Don’t Get Caught “Running with the Bulls”: Monday Grain Update 10/11/10


Corn and soybeans were higher again today as the funds are buying back the positions that they liquidated early last week.  Right now, traders are wildly bullish, which is predictable considering the bullish USDA report on Friday and the current stage of the pattern that we are in now.  However, as I mentioned in Friday’s comments, this is the time to stay focused and not swept up in the euphoria.  Markets like the current one tend to top abruptly when least expected and generally have a long tail.  However, we are not at that point just yet.  Most likely, we will top for reasons unexpected by most traders.


December futures gapped higher in the overnight session trading the 45-cent limit to 573.25.  Friday’s wrap up mentioned that we were on track for a rally to 575-585 or 593.  Expect a pullback from today’s high; it should last through tomorrow or Wednesday and will find support in the mid-5’s.  Once it is over, look for another rally to a new high followed by a week-long retreat.  The final peak will happen in the run-up in the third cycle.  The market should top in the lower-half to mid 6 range.  My analyses expects this to happen in the last few days of October to mid-November. We will narrow the range down as time gets closer.  Be advised that the cycles are a better indicator in this type of market action than price projections. 

Sales should currently be at the 50 percent level.


November soybeans gapped today along with corn.  Prices rallied to 1188.75 and stalled falling near their low at the close.  Support is expected in the mid-11 range.  Right now, the rally in soybeans looks more mature than corn.  Currently, we are on track for a move higher, possibly as high as the mid-12’s  Be alert for a top that could occur on October 27th or November 9th

Sales should currently be at the 45 percent mark.  Protect yourself with a long November  put on any unsold crop. 


December wheat followed corn and soybeans higher early in the session but lost its footing at 739.75 and closed lower.  However, a test of last month’s high  is expected.  Meanwhile, there is a more bullish pattern showing the potential for rising past the August high and possibly closer to in the mid-3rd of the 9 dollar range. 

Old crop sales should be at the 70 percent level.

Producers can actually lose money in a bull market.  How?  They fail to act when the market tops, then wait around for a recovery as they worry about lost potential revenue, as the market slips below their own break even.  The only way to avoid this scenario is by creating a plan and sticking to it.

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