Grains Holding Up Part 2

Yesterday, I posted where some support is holding underneath commodities as a group.  Today, I wish to continue that theme, but zero it in on the commodities which are of most interest to farmers, specifically corn, soybeans, and wheat.

Most of this post will focus on the technicals, but keep in mind, on the bullish side, there is massive flooding through out the heart of the corn belt delaying planting.  Freezing rain is predicted tonight in some places......snow in others.  Weather premium should be coming back into the market soon.  On the bearish side, the stocks number continues to grow.  At the heart of the weakness in all commodities is the "get me out" mentality from the funds.  At some point, there will be commercial buyers enter the market to lend support, but it is the funds that drive the market.

Starting out, the same pattern is showing up on this three year July corn chart.  On the bullish side, we have a CCI Buy signal, trend line support, and a gap to fill at $6.76.  This, along with planting concerns should be enough to provide a bounce.  On the bearish side, the shorter term trend is certainly lower, and the 200 day moving average (green line) has turned lower.  Once the 200 day MA changes direction, it normally takes about 6 months to change direction.

The December corn is where we really want to focus on getting sales made.  Clearly, there is a trend line break.  There are no CCI buy signals.  The 200 day SMA is now pointed lower.  Lower highs and lower lows.  We are still .53 cents above the 85% RP crop insurance floor.  With some sort of small rally, we can still get a reasonable price locked in.  The next stop lower will be the $5.12 area, which were the lows of 2012.

May soybeans are still holding onto its trend line.  I am not expecting to see any sort of rally back to $15.  The 200 day simple moving average is now flat.  

November soybeans prices have moved between two trend lines now.  Depending on how you chose to look at it, prices are nearing support or have broken support.  Unlike December corn November beans show signs of being oversold from the CCI.  That is good enough to me to not bite on any further declines for a while.  I am not bullish beans, but do not believe this is a place to make sales.

July wheat is still stuck in the $7.00 price range between the 80% and 85% price floor guarantees.  The CCI is not giving me any sort of encouragement for anything more than sideways trading.  Buying options in a market like this is not a good idea.  That said, should prices will probably plunge further should corn make further declines.  Wheat sales here could still be prudent if you have not yet made cash sales, but you should make plans for re-ownership should something unthinkable happen.

To summarize, I would suggest aggressive corn and soybean sales on a rally.  Wheat should be sold with a plan for re-ownership.