on the upside of the soybean charts. Looking at the new crop, November contract, we received a red buy signal on the short term indicators on June 30. This should at least lead to a challenge of the main trend line around the $10.25 – $10.50 level in the coming weeks. The November contract has left a nice gap at the $9.60 level based on the new crop contract. I would expect at some point we could revisit that level and find good support there. Meanwhile, our sights should be set on the $10.50 area as major resistance and a possible area to sell a portion of your crop. Overhead resistance is now seen at that $10.50 level while solid support is now at the $9.60 level, all based on the November futures contract.

Short term indicators are positive but for now the primary trend is still down.

Wheat

We have a bull market… at least according to the chart price action. This is not to say that we won’t see excessive volatility but let’s just go by the charts as an indicator as to what to expect. Our $5.25 downtrend line on Chicago was challenged on schedule on June 30 and the next trading day opened with a 10 cent gap, negating a major down-trend line. This is a very bullish sign for any technician. What next you ask? Well, if we were to conclude anything from the charts, we would first and foremost announce that both the Chicago and Minneapolis wheat contracts have broken the back of a six-year-old bear market in the last two weeks. Let look at them individually.

Minneapolis: This has been the leader of the pack as we first received a red buy signal back in April of this year. It took a few months to turn parabolic, but we are now into the curve and the moonshot has begun. Please remember that technical analysis throws all fundamentals out the window so we will not be discussing carry-outs, weather, or even supply and demand as these points are already baked into the price on a technical analysis. The recent move has broken two main trend lines, the weekly and the monthly (or primary) trend. Our only concern now is how high will this breakout take us before a correction sets in? We can use several tools to guess the outcome but it will be just a guess. My first target would be the current level as of this writing of about $8.75 based on the weekly chart; which we came close to today and if we manage to clear that area on a close, our next prime target is the all-important $10 level on the lead month contract. An important considerations going forward is the last trading day on July 14. We could see continued upward pressure on Minneapolis until the July contract expires on that date. Open interest has increased along with volume confirming that this move is real. Support on Minneapolis September chart is at the $7.40 and again at the $7 level.

Chicago: Although not quite as strong, the move has been impressive. The price moved to our target of $5.25 and gapped higher – which technically is a show of strength. This gap should prove to be good support in the event of a pullback to the $5.25 – $5.30 breakout level.

If we trade into this area in the next day or two our charts suggest a move towards the $5.80 – $6 level on September futures after that correction. However, if we continue higher from here without trading back to the gap, we could see stronger prices into the July contract expiry on July 14 before the pull back to the gap occurs.

Bottom line according to the technical is that this market has finally turned the corner and although it could be quite volatile it could provide a fun ride.

Support is seen at the $5.25 level and again at the $5 level basis September with our next target at $5.80 – $6.

All indicators are positive and the primary trend is up.

Harvest 2017 prices as of the close, July 5 are as follows:
SWW @ $252.58/MT ($6.87/bu), HRW @ $250.20/MT ($6.81/bu),
HRS @ $319.18/MT ($8.69/bu), SRW @ $250.20/MT ($6.81/bu).