Corn: On Friday’s limit higher trade, the market began trading corn synthetically. That trade through the options is an attempted guess at where corn should trade on Monday. The synthetic market traded in a range between 559 and about 569. Through most of the day, that is where we actually saw corn trade.
Keep in mind that over the last two days the fundamentals have been in charge, which means that fund buying is still possible to be thrown on top of current prices. Over these last two days, the dollar has been trading steady, which is no direct signal for fund activity. Some asked today if the funds would be back here buying even after the run higher. There is no current reason to believe they would shy away from buying now. New record highs in gold have not stopped them from buying that market, so its hard to think corn in the high 5’s would slow them down either.
Tuesday brings in a chance at a “turnaround Tuesday” move to fill the 26 3/4 gap left on Monday. However, we expect that setbacks in this market would be well supported. If you are looking to trade this market, recent volatility tells us that the November options are still the place to be. One possible way to trade this market is to buy short term calls on dips and buy long term puts on any large bounce. Monday's close may have foreshadowed tomorrow’s turnaround Tuesday…Ryan Ettner
Soybeans: There is talk China is thinking about ending its defacto ban on Argentina soyoil. For months, China has imposed incredibly tight quality requirements on Argentine product. Though this was not an official ban, it was punishment for a wider ranging trade dispute. Now that US soyoil has a chance at reaching an additional price tier the Chinese are reconsidering current policy. This rumor is disappointing to US soyoil, and therefore US soybean prices. Soyoil exports, which finished up the 2009 marketing year on September 30, were up 44% over last year. Part of that jump, was due to sending China three times the previous year’s level of soyoil. They were our second largest soyoil customer last year…Rich Nelson
Wheat: The wheat market was a weak one on Monday. It seems the wheat traders realized even with Friday’s cut in ending stocks we will not run out of wheat any time soon. The US wheat stocks are at some of the highest levels in the past 10 years. World wheat stocks are still clearly above the tight levels posted a few years ago…Jim McCormick
Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Rich Nelson is Director of Research at Allendale. Jim McCormick is a Sr. Broker at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.
