$30 Crude Oil?

January 20, 2009 06:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Crude oil markets new-for-the-move low... Technical analysts say the next landing area for crude oil is the $30-per-barrel mark. Crude oil futures continue to be trapped below a six-month-old downtrend line drawn on the daily chart. It would take a solid push above trendline resistance at the $42.50 level in nearby crude oil futures to penetrate on the upside and negate the present downtrend line in place on the daily bar chart. There are no early technical clues to suggest the downtrend in crude oil prices is about to end any time soon.

The bearish supply and demand picture in the crude oil market suggests the "smart money" will continue to view any significant price rallies as selling opportunities. This strategy has been a successful one since last July.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: 2 to 3 cents lower. Futures were weaker overnight on spillover from yesterday's late-session losses. Futures opened firmer yesterday, but closed 6 to 7 cents lower on spillover from neighboring pits. March corn futures penetrated the psychological $4.00 in morning trade, but returned back below it as selling dried up. Futures bounced off support at the 40-day Moving Average. Next support lies at last week's low of $3.58 3/4.

Soybeans: 2 to 4 cents lower. Futures were weaker overnight on spillover from yesterday's losses. Futures closed 26 to 28 cents lower yesterday to sharply extend early losses. Strength in the dollar and weakness in the stock market lent pressure to the soy complex. March soybeans hit a round of sell stops on the move below $10.00 and posted a bearish reversal after briefly penetrating resistance at Friday's high. Next support lies at last week's low of $9.57 3/4.

Wheat: 4 to 6 cents higher. Futures were firmer overnight amid short-covering. Futures extended early losses to close 27 to 28 cents lower in Chicago yesterday. Given the lack of fresh demand news, strength in the dollar resulted in stiff selling interest in the wheat market. March Chicago wheat penetrated support at last week's low and finished below the 40-day Moving Average for the first time since mid-December. Next support lies at the $5.00 level.


Cash cattle expectations: Watching for cash signals. Choice beef values were 75 cents higher and Select values rose 82 cents Tuesday, the ninth consecutive day of gains in both categories. Unless beef movement improves from Tuesday's 172 loads and prices continue higher, strength in the cash cattle market may be hard fought, especially if cattle futures face more heavy pressure.

Futures call: Steady to weaker. Futures are called to open lower on spillover from yesterday's sharp losses. If the stock market is firmer today, though, cattle could see some short-covering. February live cattle futures gapped lower on the open and sharply extended losses as sell stops were triggered. Futures dropped below the $83.00 level, but held above last week's low of $82.25. After that, support lies at the contract low of $80.60.

Cash hog expectations: Steady to weaker. Cash hog bids are expected to trade around steady prices at most Midwest locations this morning, although light demand for hogs could weaken bids in some areas as packers work to improve margins. Cash sources say most packers are near being filled up on this week's slaughter runs as some have cut kill hours.

Futures call: Mixed. Futures are called to open mixed following yesterday's choppy day of trade. The CME lean hog index is projected up 16 cents to stand at $58.57. February hogs are trading at around a $1 premium to the index. February hogs briefly penetrated resistance at Friday's high and closed closer to session lows. Contract low support lies at $58.90.


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