All of the grains made new highs today, and the in the last 5 minutes of trading gave up all of the earlier gains and settled lower on the day.
January soybeans traded to a high at 1078 1/2 and broke 20 cents to finally settle down 2 cents at 1058. December corn posted a high at 406 1/4 and then broke 9 cents late in the day to settle down 5 cents at 397 1/2. Finally, the December wheat potsed a high at 576 1/4 then broke 15 cents to settle down 5 cents on the day at 562 1/2. All together, a bearish close, as the grains were not able to absorb any hedging late in the day, even on a day where the outside markets were all higher.
Once again, thanks to computer trading, we have absolutely a dearth of liquidity. The funds have been active buyers in physical commodities over the past six weeks, first coming for the corn and then for the beans. Due to the inherent thin ness of these grain markets, their large volume helped to pump up the market, even in the face of somewhat bearish fundamental news, as the crops were all estimated to be extremely large.
If January comes around and the final s/d report from the USDA is less than bullish, I think we could see some limit down days, as there will be no one left for the funds to sell to, if they need to flip and get out of their longs.
Just a caveat to look for after the first of the year. If one thing has been proven, its that these grain markets don’t have the liquidity to absorb price fluctuations like they once did. If the computer programs say buy, we rally 15 cents. Period. If they say “sell” then we have Katie-bar-the-door meltdowns like we saw on Thursday night’s Dubai fiasco.
Just something to be aware of as you look at these markets for trading opportunities.
The trading is choppy, but periodically, there are these rogue waves of buying and selling which can be interesting to try to navigate.
