What’s Up, What’s Down: Spotlight on Grains
Comments for December 9, 2011
Looking ahead to Friday by reflecting back on Thursday’s trading
Futures and options trading is speculative in nature and involves substantial risk of loss. Futures and options trading is not suitable for all investors
IMPORTANT USDA CROP REPORTS TODAY WILL DRAMATICALLY AFFECT THE COURSE OF GRAIN FUTURES
GRAINS: 12/9/11: Higher closes yesterday for soybeans, soymeal, corn and oats while lower for soymeal, rough rice, Minneapolis, Kansas City and Chicago wheat ahead of the important crop production and supply/demand reports. IN SPITE OF WORLDWIDE CREDIT EASING THE ENTIRE GRAIN COMPLEX, IN MY OPINION, CONTINUES TO STRUGGLE AS SHOWN BY THE CHARTS BELOW. UNTIL WE SEE SOMETHING THAT SHOWS OTHERWISE, ASSUME THIS SCENARIO SHOULD CONTINUE. Of course, Friday’s reports may have some say in the grain direction at least in the short term. Minneapolis , KC and Chicago wheat continue to look weak overall sliding lower most of this week and like most of the grain complex lately, had initially rallied off the credit news and then fallen back. So far we’ve just seen mild retracement rallies in bear markets. The percentage of these rallies compared to the overall down-trend has been minimal so far. Minneapolis is still in heavy resistance while KC has resistance is over 700 but stronger resistance over 720 but very little support underneath. The 650 area is very critical to hold because I don’t see much support down to 500 off the weekly chart. Chicago has strong resistance over 650 based on the March contracts. Oats touched Wednesday’s low before closing higher still with little resistance up to the 350 area. Corn (March) still has a gap at 698 with strong resistance from 650 to the 700 area. Also a major portion of its resistance is from 650 to 675 and history says the odds are that this gap will be filled but right now it looks like a fading memory. Corn rallied sharply off its lows to settle higher and under normal circumstances would be inclined to start thinking that maybe this is the beginning of bottoming type action. However, more likely it was short covering and some unwinding of bean/corn spreads ahead of the grain reports. Rice settled on or near its lows in very bearish action. The beans and oil closed slightly higher and meal slightly lower probably held back by unwinding of the bean/corn spreads. The bean complex continues to look weak overall. DON’T FORGET THE CROP PRODUCTION AND SUPPLY/DEMAND REPORTS COMING OUT FRIDAY MORNING! SELL SIGNALS FOR MINNEAPOLIS,KANSAS CITY AND CHICAGO WHEAT ALONG WITHSOYBEANS, SOYMEAL AND SOY OIL ALONG WITH ROUGH RICE AND OATS. CALL FOR DETAILS
Follow more Grain market related stories and commentary at my Grain Futures blog (www.grainfuturesupdate.com)
Rick Alexander has been a broker and analyst in the futures business for over thirty years. He is a Vice-President for Sales and Trading at the Zaner Group (www.zaner.com) a Chicago-based futures brokerage firm. Email Rick at ralexander@zaner.com or call toll-free (888) 281-4158.
Futures and options trading is speculative in nature and involves substantial risk of loss. Futures and options trading is not suitable for all investors. The information in this Report and the opinions expressed are subject to change without notice. All known news and events have already been factored into the price of the underlying commodities discussed.