October 3, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 13 lower
European turmoil has the dollar higher again this morning. That coupled with the lingering shock of Friday’s USDA report will have the market opening lower again this morning. At the present time the story has shifted totally away from the demand picture and is focused on declining feed usage and better than expected yields. As long as that remains the focus look for this market to be on the defensive. The funds have dumped 47,000 contracts during the past two trading sessions and as we head into today’s opening the charts look sick. In Friday’s comments I said, “In looking at the charts the Fibonacci support levels for December futures you can make a case that we could see support at $5.75 and if that doesn’t hold the next number up would be $4.98.” We are now right up against the $5.75 area so today it will be critical to pick up support in here. I should also note that we have left a gap in the December futures from $5.90 ¾ to $5.92 ½. The key question is if we can fill that gap before the December futures go off the board. As we sit here today I wouldn’t bet a great deal of money on that happening.
SOYBEANS: 11 lower
When my wife was pregnant with our second child I gained a fair amount of weight and told her it was sympathy weight gain. We kind of had the same situation in beans on Friday. Based on the report that was no good reason for them to go lower but as the rest of the grains jumped off the cliff beans jumped right with them. Funds have sold 27,000 contracts of beans in the past two trading sessions and based on the steady drum beat of better than expected yields has traders talking about the potential to build stocks. I would look for beans to be under pressure once again this morning.
My technical indicators are remaining bearish. The Fibonacci numbers driven support come in at $11.68 which is right where the overnight session closed. This is a crucial area and we desperately need to find support here. If this doesn’t hold the next level of support comes in at $11.35.
WHEAT: HRS 8 lower HRW 3 lower
The story that we need to keep an eye on in wheat is the weather in HRW country. It looks like good rains are forecast for the latter part of this week and I am sure that the trade will be keeping a close eye on that to see if they develop. Other than that I don’t know if we know much. The HRS numbers Friday we certainly tight but nowhere near the tightness we saw in 2008. Look for Minneapolis futures to be stronger than Kansas City or Chicago but that doesn’t mean they won’t all trade lower over time. We have support in the Kansas City December futures at $6.53.
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.