Gap!
Thanks tjc for getting us started. I was watching but busy doing the ng update.
As mentioned last week, I wouldn't be short the grains.
Since the real bad weather has already happened(huge snowstorm) I can't use weather as the main indicator.
The ND crop is buried under snow and damaged. Freezing temps did some additional damage farther southeast over the weekend but that's already happened and why i was long last week.
This week, the weather looks dry and warming up....................then, it turns wet again and possibly colder, with the rains coming back, starting next weekend.
The June highs for SX were at 948 and so far tonight, the high was 945.5 after opening with the gap higher 940.25 around 2c higher than Friday's high.
Corn opened a tick below $4 and 1c above Friday's high. So a 1c gap higher.
I am not interested in buying here though(thats just me).
If this bad weather caused most of the spike..........then the weather is known already and the next stretch of bad weather is still almost a week away.
If it was the China news, we know it already now.
If we fill the gaps, then its a potential buying exhaustion signature of the price charts.
The USDA report was very bullish for beans in my opinion, so I think that the beans have more upside......whether its now or later. Beans stocks for next year have dropped in the USDA forecast by over 500 mb just since June. WOW!
I think the USDA will lower production for beans in the next report too.
Do you or anybody else have thoughts?
Previous posts on grains/beans:
USDA Crop Production report Oct. 10, 2019
https://www.marketforum.com/forum/topic/40659/
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Soybean Update
https://www.marketforum.com/forum/topic/40705/
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Export news
https://www.marketforum.com/forum/topic/40567/
Fund positions in grains
Started by metmike - Oct. 13, 2019, 8:34 p.
I am looking at 404-406 as an exit area to leg out of my dec-dec corn spread. Corn has come a LONG way.
If beans can get to 952, I will sell for a setback.
This is the fifth week up for beans and corn and most of the bullish news is known.
Longer term, short crops get shorter, but I am looking to take some profit
With both weather and China news the lows for the yr. should be in. Just mho.
Should be able to buy technical breaks. Notice NO carry in corn spreads CZ/CH and CH/CN. Someone wants corn.
BUT beans again imho I would sell the carry (July contract) and store beans right now.
Hogs should be interesting tomorrow.
That lines up with my thinking too tjc, though I covered on Friday.
Thanks for your insight/sharing.
My targets are 403 and then 417 down the road.
Beans I have 947-949.25 and then 957 and Sept. beans high for 2019 963.75
Thanks bcb!
Good to read you again.
Not price projection but yields. Our corn has run 190-243 and soybeans 61-78 so far. Not near as good as last year but way better than I expected.
Thanks pll!
pll is located in southeast IL.
Corn has filled the gap higher and is only up 1.25c right now.
Beans are also near the lows but have not filled the gap higher. This is what I was concerned about with a possible short term buying exhaustion which happens, following the market getting a strong piece of bullish news that causes buyers, sometime panic like buyers(to cover shorts) to buy at the market aggressively and overwhelm shorts to the point, that to fill all the buy orders, the price has to go up several cents higher than the previous highs.......on the open.
If there is no follow thru buying(because the bullish news maxed out), with that initial surge satiated, sellers will find a scarcity of remaining buyers and have to push the price lower to get filled/matched up with a buyer.
This would mainly be seen AFTER a decent move higher, similar to what we saw, especially in the beans.
However, if new, more bullish news happened overnight or funds tomorrow morning decide they are in a buying mood again(like recent days) then they will negate any negativity of the signal that their night trading counterparts have displayed.
For beans, this pull back to the gap, in that case might be a buy but not for me. As I mentioned, the weathers bullishness already peaked and is known, which is what I trade.
Trading the first 2 days this week does tell us that the gap higher in corn was in fact an exhaustion gap.
In the beans, though we saw a short term exhaustion gap signal Sunday Night and a 15c sell off by early morning, the market came back above the gap area, which negates that formation............but additional selling pressure took us lower again on Tuesday.
We have run out of bullish news. The NOPA number was bearish today and USDA crop report is old news.
The weather is turning more bearish now. Rains coming up this weekend/early next week will be heaviest in the Eastern Cornbelt but not heavy in the west.
Also, after that event, it looks pretty dry in late October, so excessive wetness and harvest delays are looking less likely than a couple of days ago.
Thank you for the weather factors, MetMike
Frankly, I am looking to leg back into my dec/dec corn spread. 384 to 388
Also, the break in SX has been, in my opinion, very modest. 922 would be a gift, certainly 910.
Watching today for a POOR close, and instituting trade in night session
Thanks tjc,
The weather is still bearish but rarely a factor in late October.
Heavy rains in the Eastern belt early next week but mostly dry before and after that so no major problems with harvest.
Looking at price action last week and Sunday, it's even more obvious that the spike higher was caused by the major snowstorm and first hard freeze in the northwest belt.
It's in the rear view mirror now.
Harvest pressure at this time of year can be significant but this year, maybe yield reports will count the most.............and bean fundamentals look like they have flipped to bullish.