Overview:
Grain futures were mixed today from month-end position squaring and a dearth of fresh news. Meanwhile, GDP growth was reported at 2.0 percent, which means inflation is tame. Traders expect the Fed’s to come to the rescue of the economy next month with a second round of quantitative easing. However, this is old news and the dollars that will be injected into the system are not as great as the first stimulus package. With the level of uncertainty regarding the mid-term election next week and the health of the economy, traders decided to sit on the sidelines through the weekend.
Corn:
Yesterday, December corn gave an indication that it was ready to trade past the high made a couple of week’s ago at 588. However, until we clear 588, a setback to 560 cannot be ruled out. Meanwhile, unless there is a close below 542.75, the trend is higher with the potential for a rally to 610 or 655. Look for a top in November.
Currently, sales should be at 60 percent.
Soybeans: Recommendation Pending
March soybeans peaked at 1255 yesterday and fell to 1230 today. Right now, my concern is that when prices rallied to this high, it was not accompanied by a rise to a new high by the momentum indicators. This creates negative divergence suggesting that the advance is stalling. If the rally resumes on Monday, we are still on track for a move higher to 1285-1295 or possibly 1310. However, if the market continues lower and closes below 1218, the trend turns down which may prompt the funds to lighten up their longs.
For this reason, sales should be increased from 45 percent to 60 percent in the event of a close below 1218.
Wheat:
December wheat rose for four consecutive days from 665 but could not make it five. The market closed slightly lower and could have a pullback to 695-688. Right now, a rally and close past 739.75 is needed to suggest that an upside breakout is developing from the August high at 868. In this event, we could climb to 880.
Old crop sales should currently be at the 70 percent level.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.