Overview:
The grains were firm in the overnight session, but lost their momentum during the pit trade because of the rebound in the dollar. While the Commitment of Traders Report on Friday showed that the fund long position in corn is below the record set in early October, their longs in soybeans has risen to a new level of 1.790 BB. This is 52 percent of anticipated production for 2010-11. This is overwhelming evidence that large speculators have the controlling hand in soybeans as well as the other grains. In the meantime, all eyes are on the Fed this week concerning the second round of quantitative easing. If large speculators are disappointed with the Fed’s actions, it could pressure commodities along with the grains. Meanwhile, mid-term elections are tomorrow with control of Congress expected to shift back to the Republicans. While many expect the “silly season” to be over after the election, it may be just beginning!
Corn:
December corn traded to 590.75 today exceeding the October high of 588. However, the market could not hold onto its gains and closed lower. Look for support at 570, although there could be a pullback to 560. Later, prices are in a position to climb to the longer-term target at 610 or possibly 655. This could occur later this month.
Currently, sales should be at 60 percent.
Soybeans: Recommendation Pending
March soybeans rebounded to 1246.25 today but were unable to trade past Friday’s high of 1255. My concern is that the market has moved to a new level for the advance but the momentum indicators are not following suit. This situation needs to be monitored closely as we could be close to a top. Meanwhile, unless there is a close below 1218, the trend is higher with the potential for a rally to 1285-1295 or 1310. However, if we close below support, sales should be increased from 45 percent to 60 percent.
Wheat:
December wheat started higher today but lost its momentum and turned down from 728. Look for support at 697-690. The market has been confined to a broad based trading range since it peaked in August at 868. In order to verify an upside breakout, there must be a close past 739.75. If this develops, prices could advance to 880.
Old crop sales should currently be at the 70 percent level.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.