Two different types of corn speculators
Corn: Who was going to win out? Either the big spec traders watching the outside markets suggest a small setback or the other spec traders who were watching the forecast for more rain. We saw some good volume as two sets of specs went head to head each having a couple runs. Â Â
Checking the 5 minute chart for December corn shows the battle throughout the day. Outside market specs started the day down to 407, then weather spec traders ran it back up to the day's highs of 413 1/2 within the first half hour. After that the battle continued with the bigger outside market spec traders winning out on each attempt higher. This makes sense for the fact that outside markets have lead this market higher this entire time. We have been handed bearish fundamentals yet the dollar and crude suggested grains go higher. If corn can run higher with a forecast of large yields then should we be surprised they would run it lower with a horrible forecast? Now this is only to say what has gone on today. There was not enough of a bounce in the dollar as of yet to suggest a change in the trend. Even after the close the dollar did continue to move just slightly higher. Now it looks like we have two different types of spec traders in this market, those watching fundamentals and those that only watch the dollar. Those that watch the dollar are those that got corn to these levels. It is those same people who will crush weather speculators should the dollar turn around.
Direction: Fundamentals suggest maybe a small bounce higher, the technical outlook currently does not argue with that as the dollar trends lower. Obviously the trend is still higher and that is what we will stick with. We will not fight the trend but be cautious of the trump card which is a dollar turnaroundâ€¦Ryan Ettner
Trade Idea(s): (10/21) Buy 392, risk 385, objective 412. (On Monday morning, check the 730 Kick Start page of Advisory Report. If the extended forecast shows clearer skies for the first week of November we will pull this buy order and note it on the Kick Start pageâ€¦RN)
Option Strategy(s): (10/19) Stand aside. 2010 Allendale Outlook Conference: Bill Biedermann will deliver a corn outlook to help plan your marketing for the entire year.
***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.
Corn Technical Commentary: Corn took out some resistance at 411 1/4 from back in June today, but closed well below this level. Even though the close was weak, the uptrend still remains in place here. Good support sits at the 200 day MA near 390.
Vital Technical Indicator: the next projected major turn day is November 10.
Closing Cattle Commentary
Live Cattle: So, $85.50 and $86 were the ending cash cattle trades this week. That represents a $5 jump in cash cattle in two weeks! While some of the trade is suggesting this strong move in cash and futures is some kind of outside money issue we do not agree. We do think solid fundamentals support a moderate rally into the end of the year. The entire reason cash cattle prices this year are down from last year is demand. Demand fell because people were fearful over the economy and were also losing their jobs. The economy is expected to show a moderate increase in the third quarter (growing). On the employment side while it is true we are still losing jobs, the worst is clearly behind us. Monthly job losses have been declining for several months. We may only have a couple months left of moderate job losses left. This market has realized this demand issue is coming to an end. On the supply end weekly slaughters from feedlot cattle will remain under last year levels through November and into early December. By mid-December and going through March or so they will click back to slightly above last year levels. That sounds bearish but keep in mind demand is THE issue for price determination right now. We still expect December futures to hit 88.00 pretty easily in the coming weeks.