Roller coaster in the grains!
Oct 22, 2008
The roller coaster continues! Yesterday I would have sworn that November beans had found good support at the $9.02 level. Last night’s announcement that over 20 countries around the world were in recession drove the project (a) down sharply. The stock market was down sharply today along with crude oil. Essentially, the demand bears are suggesting we simply don’t need as much inventory. With carryover at 220 million bushel and potential to go higher, fear is growing that the market could go lower than expected.
Today’s 40-plus price drop has now caused the want to be buyers to put their hands back in their pockets. I still would suggest downside risk does exist until after the November USDA Supply and Demand report. By then most of all the bearish shocks should be factored into the market. The only concern I have is how much of a bounce will we really get once the bin doors shut. My long term concern is still for increased acres domestically and potentially internationally. Unless somebody has a serious supply problem once we get into 2009, the upside potential of this market is going to be very difficult getting a $10 bushel on lead month beans.
My long term concerns are still quite high about getting a base under 2010 bean prices any time you can get between $9 to 10 net cash sale price. Unfortunately, for many we need a $1-plus rally with the wide basis to get such price levels.
November 2008 beans' down trend is still in place. We are trying to develop a low but the verdict is still out. We hope the market develops a trading range affair. A close above the red 18-day moving average and close above the early October gaps around the $9.80 level will signal the low is in and should trigger some strong buying interest “if and when” they show up.
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