Wheat: Argentine wheat futures in dollars declined the past five weeks, while still up from June. Despite a setback in crop production, Australian contracts rest at early 2015 lows. Indian wheat prices maintain a bull market since March. The continuation chart of the second contract of Chinese futures is midrange for 2015 and up from a low made in November. Canadian wheat maintains a slow grind higher since May. English contracts are range bound since late November with low volatility. A close above 113.99 pounds for the spot chart signals an intermediate low. The market acts as though there is lack of seller interest, but buyers have not been aggressive. The five-week stochastic is long the market. Euronext futures suggest European prices are stable from lack of seller interest, but buyers have been a bit complacent in recent weeks. The five-week stochastic trends higher from a buy signal made in early December. U.S. prices start the week near a low made in early December for the SRW March contract. Although the five-week stochastic is short the market it is nearly oversold and exhibits potential positive divergence behavior. The five-day stochastic is extremely oversold and likely to make a buy signal with a higher close. Nearby resistance is the five-day moving average near $4.71 1/2. A Level 3 intra-month cycle low is due and the first objective for bulls is around $4.86, but by technical definition the short-term trend was still down as of this morning. Posson's Profit Watch (PPW): 11/24: rolled to March SRW if not stopped out in October. Otherwise: bought March futures 11/24: at $4.94. May trade in and out along the way. 12/28: Since this column is updated only in the morning, a backup strategy for this column will be an exit of reownership of an official Pro Farmer position intra-day.
Corn: South African corn remains in a strong bull market since late last year. African weather issues extend support. Brazilian futures in real are in an uptrend since June, but the pace has slowed. Mexican prices are range bound since July, but within an uptrend since late 2014. The nation has been a consistent buyer of U.S. corn. Indian futures are in a bull market since late last year, but have recently exhibited a rolling characteristic with prices near a bull market high made in 2012. The continuation chart of the second traded contract in China exhibits a major low made in November and traded a wide range this month. Prices act as though support is the five-week moving average near 1,918 yuan. Trade above 2,041 yuan would be additional evidence of a long-term cyclical low. European prices broke down last week and are now the lowest since March. The five-week stochastic is deeply oversold. Last intermediate business cycle bottom was in late October and ideally another low is to be placed this week or next. A related high offers some recovery next month. U.S. March futures are quite oversold relative to the five-day stochastic suggesting a rebound is in order. A Level 3 cycle high is due near end of the week, if not early next, suggesting a retracement higher. Resistance levels are around $3.67, $3.70 and the 40-day moving average near $3.73 3/4. Support is the low of the month at $3.62 1/2. PPW: 11/24: rolled to March -if not stopped out in October. Otherwise:11/24: bought March at $3.70. 12/28: Since this column is updated only in the morning, a backup strategy for this column will be an exit of reownership of an official Pro Farmer position intra-day. 11/24: Feed users should be at least 50% covered into summer.
Soybeans: Indian futures are up from a low made in September, but have stalled in a wide range since late October. Prices slipped last week. Last week, Canadian canola prices broke higher from a 12-week range. This should be a significant development, but the five-week stochastic is overbought, which may limit the pace of rise. European rapeseed prices may be the next in line to turn higher as an intermediate cyclical low is due, while the five-week stochastic trends toward oversold. A weekly close above the five-week moving average near 376.79 euro would be supportive. Brazilian prices in dollars are range bound near the 2015 low. Argentina futures in dollar have drifted lower since early November, but are higher than a major cyclical low made in September. Although the recent 30% devaluation of that nation's peso should assist its exports, it has caused a rise of expenses for its citizens in terms of cost of living, while there has been little to no increase in wages. Seems to me this gift for Argentina farmers will be erased as inflation eats away at currency based gains. Makes me wonder how aggressive sales will be on a long-term basis by its farmers for export. And farmers are expected to pay their fair share of taxes. Chinese futures are quiet, range bound for December, but show signs of a major low made late last month. U.S. March futures extended last week's losses as of overnight trade. The contract violated the 40-day moving average near $8.75 5/8, but the five-day stochastic is oversold. A Level 2 cycle high was likely placed last week, if not as of Dec. 7. A Level 3 cycle high is due near end of the week to mid-next, which offers a rebound, but by technical definition the trend was down as of this morning. The dollar against the Argentina peso and Brazil real was lower this morning. The dollar has struggled against the real in since September. And it has dipped against the peso immediately following the thrust relate to Argentina's devaluation. I think the dollar index has peaked for a while, but it is short-term oversold. PPW: 10/21: long one unit March futures at $9.05 1/2. 12/16: Since this column is updated only in the morning, a backup strategy for this column will be an exit of reownership of an official Pro Farmer position intra-day. Otherwise waiting on response to Fed results.
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The Good and Bad of 2016 Grain Prices