Closing Comments
Lynn Miller
January 7th, 2016
I read a snippet yesterday from the Feds meeting notes that hinted they are regretting they chose to raise interest rates. Something about a misinterpretation of the economic data or whatever, but as US stocks fall we may see them veer from the plan they laid out last month and the rise in rates may be slower than expected.
Also, we have record short positions held by the funds in all commodities: Corn, Beans and Wheat. If memory serves me right, we had record longs in all commodities in 2012, and you see what that got us, lower prices when they finally changed their positions. So with a record short we should have hopes for a rally driven by fundamentals. But, this will need fuel, such as a decline in the dollar, a raise in crude oil (should we see unrest in the Middle East) or a weather scare with merit anywhere around the world. I see all the bearish news and now the fundamental picture, but it seems to me we cannot have everyone on the same side of the boat. So as dismal as the picture is today, I do believe we will see opportunity yet.
Corn:
We managed a close near unchanged even after touching new lows on the overnight. The fact that world demand for US corn is slow, and the fact that the US farmer holds a record supply unpriced, makes this a tough market to get a rally going in. And it will be tougher when the farmer actually starts to sell.
Export sales today were in line with trade estimates at 10 million bushels.
Technically, two of three indicators continue to be bearish the March futures. The stochastics did issue the buy signal today. Our trading range shows signs of consolidating here, at least that will slow the hemorrhaging. . Nearby support continues to hold at $3.48. My selling targets would be $3.62, $3.66, $3.70, $3.75, $3.82 followed by $3.92.
Soybeans:
As the value of the Chinese yuan continues to fall we hear rumors of China pricing beans to help stabilize margins in the crush market. Big world supplies and slow US export demand are the two biggest controlling factors of this market right now.
Export sales were 23 million bushels today.
Technically, two of three indicators continue to be bearish the March futures. The stochastics continue to be in buy mode and we managed to trade through the 10-day moving average although we closed just below it. Nearby support continued to hold today back at the $8.47 level established on November 23rd. My selling targets would be $8.75, $8.82, $8.90, $9.00 then $9.12 if you really want to reach.
Wheat:
Even on poor exports again this week (only 3 million bushels) we managed to end the day higher. The coming cold US temps may be offering some support with a lack of snow cover in wheat areas.
Technically, two of three indicators are now bullish the March Minneapolis futures. The stochastics are buy mode and we managed a close over the 10-day moving average. All that’s lagging is the MACD, which is coming together. Nearby support continues to hold at $4.82. My price targets now would be $5.10, $5.20, $5.28 and $5.39.
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