Since our last writing of grains on 4/19/09, we saw the markets find support and begin to rally or at least come off the lows. As we have been viewing the May contracts, will will now be focusing on the July contracts. However the word of the week is Swine Flu. This seems to be on the mind of all markets as it may cause the global economy to take longer to recover and have an impact on travel related and commodity related industries.
Coming into the weekend the grain markets were focused primarily on the USDA's planting report released yesterday. However the immediate discussion of Swine Flu took priority as the weighing component on the grain and commodity markets. Yesterday China announced they were banning pork from Mexico and parts of the U.S. until further notice due to the flu. This would lead to a reduced demand for feed grain and it caused the grain markets to move sharply lower. And as the equity markets fell on the flu news, a slower global economy will only reduce the needs for many commodities.
Unitl recently there was no stopping soybeans. Since bottoming on 3/2/09 (basis the May contract) the market rallied over $2.34. 4/21/09 we received a sell signal on the May contract. On 4/24/09 we received a sell signal in the July contract. There is major support in the $9.82 to $9.61 range. If that should break, we would be seeking $9.40 to $9.20 as the next major support level. On the upside there is major resistance at $10.1. The market settled today at $9.83.
Wheat (basis July) had a sell signal 4/13/09. On 4/20/09 the market bottomed at $5.1250 and tested the lows of 4/3/09, where the market bottomed at $5.1075. On 4/27/09 the market topped at $5.5050. Due to the flu scare, the market sold off heavily yesterday. There is major support in the $5.12 to $5.04 level. If this should be broken, the next major support level is $4.94 to $4.50 level. However we believe the market is currently seeking a bottoming process. The next major resistance level is $5.30 to $.5.40. The market settled at $5.22.
Corn (basis July) received a sell signal on 4/13/09. The market then bottomed on 4/20/09 at $3.70. By 4/24/09, the market had rallied up to $3.95 which is a major resistance level. Due to the flu scare the market fell on 4/27/09 back to $3.70. There is resistance in the $3.86 to $3.95 area. If we break above this level we could be setting the stage for the next up leg. On the downside there is major support in the $3.70 to $3.54 area testing the lows of 3/2/09. The market settled today at $3.8350.
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