Joined: Mar 2010
Posts: 57
 
  Viet Nam
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 Dec 06, 2010, 11:23:24 PM | #1 |
You may find it lazy at first when looking at the long review on Grains. But whenever you trade on this or related markets, they are all useful information . I will not take your time any more. Just have a look at it to see what Pitguru Matthew Pierce listed out for us!
The Grains Review
For the week of December 6th, 2010
On Friday traders saw a solid rally across the floor following a massive pop in the Euro versus the US dollar. Crude oil price continues to rally offering another incentive for corn with Ethanol now looking to move out of government subsidies. The price leader was once again wheat with weather problems increasing as we roll into the hibernation period here in the US. The dryness in W. KS, OK, NE and TX remains prevalent with no relieving rains expected. Australian weather remains a major issue as well with too much rain in the SE and no rain in the NW. This is a static situation that is helping world wheat values move higher. Beans and corn moved to the upside lacking any real thrill with Argentina bullish and Brazil bearish. Talk had China buy 1 cargo US beans on Friday for May delivery. I am digging further into this before believing. China was relatively quiet with continued talk that they will have to import massive amounts of international corn in 2011. The bigger talk was the Mexican government and their new found interest in EOO (Exchange of Options). The market saw thousands last week with the CN, CU and CZ puts popular with the CN calls bought by the government. This is a major shift in their activity that should be watched by many in the trade. If the CME wants transparency I don’t think this is the way to get it. I don’t know who transacts these but there is plenty of talk that Bunge is involved. The overnight session did little with wheat again the price leader as both beans and corn treaded water. Bean oil gained with palm rallying significantly due to supply problems and 2 year high prices bringing in speculative capital. Heading into the day session there is no change in sentiment with the USD acting as the bearish input with demand and wheat weather acting as the bullish fundamental factor. Look for row crops to struggle as wheat is again bought or covered against. I think oil should again gain against meal with world oil prices surging.
Beans are called mixed to start with the market caught between the range high at 1348.50 and the 20-day MA sitting at 1263.25. Indicators support a bullish stance with S. Stochastics sitting in a positive stance in the bottom end of the range. Corn is called 4-6 Lower on consolidation pressure with the 50-day MA sitting at 557.50 offering first major support. Indicators are strictly positive with plenty of room. Wheat is called 10 Higher looking to achieve the recent chart high at 800 ½. The overnight trade took out the long term resistance line offering more breakout potential with wheat still holding a net fund short. Meal is called 1-2 dollars Lower with the 20-day MA sitting at 346.40 offering first support. Bean oil is called 20-30 Higher, like beans, caught between the 20-day and the range high in a wide range. Indicators support a bullish stance.
On the fundamental side, Australian weather remains another major factor for wheat with the SE remaining drenched with quality tanking. I think this will favor both Minni and KC especially following the tightening seen on Friday. Today is an opportunity to look at getting involved in both KC and Minni versus Chi following the dramatic profit taking on Friday. Look at the long term charts and you will see my point. The long term support line is now within reach. As another example of relative strength, into delivery, WZ was 5 higher overnight with both KC and Minni trading 25 Higher…which do you want to be long? Brazil and Argentina remains split down the middle with the former looking at heavy southern rains adding to already good conditions. Argentina saw weekend rains fall short of expectations which could help corn more than beans. Above normal temps are adding to the concern with no rains expected through the first part of the week.
Late sales this morning are adding to bullish momentum: Beans 171TMT to China, 116TMT Corn to Unknown, 20TMT oil to unknown and 160 HRW to unknown.
Looking to the week ahead, I see WASDE on Friday offering minimal impact overall. I want to see the breakdown on domestic wheat stocks with the split between quality wheat and feed wheat to widen. Outside of this do not look for anything from the domestic side in row crops. The US government will most likely wait for the final numbers due out on the Jan report. Weather for the wheat production areas in the US and Australia will be the biggest factor on the fundamental side form a production standpoint with Chinese demand the biggest consumptive factor. Look for a higher bias this week as fundamental factors allow the market to shrug off any negative macro momentum. I think wheat will be the price leader, oil will win against meal while beans and corn look to demand for direction. I believe the early week sales are supportive of a bullish bias that I continue to hold through the end of the year.
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