Long liquidation pressure in the grains
Jul 06, 2009
Today’s break is a continuation of the heavy selling and long liquidation pressure that we saw last week. The crop conditions rating is expected to show a very solid looking crop. Weekend rains I believe may show the crop is actually improving. Even if your crop is being hurt, you have to accept overall the market has little immediate weather concern. Right now the only thing the corn market has to hope for is some dry weather igniting the bean market and eventually pulling up corn. The problem is this potential is still towards the end of the month into August. Right now I have to say the bear is in full control. Farmers have a lot of old crop corn that needs to come to the market. The crop is getting better. The outside markets are turning bearish.
So the issue is how far does the market have to go before it has overdone the down side? At this time the bears have until mid-August before any worries about early frost appear. The next two weeks could be very negative. Right now I would recommend a net short position. Don’t try to buy it just yet, wait for a technical bounce. As we get closer to the end of the week we could see a bounce but overall the $3.20 level is the next target and more than likely a lot of people will be talking about the $3 to $3.10 level.
My suggestion: If you are short, enjoy the ride but don’t press your bet. If you have been long, I hope you got out. Take a break and get ready to come back hard in late July to early August. If you are still long you have a tough decision to make. Either you hold for another 50-cent risk and scale down which it will be more than likely be next year before you recover or get out and lick your wounds and prepared to come back in strong at lower levels.
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