This from The Daily Reckoning Australia:

Copper has fallen 22 percent from the peak of $8,775 posted on June 30, as increasing stockpiles signaled weaker demand. Imports of copper and copper products by China fell 4% in August compared with July.

Another element that has an impact globally on commodities markets is the recovery of the US Dollar. Remember that despite the exchange being based in London, copper is priced in US Dollars. A rebound of the Greenback therefore reduces the dollar-priced investments.

The price had moved within a long-term indecision triangle pattern. The basis line of this triangle was the long-term support line that backs the bullish trend started in late 2003. It had been tested and validated in February and December 2007 (points A and B on the chart) where the price bounced back strongly.

The upside of the indecision triangle pattern was the resistance line that goes through the highs posted in May 2006, and in March and April this year. This resistance zone was set around $US 8,900.

The last retracement level (61.8%) of the sharp bullish trend occurred between last December and last March (between points B and D). This had been the opportunity for a small rebound (point H) but it failed to cross above the 38.2% level (point K).

Since the beginning of this month, both the 61.8% level and the long-term support have been broken on the downside. This means the negative trend still goes on.

The MACD has just triggered a new bearish signal, and the Momentum indicator and the RSI are also negatively oriented. In this bearish scenario the next important target is the level of the previous long-term low which is the low posted in December last year (point B), around $6,300.

Source:  Profiting From the Copper Indecision

This from Gabriel:

First, the global demand, because of the world population growth, is easily predictable. Those past few years, it has moved between 615 and 625 million tonnes per year.

On the offer side, 20% of the world production is put on the market when 80% is domestically consumed. The main producers and exporters are the US, Canada, Australia, the EU, the ex-USSR area and Argentina.

Like on the corn market that we studied recently (Money Morning of August 20), the two main drivers of the offer side are the plantations and the weather conditions.

Last year, many farmers in the US changed wheat plants to corn (at this time producing corn was more profitable thanks to the bio-fuels rising demand) and the weather conditions were really terrible worldwide (drought in Australia, heavy rains in Europe and Russia, cold wave in the US and Canada). The correlation between weather and prices on the wheat market is really strong.

As a result the global stocks decreased massively during the past year. The current level of inventories is the lowest in the last 60 years in the US, the lowest in the last 30 years globally.

However, the recent decline of the wheat prices (-16.8% since August 21) is now explained by current economic circumstances. First the rise of the US Dollar is a brake for the non-US importers. As the wheat is sold in US Dollars, a stronger Greenback leads to higher prices for the rest of the world.

The other reason is that several exporting countries have just eased restrictions that they had decided a few months ago when the food inflation and alimentary crisis was peaking!

Of course, last but not least, the speculation on this volatile market (therefore where there are a lot of opportunities to make money) is a key factor that strengthens the trends in place.

What to expect now? Two contrarian forces are in place. On one hand the momentum and oscillator indicators are bearish. Both the MACD and the CCI (Commodity Channel Index) have triggered negative signals in late August. There are no oversold conditions therefore a further move on the downside might be possible.

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On the other hand, the price action reached last Friday an important area of support. It corresponds to both the medium-term support line (that goes through points C, D and now E) and a long-term support line that has been a previous resistance in 2003 and 2004. This level of $7.50 has indeed been a previous high; it could be now the new low.

That’s why a short-term rebound is expected during the next few sessions. A retracement of half of the recent decline (therefore towards a target of $8.25) is likely.

Source: Wheat Prices Look Set for a Move Up

Macmahon Holdings Limited (ASX:MAH) operates as an engineering contractor focused on delivering specialised services to clients in Australia, New Zealand and Malaysia. The company’s core businesses comprise open mining and crushing, underground mining and civil engineering.

The stock climbed from less than $0.10 in June 2001 to $0.97 in February 2007 at a regular pace. However it really took off in early May 2007 as it was trading around $0.80, to reach twice the level of $2 a few months later, in November 2007. It’s a 150% rise (between point A and point b on the chart).

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The stock has corrected this large increase and has been trading since within a consolidation phase. The first retracement move drove the price until the 50% Fibonacci ratio (point C) and towards the 61.8% ratio one month later (point D). The fact that the price action eventually bounced back on this level means that the outlook is still positive on the long-term, and that new attempts to test the historical highs may be possible.

Recently, on August 13 and 19, two lows have been posted on the long-term support line (through points A, D and E). As a result, the price rebounded and should test now the long-term resistance line (through points B, F and G). The trading envelope is narrowing.

The MACD has triggered a bullish signal as it curved upward and crossed above its signal line. Other oscillators confirm this therefore a further move on the upside is likely.

An interesting complement to the MACD is the TRIX indicator. TRIX displays the percent rate-of-change of a triple exponentially smoothed moving average of the security’s closing price. This triple exponential smoothing is designed to filter out “insignificant” cycles.

Here the TRIX changes direction and crosses above its signal line. It confirms the MACD indication. The stochastic oscillator is also positive but shows that extreme levels could soon be reached. The theory behind is that in an upward-trending market, prices tend to close near their high.

Therefore the level of $2, the historical high price, will be probably a strong resistance to the current bullish price action. Today the stock is trading at $1.825. A jump to $2 is a 9.6% further rise. At this level the stock would be probably overbought on the short-term so a pull-back would be expected.

The stock would need to clear this resistance and cross above $2 to get new fresh bullish momentum. On the downside, the main support line is set around $1.55.

Source: Macmahon Holdings Limited (ASX:MAH) Near a 52 Week High

In our last update on corn, on July 10, we were betting that $6.50 would be the main target but that a breakdown of the 100-day moving average would give some further bearish momentum. This is what happened, as the price action posted a low at $5.04 last week. It has however already slightly rebounded. Technical indicators show that the current rebound should drive the prices higher.

Corn prices yesterday fell recently to the lowest level this year after the US Department of Agriculture revealed that farmers were able to boost the country’s corn crop in spite of the damage generated earlier in the season by the worst flooding in 15 years.

The USDA forecast the 2008-09 season would see the second largest corn crop on record, triggering further selling of agriculture commodities futures. That’s why the prices declined from a high of $7.99 a bushel last June to the recent low at $5.04, which is a 37%-fall. This cooled down the concerns about global food inflation.

Nevertheless, food prices are still 44% higher than last year and almost double the level of 2006.

Yields and harvests were expected, thanks to new plantations in the US, to increase significantly the offer, driven by food demand and bio-fuel consumption. However price will remain sensitive to weather conditions that may affect the expected production.

Prices countertrends are then likely. Technical indicators help us to identify them.

The prices have already retraced 23.6% of the bearish trend initiated in late June (between points A and B on the chart). They should go higher. MACD has triggered a bullish signal when it crossed its above signal line, as well as the RSI that indicates that an obvious oversold configuration was reached. The price oscillator also shows that volume is building up on the short-term. Consequently a momentum is building up too on the upside.

The main target is therefore likely to be the 50% Fibonacci retracement. It also corresponds to the 100-day moving average, around the level of $6.50. It would become a solid resistance to this rebound.

Source: Corn Prices on the Rebound