Grains were mixed Wednesday with soybeans sharply higher and wheat lower. January soybeans made their high for the trading session at 2:00am last night which was mostly related to the Dalian markets. Chinese soybean futures rallied sharply overnight and Malaysian palm oil futures were sharply higher.
This morning’s news was also positive for soybean prices. NOPA crush was 9 million bushels more than the average guess. We also saw a USDA sale announcement of 120,000 MTs of US soybeans to China and 40,000 MTs of US soyoil to "unknown". At a time when we still need to see demand rationing this news was supportive. Even with the supportive fundamental news we weren’t able to touch the overnight highs for January soybeans. One thing I wanted to discuss is the massive volume change that we still see at the 9:30am session open. A lot of computer based trading systems still appear to be waiting until that time before trading despite the 21 hour market availability. It is also important to note that the majority of the recent weakness and large sell orders have come during this opening timeframe after supportive overnight markets which come on low volume. See chart:
The other topic that is hogging the headlines is the fiscal cliff. We have very quietly lost over 700 points on the Dow Jones since Election Day. The government does not have a solution to the Fiscal Cliff yet and the market is selling off in anticipation. This could be the next downside risk to watch out for in the ag markets is spillover selling. If we break $7.05 in the December corn contract watch out for the gap fill at $6.76 to be the next technical target. With that said we have just had a two day bounce off the oversold levels which is short term positive on the stochastics.
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