A word of caution about the corn market from Grain Farmers of Ontario analyst Marty Hibbs.
He suggests we would need to see a solid close above the $4.25 to $4.50 mark on the July chart to even try to break the back of the four year old bear market.
GFO's weekly market commentary has the corn short term chart indicators positive while the weeklies are neutral and the long term is still down.
Hibbs says a close above the $10.60 ceiling on the July chart for soybeans could ignite another round of fund buying.
He thinks that buying could drive the market higher by a dollar or more - if it happens.
While the weekly soybean chart indicators are positive, the long-term rend remains down.
He suggests we would need to see prices above $13 in the next month or two before seeing a trend reversal.
And this week's commentary links possible future wheat market activity to what happens with soybeans.
Hibbs says if soybeans continue to climb, we could see another challenge of the $5.50 overhead resistance for wheat.
Daily chart indicators are positive for wheat but the main trend remains down.
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Grain Farmers of Ontario Weekly Market Commentary: (Marty Hibbs)
CORN
We reached our upside resistance of $4 on the May contract this week, and quickly retreated. As of today, we will move to the July contract. The current trading range is $3.70-$3.90 on the July contract, and we need to stay above the $3.70 on July to maintain our bullish stance for the short term outlook. If we can do that, we should be ready to re-challenge last week’s high of $4.07 on the July corn contract. Our short term indicators are still in bullish mode, but like all of the grains, we are fighting to turn the trend on the weekly charts, which may take considerable more time and work. For the time being, a close below $3.70 on July could mean a re-test of the $3.50 level. Meanwhile, for those thinking that this recent action could be the turning point, the technicals show that we would need a solid close above $4.25-$4.50 on the July chart to even attempt to break the back of the four year old bear. Short term indicators have turned positive, while the weekly indicators are neutral, and of course, the long term trend is still down.
SOYBEANS
As indicated last week, we saw our upside target of $10.50 challenged, as the July contract reached an eight month high of $10.44 before succumbing to gravitational forces. We are also getting the pullback we expected as we await a signal for future direction. We suspect a large part of the move came from fund short covering and actually reversing positions to bullish. Funds ramped up their bullish bets by the fastest pace in six years as they lifted their net long positions in soybeans to the highest level in more than two years, according to data from the US Commodity Futures Trading Commission. From this point we could either see a continuation rally to challenge the $10.60 resistance on the July contract, or settle back to re-test support at the $9.70, $9.50, or even the $9.25 level.
The weekly indicators are still positive, and our next challenge is to clear the $10.60 ceiling on the July chart. A close above that level could ignite another round of buying by the funds and drive this market higher by a dollar or more. Remember that this rally was foreseeable, but the charts still see the soybeans in a long term down trend and we would need to see prices above $13 in the next month or two before we could identify a trend reversal according to the technical alone.
WHEAT
July wheat enjoyed a good run alongside corn and beans last week, as we hit $5.20 on the July contract. This is in line with our expectations of $5.25-$5.50 major resistance, as mentioned many times. However, the check-back was more severe than its counterparts on the technical side of the trade. If the Soybeans continue its upward trek, I feel we will once again challenge the $5.50 overhead resistance, based solely on the bean and corn performance. Meanwhile, the short term indicators are friendly, but there is no doubt about the direction of the real trend, at least for the time being. Daily indicators are still positive, but the main trend is still down. Support is seen at the $4.60 level, and again at $4.40. while major resistance is still at the $5.40-$5.50 level based on the July contract.
