A Break Lower in Ags

Four out of the last five days corn futures have lost ground giving up nearly 40 cents after failing at their highs near $5.20/bushel in the July contract. Today the 50 day MA (blue line) was breached for the first time since late January. Future settled just below their 38.2% Fibonacci level . Though the easy money has been made in my eyes we still see lower trade and I will be looking to fade rallies with Ag trading clients.

Bearish technical action remains present and barring any weather issues I expect the 50% and 61.8% Fibonacci levels to be challenged. Big picture the increasing supply outlook globally should accentuate the move lower. Cooler or wetter weather could add bullish spikes short-term so do no fall asleep at the wheel.

Corn Futures in Ags:

Corn futures chart for Ags

Corn Futures chart

The last five days July wheat futures have been in the red trading 55 cents lower and also breaking the 50 day MA (blue line) for the first time since late February. I see mild support at the 38.2% Fibonacci level that acted as support in recent months but could this time be different? Like corn I’ve suggested using the Fibonacci levels as your objectives.

Large fund positions have started to lighten up so if they all scurry for the doors do not rule out further unwind to cause additional weakness. Questionable export growth in the coming months is also helping the bears case.

Wheat Futures in Ags:

Wheat Futures chart for Ags

Wheat Futures chart

Soybeans have held up the best relatively speaking in the AG complex, on a % basis lower by 3.3%. While futures are 50 cents off their highs support has still held and July currently stands 38 cents over their 50 day MA (blue line). I do see lower trade but as opposed to trading old crop I prefer bearish exposure in new crop (SX14).

I know it sounds like a broken record but use the Fibonacci levels here for guidance on exit as well. With increased South American production and the outlook for record US production and increasing domestic and global ending stocks the tides appear to be shifting.

Soybeans Futures in Ags:

Soybean futures chart for Ags

Soybean futures chart

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As always, I’m here to discuss specifics and give guidance. Shoot me an email…Give me a call… you can reach me at: mbradbard@rcmam.com or 312-870-1653

Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.

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