Weekly grain report

August 16, 2009 07:00 PM

Focus: September wheat

In July, wheat prices remained in a daily range, crossing back and forth over the 2008 low of $5.22. Since the beginning of August, wheat has moved decidedly lower, moving out its range to set new, multi-year lows. Last week, wheat prices fell 7.75¢ to close at $4.81 3/4. Wheat fundamentals remain weak due to low export demand and increased USDA estimates for wheat production. However, the technical outlook suggests a rebound is setting up. The current -ADX pattern shows bullish divergence. Wheat prices are falling on lower trend strength; the current –ADX peak of 25 is weaker compared to the previous -ADX peak of 55. Despite a lack of strong fundamentals, a technical short-covering rally is likely to occur soon.

Chart Courtesy of TradeStation

Dr. Charles B. Schaap 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.

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