Technical Analyst, Saxo Bank
Summary: Also in this analysis report: Range bound Soybeans and Corn
Wheat seems to find support at the 200 daily SMA and in the middle of the Consolidation area, close to the 0.764 retracement at $886.
RSI indicates we could see a last exhaustive move lower possibly to 885-860.
However, if short coverings and bottom fishers can lift Wheat higher next couple and RSI closes above its falling trendline we could see a rebound to resistance at 972. A close above 972, 1,034 is next major resistance.
The collapse in Cotton prices has been the talk of the (Soft Commodity) town past few days. The floor seems to be around the October/November 2021 lows around 103.50. If Cotton can close above 105.31 today it has formed a Bullish Engulfing bottom and reversal candle.
If that scenario plays out, we could see a nice rebound possibly to 117-123.
Out Commodities expert, Ole Hansen explains the reason behind the price collapse in Cotton:
“Cotton, a recession-shy contract, took a major hit last week from raised concerns about an economic slowdown, primarily in China, a major consumer of cotton, but also the wider world as central banks accelerate their efforts to bring down inflation by forcing down activity through higher interest rates. The fiber together with copper are often viewed as gauges for the health of the Chinese and global economy, and recently both have been flashing red alert.
However, after hitting a nine-month low, some 32% below the May peak, the market is showing signs of stabilizing. Driven by a combination of prices hitting deeply oversold levels, the speculative froth being sharply reduced, China softening its strict Covid rules and not least a worsening outlook for US crops after the percentage of crops being rated good to excellent dropped to just 37% versus 52% a year ago. .”
Soybeans still range bound between 1,579 and 1,765. Current bounce off from support around 1,579 is likely to take Soybeans back to around 1,681 i.e. middle of the range.
Corn range bound. 725 and 800 are key levels. RSI is showing negative sentiment indicating we could see test of 725.
Coffee has broken below short-term rising trend line. If breaking below 218 Coffee is likely to drop to around 211 support, possibly down to May lows around 202.
To reverse or neutralize this potential bearish picture a close above 237 is needed.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.