The outside markets held the key to commodities on Wednesday and I suspect that may be a trend that continues for some time. Of particular concern to the markets at large on Wednesday was the fact that Germany tried to sell bonds and could only find buyers for 60% of what they were offering for sale. Kind of makes you wonder what would happen to our economy if buyers for our binds disappeared. Earlier this week I ran the CRB index chart and told you I would run the monthly S & P 500 chart later this week so I am doing so this morning with the three technical indicators that I follow included with the chart. My slow cousin Jimmy looked at it and said, “Cwap, I have too much money in the stock market.” So now you have both the chart and the analysis of my slow cousin Jimmy.
November 25, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 4 lower
Turkeys were not the only thing getting slaughtered on Wednesday as the bodies of bulls with broken spirits littered the countryside. When you get past the outside markets you find a couple of pretty good stories. First, ethanol is making money and thus the demand from that sector should remain strong. Livestock feeders also appear to be doing well so feed demand should remain solid as well. That leaves us with exports which are kind of the fly in the ointment. The last time we got down the levels that we are now approaching China stepped in and bought corn. It does not appear as if that will happen this time. The Chinese economy seems to be cooling with one analyst projecting that livestock feed production this year will grow by 4%, sharply lower than the 10% growth posted a year ago.
Technically nothing has changed with all three of my indicators bearish with support on the weekly chart at $5.45 and $4.85.
SOYBEANS: 14 lower
Soybeans dropped to the lowest level seen in over a year as fears of potential meltdown in Europe swamped the market. Grabbing as much attention as the European situation were reports from China that show a slowing economy. With China being our key consumer of soybeans this news had more pressure on beans than on the other markets. In South America the news continues to be that of predominately good growing conditions with a few dry areas in northern Brazil and Argentina noted. All in all things look pretty good.
I have been saying for several weeks now that we could very well see the January futures drop to the Fibonacci support at $11.17 and if it got there would also look for it to drop to $11.09 (red line) to fill the gap left in September of 2010. The way the market is acting I would not be surprised to see the January futures drop down the full 1.618% retracement which would take us to support at $10.89. I am just thankful that we spotted this trend well ahead of time so that you guys could sell your beans and not have to ride this market down.
WHEAT: HRS 10 lower HRW 4 lower
Wednesday wheat faced adequate world stocks, tough export competition, bad outside market influences and a market in which the other grains were trading lower. With that background it made sense for wheat to head lower as well. I know we had a day off yesterday but I don’t think that in the last 36 hours the world of wheat has fundamentally changed and thus I suspect that wheat may continue to struggle.
Technically all of my indicators are still bearish. Even more concerning is the fact that on the Kansas City (HRW) futures that the area that I told you need to provide support has given way. You can look at the following chart yourself and try and figure out the implications of that.
The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only. There is a risk of loss when trading commodity futures and options.