Commodities were mixed today
Sep 24, 2008
The corn and bean market both saw modest gains today but the was able to get above the important $6 level in December 2009 corn and $12 in November 2009 beans. Both price levels have been psychological overhead resistance levels. The major long term resistance for December corn is $6.50 while $13.25 is for beans. My bias continues to be very strong that there is justification for corn to rally but beans are living on borrowed time. I continue to urge producers to look aggressively at getting a floor under all of their 2009 beans at current levels by forward selling in the cash market and then come back on paper with a 3 to 5 dollar vertical call strategy. I continue to stress the potential for significant increase in bean acres domestically and internationally next year with a very uncertain demand outlook at best.
We just put a special report on at our website about a natural gas play for this winter and fall. If you are interested call us for a free trial subscription. Bottom line: it’s time to buy at the 7-cent range.
December hogs are starting to develop a solid technical base at the 65 to 66 level. The charts are very balanced right now and would suggest we could go either way. Since we could still see a little more sell off on herd liquidation into October, I would hold off on buying for a bounce but it’s very close and one needs to be ready.
Just a quick note about gold—the reason why ag traders watch it is because it’s historically been a good warning signal for inflation or a flight of capital from the equities which also helps commodities. After seeing close to a 1,000 a ounce high in July, it crashes below $750 in a significant long liquidation break. Then in September we experienced a historical one day rally. This was all fueled by the uncertainty associated with the financial markets. The chart is developing a compression formation called a triangle formation. The implication one should be getting ready for a violent price move. We could go another couple of days but I would not be surprised to see a major breakout by mid week. Since it’s difficult to say which way this would be an excellent time to buy a put and call in nearby options. Once the breakout occurs hold the winner and sell the loser.
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