Are Grains Setting Up for a Bounce?
Sep 25, 2012
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
Are corn, wheat and soybeans setting up for a technical bounce? There has certainly been a lot of energy spent pushing grains off highs but it seems that pressure could be waning for the time being. Overall the grains may very well still have some more downside potential, but the last 5 trade sessions are starting to hint that there may be some opportunity to sell some higher prices.
In the last 5 trading sessions we have tried to push corn down below 739 and soybeans below 1600 with some success, however every time support is broken grains come rallying back to close over the key numbers. After trying and failing to do this 4 out of the last 5 sessions it may be time for the bears to give up the gun for now and let the bulls take the wheel and give it a shot. If there is a bounce from here it is most likely to be sold. Major resistance for corn comes in 30 cents higher at 773 and for soybeans major resistance lies 40 cents higher at 1655. If we truly are in a fledgling bear market the bounce will not quite hit upside objectives as sellers will jump the gun to make sure they get good pricing.
CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie
Overall it is very possible that with early harvest this year harvest lows could also come early. However, with harvest numbers widely coming in better then expected and demand destruction (according to the USDA) being more aggressive then anticipated it is certainly conceivable that grains could continue to slide through the November USDA report. What happens in the winter months will be mostly determined by weather. This year we will be watching weather straight through next growing season as South American weather will be very important in price determination and our own winter precipitation will be needed to improve drought depleted sub soil moisture levels. Good precip in the states and a good growing season, possibly El Nino, in South America could put a major damper on our post harvest rally.
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With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.
December Corn Daily chart:
November Soybeans Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have new crop corn above $7.00 and new crop soybeans above $16.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent.
Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs.
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
Please check out my Blog at: http://tedseifriedfutures.com/
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried
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