After this morning’s USDA report, early calls were for grains to be slightly lower to unchanged… The US Dollar, which seems to be driving these grain prices more than fundamentals is stronger today… The metals have backed well of yesterday’s all time highs, with a disappointing lack of follow through for any bulls who came late to the party in the metals.
Also, now, we are getting conflicting weather forecasts, which have the freeze being perhaps not as bad as had been imagined 3 days ago when it showed up in the 7-day outlook…
All in all, most traders probably anticipated a lower day in the Grains.. We have good carry out in the Beans, there is a huge carry out world wide with wheat, and the yields in the Corn appear to be OK, with a crop still anticipated at 13BB…And beans looking at a 3BB plus crop.
That being said, We opened on the highs in wheat and corn, fell lower initially, but both wheat and corn have been held up with a 20 cent rally in the soybeans, which opened up at 936, posted an early low and then exploded up to the 958 level..
That action dragged along the corn and wheat as well, and honestly it was a surprise, given the report. It just goes to show, that markets are price discovery mechanisms… Time will tell if this is a shake out or something real in the mix.
Certainly, with the holiday weekend upon us, we will have thinner than normal markets…In any event, I would not be a hero trying to fade this bounce today. Its Friday, and we’ve had a sharply higher move.. There may be a correction inter day when the morning weather forecasts come out from about 11 to 12 or so… That could be a volatile time to have a position on.
In the Stock indexes, it looks like quiet trade…The DJZ has only a 45 tick trading range, sitting between 9770 and 9720.. In the SPZ its quiet as well with a 12 handle range.. Again, I think this is a function of the holiday weekend…
Gold and Silver are both lower Gold about 8 bucks lower, at around 1047, after making new all time highs yesterday at 1062.and change…Another case of buy the rumor sell the fact.. Traders looking for breakout trade at the new high have once again had their enthusiasm for new highs punished.. We have been bouncing off of technical highs in the Gold each time only to have ten to 20 dollar pullbacks… Which tells me that pros are using the new highs to unload profits…
The rest of the day should be choppy. People who caught the rally this morning in the grains, after early lows, are probably counting their blessings, heading to an early lunch and then blowing out of town for the weekend…
I would be careful trading through the rest of the day, as it will be thin and choppy at best.
Technically, we have good resistance at 370 in CZ, and 960, and 975 in SX.
Good Trading