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Grain Hedge

RSS By: Brock Schimbeno,

Grain Hedge is a self-directed discount brokerage that saves farmers money when trading in the futures and options market. For $7 commissions per side producers can execute their marketing strategy with authority, any time the markets trade.

Black Friday has Markets Seeing Red

Nov 25, 2011

This is traditionally the day when businesses start to turn a profit giving way to the term "Black Friday."  This week has been quite different for the equity and commodity markets.  The Dow is off 564.22 points this week to finish at 11,231.94.  Oil has fallen 13 cents to trade at $97.32 a barrel.  Gold has tumbled $40.30 an ounce and last trade was at $1,685.50.  The dollar index has risen sharply due to a falling Euro.  The grain markets have continued their slide too.

Corn has once again fallen through key support levels and is down 27 ½ cents on the week trading at $5.82 ½ on the December contract.  The fundamental and technical landscape for the grain is not looking good.  The market blew through support in the $6.00 area and is now hovering near support at the $5.85 level.  Adding to the pressure is a relatively strong dollar index.  Export sales continue to fall and were reported this week to be 312,000 MT, which is up 49% over last week.

Soybeans have been the leader to the downside losing 61 ¾ cents this week, leaving the January contract trading near $11.06 ½.  Global economic jitters stemming from Euro-zone debt issues and a slowing Chinese economy are major contributors to the sell-off.  Again, a strong dollar is providing pressure as is a great start to the South American crop.  Export sales increased to 921,600 MT, which is up 23.5% from last week.

Wheat has followed the other two grain markets lately and is down 23 ¾ cents for the week with the December CBOT contract trading at $5.74 ½.  This market is fundamentally weak with stiff export competition, large supply, and strong dollar contributing to the weakness.  There is not much out there to move this market higher and further weakness is expected.  Export sales were reported as 614,500 MT, which is up 94% over last week.

The days leading up to "Black Friday" have not been kind to the equity and commodity markets.  Both markets in general have had a steep sell off due to global economic uncertainty and a general risk-off attitude.  Weak demand and a sharply stronger dollar index have added pressure too.  Items to keep in mind going forward are: December options expiration today, first notice for December contracts Wednesday, year-end position evening and profit taking should be a factor for the next month.

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