Ontario Grain Market Commentary for October 24, 2018

Commodity Period Price Weekly Movement
Corn CBOT December 3.68  08 cents
Soybeans CBOT November 8.50  36 cents
Wheat CBOT December 5.00  17 cents
Wheat Minn. December 5.78 10 cents
Wheat Kansas December 4.97  24 cents
Chicago Oats December 2.92 05 cents
Canadian $ December .7689  0.05 points

Corn

It was a quiet week in the corn futures as the market was confined to a 10 cent range.

Initial support is now seen at the $3.65 level on December. Indicators are neutral, but the primary trend is still down. We still need a close above the $4.40 level on the lead month contract to get excited about a major trend reversal.

Soybeans

Soybeans reached our $9 area and once again backed off. This was expected as we are defining our box, which once completed could produce a break to the downside. This formation, which is visible on the monthly chart, suggests that, if we break our long standing $8 price on the lead month futures. That break, if it were to occur, would extend the beans into a $7 price handle for the first time since 2008.

There is a chance we may never seen this, but it is a possibility. First, we need the $8 support level to be violated in a big way. I see that as a possibility with the continued rhetoric from China and Trump.

If by chance things were to settle down globally, we could see the upside target of $9.20 negated in which case the flag formation would be destroyed and meaningless. Only time will tell.

Meanwhile, we expect more of the same with the lead month bean contract trading between the $8 – $9 range. The primary trend remains down.

Wheat

Wheat is testing the support level near $5 and continues to hold. However, there is a pattern that concerns me in the short term. This is a very reliable pattern that is known to show capitulation and market turns when it is fully developed.

To clarify this, the pattern in question is based on our daily chart and it shows a possible short term move downwards that could result in a price target of around $4.80 on the lead month futures contract. If this pattern were to follow through, I would expect good support at our previous support level of $4.80 and a move higher from that area in the coming weeks.

For the time being, we are still finding support near the $5 level on December at our September swing low of $4.95 and we may not see this break in prices.

Initial support is still seen in this $5 area on December Chicago futures while overhead resistance is now back at $5.25.

Indicators are still positive, and the primary trend is neutral.

Harvest 2018 Grain prices as of the close, October 24, 2018 are as follows:
SWW @ $222.53/MT ($6.06/bu), HRW @ $229.70/MT ($6.25/bu),
HRS @ $233.53/MT ($6.06/bu), SRW @ $222.53/MT ($6.06/bu).

Marty Hibbs is a grain merchandiser with Grain Farmers of Ontario. Hibbs is a 25 year veteran futures trader, analyst, and portfolio manager. He was a regular guest analyst on BNN for four years and is currently authoring the Market Side education series on futures trading basics in the Ontario Grain Farmer magazine.