After selling off earlier this year the last few weeks have seen a little rally from the lows. Late February oats signaled a start of a rally, followed by corn, wheat and soybeans in early March. This rally has several possible components. 1) As we enter the spring planting season, grains have a tendency to bottom. 2) In recent weeks the market participants are cautiously increasing confidence that the American economy may be starting to stabilize, or at least less fear of a falling economy. Thus greater demand for commodities. 3) Talk that China's economy may be starting to bottom is also supporting not just grains, but several commodities. Export demand is always a strong factor in pricing grains. 4) The last several weeks have seen a falling dollar and this equates to increasing overseas demand for commodities. 5) Another level of support has also been seen in the recent rally of the Australian $ and the Canadian $.
The grain markets may be getting a little tired. They are nearing selling signals and will either find support in the next couple of days or begin the next leg down. Basis the May contracts, corn has major support in the $3.85 to $3.79 range. Soybeans has major support in the $9.37 to $9.30 level. Wheat did signal a short move yesterday and is breaking major support levels and would need to break above the $5.63 resistance level to find the next bull market.
1 Comment
Scott
3/25/2009 08:53:08 am
What a great site
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