Grains Flashing Key Technical Signals

June 21, 2013 01:16 AM
 

What Traders are Talking About:

Overnight highlights: As of 6:15 a.m. CT, corn futures are 3 to 6 cents lower, soybeans are around 1 cent lower in old-crop contracts and 4 to 7 cents lower in new-crop contracts and wheat futures are mostly 1 to 3 cents lower. Unless some fresh bullish news surfaces prior to 8:30 a.m. CT, bears will keep the upper hand on the reopening of trade this morning. Based on overnight electronic trade, cattle and hog futures will favor the downside during the daytime hours.

 

* Technicals very telling. I'm primarily a market fundamentalist, focusing mostly on supply, demand, weather, etc. that drive price action. But technicals are a key part of what makes up price action in the marketplace. And currently, technicals are very telling. July corn futures filled the April 1 gap at $6.76 earlier this week and failed to find followthrough buying above that level. December corn futures ran up to the top of the extended trading range that contained prices all spring and rolled over. July and November soybean futures are working on low-range closes for the week and looking "heavy" on the daily charts, threatening to roll over after a multi-week consolidation. Wheat, the market which has been the weakest for a long time, is actually showing the best technical action, as futures continue to "base" in the midst of winter wheat harvest pressure and demand concerns.

The long and short of it: Technical trade this week signals short-term tops are in place for corn and beans, while the wheat market is holding up remarkably well. Don't lose track of wheat technicals are telling us as the market tries to sort out the fundamental situation.

* Low-path bird flu found in Arkansas. A low-pathogenic strain of H7N7 bird flu was discovered on a poultry farm in Scott County, Arkansas, according to Arkansas Livestock and Poultry Commission Director Preston Scroggin. He says 8 in 9,000 birds on the farm tested positive for the bird flu strain. The entire flock has been euthanized and all eggs were destroyed. Officials also quarantined all farms within a 6.2 mile radius and no additional case were found.

The long and short of it: This will not be a market factor as long as it's contained. But if additional cases show up, it would be price-negative for grain futures.

* Cattle on Feed, Cold Storage Reports to show differences between supply and demand. USDA's Cattle on Feed Report is expected to show all three categories -- On Feed, Placements and Marketings -- below year-ago. Feedlot inventories are expected to be down 3.5% from year-ago, according to the average pre-report guess from a Dow Jones newswire poll. The "read" on the report will come from the Placements category as the guess range is again wide, even though all pre-report guesses are below year-ago. Meanwhile, pork and beef stocks in storage as of May are expected to be record-large for that date. Pork stocks are guessed at 663 million lbs., while beef stocks are expected to be 511.5 million pounds.

The long and short of it: The Cattle on Feed Report will highlight tight cattle supplies, while the Cold Storage Report will remind traders of the demand concerns for beef and pork.

 

Follow me on Twitter: @BGrete


Need a speaker for a seminar or special event? Contact me: bgrete@profarmer.com

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