| Corn | Soybeans | Soymeal | Wheat | Live Cattle | Hogs |
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| Cotton | Class III Milk |
| Weekly Corn |
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Corn: Last week’s cyclical analog chart showed 2014 and 2015 lows were at average price levels compared to past cycles since 1720. The continuation chart does not look as bearish as individual contract months such as July. Since late 2014 prices have been rather range bound for the continuation chart suggesting bearish fundamentals have limited upside potential and have not created renewed downside objectives. The July weekly chart shows prices violated the downtrend since July of last year. And the five-week stochastic made a buy signal shown at the green arrow. The recent update to the net-fund chart shows a possibility that funds are returning to the buy side. I keep a running sum of daily fund estimated transactions that suggest funds likely bought back half of what was sold last month, which suggest the net-fund chart may be a bit behind of actual fund activity. Producers/commercials have been rather steady, suggesting light farmer sales. Prices also bottomed for a Level 1 business cycle low at the anticipated price and time objectives shown as the box near the Level 1 label. Upside objectives for a Level 2 top next month were raised slightly to $3.85 to $4.00. The Level objective due late April through May was raised to near $4.10 to the $4.20 area. A combination of sentiment relating to Level 1, 2 and 3 cyclical trends, which covers short-term intra-month trade to the more important of intra-year fluctuation of demand shows an increase in buyer interest this month. It also shows traders have increasingly favored the bull side since September. Nearby support for the July contract is the five-week moving average near $3.74 ¼. |
| Weekly Soybeans |
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| Soybeans: July futures are within the time and price objective shown as a box for a Level 2 business cycle low that should lead to a bounce in prices next month. The five-week stochastic made a buy signal shown as the green arrow. Currently prices are hugging the five-week moving average near $8.79, which is a pivot. Support is the uptrend near $8.63. Resistance is the downtrend from the summer high through a Level 1 cycle top in December. Prices are near that level for the start of this week. Closes above it (near $8.83) would suggest a Level 2 uptrend is underway. Upside potential ranges from $8.93 to $9.13. Concerns over China’s demand for commodities are likely overdone, but still a psychological headwind. Keep in mind that China’s slowdown is partially related to a switch to a consumer driven economy that overtime will be positive for those exporting to that nation. Chinese grain futures are not showing stress over the pace of economic growth. |
| Weekly Soymeal | Back to top |
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| Soybean Meal: Futures are still within a downtrend since the summer high and the July contract is within time and price objectives for a Level 1 business cycle low. The five-week stochastic recently made a buy signal shown as the green arrow. Nearby resistance is the downtrend around $278.20. The five-week moving average is a pivot near $274.10. Producers/commercials have not shown an interest in adding to shorts, which suggest prices are likely a value to the buyer. But funds have been quiet. | |
| Weekly Wheat | Back to top |
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Wheat: July SRW futures are trying to breach resistance of a downtrend since October and the five-week stochastic was still long as of last week, following a buy signal shown as the green arrow. Nearby support is the five-week moving average near $4.86 1/2. Prices are slightly above anticipated price and time objectives for a Level 1 cycle low and the forecast offers a rally during February into a related top. Upside objectives range from $5.13 to $5.30s with potential to be revised higher, but traders will view $5.00 as a hurdle. Funds reduced shorts somewhat, while producers/commercials have been reluctant sellers suggesting wheat is at a value level for the buyer. A weekly close above $4.95 should be a bullish sign. In the news: cold snap likely damaged some of the crops in eastern Europe and Ukraine. | |
| Weekly Live Cattle | Back to top |
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| Live Cattle: For the start of the week, June live cattle futures were turning down from potential resistance of the five-week moving average near $123.80 1/2. A setback relative to the intra-month Level 3 cycle is allowed into next week and it is not shown on the chart, but will be tracked at Posson’s Profit Watch. The time objective for a Level 2 cycle low was revised to better show a low due next month and it is coinciding with seasonal tendency for beef to erode from a rally in late December into January into a bottom during late February. (Futures are allowed to bottom ahead of beef.) The seasonal trend is then normally up into the summer grilling season. The Cattle-on-Feed Report did not provide encouragement for bulls, but business cycle analysis suggest cattle and beef prices are undervalued on a long-term basis, which is why the price objective for the Level 2 low was left mostly unchanged. This suggests a chance for range trade into said bottom and a truncated low is also feasible. The five-week stochastic is trending lower from a sell signal shown as the red arrow. That signal occurred in line with the correct Level 2 cycle time and price objectives for a high. The downtrend since summer is major resistance near $127.00. Support is last week’s low at $118.77 ½ followed by the December low at $115.47 ½. The latter may have been a long-term three-year business cycle bottom that offers support for 2016. Producers/commercials have been light sellers since the Level 2 cycle that suggested waning buyer interest and rising seller interest. It is how we do business. | |
| Weekly Lean Hogs | Back to top |
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| Lean Hogs: June lean hog futures peaked for a Level 2 cycle high a few weeks ago and there was little impact. This caused a revision to show the November low was actually the more important Level 1 type of bottom, which also makes it a possible long-term three-year cycle low for the continuation chart. The trend is up into a Level 1 top due late February to March with potential for around $81.00. Nearby support is the five-week moving average around $78.39. National pork cutout values have risen nearly 11% and the lean hog index is finally on board with the business cycle model. A drawback may be the overbought five-week stochastic, which could limit upside potential. Funds have been buyers and offset sellers like producers/commercials. | |
| Weekly Cotton | Back to top |
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| Cotton: July cotton futures are dipping into the time and price objective for a Level 1 cycle low. Although funds bought the prior week, sellers are still present due to concerns of exports, the strong dollar and the global economy that these days is mostly linked by traders to China. Which is likely a mistake, but bears are getting away with it. The five-week stochastic is oversold and may make a buy signal this week even with a modest lower close. Nearby resistance is the five-week moving average around 63.16 cents. Support may come from the lower-end of the objective box near 61.74 cents. Closes above last week’s high at 63.47 cents would be a sign the Level 1 low is in place. A buy signal from the stochastic should also be considered. There is potential to return to 65.00 to 67.00 cents for a Level 2 cycle uptrend during next month. The objective may be revised higher or lower dependent upon the price level of the coming Level 1 cycle low. | |
| Weekly Class III Milk | Back to top |
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| Class III Milk: September C3 futures are trending lower into the Level 1 cycle low time and price objective. Support may be as low as $15.44. Nearby resistance is the five-week moving average around $15.96. The five-week stochastic is oversold. A weekly close above the average and/or a buy signal from the stochastic should be a sign of said bottom. Prices would then be forecast to rise into a Level 1 top due near April. Upside potential may rather limited to due to lingering supplies. Consumer confidence suggests demand should be firm. But there are those in the industry pointing to the volatile stock market as an excuse to be a careful bidder. Cheese and butter prices have rolled over in order to trend into a similar low due next month. This would be yet another opportunity for placement of the three-year cycle bottom. Is this week’s gap lower an exhaustion into a Level 1 bottom. | |
