A Solid Bounce in the Grain Markets!
Feb 02, 2010
The market saw a solid bounce today. In fact chart followers would say we had a gap higher open on the daily charts. If this gap were to remain open for the rest of the week, many chart watchers would say it’s a breakaway gap. For this to occur, the market would need to see a solid increase in volume tomorrow on higher prices. Even further open interest needs to increase as well to give the technical bulls confidence this rally has some potential upside momentum.
Why the rally? Well, the dollar was weaker and crude oil was stronger seems to be the most cited. This coupled with rather slow farmer movement has forced end users who want to buy inventory to bid up prices to attract more grain. I would also suggest sellers who have seen sharp gains over the last 13 days or so want to take some profit and get neutral before next week’s supply and demand report.
Personally, I see limited changes. We may see the Chinese corn crop reduced a little but we could also see the South American bean crop increased. Going in, I believe corn is the strongest, with beans and wheat as followers rather than leaders right now. As we look forward, it appears big on farm corn and bean supplies and the ability to hold, conditions will need to be balanced against the potential of a March supply report revision due to a USDA resurvey of the corn and bean harvest in selected areas. Overall, my experience tells me that the unpriced seller should be prepared to sell ½ retracement of the recent break. We will be keeping clients on our electronic copy informed of these levels.
I encourage everyone to get their market plan written down now for the 2010 and 2011 crops. Only by knowing where you want to get to, does one have any hope of accomplishing their objectives. If you need help, call us at (800) 832-1488.
Bob’s Upcoming Speaking Engagements:
Periodically go to www.utterbackmarketing.com and click on “Upcoming Seminars.”
February 2010: Louisville, KY … Anaheim, CA.
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