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

Comments for August 3, 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: 8/3/11 Higher to sharply closes higher for rough rice, oats, corn, soybeans, soymeal, soyoil, Minneapolis, Kansas City and Chicago wheat. Minneapolis and Chicago wheat are still forming potential bottoming formations while now have a confirming  BUY SIGNAL for  KC. The former two grains are on the cusp of a possible buy signal at this time with the sharply higher closes in the wheat complex.. We’ve seen consolidation in choppy action over the lasts several weeks for the wheat complex in general. Minneapolis has been in a range between 820 and 860 while KC broke out its its recent sideways action. I am keeping my sells for Minneapolis and Chicago in place however but they’ve been greatly weakened by today’s action. Oats settled higher also but does have resistance from 380 to 420 basis December contract while 350 remains important to watch below in my opinion. I continue to remain on the sidelines for this grain also. Rice settled higher after making its lowest low since July 12th in reversal type action but continuing to look lower overall. Corn closed up the daily 30 cent limit after a private forecaster lowered the average corn yield estimate from 156 per acre to 150 also pulling up the rest of the grain complex. This was a new CONTRACT HIGH CLOSE along with giving me a BUY SIGNAL continued its choppy action by having a strong close this time but as I’ve repeated many times lately nothing has changed as far as I’m concerned. The Dec. contract still needs to settle over 700(Dec.) which to me is the most important. Don’t get me wrong Its still in a long-term uptrend but hasn’t really gone anywhere over the last few months while trading between 625 and 680 most of the time. Corn has been in a trading range between 703 3/4 and 663 1/4(Dec.) over the last thirteen trading sessions. The bean complex settled higher pulled up by the corn but no changes technically in my opinion. The beans have been in a trading range going back to the beginning of April but now looking toppy although after making their worst low since July 12th did settle higher in reversal type action. They can be sold around the 1400(Nov.) area since it has yet hasn’t closed over it but 1350 is a key area to watch below. ALSO, THE NOVEMBER CONTRACT IS IN THE SAME BASIC FORMATION FOR THE FOURTH TIME THIS YEAR FOLLOWING THROUGH LOWER THE THREE PREVIOUS TIMES. Meal, now in a resistance area, continues to look toppy in my opinion and can be sold on rallies but it must be noted there is strong support under 360(Dec.) making this a difficult grain to trade at this time. Also, it made its lowest low since July 13th also settling higher in reversal type action. Oil continues to lag behind because of meal/oil spreading but did settle sharply higher making its best close in over two weeks.. Oil has been in a down-trend that’s been going on since early April and I just couldn’t ‘pull the trigger’ on this trade which has been my misfortune. BUY SIGNALS FOR KANSAS CITY WHEAT AND CORN. SELL SIGNALS FOR ROUGH RICE, SOYMEAL, 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.