What’s Up, What’s Down: Higher Grain and Energy Futures
Comments for Tuesday October 21, 2008
Looking Ahead to Today By Reflecting back at Monday’s price action
GRAINS:
Ask me why I’m so Bearish? Higher settlements yesterday in soybeans, meal and bean oil, Minneapolis, Kansas City and Chicago wheat, oats and corn while lower for rough rice. The entire wheat complex continues to be in a major downtrend closing lower but most likely affected by spread trading against the wheat by corn and bean traders. Corn settled sharply higher as its retracement continues and it’s still in a resistance area.
After the close, the USDA came out saying that only 21% of the corn has been harvested so far. It looks like a lot of corn has been left in the fields to dry. Of course the energy market has more say in which way corn goes than in other years because of ethanol causing a huge crop again although not as large as last year. Rice made a new recent low close again continuing to look exceptionally weak. Oats closed higher but, technically, is still in a downtrend overall. Sharply higher closes again for the bean complex which is in a retracement rally. However, the long term downtrend is still in tact. The USDA said, after the close, that 2/3rd’s of beans have been harvested which in normal times can mean the beans are near a bottom. I wouldn’t take that to the bank this year, however.
My thoughts and outlook for other commodity markets this week…
MEATS:
Higher for pork bellies, lower for live and feeder cattle and slightly lower for lean hogs. The feeders are still technically in a better position to bottom than the cattle but both are still in downtrends. Cattle needs to show me more for the downtrend to be over. Bellies settled higher with little resistance up to the 9000-9250 area. Bellies are also in a downtrend but could be forming a possible major bottoming formation. However, it’s still too soon to tell and I’m still bearish on the Meats.
ENERGIES:
Sharply higher closes for crude and heating oil along with the rbob but lower for natural gas. The energies all are in downtrend and natural gas is also in a bear pennant. OPEC will try to stem the tide by cutting production but that won’t stop lower energy prices if the world’s economies continue to struggle like they are now.
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. If you would like a free booklet explaining the charts mentioned above, email Rick at ralexander@zaner.com.