Joined: Mar 2010
Posts: 57
 
  Viet Nam
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 Nov 02, 2010, 01:05:53 AM | #1 |
Just a quite introduction, I will not take your time. Now, just check out the Grains review by our expert - Pitguru Matthew Pierce - to see what will be going next in the Grain market in the next few days.
The Grains Review
For the week of November 1st, 2010
Last week saw an overall bullish sentiment move back into the market with wheat leading the way. Traders saw the previous week’s COT and saw that wheat was the only short on the floor. This triggered fund buying that backed up the increasingly bullish turn in fundamentals both here in the US and in Australia. Bean oil gained nicely against meal with beans surging on Chinese demand. The corn market rallied but failed to spark any major movement in fund positioning. The month ended without a bang in a narrow ranged trade. From shifts in OI the market saw small gains in wheat and corn with beans seeing profit taking. I attribute the small gains in BO to new shorts that were forced to cover on the overnight rally. The overnight session was moderately higher with support from a weaker USD and stronger crude on the macro side. On the fundamental side I continue to see gains in Dalian markets as Chinese demand remains stout. Palm was firmer helping oil gain against meal with oilshare again looking good. Weather was moderate to bullish with all eyes now focused on Australia. The day session looks to open in line or stronger with a strengthening USD the only new bearish impact I can see versus the overnight. Look at macro more than fundamental today with nothing fresh to garner or shift momentum.
Beans are called 3-5 Higher still reaching for their contract high at 12.4875. The market seems caught between strong demand and good plantings in S. America. Corn is called 4-6 Higher breaking above the contract high overnight reaching 590 ¾. The only target remaining is the $6.00 strike. Wheat is called 4-6 Higher targeting the Oct high at 739 ¾ this week. Indicators offer best upside potential of all agricultural commodities. Meal is called Flat/Mixed looking to move against the new contract high at 340.50 this week. Bean Oil is called 40-50 Higher recovering from Friday’s profit taking decline with the fresh contract high of 50.15 the initial target.
On the fundamental side no break is seen for the SW US and the suffering HRW crop. The recent scattered rains have not offered anywhere near enough moisture to ensure germination. This is adding to the overall fundamental support for international wheat. Both the US and EU prices have rallied sharply recently and look to continue as long as both hemispheres experience trouble. In Australian weather, the NW is still a desert. There is no break in sight 8-10 days out. This is a major issue for spreads as well as flat price with its area’s quality not afforded to any other growing area. Watch Minni versus CHI to take advantage of any move. No weather threat out of wither Argentina or Brazil with both seeing average temps. Argentina is dry right now but has major rains 10-days out. Brazil is wet right now drying into the weekend.
Chinese cotton markets were limit higher overnight painting a nasty picture in the upcoming US acreage battle. The delta will be up for grabs with wheat, corn, beans and cotton all near or at record prices. This is going to be the talk of the trade moving forward into the Jan report. I know that is a long time away but there is no reason the upcoming planting season cannot be the strangest ever seen.
Open Interest moved as follows: Beans -12729, Corn +8697, Wheat +5171, Meal +1259 and Bean Oil +2188. I attribute the gains in corn to new money with beans taking profits. The latter is due to fundamental selling against good starts in both Brazil and Argentina. Couple this with the changing political scene in Argentina and we could see a tremendous jump in their exports taking away from the current US advantage. This is the key factor in the N/X inverse currently seen in soybeans.
In conclusion, the week ahead should be muted due to the upcoming elections in the US, political unrest in Argentina, bomb threats in Greece and the US and mixed weather across the globe. I continue to like the upside but it may not have enough steam to get there ahead of the all important WASDE report next Tuesday. Concerning spreads I like the bear side of bean spreads, the bull side in corn spreads and I love wheat versus corn. I am not a fan of owning oilshare but it seems to be the right thing to do. I do not like meal prices here due to the increasing crush margins as bean oil is shipped all over the globe. Palm oil prices are to blame here. Sentiment remains strictly in the bull’s corner and should remain so through the report. Retain an overall long bias with nothing changing that would point to a major flush out coming soon.
Daily information on grain market will be updated at grains prices. Keep up with market changes for your trading!
**chart courtesy Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results. |
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