Grains trading in a see-saw pattern
Oct 21, 2008
The see-saw battle continues for the grains and oil seeds. Yesterday’s gains were washed away today. The big issue is where is the bottom. I have to continue to suggest last week’s lows look more and more like the panic bottom. I would not be surprised this week to see limited follow through today’s correction.
We’ve been seeing very good harvest progress. Most of the inventory is going to get locked up. One still has time to get long for feed needs and reownership between now and right before Thanksgiving. More specifically, if we can get past the November USDA Supply and Demand reports and show no signficiant increase in supply or reduction in demand, I have to say all fundamentals are in place for a low for “now”.
The problem is we need time to see how much damage we have done to the domestic and global demand. I would propose we should see a confirmation of lows in November a sideways to higher price pattern into end of year simply because of lack of selling. As we get into the new year, one simply has to wait to see how much strength will develop. Right now I would suggest a working number is lead month corn back above $5 and beans above $10 should be extremely difficult to develop.
Bottom line: Don't fall in love with the inventory you put in the bin unpriced. You might want to consider selling out of money calls at the strike price you want to sell at and at least pay for all the storage cost to get the inventory into the time period you desire.
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