Was it a Great Day to Buy Corn or Sell Soybeans?
Feb 19, 2013
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.
An unusual day in grain markets today as soybeans were sharply higher while corn and wheat were down. It really was like soybeans were in their own little world today as they gaped higher and posted an upside breakout. Corn and wheat on the other hand came very close to producing fresh new sell signals right above lows which would be quite a bearish development. This sort of activity does not seem likely to persist even as we get further into the acreage discussion. So, the question is are the soybeans predicting a rally for the grains, or was the weakness in corn and wheat suggesting that the soybean rally was a bull trap?
It would be easy for the soybean bulls to say - "look at how strong the soybeans were despite the weakness in corn and wheat", and it would be easy for corn or wheat bears to say - "look how week the corn and wheat was despite the strength in soybeans". And for the most part they would all be right, however these sorts of disconnects or divergences typically are not of the long term variety. So the real question here today is - Was it a great day to sell soybeans, or was it a great day to buy corn and wheat? Time will tell, but looking at the action on the close it seems that at least for now the soybeans still have momentum to the upside and corn and wheat might very reluctantly follow.
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Reports from the floor and the news wires were attributing the strength in soybeans to less then expected rain in Argentina and export interest. The weakness in corn and wheat was blamed on a winter weather event here in the US and a lack of demand interest. The interesting thing is that the less then expected rain in Argentina might have been more bullish for corn then for soybeans even thought the board certainly did not reflect that. The bigger issue for soybeans right now is the annual "can Brazil get product to port" game. The longer it takes them to get in the export game in a big way, the longer US exports stay relevant. The next few days / weeks will show us how prepared Brazil is to move soybeans, but I have a sneaking feeling that at these prices they will surprise some by getting their act together quickly. However, that certainly does not mean that we stop hearing about the horror stories. Brazil likes when we get all excited about their logistical issues. They get it sold and shipped just like they do every year, and they get higher prices in the mean time.
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March Corn Daily chart:
March Soybeans Daily chart:
March Wheat 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 corn near $7.00 and soybeans near $14.00. 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. Be safe!
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
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