GrainTV – November 28th, 2011

GrainTV went live this morning as grains continued higher following yesterday’s buying action. At the time of this post we see corn up 12, beans up 15, and wheat up 23 — all spurred higher by a dollar index that has fallen 0.32 in today’s action. On today’s broadcast we discuss some simple math producers should be thinking about when making the decision between corn and soybeans for their 2012 crop. Tune in this morning for the full report!

Cash Commentary – November 25th, 2011

With support from the export market, soybean basis moved up four cents on average across the country. The export market in previous weeks has held steady and given the cash market little support. In contrast to what has happened throughout the month, over the last seven days spot soybean basis out of the Gulf increased 15 cents. This increase sent a wave of strength up the rivers as terminals boosted basis an average of 10 cents. Basis strength along the rivers was also supported by falling barge rates. In the last couple days the rate for barges moving to the Gulf from St. Louis have decreased their rate three cents allowing elevators in the area to further increase basis.

Regional Strength
Over the week, North Dakota increased basis an average of eight cents, Nebraska moved basis up seven cents and South Dakota boosted basis five cents. In the beginning of November, North Dakota soybean basis was 35 cents below the national average. As of today they have narrowed that margin by six cents and decreased the difference to 29 cents. Basis in North Dakota is currently 23 cents above where it was recorded in 2010.

Black Friday has Markets Seeing Red

This is traditionally the day when businesses start to turn a profit giving way to the term “Black Friday.”  This week has been quite different for the equity and commodity markets.  The Dow is off 564.22 points this week to finish at 11,231.94.  Oil has fallen 13 cents to trade at $97.32 a barrel.  Gold has tumbled $40.30 an ounce and last trade was at $1,685.50.  The dollar index has risen sharply due to a falling Euro.  The grain markets have continued their slide too.

Corn has once again fallen through key support levels and is down 27 ½ cents on the week trading at $5.82 ½ on the December contract.  The fundamental and technical landscape for the grain is not looking good.  The market blew through support in the $6.00 area and is now hovering near support at the $5.85 level.  Adding to the pressure is a relatively strong dollar index.  Export sales continue to fall and were reported this week to be 312,000 MT, which is up 49% over last week.

Soybeans have been the leader to the downside losing 61 ¾ cents this week, leaving the January contract trading near $11.06 ½.  Global economic jitters stemming from Euro-zone debt issues and a slowing Chinese economy are major contributors to the sell-off.  Again, a strong dollar is providing pressure as is a great start to the South American crop.  Export sales increased to 921,600 MT, which is up 23.5% from last week.

Wheat has followed the other two grain markets lately and is down 23 ¾ cents for the week with the December CBOT contract trading at $5.74 ½.  This market is fundamentally weak with stiff export competition, large supply, and strong dollar contributing to the weakness.  There is not much out there to move this market higher and further weakness is expected.  Export sales were reported as 614,500 MT, which is up 94% over last week.

The days leading up to “Black Friday” have not been kind to the equity and commodity markets.  Both markets in general have had a steep sell off due to global economic uncertainty and a general risk-off attitude.  Weak demand and a sharply stronger dollar index have added pressure too.  Items to keep in mind going forward are: December options expiration today, first notice for December contracts Wednesday, year-end position evening and profit taking should be a factor for the next month.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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GrainTV – November 25th, 2011

Grains traded lower on light volume this week, leaving many analysts wondering if we are due for a bit of near-term correction. RSI analysis of DEC corn, first notice day for December contracts, and the deteriorating state of the European Union are all covered in today’s broadcast, tune in for a full breakdown of what these issues mean for the grains moving forward.

Have a great weekend and we will see you back here on Tuesday!

RSI for DEC Corn Nearing Over-Sold Territory

Below we have a screen capture taken from the Firetip platform. We see C1Z trading lower in today’s action, down 9 1/2 cents at the time of this post.

Continued strength out of the dollar is helping pull grains lower this morning, and we are now trading 10 cents below the 600 level we have been watching for a while as a level of near-term support. With this in mind, take a look at the low-trade volume we have seen this week as few traders are adding positions moving into the Thanksgiving holiday. We have certainly moved through this level of near-term support, but with declining volume this move lacks the conviction to spur a sharp move lower.

Looking at the Relative Strength Index (RSI) on DEC corn, we see that with today’s action it sits at 32. When the RSI reaches 30, technicians consider the contract to be in over-sold territory. This supports the idea that we might see a bounce following low volume selling, but lets take a look at the last time we saw the RSI reach 30. This was back on September 21st, and we saw DEC corn trade nearly 70 cents lower before finding the bottom on October 4th. This highlights the fact that technical indicators can be helpful in making trade decisions, but are only a small piece of the puzzle.

If you would like to chart DEC corn today in your home, take a demo of Firetip or contact a Grain Hedge broker – 866-472-4607. Have a great Thanksgiving everyone, and we’ll see you back here on Friday.

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THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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Head and Shoulders in C1Z

In today’s Technical Tuesday installment, we will examine the DEC corn chart and the
interesting formation that is near completion. Below is a snapshot of the DEC corn chart
taken from our Firetip trading software.

As you can see, we started this head and shoulders pattern in mid-May of this year.
Buyers eagerly came into the market forcing corn up to the first peak, known as the left
shoulder. Then, sellers came in at the highs pushing the market to the June 30th lows
establishing the neckline. Buyers returned and drove the market all the way up to 779
on August 29th forming the head. The buying dried up sending the market down to
the neckline near 575 on October 3rd. Tentative buying re-emerged to create the right
shoulder before falling again towards the neckline. Volume is important when examining
a pattern such as this head and shoulders formation.

Big volume forced the market to the left shoulder, diminishing volume formed the head,
and the right shoulder was formed on even lower volume, evidence that buyers have
exhausted themselves. This pattern will be complete if we break through the neckline in
the 575 area comes on increasing volume. To give our Firetip software a try, please take
a demo by clicking the button below.

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THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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Futures Commentary – November 17th, 2011

It did not take much by way of bad news to propel the commodity markets out of their recent ranges. The equities fell too, as Euro-zone debt issues continue to bolster risk-off attitudes and trades. The Dow has lost 382.95 points as of the close Thursday finishing at 11,770.73. Oil hit its highest level in several months early in the week, but is unchanged overall at $99 a barrel at the close today. Gold has slid $68 an ounce to settle at $1,720.60, while the dollar index has risen sharply. The grain markets are down sharply this week.

Corn is the leader to the downside for now losing 24 cents off the December contract ending trade Thursday at $6.14 ½. Today was finally the day when we broke out of the recent sideways trend and fell through several support levels along the way. Economic uncertainty around the globe and very poor export sales opened the door for bears to jump into the driver’s seat. Speaking of export sales, they were reported as 208,900 MT, which is down 17% since last week.

The technical and fundamental landscape for soybeans is relatively weak adding fuel to the bearish fire. The oilseed lost another 7 ¼ cents on the January contract to settle at $11.68 ¼ Thursday, a four-month low. Harvest is all but complete domestically and internationally Brazil and Argentina have had a near-perfect start to their respective growing seasons. Rumors of Chinese purchases kept support under the market preventing a virtual free-fall. Export sales were reported as 746,100 MT, which is up 23.5% since last week.

Wheat continues to suffer from excess global supply and lost 23 ¾ cents on the December CBOT contract to finish trade today at $5.92 ½. The Southern Plains received some beneficial rains to aid the winter wheat crop that is almost completely emerged after a rather slow planting. A sharply higher dollar index certainly isn’t helping matters either. Export sales were reported as 317,100 MT, which is up 6% from last week.
Bears have once again taken over the driver’s seat for the commodity markets. Relatively weak demand, a sharply stronger dollar, and ample supplies will cap any rallies in the near future. Attention has turned from supply side issues to the demand side and the picture isn’t pretty.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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Cash Market – November 17th, 2011

Spot corn basis continued its gradual climb this week, up two cents on average across the country. The market was a little more segmented this week with strength seen along the major river systems in the center of the country.

Different from weeks past, we are seeing the most strength in the northern states especially along the Missouri River. North Dakota increased basis by an average of five cents, South Dakota boosted basis by six cents on average and Minnesota moved their basis up by three cents on average. River terminals along the lower Mississippi moved basis up two cents with support from the Gulf which increased basis by three cents over the last seven days.

Many states in the Eastern Corn Belt saw basis remain unchanged or drop over the week. In recent weeks much of the basis strength in that area was tied to the demand from feeders located in the Eastern Seaboard. This week those feeders did not increase their basis and caused states like Ohio to drop their basis at least one cent on average.

Grain Markets Getting Basted Before Thanksgiving

Monday was met with another large sell-off in the grain markets.  December corn fell another 12 ½ cents to $5.97 ¾, January soybeans were off 20 ¼ cents to $11.48, and December Chicago wheat lost 6 ¾ cents to $5.91 ½.  For corn, the lowest point since October 5th was hit.  Soybeans hit a low that has not been seen since November 23rd, 2010 and Chicago wheat dipped to its lowest point since June 29th, 2010.  Adding to the bearish tone is a bevy of negative information that includes, but is not limited to:

  • interest rates on European debt continue to rise
  • the Super committee failed to come to any sort of debt reduction agreement
  • grain exports continue to lag behind expectations
  • dollar index is relatively strong

 

These are just some of the issues weighing on commodity and equity markets.  The next few sessions will be important for the grain markets, in particular corn, as the markets are pushing towards some key support levels. It is important to keep in mind this week that low volume is to be expected due to the holiday.  With low volume comes inherently higher volatility.  Also, December options expiration is Friday this week and first notice day for December contracts is approaching on November 30th.  Volatility tends to increase as we near dates such as these.

The fundamental and technical landscape is not looking good for the grain markets as a whole.  There are a couple of bright spots to be thankful for however.  Corn basis is historically strong for this time or year and some good profit margins are available to livestock producers.  Taking advantage of opportunities when they are presented is paramount to a successful marketing plan.  To discuss your marketing strategies with one of our brokers, please give us a call at 877-472-4607.

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GrainTV – November 18th, 2011

Grains ended the day mixed with both corn and soybeans trading off of key price levels in today’s action. Corn traded down to 601 1/2 before closing at 610 1/4, while beans traded lower to 1152 3/4 before closing the session at 1168 1/4. The dollar index continued higher this week as a result of continued Euro-zone weakness, and we expect the situation in Europe to get worse before it gets better. For a full breakdown of what this means for the grains and how producers can protect their bottom line, tune in to this afternoon’s GrainTV broadcast. Have a great weekend.