Monthly Dairy Technical Commentary Thursday September 5, 2013

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1 Monthly Dairy Technical Commentary Thursday September 5, 2013 CME Class III Milk Futures The weekly price trend for Class III Milk points down from its August 2011 high, and the latest breakdown below support at keeps the bears in control. Meanwhile, an advance and daily close back above might suggest that the intermediate downside move has run its course. The weekly trend maintains its negative slant until price Class III Milk can overtake downtrend line resistance at 18.60, and ultimately the July high of Close-in support for Class III Milk stands at the August low of 17.27, then the Jan/Fed 2013 low range of down to One way to approach Class III Milk is to let the near term strength play out, taking prices back toward downtrend line resistance. Watch for negative technical signs, such as an outside day reversal, to initiate short positions.

2 CME Class IV Milk Futures The month of August saw Class IV Milk challenge its September 2012 high of 20.00, which thwarted the advance. Meanwhile, price action over the last 13 months carved out an ascending triangle pattern, highlighted by deliberate and symmetrical moves toward resistance. Confirmation of a move above would set the stage for a run at the June 2011 high of 20.90, with further upside potential coming in at It is interesting to note that the November Class IV Milk contract has overcome resistance and appears more mature in breaking out of its ascending triangle pattern. However, a concern for the bullish traders comes from the stochastics indicator, which failed to confirm the early August drive to 20.00, suggesting that a corrective decline is in order before mounting another attempt. Swing low support on the weekly charts comes in at Upside breakout confirmation comes on a weekly close above

3 CME Non-Fat Dry Milk Futures The latest drive into a new high, with an expansion in trading volume, is supportive for the bulls. The uptrend pattern remains intact until swing low support at is violated. Upside targeting for the current advance in Non-Fat Dry Milk comes in at the October 2007 high at In the meantime, a bearish momentum divergence during the last drive above produced a negative signal on the slow stochsasics indicator. While this does not necessarily call for a top, it suggests that the bulls might be running out of upside momentum. This technical condition leaves the market susceptible to corrective setbacks toward close-in support at

4 CME Dry Whey Futures The weekly trend for Dry Whey turned positive in August with the drive above the March 2013 swing high of The advance also confirmed a move out of a larger symmetrical triangle pattern that points to even higher prices. However, the drive toward and into 2012 trading range resistance proved too much to handle in the short term, highlighted by the quick mid-august breakdown to It will become increasingly important that rally attempts recapture the level. A move back above opens the charts up for a challenge of the November 2012 high of , with longer term potential toward

5 CME Cheese The cheese market failed to breach resistance during the August rally and turned sharply lower. The setback came back into agreement with the weekly down trending pattern with support coming in at , then In the meantime, the weekly chart pattern is forming a descending triangle, highlighted by a series of lower peaks and defined support. A breakdown of this pattern would be confirmed on a drive below It probably takes a weekly close above 1.84 to turn the weekly trend positive. Close-in support stands at A further slide below would open up the charts up for a test of the March 2012 low of

6 CME Butter The butter market sliced through support at and that keeps the weekly trend in favor of the bear camp. However, a bullish stochastics divergence during the August decline leaves the prospect for a shorter term rally. An advance back above would turn the tide back in favor of the bulls, opening prospects for greater corrective rally potential. Upside retracement targets from the April 2013 August 2013 decline stand at , then the halfway mark at ***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of HighGround Trading Group is strictly prohibited.