As expected the Sep & Dec Wheat contacts found strong fund buyers on Friday after Thursday's selling climax. The Sep contract (1 more week till Dec roll) made a low of 725.75 on Thursday and rallied to 755 near Friday's close.
If the buyers can bid it up to the 665-670 area in the Sep contract on Monday, the fakeout/shakeout to the downside will be confirmed. All the new shorts below 665 will be underwater and in need of buying to cover their losses. This should add fuel for the up move.
Bigger picture, I think Dec Corn has bottomed for the season. The chart continues to mark higher lows and highs. There have been many anecdotal accounts of disappointing kernel fill across the corn belt so the odds favor yield predictions to decline further.
There is a weekly gap on Dec Corn around 674.5 and a June 1st low at 682 which will both function like magnets to pull prices up to those areas once Dec Corn breaks out fully. Please see all these features marked on the Dec Corn chart below.
Also for corn and beans the 35-38 day cycle occurs in the Aug 26-30 timeframe. We are looking for an important swing high or low around those dates. While Sep & Nov Beans have also been marking higher highs & lows, performance has been disappointing for the bulls considering all the bullish fundamentals.
Dec Cotton Update: Apparently, this years cotton crop supply is in very bad shape. I read an article this weekend that said harvestable acreage in Texas was estimated to be down almost 70% and total US acres down about 57%.
This news caused a few limit up days and an apparent measuring gap up last Monday. Dec Cotton was rangebound Tuesday-Thursday last week, and on Friday made a feeble attempt to close this gap but failed. It is now a confirmed measuring gap which projects Dec Cotton to rally up to $1.39 or higher. Because the gap up occurred on Monday, it is a weekly measuring gap - this is more substantial than a daily gap alone.
For reference the top of the gap is 108.59 and Friday's low was 111.01 - about a 2.5 cent gap. After the heavy fund buying reversed prices back up on Friday, Dec Cotton closed at 116. Support should come in between 113.50-114.30 on Sunday night and Monday. Here is a daily bar chart of Dec Cotton where you can see the gap area, Friday's bar which pokes below Monday's low, and contract high to the left at 133.79.