A Recap of Today's Trade
Sep 28, 2011
It was another weak day for grains, with corn and soybeans both making new lows for the move and settling near the bottom of today’s trading range. December corn finished 21½ cents lower at $6.30¾, December wheat was down 19½ cents at $6.38¾ and November soybeans were down 39½ cents at $12.23½.
Much of this was long liquidation, as the outside markets were also sharply lower. Many traders were exiting longs, potentially squaring up positions before Friday’s quarterly stocks report. When we got back below the 200-day moving average around $6.425 in December corn, the market just couldn’t hold support.
Tomorrow morning, we will have export sales. The guesses are as follows:
Corn 600,000 – 1,000,000 MTs
Soybeans 500,000 – 800,000 MTs
Wheat 350,000 – 650,000 MTs
Until Friday, the markets can remain choppy, especially with moves like we are having in the stock market and energies. The quarterly stocks report will be released at 7:30 a.m. Friday.
As we have been saying, soybean volatility has remained especially low until recently. Over the last week, we have watched volatility go from 18% in soybeans all the way up to where the Soybean Volatility Index settled today at 28.90%. Corn volume is still very high at 42.37%. With many option writers having to liquidate short option positions, the options are becoming more expensive. By the same token, holders of short puts that are getting closer to the money have had to exit positions or sell futures, which can put even more downside pressure on the market. Until Friday, be on the lookout for large swings, and there may be opportunities to get some hedges bought back with calls or get more sales on after a rally. Please call your broker for re-ownership strategy details.
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