Allendale Wrap-Up 11/24/2009
Corn: We need to check our calendar today because it definitely felt like a Wednesday. For the last three weeks the funds have finished up their buying for the week allowing selling to take over and have the market slowly grind lower. Once again, as was the case last week, corn had troubles staying above $4.00 per bu. When the fund buying was present early on in trade it looked as though corn could finally move past that level and find new highs for the move if the buying continued through the week. What if today actually was our typical Wednesday though? What does that leave us with for the rest of the week? Corn closing lower than all of last weeks lows on a Monday does not look positive for this market at all. For the rest of the week we can expect lower than average volume which often allows for small orders to make a big difference. This means that hedges and commercial selling could force this market quickly lower. For three weeks now the corn market has relied on the fund buying through half the week. If we don’t see it reappear tomorrow then we should quickly see what we have in store without that buying. In December corn the 200-day moving average comes in at $3.85 which was also the low for today. We have been watching the index funds lately rather than the trading funds but a technical level such as the 200-day moving average could hold some sell stops for corn from that group. Support is over leaving sellers in charge. Funds may have taken the sidelines for today and bulls had better hope they come back tomorrow. Given the potential setback if the index funds do take the week off we want to once again emphasize the need to put on additional hedges for next year at the prices we see now.
Soybeans: What started off as a big run higher turned into a disappointing day that barely held the steep uptrend line. Looking back at the resistance level of $10.68 per bu. we now need to see what happened when we failed at that level. What we found when this happened in August is an overnight high of $10.68 with a close three days later at $9.5225. Today both the overnight trade and the day session tested that resistance. Another day of selling tomorrow would break the uptrend line which could spark even more selling. Those who are bullish this market will need China to step in with more significant buying. A good export sales report this week is almost essential to hold on to current prices. As with other markets the beans will likely see very thin trade. An old saying would suggest that the bulls eat turkey on Thanksgiving and the bears eat it at Christmas. While it is a saying that suggests buying through this week, if we break the trend line that may seriously be in jeopardy this week. There are quite a few levels where selling could step in just below current levels. This market needs to see active buying tomorrow or it is setting up for what could be an active sell off.
Wheat: Wheat tried to hold on to early gains due to the dollar getting hit hard this morning but after corn and beans dropped far enough the wheat finally followed. Seeing as how this has become a strictly technical market we must see that the $5.58 level has acted as resistance a couple times now so moves up to that level again can be seen as a sell. As we mentioned on previous directional trades it would more than help to see the dollar higher before putting in sell orders no matter how well backed up that trade may be technically.
Ryan Ettner is a registered broker and grain analyst at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com