Grains had another day of long liquidation ahead of their three day weekend. December corn settled 8 ¾ cents lower at $7.99 ¾, November soybeans 7 cents lower at $17.56 ½, and December wheat 13 ½ cents lower at $8.89 ½.
The fact that the Russian Ag meeting did not lead to an export ban resulted in downward pressure in the front month wheat contracts. Corn and soybeans also found resistance as corn traded right alongside with wheat (see chart).
Chart: December Wheat with a December Corn Overlay – 20 minute bars
The main news event was Bernanke’s Jackson Hole speech where he hinted to more stimulus if needed. Though he did specifically say the FED would initiate a third round of Quantitative Easing, he heavily defended the programs and "wouldn’t rule out further asset purchases". This was significant enough for the market to send the dollar down to 3 month lows. Despite the weak dollar, strong crude oil, and strong gold, grains did not seem to be affected.
Technically December corn’s sell signal from the exponential oscillator remains intact. If we break through the lower end of the range we are currently in, we could see further technical setbacks.
Chart: December Corn
Soybeans have not shown much demand rationing and could still be set for a move higher. We are however finally seeing the March contract start to gain some ground back to the November and an overall trend of declining open interest (all combined contract months). Today was significant given it was the first day we settled below the 50 day moving average since June 6th. Next target: 54 cents over.
Chart: November – March Soybean Spread
The Commitment of Traders report showed a significant reduction in corn and bean longs by the managed money. They are still holding a massive amount of longs but any sign of them getting out may also be something to trigger more market weakness.
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