Tucker Talk: January 21

Soybeans

More people in Box Butte County are talking about soybeans these days so I thought I would include a little market information.  Export loadings are up from last week but are still 11% behind last year and 8% behind USDA estimates.  Informa increased their soybean planting acreage estimate by 2.5 million acres from 2015 on Tuesday with some acres shifting from corn to soybeans.  The shift in acreage may be due to a possible mass exodus of producers from corn to soybeans because soybeans are cheaper to grow.  Returns for soybean, although still negative, are currently better than corn and could be considerably better if weather does not cooperate and yields move back to average from the high levels we have seen the last two years.

Corn

There has been a welcome $0.18 rally over the last 2 weeks bringing corn back up to a $3.20-$3.25 cash price range but it is being offset by weakening basis levels.  The rally has been attributed to short covering of managed money that was short 195 thousand contracts on Friday.  After the funds stop buying, we will need another reason for them to continue buying corn contracts to drive the prices up.  We have seen some corn movement across the country but mostly from elevators moving corn in preparation for the coming year.  Producers are still not selling and are instead taking advantage of delayed pricing programs in order to let the elevators move the grain.

I have been talking about the El Nino/La Nina pattern and its importance to 2016 prices.  El Nino is attributed to granting our excellent yields over the last two years and has recently started moving to a neutral position.  If it stays neutral for another year then we will probably see good yields again, however, if it moves into a La Nina, it could result in drought conditions and cause reductions in supply.  Unfortunately, this is what is needed to drive prices up to profitable levels.

The first chart below is an interesting chart of the El Nino/La Nina pattern with an overlay of corn futures.  When the gray line is above the horizontal black line, it is a strong El Nino and when it is below it, it is a La Nina.  As you can see, there is an inverse relationship between the El Nino/La Nina and corn futures.  The second chart shows seasonal December corn futures in years with high carryout similar to the 2016 year we are currently entering.  The transition to a La Nina event occurred in 2007, going into 2008 and in 2010 and the impacts on prices can be seen in the second chart.  It is interesting to compare the two charts and one conclusion I can make is that unless we transition to a strong La Nina, the highest prices we see for new crop may be in the February-March period.  It may be a good idea to forward contract some during this time period to reduce your risk.

MonthlyOceanic_2_1

El Nino Index vs Corn Futures.

Seasonal Corn Futures.png

Seasonal December Corn Futures

 

 

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Technical Analysis: June 19

Corn

On Tuesday, July Chicago Board of Trade corn hit the contract low of $3.46 that was seen on October 1.  This is a major support level as it represents the low.  Any trade through this level could see further declines.  Corn saw a slight increase this week but could not trade through resistance at the 40-day moving average.  Any large gains are probably out of the question until after the June 30 stocks report.  Resistance currently lies at the 40-day moving average $3.60 and higher at $3.67.  Support is at the contract low of $3.46.

July Chicago Board of Trad Corn

Wheat

Wheat is currently playing a weather game and has declined all week due to occurrences of rain events across the US.  Prices traded through the 40-day moving average support on Monday and continued to decline.  Initial support lies at $4.95 and other support lies at $4.85.  Resistance lies at about $5.20 with the 10, 20, and 40-day moving averages all converging at that point.  Long-term resistance lies at $5.53.

July Kansas City Wheat

Technical Analysis: June 12

Corn

July Chicago Board of Trade corn started out the week well while it followed wheat higher into Wednesday before the supply and demand report came out.  The report was bearish for wheat so corn followed wheat back down.  Corn was unable to close above the 40-day moving average on Wednesday which would have been a good short-term bullish pattern. Short term resistance currently lies at $3.63, the 40-day moving average and long-term resistance is at $3.67.  Support lies at $3.48.

July Chicago Board of Trad Corn

Wheat

July Kansas City wheat had a rough go on Wednesday when the supply and demand report came out a little more bearish than expected.  Prices fell Wednesday and Thursday.  Prices are currently testing support at $5.23 which is also near the 40-day moving average. If prices can remain above these levels we are still in a bullish pattern.  Other support lies at $4.95 and $4.85.  Resistance lies at $5.53 and $5.64.

July Kansas City Wheat

Technical Analysis: June 6

Corn

July Chicago Board of Trade Corn is beginning to form a short-term bullish trend.  Prices were weak on Thursday but were able to shrug it off to close higher to form a bullish outside day.  Important short-term support is at Thursday’s low of $3.56 which corresponds with the 10-day moving average.  If this level holds firm, the minor short-term uptrend will remain. If it does not, further support lies at $3.48.  Resistance lies at $3.67.

July Chicago Board of Trad Corn

Wheat

July Kansas City Wheat had an expected fall on Wednesday after 3 days of fund short covering but was able to rise again and continue climbing with news of dry areas in wheat producing regions (see Tucker Talk).  Thursday’s low at $5.24 is now strong short-term support ahead of lower, swing low support at $4.95.  Resistance lies at $5.64 and was tested twice a couple weeks ago.

July Kansas City Wheat

Technical Analysis: May 29

Corn

Markets were closed Monday but starting on Tuesday, July Chicago Board of Trade corn declined response to wheat’s decline and the increasing value of the dollar.  There was a slight rally on Thursday but prices were down again on Friday.  Support lies at $3.48 and resistance lies at $3.67.  Funds are currently short a record 177,000 contracts so if there is even the slightest weather scare to start the buying we could see a pretty significant rally.

July CBOT Corn: May 29

Wheat

Kansas City July wheat declined this week as trade began to focus on the impacts on adequate moisture across wheat growing areas.  A reduction in quality scare last week gave the market the nudge it needed to get the short positions to start covering, and cover they did.  This week trade thinks that although there may be quality problems, there will still be a large number of bushel to be sold causing prices to drop and the gain from last week to be lost.  Short term support lies at $4.97 while long term support lies at $4.85.  Resistance is at $5.61.

July Kansas City Wheat May 29

Technical Analysis: May 22

Corn

July Chicago Board of Trade corn rallied on Monday pulled up by wheat and the prospects of reduced acres due to wet conditions preventing planting.  Strength in the dollar and a corresponding fall in wheat prices then pulled corn down before another rally on Thursday.  The short-term trend for corn looks neutral as it remains between initial resistance at $3.70 and support at $3.57.  The long term trend is bearish with long term support at $3.55.  Any loss below this level will open up further declines.

Corn May 22

Wheat

July Kansas City wheat has been choppy this week as funds continue to cover record short positions.  Prices have been testing the 100-day moving average ($5.52) resistance all week while funds continue to cover shorts and the rest of the market plays the weather game.  Price closed above the 100-day moving average on Thursday but could not close above resistance at the May 18 high of $5.64.  The short term trend for wheat is still slightly bullish but the overall trend remains bearish.  Resistance is still at $5.61 with support at the 100-day moving average of $5.52.  Medium term support lies at $5.28 and long term support at $4.85.

Wheat May 22

Technical Analysis: May 15

Corn

July CBOT corn rallied to a higher close on Thursday trading through the resistance level at the 10-day moving average but couldn’t quite get above the 20-day moving average.  Corn has been trading under the 20-day moving average for the last 5 weeks so this is an important resistance level at $3.68.  The next resistance level lies at $3.70 and any trade above this level would signal a bullish trend.  Overall, the intermediate trend for corn is bearish with support levels at Thursday’s low of $3.61 and long term support at the May 5 low of $3.55.

July Chicago Board of Trade Corn

July Chicago Board of Trade Corn

Wheat

July Kansas City wheat rallied an incredible $0.34 on Thursday in response to weather concerns, increased demand, and short fund covering.  The rally pushed through resistance levels at the 10-day, 20-day, and 40- day moving averages.  The primary trend for wheat is bullish but the short term trend has turned bullish with yesterday’s rally.  As long as these levels hold the medium term trend will also be bullish. Initial support lies at the April 23 high of $5.28 and long term support lies at the May 5 low of $4.85.  Short term resistance lies at the 100-day moving average value of $5.58.

July Kansas City Wheat

July Kansas City Wheat

Soybeans

July Soybeans did not show any major changes on Thursday as wheat and corn rallied.  Prices are currently hovering above the support level of $9.49 and is currently in a sideways trend between this support level and resistance at $9.97.  A breakout below this support would signal a bearish trend.

July Soybeans

July Soybeans

Market Analysis: March 27

The grains are fighting for position ahead of the March 31 reports.

Corn

May Chicago Board of Trade corn had several good trading sessions before it tried to touch the $4.00 level on Thursday and then tumbled to close at $3.91.  Overall, corn remains in an intermediate neutral zone with resistance at the $.00 level and initial support at the 40-day moving average of $3.88

corn

Wheat

Kansas city May wheat saw a high on Monday that we haven’t seen since mid-January.  Prices plunged on Thursday and broke the rising trend pattern.  It is currently recovering a little of what was lost on Thursday but the overall trend is weak.  Initial support lies at $5.34 and major support is at $5.16.  Initial resistance is at the 10-day moving average of $5.56 and major resistance is at Wednesday’s high of $5.79.

wheat

Market Analysis: March 13

Corn

May Chicago Board of Trade corn maintains a tight, coiling, sideways movement within a 20 cent range.  Corn is torn between fundamentally large old crop stocks pushing price down and concerns about reductions in new crop plantings pushing price up.  There could be a major breakout depending depending on which fundamental prevails.  The longer the sideways movement, the greater the potential of a major move after a breakout.  Major resistance at the February 9th high of $4.00 and support at January 30th low of $3.73 3/4.  Minor support is at the February low of $3.80.

corn

Wheat

May Kansas City wheat saw favorable gains this week with covering of short funds continuing from Friday of last week.  On Thursday, price tested but could not close above major resistance at the March 3rd high of $5.48.  Friday is seeing a fall as the overall bearish trend of wheat is poised to continue.

wheat

Soybeans

May Chicago Board of Trade soybeans dropped from last week as the overall trend is bearish.  Prices maintained a sideways trend and tested support at $9.76 on Friday.  Declines under this support would reignite the near term bear trend with a target of $9.71 at the Feb 11 low.

soybeans

Market Analysis: February 27

Corn

May Chicago Board of Trade corn is trapped in a sideways trend between resistance at $4.00 and support at $3.73 3/4.  Price has dropped below the 10 and 20-day moving average which now create resistance for prices to move higher.  The closer downside support is the February low of $3.83 and a break through this would be a bearish signal.  Overall, choppy, sideways movement is expected to prevail.

Corn

Corn

Wheat

May Kansas City wheat rallied slightly on Thursday.  The long-term trend is bearish but there may be a bottom forming.  Contracts are over-sold and the market is vulnerable to a corrective bump.  Support lies at the Thursday (26) low of $5.21 3/4 and resistance is the Feb 24 high of $5.47 1/4.  Spotty winter kill in the US is also supporting a minor increase in prices.

Wheat

Wheat

Soybeans

May Chicago Board of Trade soybeans are in a short-term bullish pattern.  The 10-day moving average support level of $9.94 1/2 was tested this week and held.  Major support lies at the January 30 low of $9.61 3/4.  Initial resistance lies at $10.32 with larger resistance at $10.67, the January 8 high.  The 10-day moving average support needs to hold to keep the bullish pattern.

Soybeans

Soybeans