Grains Go Higher Today!
Nov 30, 2009
The corn market was weak from the opening bell. Corn inspections were at 23.75 million bushels down from last week of 23.075 million bushels and down 37% from a year ago at 38.458 million bushels. This was not a real surprise for the market but only adds to the slight negative tone. While we have seen some rains in the Midwest, harvest was decent over the weekend and good progress is anticipated to be reported after the close.
For corn, basis is starting to widen out. Essentially, the cash market is preparing for more price pressure in January to March rather than during harvest. Can the futures market look beyond this to the anticipated spring strength? Right now, it looks like it will be very difficult to get the lead month futures below the $3.50 technical support. Equally, it’s going to be difficult getting the deferred July 2011 above $3.65 until spring and we have solid confirmation of some type of planting delays. This range bound trading market may present opportunities for the trader but will more than likely prove to be frustrating for the hedge.
Beans were higher in overnight trading because of technical breakout considerations. The market did pull back a little during midsession trading but overall has the makings of a market that could breakout to the upside. Exports this week were surprisingly weak at 41.268 million bushels compared to last week of 80.494 million bushels. While this is in line with year ago levels of 40.017 million bushels, it’s not the type of exports that one wants to see if we are to have the fundamental strength to trigger an upside price breakout. The bulls are still in control of the market. The four big positive variables are
- The overall U.S. crop size is going to reduce with smaller yields.
- China is going to continue to be a strong buyer because of strong internal demand needs.
- Inflationary concerns are still very high and any solid breakout in equities and oil to the upside will send investors to commodities.
- South America always has potential for yield stress.
I have to suggest that while I sold soybeans on Friday, I have equally taken the position off today. I’m simply not comfortable with the chart action at this time. As long as the January beans can stay above $10.50, the potential exists for a retest of $11. If South America has any type of significant yield stress things could get really tight on supply.
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