Reestablishing Positions

January 5, 2009 06:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Okay, okay, I'm back!... I enjoyed my holiday break but all good things must come to an end. But I'm enjoying (at least it's "good" for me) getting back into a regular routine. And as traders return to the markets this week, they have several things to consider. Corn, soybean and wheat futures are providing more "hints" at near-term lows being posted. Here's what tops their list:

Outside markets: Interestingly enough crude oil and the dollar didn't "trade together" to start the week. Despite strength in the dollar, crude oil turned higher. If these markets don't trade together this week, it will result in volatile price action.

Acreage: The turn of the calendar to 2009 will have more focus put on spring acreage plans. USDA will also release a barrage of reports next Monday, including the Winter Wheat Seedings Report, which will provide more signals of "available" acreage to spring-planted crops.

South America: Recent rains in southern Brazil have relieved concerns about crops in that area, but rains were spotty in Argentina -- and too late to help do more than stabilize the corn crop. Now the forecast is hot and dry again for southern Brazil and Argentina. Focus on crop prospects will remain -- especially given the tight global soybean carry.

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: 6 to 7 cents higher. Futures were mostly around 6 cents higher overnight. Futures closed mostly around a penny lower yesterday. Continued strength in the dollar and pressure on gold limited upside potential from strength in crude oil and resulted in corn drifting back below unchanged to post slight losses for the day. Resistance for March corn lies at the December high of $4.23 3/4 and support lies at last week's low of $3.85.

Soybeans: 20 to 21 cents higher. Futures were up mostly around 21 cents overnight. Futures posted high-range closes yesterday, finishing 8 to 13 cents higher. Futures were supported by spillover from strong gains in the crude oil market and South American weather concerns. March soybean futures remain in the uptrend from the Dec. 5 low. A push through the November high of $9 93 1/2 would leave key resistance at the top of the Oct. 6 gap at $10.21 1/4.

Wheat: 4 to 6 cents higher. Futures were higher overnight on spillover from neighboring pits. Futures rallied in late trade to close slightly higher after trading weaker most of the day.   March Chicago wheat futures remain in the uptrend from the Dec. 5 low. The contract has now retraced about 50% of the price decline from the late-September high to the contract low. A 62% retracement would be at $6.61 3/4.


Cash cattle expectations: Watching beef trade. There are mixed opinions about this week's cash market, although most expect steady to firmer bids to develop later in the week. Cash trade came in mostly at $87 last week, with movement light to moderate in the Southern Plains compared to more active trade in Nebraska. As a result,
some supplies were carried over into this week, which could limit feedlots' bargaining power.

Futures call: Mixed. Futures are called to open mixed amid more spreading and as traders wait on cash trade signals. Nearby live cattle futures posted an inside day on the daily charts, with resistance at last week's highs. Resistance for February cattle lies at $89.05.

Cash hog expectations: Steady to firmer.While cash sources say market- ready supplies are plentiful, some packers are increasing kill hours this week to make up for lost time over the last two weeks. Therefore, demand for cash hogs is expected to be strong throughout much of the week. Steady to firmer cash hog bids are expected again this morning.

Futures call: Weaker. Futures are called to open weaker on spillover from yesterday's losses, but could see some short-covering. Yesterday, traders focused on a large premium nearbys hold to the cash index. February lean hog futures posted a bearish reversal and closed back below the 40-day Moving Average to start the week. If the contract closes lower again today, it would mark a short-term technical top. Initial resistance extends to the bottom of last Friday's large gap at $60.95.


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