December 15, 2011
By: Craig Haugaard, Grain Origination Manager
I sometimes get the feeling that there are days in the market when the action has nothing to do with the underlying commodity. That was the case with grains yesterday. Lately we have had the dollar rallying strongly as fears over the European financial situation have made it look like the Rock of Gibraltar all of a sudden. That dollar strength coupled with a sudden free fall in the price of crude oil set the state for lower markets pretty well all across the board. The following chart is a little busy but illustrates what has been going on. The black line is the stop corn futures, the blue line the dollar futures and the red line is crude oil futures. If we look purely at the technical’s all three of the ones I follow are now bearish with Fibonacci support in the March futures at $5.52 and $5.31.
SOYBEANS: 8 higher
We are still looking at some hot and dry conditions in South America with temperatures forecast to hit the 100 degree mark early next week in portions of Argentina and Brazil. Today that might lend some support to this market but yesterday nothing but the outside markets seemed to matter and they were bearish. I am hearing more speculative talk that the world’s economies may see a slowing and in fact the fear of deflation seemed to be mentioned quite frequently yesterday. This was enough to drive the January soybean futures to its lowest close in all of 2011. We are banging on an area that should provide support. If this line can’t hold you could make the case form a technical standpoint that this market could drop to a futures price that starts with a 9.
WHEAT: 3 higher
In looking around the world it may be an overstatement but right now it appears as if every dry, wheat growing spot on earth is set to get moisture. Couple that with large world supplies and outside markets that were plummeting and there was no earthly reason for wheat to trade higher yesterday and thus it didn’t. All of my technical indicators are bearish for both Minneapolis and Kansas City futures. Maybe we can find some support in the spot Kansas City futures at $5.80.
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.