We are now into the holiday week. Normally, it is reduced volume and many traders elect to move to the sidelines. However, it appears the market wants to move higher under pressure from the bulls. The expectation is growing that supply problems will persist into the New Year, along with strong demand. The market is now 18 days up in the current rally without a correction. I believe the odds are increasing significantly that a lot of the bullish expectation will be factored into the market before the January report.
Please note that the Dec 2011 contract broke above the $5.40 overhead resistance today. This opens up a move to the $5.62 fall high. While many producers seem to be waiting for the $6 level, we urge caution in getting too bullish. While we still recommend waiting until closer to mid-January, we believe one must start thinking about a scale-up selling program -- start right below the old highs and get very aggressive as the market moves closer to $6.
The soybean market advanced nicely under continued concerns that strong demand was going to push up domestic prices. There seems to be a general lack of selling interest right now. Subsequently, it takes very little to move up the market. My only concern is it’s almost too easy for the market to move higher. If we have any change in attitude this market could experience a correction very quickly. While we do have some concern about the short-term overbought status, we have to say the overall long-term picture looks positive. Our strategy continues to be defending previously sold positions and holding off on selling new crop inventory. We really don’t believe this market will end in a “V” top, but more likely a distribution top that should give producers plenty of time to get sales in place.
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