What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are fractionally to 1 cent higher, soybeans are 2 to 4 cents lower and wheat futures are mixed with a modest upside bias. Soybeans will be the key to price action through the daytime hours as that's the one market right now that has the ability to impact the others. Cattle and hog futures are expected to favor the downside this morning.
* To taper or not to taper. The Fed will conclude its two-day Federal Open Market Committee meeting around 1 p.m. CT, with Chairman Ben Bernanke's quarterly press conference to follow a half hour later. The Fed is widely expected to pare back its $85 billion monthly purchases of Treasuries and mortgage-backed securities amid signs of gradual economic growth. Economists and traders are generally expecting the Fed to trim its monthly bond purchases by a modest $10 billion to $15 billion.
The long and short of it: With modest tapering widely expected, it would be supportive for the Treasury (bond) market if the Fed chooses to delay the easing of bond-buying program. There's risk a Fed "punt" could be highly price-negative for equities, though the stock market has shown an ability to look past negative happenings when attitudes are bullish, as they are now.
* Another wave of rains. Rains fell across the Corn Belt yesterday and a new wave of precip is moving across the region this morning. For corn, the rains are not strongly price-negative as much of the crop shut down during the period of extreme heat at the end of August and beginning of this month. If anything, the rains now will delay early harvest activity. But the rains are pressuring for soybeans as traders feel they will help late-maturing beans fill pods, which they will. Forecasts call for more rains on Thursday before the wetter pattern moves out of the Corn Belt.
The long and short of it: The wetter weather pattern is price-negative for soybeans, but the overall tenor in the soybean market still favors bulls.
* Chart still bullish for Nov. beans. Nov. soybean futures dropped 68 cents from last Friday's high to yesterday's low, but the daily chart is still bullish. The daily Nov. soybean chart boasts a strong upside gap (on Aug. 26) and a bull flag formation -- both technical signs bulls still have the upper hand technically. But that would change if the Aug. 26 upside gap at $13.31 1/2 is filled. The contract got within 1/2 cent of filling that gap yesterday and bounced. If the gap is filled and there's followthrough selling, it would flip the technical picture in favor of bears as that price action would negate the two bullish factors on the chart and would suggest an extended price pullback is underway. But if the gap remains open on this test of that support, soybeans may have another run to the upside left in them.
The long and short of it: There's always a chance the Aug. 26 chart gap at $13.31 1/2 could be filled and it could turn into a bear trap, but that's the key level bulls must defend to keep the upper hand technically.
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