The worsening U.S. economy continues to drag on the grain markets, and there is concern about weakening global demand. Grain prices continue to linger near three-year lows. The U.S. Department of Agriculture recently estimated that plantings for wheat in 2009-2010 would be down 2.5 million acres compared to the previous year. Wheat prices have fallen over 60% from the highs in February 2008. On a weekly chart, ADX is weak near 25 and the –DMI is dominant; this usually results in sideways or down price movement. Wheat is likely to establish a price range between $4.75 and $6.50 until something affects the current supply/demand stagnation. If the U.S. dollar falls, inflationary pressure will put upward pressure on prices.
Chart Courtesy of TradeStation.
Dr. Charles B. Schaap transitioned from health care to wealth care in the nineties. He is the author of ADXcellence —Power Trend Strategies and Invest with Success—Big Profits for Small Investors. Dr. Schaap is a commodity futures strategist and recognized authority in technical analysis of the financial markets. His website is www.adxcellence.com.
