Price Action for Corn And Wheat Gets a Little More Positive
Aug 06, 2013
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Corn and wheat were under pressure early today but bounced well off the lows going into the close. Soybeans however remained under pressure as they shed some weather premium. Technical indicators point to very oversold grain markets and could be suggesting a bounce or sideways trade in the near future.
After a tough day yesterday and early selling pressure today wheat was able to manage a positive close on the day. Corn closed lower on the day, but for the second day in a row found some buying interest in the last few minutes. Both corn and wheat could be due for a bounce but for different reasons. Now that the bulk of the harvest pressure has fallen away for the wheat it could be time for a post harvest bounce. Most likely any bounce in wheat would be short and unimpressive however if corn and soybeans stay under pressure.
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Corn could be due for a bounce here too. The corn market has worked hard in the last few weeks to take weather uncertainty out of the market once we knew corn would get through pollination without any major issues. Now that the hot and dry weather uncertainty has mostly been pulled out, corn has gotten very oversold from a technical standpoint. And, there may be a new weather issue lurking around the corner. Corn conditions are very good right now in most places however progress is behind. Late planting due to a cold and wet spring along with below average temps in the last few weeks has left the crop a week to ten days behind. This could leave the door open for frost damage. Even though most forecasters are not calling for an early frost we might need a little more time then normal which could be risky if temperatures do not start getting much warmer for August.
Soybeans may still have some weather premium to pull out of prices. The key moisture sensitive stage for soybeans comes later then for corn, so in many years soybeans will hold onto weather premium longer until we have a better idea of how weather will be for pod set. Now that we are into August and the weather forecast looks mostly normal it might be time to take out some more weather premium as the uncertainty falls away. Soybeans may be in a sense playing catch up to corn for a week or so. Here too however, weather may become a positive force at some point with progress being behind.
So grains as a whole have been under quite a bit of pressure lately, but price action in corn and wheat has been a little better to start the week. From a technical perspective grains markets are very oversold. Corn and wheat may be at a point where they can bounce or trade sideways to correct this oversold condition. Keep an eye on corn and wheat, and stay tuned for weather as at some point markets could get concerned about crops being behind and the possibility of frost damage.
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December Corn Daily chart:
November Soybeans Daily chart:
December 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 $5.00 and soybeans near $12.00. 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 firstname.lastname@example.org
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