There were no startling surprises in the crop production report today other than the soybean yield was higher than expected at 44.7 bpa. Meanwhile, traders expect the USDA to lower corn yields from 162.5 bpa in subsequent reports. Right now, the driving force in the grains is the funds, which are holding enormous long positions in corn and soybeans. How large they get before the bubble bursts is anyone’s guess. It is my opinion that a dramatic jolt in the global economy, i.e. sovereign debt or a geopolitical event will be the issue that eventually shakes their resolve.
For over a week, I have mentioned that we had to exceed 478 in December corn to verify that the advance from the contract low at 343.25 would accelerate. That occurred today and support should be found on any pullback. It will take a fall to 445 now to break the up trend. The cycles currently point to a top in about 10 days, although it could be as late as the second week of October, depending upon the speed of the rally.
New crop sales should be at the 50 percent level.
November futures are backing off from the high at 1057 and I am concerned that the rally to 1057 was not accompanied by a new high in the momentum indicators.
Support is at 1028-1022. Unless we trade below 1000, the trend is up with the potential for a move higher even appraoching 1100. Be mindful of a top within the next week to 10 days.
New crop sales should be at the 45 percent mark.
Look at a put to protect any unsold portion.
December wheat fell to 717 today, but regained its footing when selling failed to take prices below yesterday’s low. In the meantime, we continue to be range bound from 748.5-677.5.
Resistance is at 773 followed by 795. However, there is a more bullish pattern showing the
potential of prices climbing past the August high which is doable if the funds decide to increase their longs.
Old crop sales should be at the 60 percent level.
For more detailed information and analysis, complete with firm dates and prices and marketing recommendations for new and old crop grains, sign up for a FREE! trial subscription to our daily newsletters.