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

Comments for August 5, 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



GRAINS: 8/5/11 Lower closes yesterday for rough rice, oats, corn, soybeans, soymeal, soyoil, Minneapolis, Kansas City and Chicago wheat once again as the choppy action in the grains continues! Minneapolis and Chicago wheat’s  potential bottoming formations are over as far as I’m concerned but there are good parameters that have formed I hope eventually will give us a good direction. Also for now I’m standing aside in KC wheat. We’ve seen consolidation in choppy action over the last several weeks in the wheat complex in general. Minneapolis has been in a range between 820 and 860 with 860 and 800 the critical price areas to watch in my opinion after making its lowest close since July 18th. KC broke out its its recent sideways action earlier this week but and also made its worst close since July 18th. The key price to watch overhead is 860 and below 820 along with 790.  I am keeping my sells for Minneapolis and Chicago in place at this time with 728 overhead and 664 1/4 along with 650 the key prices to watch for the latter. Oats had its lowest low and close since late June giving me a SELL SIGNAL after ending up below 350(Dec.) that I should have already had. They have good resistance from 380 to 420 basis December contract . Rice settled lower again continuing to look down overall with good support under 160 but also wouldn’t look good going down to that area. Corn followed through lower after Tuesday’s reversal type action. Corn had been trading between 625 and 680 most of the time before a private forecaster lowered its average yield estimate by six bushels per acre. I’ve heard from other contacts also that corn doesn’t look particularly good in several areas around the country remaining the strongest of the grain complex. The bean complex settled sharply lower with the beans giving me a SELL SIGNAL which I won’t take but would rather do what’s mentioned next, The November bean contract has been in a trading range going back to the beginning of April but now looking toppy.They can be sold around the 1400(Nov.) area and bought around 1300 until it doesn’t work anymore. However, closing below 1350 should mean the beans will continue lower at least in the short term which is my opinion. ALSO, THE NOVEMBER CONTRACT IS IN THE SAME BASIC FORMATION FOR THE FOURTH TIME THIS YEAR FOLLOWING THROUGH LOWER THE THREE PREVIOUS TIMES. Meal wasn’t been able to get through its resistance area last week and has been dropping since then. Howver there is strong support under 360(Dec.) all the way down to the 340 area. Oil continues to lag behind because of overall meal/oil spreading and has been in a down-trend that’s been going on since early Aprilt. Unfortunately, I wasn’t able to ‘pull the trigger’ which has been my misfortune but I really need to say that I have a belated SELL SIGNAL also. BUY SIGNAL FOR CORN. SELL SIGNALS FOR ROUGH RICE, SOYMEAL, SOYOIL, MINNEAPOLIS AND CHICAGO WHEAT. CALL FOR DETAILS!

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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.