Overview:
During the past several sessions, the funds have gobbled up anything that related to commodities. However, they may be getting their fill, as soybeans were higher but corn and old crop wheat lower. Overall, traders are bullish from disappointing corn yields in the U.S., freeze threats in China and dryness in South America. Meanwhile, investors are seeking more risk as they believe that the worst of the sovereign debt crisis is behind us and are becoming more upbeat about the global economy.
However, the woes of the sovereign debt crisis will not be resolved quickly and are far from being over. Currently, the funds are holding a record long position in corn and closing in on one for soybeans.
Corn:
December corn traded higher to 523.75 today meeting the secondary target. As mentioned in previous comments, we are in a period for an intermediate-term top to develop is week.
Support is expected on a pullback to 495 in a correction lasting 5-8 days. Longer-term, however, the market has the potential for advancing to 550 or higher. My experience in a stout market, such as corn, is that one needs to pay greater attention to the cycles. Right now, they are pointing to mid-October as a major top.
New crop sales should currently be at the 50 percent level.
Soybeans:
November soybeans rallied meeting the target at 1095. Last week’s comments mentioned to be alert for an intermediate-term or possibly a major top that could occur this week.
Right now, the wave pattern is unclear as to which one is working. If an intermediate-term top is developing, there is a chance that we could trade higher to 1155 and top either the last couple of days this month or possibly as late as mid-October 15th.
New crop sales should be at the 45 percent mark. Protect the unsold portion with a long November put.
Wheat:
December wheat traded to 757 where resistance was met. Additional resistance will come in the 70’s and 90’s. Meanwhile, a more bullish pattern points to a rally past the August high.
Overall, corn is pulling wheat higher with no fundamental reason in the crop itself to be moving forward. When corn loses steam, so should wheat.
Old crop sales should be at the 60 percent level.
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