A strong bounce in the grains today!
Oct 27, 2008
Finally, a strong bounce off the bottom with some follow through! Most of the traders will be watching to see how much follow through we develop tomorrow. While I want to argue we are nearing value levels, I’m not positive the market can handle this level of price strength prior to the November USDA Supply and Demand report.
Early trade estimates seem to be coming out that yields may be adjusted down for corn and beans but the big uncertainty factor is demand. With ethanol plants shutting down, will the USDA adjust back its demand projections?
The big key this week to grains' and oilseeds' ability to hold and add to gains will be what happens to the outside markets. Last week OPEC lowered daily production estimates by 1.5 million barrels. While this will help keep supplies building, the concern is will global demand will remain weak which will keep pressure on crude oil. As crude oil makes a low between 50 and 60, corn seems to be wanting to make a low between $3.50 and $3.75 and beans around the $8.50 to $8.75 level.
Once we get solid signs the bottom is in which would be a close above the overhead resistance and long term 18-day moving average; the next test will be will we have any buying power or will the commodities essentially trade sideways for a longer period than most clients want with inventory being stored in the bins?
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