With just a hand full of trading days left, you are probably best served by doing very little trading.
Overnight markets were closed due to the Christmas Day break. Today at 8:30 we opened up to a sea of red in the grains as traders ran from long positions. China canceled some DDG shipments (Dried Distillers Grain) this is a by product from the ethanol production (which interestingly made for a chunk of the profits from the ethanol production process. DDG’s are used as a feed substitute.
These were rejected due to GMO hits for positive on some loads. Speculation is rife as to weather they are really GMO, or if the Chinese are just hedging their previous purchases by setting up a scenario where they can walk away from product bought when prices were higher.
In the next 12 to 16 weeks, the South American crops will be in full swing. A huge crop there will make supplies more plentiful, and therefore make those bushels and DDG’s much more in-expensive.
Beans traded down to 1316, when just last week the bulls were talking sub soil moisture issues and hot and dry in Argentina. The lack of continued bullish weather, topped off with the Chinese bailing on previous DDG and corn sales were enough to spook the bean longs out. We wait now for a test of 1301.
The stock indexes continue to test the ether of new highs. End of year window dressing is to be expected. Sell those indexes at your own risk. However, come January, the bulls could be singing a different tune if we get a substantial correction.
I am taking off until next Monday. I’ll be back and we will talk about the Jan 10th report. That is shaping up to be a major market mover.
For now, notice the wedge that old crop beans are displaying on the daily charts. The move above or below those two trend lines should produce a good opportunity for traders with no bias. Bullish or Bearish, we are going for a ride when we break out of this wedge.
CER