China’s industrial production rose 13.9 percent during August, which is improving investor
confidence for a rebound in the global economy. As a result, the dollar was weaker today and
stocks higher, which underpinned the grains.
Meanwhile, the combined fund long position of the trend following and index funds in corn has risen to a record 4.140 BB, or one-third of production. Their long position in soybeans stands at a lofty 1.490 BB. Right now, traders are extremely bullish as prices continue to roll higher. However, the wheels will likely come off when the bulls least expect it.
December corn traded to 486.5 on Monday. For the intermediate-term, we are on track for a rally to 505 or 520 within the next 14 days. Meanwhile, an even more bullish pattern could be unfolding. If this occurs, a major top will likely be closer to the second week of October.
Support is at 470-460.
November soybeans fell 1022.75 yesterday before rebounding. Friday’s update mentioned that support was expected at 1022. As it stands now, we should move higher. Be alert however for that climb to end within the next 8-10 days.
December wheat rebounded to 754.5 but will face more resistance near 770, then again in the mid 790s. As wheat is supported by corn/beans there is an even more bullish trend pointing to a rally past the August high.
Tommorrow, we’ll look in depth at the soybean trade.
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