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).

Grain Market Commentary for June 28, 2017

June 28, 2017

Commodity Period Price Weekly Movement
Corn CBOT September 3.57  11 cents
Soybeans CBOT November 9.21  02 cents
Wheat CBOT September 4.73  08 cents
Wheat Minn. September 7.10  52 cents
Wheat Kansas September 4.80  12 cents
Chicago Oats September 2.59  06 cents
Canadian $ September 0.7690  1.55 points

Corn

Although we nailed our $4 resistance level ($3.99 on September contract) before prices reversed, we pulled back to our support level of $3.60 faster than expected. Also unexpected was a red sell signal that flashed on June 22. This has changed the dynamics on the charts and it looks like we are once again on the defensive after hitting our $4 multi-year downtrend line and dropping sharply. From the severity of the pullback since June 9, it could take more time than previously thought before we attempt to challenge the $4 trend line again. Since we failed to negate that all-important line, the down-trend is still very much intact.

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 again negative and the main trend is still down.

Soybeans

As expressed in the last commentary, we are now challenging the $9.10 support area on the new crop November futures. This $9 futures price is important because should we fail to find good support in this area, and close much below the $9 price on November, there is nothing on the charts to prevent a selloff toward the $8.50 bottom of 2015 that we have spoken of so many times since the spring. Overhead resistance is seen at $9.50 and again at $9.80, while support on the September contract continues to be at the $9 mark.

Short term indicators are all negative, and the main trend is still down.

Wheat

It looks like our question was answered as to which we would see first, a pullback to $6 or a rush towards $7.25. We are currently trading at $7.10 as of the close on June 28. Our red buy signal on June 12 possibly marks the end of a six year bear market. Of course, we could be premature and it’s likely we could still see a hard break in prices in the next few weeks, but this should not disturb the bullish formation that we are building. Bull markets can last from two to 10 years, and once entrenched, these markets are to be viewed from the long side, which is to say, buy the dips. This is in direct opposition to the bear market we have seen in the Minneapolis wheat since 2011 which dictates to sell the rallies.

The next price target on Minneapolis would be around the $8. mark on the September contract while support is currently around the $6.50 price if we were to get a correction from the current levels. Of course this price will move higher as the runaway market registers higher prices. For today, we will say that the long or intermediate trend has turned bullish.

Chicago wheat, while not performing as well, is still on track to challenge the $5 level this summer and could even reach the major overhead resistance target of $5.25 before the end of July. Meanwhile, solid support is seen at $4.50 on the September contract, while our overhead resistance is now at the $5 – $5.25 also on the September futures.

Short term indicators are positive, but the primary trend on Chicago is still down.

Harvest 2017 prices as of the close, June 28 are as follows:
SWW @ $214.18/MT ($5.83/bu), HRW @ $211.79/MT ($5.76/bu),
HRS @ $288.75/MT ($7.86/bu), SRW @ $211.79/MT ($5.76/bu) ($5.91/bu)

Grain Market Commentary for June 21, 2017

June 21, 2017

Commodity Period Price Weekly Movement
Corn CBOT July 3.69  08 cents
Soybeans CBOT July 9.19  13 cents
Wheat CBOT July 4.65  22 cents
Wheat Minn. July 6.49  22 cents
Wheat Kansas July 4.68  11 cents
Chicago Oats July 2.59  04 cents
Canadian $ September 0.7525  0.25 points

Corn

The $3.80 -$4 resistance level did its job and allowed for sale of product at higher prices. It then decided to withdraw in an orderly fashion to re-test the support line once more at the $3.60 level based on July. Our red buy signal from June 8 is still intact and we should be able to hold the support for at least one more attempt at the $4 level on the lead month contract.

We will need a convincing close above $4 before we are ready to challenge the long term trend line at $4.40. Support on the July contract is seen at $3.60, while overhead resistance is still at $3.80 – $4 on the lead month contract.

Next week we will switch to the September contract for the purpose of technical analysis.

Short term indicators are neutral to positive, but the main trend is still down.

Soybeans

Prices continue to slip lower on the July futures and we are now just seven cents from the contract lows on July. Our red sell signal on May 19 is still intact, and we will possibly see another challenge of the $9.10 support based on the July contract. Overhead resistance is seen at $9.50 and again at $9.80, while support in the July contract is now at the $9.10 mark. It is very likely we will see a test of the $9 price on July before it expires. It is important that this level holds, as there isn’t much support below here until we approach the $8.50 level.

We will be switching to November new crop beans starting next week for the technical outlook.

Short term indicators are all negative, and the main trend is still down.

Wheat

The week of June 12 we officially received a red buy signal on the monthly Minneapolis chart. This is a very positive sign going forward, however, this is on the technical outlook and we will expect some severe moves both up and down in the coming weeks and possibly months. It is difficult to guess where we will go first, up towards the $7.25 price or pull back to challenge the support around the $6 mark. Either way, this market is pumped.

Chicago wheat, while not performing as well as its cousin, has been on track with our analysis. We are still looking for $5 futures by harvest based on the lead month contract. The week of June 19 saw the July contract gain about 30 cents per bushel and the September traded as high as $4.90 as of this writing. The five point wave formation still suggests we could be looking at $5 to $5.25 on the September contract by mid summer.

Meanwhile, solid support is seen at $4.20 – $4.30, while our overhead resistance is now at $4.75 the old pivot high reached in March of this year.

For technical analysis we will be switching to the September chart for our next commentary. Short term indicators are positive, but the primary trend is down.

Harvest 2017 prices as of the close, June 21 are as follows:

SWW @ $219.48/MT ($5.97/bu), HRW @ $217.05/MT ($5.91/bu),
HRS @ $267.34/MT ($7.28/bu), SRW @ $217.05/MT ($5.91/bu)