The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Walsh Trading Commercial Hedging Service is dedicated to providing timely, relevant and quality information. Tim Hannagan, our Senior Grain Analyst provides a weekly Grain Report. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. Additionally, Mike Bauer, our Senior Livestock Analyst and Ben DiCostanzo, our Senior Technical Analyst provide frequent insights into the Livestock market. Finally, Sean Lusk and John Weyer, Co-Directors of Walsh Commercial Hedging Services provide a variety of insights into the Grain markets.
September 18, 2013
U.S. soft red winter wheat and hard red winter wheat inventories are at six year lows. World stocks are sitting at five year lows. Cumulative U.S. export sales are running 8% above the five-year average. With the supply curve declining and the demand curve rising December CBOT futures have built very strong support at 6.40. Trend following funds are short 83 thousand contracts, just 13 thousand short of an all time record. This may lead to a large short covering rally. In the spring of 2012 these funds were short 87,000 contracts. When they began buying back their positions a $2.00 rally ensued! The high in April was 7.58. December CBOT wheat has broken down to a low of 6.40. We have formed a near perfect head and shoulders bottom on the December contract. A rule of thumb in the charting game is when you finish a long-term break in the market and a head and shoulders formation is built , when the right shoulder is complete we break out to the upside 85% of the time.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
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