Back-to-Back-to-Back High Range Closes

August 14, 2008 07:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Today could be critical for corn market... After back-to-back-to-back high-range closes in the corn market (yes, that's three consecutive), today could be set up as a critical day for the corn market. Filling the early August gap areas would reopen significant upside potential and confirm a near-term low is in. That puts the next level of resistance for December corn at the top of the early August gap area at $5.82.

Based on overnight price action, it appears we're headed for a lower open. Heavy selling pressure hit the commodity markets overnight amid global economic concerns. Crude oil prices dropped to their lowest level since late April, while gold futures slumped to their lowest mark since early December 2007. Meanwhile, the U.S. dollar continues to strengthen and the dollar index is now at its highest level since January.

Key this morning will be if corn traders view a weaker open as a buying opportunity or if they focus on outside markets. Yes, it's setting up to be a very interesting day.

Keep your comments coming. Always good to have conversation with you and input on what you'd like to talk about. E-mail your comments/question to me by clicking here. Please include your location.


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

Corn: 17 to 19 cents lower. Futures were sharply lower overnight on dollar strength. Yesterday, futures gapped higher, filled the gap, but then turned higher to extend early gains. Early support came on spillover from Wednesday's limit higher performance, signaling momentum has shifted back in favor of bulls. It's impressive to see corn regain upside momentum after filling in yesterday's upside price gap. Key will be if early losses are seen as a buying signal again this morning.

Soybeans: 31 to 34 cents lower. Futures were sharply lower overnight on dollar strength. Futures closed weaker yesterday, seeing spillover from strength in the dollar and weakness in the crude oil market. Additional pressure came from a disappointing weekly export sales tally. Late-session buying in the corn pit helped lift soybeans off session lows. November beans closed "just" 10 cents lower, but need a close above the $13.00 level in the near-term to attract fresh buyer interest.

Wheat: 17 to 21 cents lower. Futures were lower overnight on spillover from neighboring pits and dollar strength. Futures saw two-sided trade yesterday, but ended higher on spillover from strength in the corn market. Traders will continue to keep an eye on the dollar, which was sharply higher again today. Renewed strength in the dollar has traders concerned about an eventual slowdown in export business, although right now it appears to be attracting buyers as they extend purchases on fears of additional dollar strength.


Cash cattle expectations: $1 to $2 higher. Very light cash cattle sales were reported in Nebraska at $101 late Thursday. However, most feedlots were reportedly holding out for $102. No cash cattle sales were reported in Kansas or Texas. With Nebraska trade starting at $101, Kansas and Texas feedlots should make sales in the $101 to $102 range today.

Futures call: Mixed. Futures are called to open mixed as traders wait on cash trade to develop. October live cattle posted a high-range close, which opens the door to spillover buying this morning. Traders are also keeping a close eye on the corn market, as strengthening corn prices raise expectations for stepped up herd liquidation.

Cash hog expectations: Mixed. The cash hog market is called mixed, as some locations are in need of supplies for early next week, while others focus on improving profit margins. Some packers are in need of supplies to fill Labor Day orders. But as soon as holiday buying is complete, it could be difficult for pork prices to remain at high levels.

Hog futures: Mixed. Futures are called mixed amid more spreading. The expiration of August hogs puts more pressure on the October contract to watch the cash market more closely. October hogs are trading at around a $12 discount to the index, which opens substantial near-term upside potential.


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