Code Name: Volatility
Nov 12, 2008
The key word today is volatility, or movement up and down. I realize a lot of producers are putting a lot of grain in the bin and are looking for a bottom. Seasonally, as the bin doors shut one would think we would be getting bullish price trends. This year is a totally different mindset. The influence of the outside markets specifically the equities, oil and the dollar are all becoming a major predictor of price activity in the beans and corn.
Today we opened lower with January beans at $8.88 and December corn at $3.63¼ on weakness in the crude and equities. Then corn, beans and wheat started to see price stability and even moved to a very nice plus level with December corn at $2.89½ and January beans up to $9.22. This all helped to develop a daily trading range of 34 cents for beans and .2625 for corn. I have to tell you this is an impressive range but it also potentially took a lot of power away from the bulls today. I would suggest the following: Today’s rally was about some strong profit short covering and speculative bottom picking by the bulls. I fear many of the bulls bought on the break out event and are going home a loser now. If the oil inventory numbers are bearish and we drive the crude down another 5% or so tomorrow I would not be surprised to see buy stop loss liquidation to develop early on.
So if you are looking to be a short term buyer, I like buying December corn below $3.62 and November beans below $8.88. If the trades not good by midsession I would be defensive with no more than a 10 cent loss exposure.
Overall I would suggest sit and hold positions must be cautious in trying to get too big now until we see a solid technical confirmation of a bottom in both the grains, energy, and equities and top in the dollar. The problem is this is going to take time perhaps longer than most bulls want to wait.
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BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.