2010 starts out with a bang!
Jan 04, 2010
Grain markets started the year with a bang! Cold weather, a weaker U.S. dollar, strong equity market and fear of large fund buying drove March corn above overhead resistance at $4.20 and January soybeans above $10.65. While the early gains were exciting, they could not hold and we experienced a mid-session correction. The issue that is on many minds is whether or not these price moves are the start of a new speculative buying drive to move corn back to the $4.80 and soybeans back to $11.50, or is it simply a bear trap? Our bias remains that it is a bear trap rather than a technical bull breakout signal. I believe we will know more after the January supply and demand report. As always, trade accordingly and within cash flow ability to handle the swings in the market.
We still feel strength into the January supply and demand report will be followed by bearishness into the February when cash products have to be moved into the marketplace. We encourage those following our recommendations to view this as a scale-up selling opportunity to get a base level of expected inventory sold for 2010 and focus on cleaning up a lot of cash inventory that must be sold by early March.
Again, if the market does break out of the current trading range on aggressive index fund buying, sellers of grain should wait in the wings to aggressively sell the product.
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