The stronger dollar is pushing the beans and the wheat lower. Technically, Jan beans today slid to an important number, testing the key 1000 a bushell level. I would be careful trying to step in and pick a bottom around here. Just 4 sessions ago, we were 70 cents higher. Have we come too far too fast? That’s any one’s guess. On the charts, there looks to be support around the 985 level, and then if the wheels really come off, there is support at the 970 and then the 950 strike prices. I am actually leaning towards the 970 level, since that would be a nice one dollar break. Enough to make the beans attractive again for the New Years fund buying, not to mention the Chinese, who have repeatedly stepped in an bought dips in the beans in an effort to procure cheap(er) food for its population.
March wheat took it on the chin today as well, with the contract now poised to test the November lows at 510. Four sessions ago, WH looked poised to challenge the 550 level, but as the dollar ramped up, traders beat it like the red-headed step child.
The hedge against these short sales has been March corn. January will give us the final crop report which will tell the true story as to how badly injured the crop was due to the wet weather and repeated harvest delays. The markets hate uncertainty, and for now, although the crop was huge, there is still a potential for a bullish surprise, which is enough to help keep this market bid. We continue to have good exports as well, which will serve as bullish under pinning for the time being.
Seven sessions ago, CH posted a low at the 380 level, which is now looking like substantial support on the daily charts. A boost above the 413-415 area would solidify that this bull trend is real, rather than just the bull side of the inter-markets spreading, which has seen corn being bought while beans and wheat have been sold with extreme prejudice.
Finally, a brief look at the crude oil. It is having its own supply/demand issues. With Dubai in such trouble, I can’t imaging OPEC doing anything silly and trying to jack up oil prices. Right now they are looking for stability. They need steady flow of US Dollars.. Would they rather have 100 dollar oil? Of course, but I think here at 73 or so, they are whistling through the graveyard. A brief look at the charts seems to point to some continued weakness.. We had mini melt-down over the last 2 weeks in crude oil, from the 80 level to the 69 level. We’ve now had a corrective bounce, and if the dollar keeps getting stronger, the oil daily charts look vulnerable to a break down and test of the 67 level. That would likely translate to or be fueled by a continuation rally in the dollar, and most likely a correction lower from the current highs in the stock indexes.
Good Trading
