EHedger Closing Grain Commentary 8/17/09

Published on: 17:18PM Aug 17, 2009
Sep 09 Corn
314 ½  
- 4 ¾ 
Dec 09 Corn
- 5 ¾ 
Nov 09 Beans
950 ½  
- 31 
Sep 09 Wheat
471 ½  
-10 ¼  
Sep 09 KC Wheat
500 ¼  
- 8 ¼
Sep 09 Min Wheat
540 ¾ 
- 8 ½ 
Dec 09 Meal
- 7.4
Dec 09 Oil
- 1.31

Grains Close: Soybeans, Corn Continue Downward Spiral
  • Nov Soybeans Retreat Another 27c To Below $9.60
  • Friendly Weather, Bearish Technicals Spur Broad Liquidation
  • Crop Conditions Little Changed In Corn & Soybeans
Soybeans remained the most influential market on the CBOT Monday, and continued their recent downward spiral with another heavy setback. The 27-cent drop brings Nov’s losses to more than $1.10 a bushel in just three trading sessions (since August 13, the high of the recent move), and demonstrates the one-way nature of the recent trading traffic.
Deteriorating domestic demand coupled with improving growing conditions has ushered in waves of long liquidation and profit taking lately, while curbing the appetite of buyers. More weakness is expected in the days ahead, though a modest rebound can’t be ruled out before too long in light of the steepness of the recent slump. Further, from a technical perspective Nov futures managed to hold above the widely-watched 200-day moving average in place just below $940, which may spur some chart-based buying overnight.
However, the overall bias here remains negative, as right now it appears the market is bracing for a potential record-sized crop in the fall. (We’ve heard all the stories of yield-threatening early frosts potentially nipping crops in late September, but it’s August right now and the crop is growing nicely overall – and that’s what the market is concerned with at the moment.) As long as the weather remains non-threatening, it’s possible for this still heavily-long market to continue grinding lower until the end of the month. That means a retreat below $9 is on the cards, which would bring into view 2009’s lows of $7.84-8.00.
We’re not stating that Nov prices will go back down there this month (though we’re not ruling it out), but are confident that those producers who…
Dec corn closed 6 cents lower at $3.21 ¾ - its lowest close in nearly a month. Bargain hunting and short covering managed to lift the market off its early lows of just above $3.10, but it appears the path of least resistance remains lower as long as growing conditions remain so friendly.
The $3.10 level is a key support target on the charts, and any breach of there would target $3.00. To the upside, the $3.40 region should now act as resistance.
Dec wheat closed below $5 for the first time since May of 2007 as the recent exodus continues. Swelling global stockpiles combined with soft end-user demand look set to keep this market under pressure, and make a retreat towards $4.50-4.60 likely in the weeks ahead.


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