Beans move while wheat and corn stay flat
Nov 26, 2008
While the market had some movement in beans, the wheat and corn market was rather flat today. It should not be too surprising prior to the holiday. We want to note that that Friday will be a short trading day. Sometimes it’s really quiet and sometimes it’s very active.
We would caution everyone that the crude oil market had very powerful percentage move up today. The weekly energy report was neutral to slightly bearish to crude oil but was very positive to natural gas. This fact plus an upcoming Opex meeting, where the expectation is growing under pressure from Iran and other smaller Opex producers, indicates we will see another 1 million-barrels-a-day-reduction in production. The motivation is to drive up prices to stabilize cash flow. (ie. They don’t really care that much about our economy—they need the money to keep their economy going.)
So as we wrap up the month, our general opinion of the market has not changed. Any sustained upside potential in grains or oilseeds will depend first on stability in the equity market. We may be getting that. The next step is a stabilization of the energy market, we may be close to that point. Then the final step will be confirmation that demand is stable and building. This is going to take some time. Overall, I want to buy July corn back below $3.80 while I will be looking to sell new crop beans above $9. As for wheat, I really want low $5 before I buy. Finally, while cotton is very oversold, I believe we have some real conflicts of the fundamental. I would focus on buying December 2009 cotton in the low 40’s.
I hope everybody has a good holiday. I will be on vacation now for a couple of weeks. While I will be checking in with the office daily, my intent is to wind down a little. It’s been a long year and I want to take a mental time out before we start next year with it’s unique challenges.
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