August 30, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 10 lower
I am not sure what to highlight here this morning but the thing that stood out for me was the way in which we approached the Fibonacci resistance level and then broke down from it. If this bull market is to continue we will need a solid close above the $7.80 level to keep the show going. After the close the crop conditions report came out and showed a 3% weekly decline. With only 54% of the crop now rated good to excellent this should be supportive to the market. One wild card that we have not discussed but that may end up being a factor is test weight. Early harvest reports coming out of the eastern Corn Belt indicate that the test weights have been light. If that trend continues it could have an impact on the final production numbers as well. As things stand this morning, we have resistance in the December futures at $7.80 and two of my three technical indicators are bullish.
SOYBEANS: 9 lower
Since I have been telling you that once we broke out of the months long sideways pattern that the November futures should go to $14.60, I was excited to see the market make significant progress in that direction yesterday. Fears that the crop is deteriorating drove the buyers to add to long positions. Coupled with the fear that the crop is getting smaller was the recognition that the cumulative export loadings are currently running 2% ahead of last year, above the 0.5% increase the USDA is projecting. That leaves us in a position where the exports may be better than expected while the crop is worse. That would appear to be the recipe for a bull market. Two thirds of my technical indicators are bullish and as noted earlier we should run into some resistance at $14.60.
WHEAT: 12 lower
This still appears to be a drought story with trader’s greatest fear being a sharp reduction in the number of HRW planted acres as a natural outcome of the ongoing drought. The Kansas City December futures seem like they may have run out of steam right where the Fibonacci resistance numbers indicated they would struggle. If we get a solid close through that resistance I see we have a gap all the way up at $9.77 ¾. Is it possible that we will see December Kansas City futures make that strong a move? I honestly don’t know. What I do know is that two of my three technical indicators are bullish right now and unless it starts raining in HRW country so am I.
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