HighGround Dairy Technical Commentary – December 2, 2013

CME Class III Milk Futures January Class III Milk saw further upside Monday and breeched the 18.00 level in the process. This brings the market in close proximity to its contract high of 18.12. There is a cluster of trade from April of 2013 at this level that should provide a level of resistance. Meanwhile, a number of technical measurements have reached concerning levels, which raises the probability of a near term corrective setback. These include a six session rally from the November 21 low to today’s high of 90 points and the most overbought RSI indicator reading since January 2013. The uptrend pattern on the daily charts remains intact, with an upside price target 18.64. Near term support comes in at previous resistance of 17.52, then 17.11.   CME Jan-Dec ’14 Class III Milk Pack The January – December ’14 pack closed higher for the sixth consecutive session and broke out to its highest level since July 24th. The 12-month pack appears in its third wave. The first wave from the August 20 low covered 32 points, wave two covered 34 points and wave three has so far covered 25. This projects another push to 17.32. This coincidentally comes into agreement with the July 16th closing high of 17.33. Given the technical backdrop for Class III, we would expect the market to struggle getting beyond these levels without a modest downside correction. Support on the pack stands at 17.10.