World Perspectives
farm-inputs wheat

Technical Views - Meal Correction Upwards

SPREADS

September KC/Chicago spreads moved to new contract lows yesterday.  KC wheat/corn spreads moved back to levels conducive to putting HRW back into feed.  October crush firms to 1.07c/bu while oilshare firms to new highs at 33 percent.   Dec/March corn trades from 10c to 10 1/4c while Dec 19/20 trades from a 3c to 5 1/2c inverse.  Sep/Dec meal trades from $5.10 to $5.30.  Dec wheat/corn trades from 84 3/4c to 80c.  

PALM OIL 

Closed up 41 ringgits for October.

NEWS

Stocks are lower this morning off 80 pts with crude oil firmer at $53.75/barrel and the US dollar weaker at 97.49.  US June PPI final demand was left unchanged at +0.1 percent.

CALLS

Calls are higher across the board with good technical performances, and a drought monitor that is starting to get worse suggesting, we need to see good rainfall soon:

beans: 4-6 higher

meal:  1.00-1.40 higher

soyoil:  40 higher

corn:    2 1/2 higher

wheat:  5 higher

TECHNICALS

Dec Corn:  Major direction is sideways/higher, and we held key support at $4.09 to trade back over $4.20.  The close was extremely constructive and suggests that we trend towards $4.205 with a stop at $4.23 where the next level of resistance is located.  Think that the change of direction finds pullbacks supported.  Best location of support now moves up to $4.16, should we go there.

first support: $4.16

resistance: $4.23

possible range: much the same or higher

Sep Wheat: The market formed a small uptrend channel with a base from $4.75 - $4.95.  The close was into key resistance at $5.00, which may trigger some buy-stops at the open and take us to $5.08.  Best level of resistance that would turn back a rally is $5.15, and it is close to the top end of the trading range at $5.25.  A pullback towards $4.95 will offer up support if we go there given the market correction to the upside.

first support: $4.98

resistance:  $5.05/$5.08

possible range: much the same or higher

Nov Beans:  Major direction is sideways/higher, and the market closed right into key resistance at $8.90, which has been both the top and the bottom of recent trading ranges.  Therefore, a trade over $8.90 will find more short-covering and test $9.00/$9.05.  Given the good close, think we probably print $8.90 at the open and target values above.

first support:  $8.82/$8.85

resistance:  $8.90/$8.95

possible range: much the same or lower

Dec Meal:  Chart is sideways with major lows crossing at $300.00.  Technically, we are therefore forming a base, and if we see some unwinding of the recent buy soyoil/sell meal trade then this chart can make an upward adjustment heading into Monday to establish a $300.00 - $310.00 trading range.  Would look for that possibility rather than another large break.  Any trade over $305.00 brings in more buying activity and a probable trade to $308.00.

first support: $302.00

resistance: $305.00

possible range: much the same or higher

Dec Soyoil:  The market broke out to the upside when it traded over 2930c.  The new high is 30c.  On a setback, would look for 2930-2950c to offer up support.  The target high on any settlement over 30c would be 3020c, then 3050c at the top.  Soyoil has had a tough go on rallies, so would probably be lightening up on overall length on rallies back towards 30c until we confirm we can close over.

first support: 2930c-2950c

resistance:  30c-3020c

possible range; much the same or lower

DECEMBER MEAL

Price action is congested at the bottom of the chart, but is building in a base of trade from $300.00-$305.00.   Given the extent of the break, we could see trade back over $305.00, which clearly opens the door to trade up to $308.00 and then $310.00.  Think this is probably where we are headed - for a $295.00-$310.00 trading range on a correction upward.

 

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