Grains were mostly higher overnight, but have moved lower in sympathy with the outside markets today.
Jan Beans posted a high last night at 1063 3/4, basically the upper limits of its 30 cent sideways trading range for the past few weeks. Overnight the low was 1044, and so far today, that low has held. SF posted a high today at 1055 and is currently at 1044 1/2 down 8 cents. On the daily charts, there isn’t real solid support until the 1034 area and then the 1021 area. Honestly, this looks like a 30 cent consolidation trade, as the market makes up its mind which way the next dollar or two dollar move will push towards.
Front month option in the corn and wheat is now March. March Corn is unchanged on the day so far, while March wheat is 8 cents lower, and looking vulnerable on the charts to get to possibly break down to the 530-510 trading band of support. The trend definitely looks as if it has shifted to bearish for the time being in the Wheat.
The crop progress report was a firming factor for the corn. The report showed that there are 1.5BB bush ells of corn still in the field. 300 Million on Illinois, with 200 Million bushels out in both Nebraska and South Dakota.
With the storm coming through with snow and high winds, the last stages of this delayed harvest will be further delayed.
So far today, the outside markets moving lower are weighing on any bullish factors in these grains. Gold continues its sharp pullback, crude oil is down around the 73 to 72 area, while it was at 80 dollar a barrel just several weeks ago.
The Dollar index is posting a one month high today, as the whole world seems to be short covering their bets against the US dollar.
We will be hearing more and more about the carry trade, how people have borrowed cheap US dollars to buy physical assets. If that trade reverses, it will be bearish for the physical assets, ie Gold, Silver and Grains.
The stock indexes are lower on some bearish news about McDonald’s profits falling due to the high unemployment in the country. McDonald’s most profitable meal is the breakfast option, and with unemployment so high, obviously, people are not stopping in for an egg McMuffin in the morning like they used to.
One final bit of bearishness for the grains, is the estimate from Brazil that they will have a record crop in soybeans. That prediction, along with the tight carryouts in the fact of Chinese demand, will focus all eyes on any weather problems this year in the growing season in Brazil.
Good Trading
