Grains Struggle to Rally off Lows pre USDA
Jan 08, 2013
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
Grains attempted to follow through on yesterday's strength in soybeans, but fell flat today after a mixed, low volume day. With the USDA report coming on Friday it could be that traders are now going to wait, but more likely this is a case of the market not knowing what to do until we get some fresh news to trade.
The last month has been very heavy on grains. With a complete lack of export interest for corn, favorable South American weather, and improving weather in the US it has been hard to get too bullish on the grains. The idea that we very effectively price rationed with the summer rally leaves us with the question of what happens if we have a half way decent crop next year. What will it take to buy this demand back? And, with South America on the verge of a monster soybean crop how much longer can we enjoy good sales in soybeans? These are all thoughts that have been swirling around in my head for months now, and the answer to these questions are not popular ones.
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I plan to dig into my pre report commentary on Thursday, but for now I would like to have a word or two about what we might see between now and the report. It seems likely to me that in front of this report we could see some speculative and/or protective positions put on by fundamental traders. After all, this January report has produced a limit move in 5 of the last 6 years. But as far as the mostly technical fund traders one would think that they would not want anything to do with such a big fundamental influence. Seeing that the grains have gotten very oversold and are holding above support I would think that we could see some profit taking on short positions from short term tech traders, or even some technical long positions. But, so far any attempt at a bounce has been disappointing.
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March Corn Daily chart:
March Soybeans Daily chart:
March Wheat Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have corn near $7.00 and soybeans near $14.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or email@example.com
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