What’s Up, What’s Down: Spotlight on Grains

Comments for Novemeber 2, 2011

Looking ahead to Wednesday by reflecting back on Tuesday’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


GRAINS: 11/2/11 Higher for Chicago wheat and corn while lower for Minneapolis and Kansas City wheat along with rough rice, soybeans, soymeal and soyoil. Although KC and Chicago wheat remain in down-trends overall even after retracing higher lately, Minneapolis is the only grain, in my opinion, still in a decent uptrend at this time but now is showing some potential topping signs. Minneapolis bounced off its resistance(920 to 940) making its best high in thirteen sessions before closing lower in reversal type action on Monday following through slightly today. Chicago made its worst low in 14 trading sessions before settling higher in reversal type action. Meanwhile, Chicago has been trending basically sideways to slightly higher since October 3rd. Corn had its second best close since September 21st  but continues to act heavy overall with good selling on rallies over 650(Dec.) so far. What kind of confuses the issue is it has a gap that goes from 682 to 685 1/4 and there is also strong resistance all the way up to around the seven dollar area basis that could make it a struggle to fill this gap. On the other hand If you’ve been reading my comments for a while you know how I feel about grain gaps especially in the corn. I expect corn to stall out anywhere up to filling the above mentioned gap. The Russian and Chinese news a few of weeks ago along with a weak dollar lately seems to have helped stabilize corn and to a lesser extent the bean complex. Finally, corn’s struggle to fill its gap, after talking to many of my clients, seems be caused by the selling of corn that the farmers have been holding. Now, I feel that once this selling dries up corn chould have its belated rally. Of course there’s no guarantee that its gap will ever be filled no matter what I say or feel.  Rice has good resistance from 1720 to 1780 basis the January contract along with more over 180. So far rice hasn’t been able to completely penetrate this resistance leading to lower highs over its last five sessions. The 1650(Jan.) area is critical for me hold at this time. Oats settled slightly lower while near the upper end of its session’s range but has been making lower highs and lows since the beginning of September never able to close over 350(Dec.). The bean complex also settled down and , although the beans, meal and oil have been consolidating over the last couple of weeks or so, a breakout to the downside looks more than likely at this time. All three have been in down-trends since the beginning of September and I just flat out blew sell signals for this complex. BUY SIGNAL FOR MINNEAPOLIS WHEAT AND ROUGH RICE. SELL

Follow my grains commentary daily at the Grain Futures Update blog; https://grainfuturesupdate.com

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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.