Commodities | Oct 27 2011
By Jonathan Barratt
The overall grains complex is starting to look more attractive and the continued volatility of the market is testing the resolve of many of the traders. In essence, we feel that the market is trying to form a low however, traders are reluctant to put on new positions ahead of any statement from the EU.
Corn
World ending stocks for Corn remain tight and we expect this to remain the same in particular as farmers are reluctant to put their harvest to the market whilst prices remain low.
Technically, the range for Corn is US 600 to the downside and US 655 to the top side. Dips back to US 625 should be supported. Our bullish move is frustrated if US 580 is compromised. Any stops on long positions need to go in at US565.
Wheat
The volatility in the wheat market continues to frustrate traders, this remains the same as last week. We are hearing that the market is nervous about the prospects of supply coming from Australia and Russia. In Australia the recent rain is suggesting that WA will likely double its crop and the countries overall harvest will be close to a record. The main concern we feel is that the BOM is predicting a La Nina event this year so may be a wet harvest. As such protein spreads will be volatile.
We are still long the commodity from last week.
Technically, support now comes in at US605. We need to see US650 broken on a daily close to see the trend higher resume. Momentum indicators remain bullish. Stops remain at US595.
Soybean
As mentioned last week the momentum for the move higher was slowing and we could expect the market to enter into a period of consolidation. Taking profit has been the order of the day however, we feel we are getting close to a low. A pull back to US 1215 is on the cards.
Technically, momentum indicators are toppy and we suggest that we will enter a period of consolidation. This comment remains the same as last week.
Rough Rice
Rough Rice continues to look supported from the floods in Thailand and traders are getting nervous that production quotas will not be meet. We continue to suggest that this will be temporary as we look towards India for a record harvest to fill in the gap as a result of the loss from Thailand.
As from last week we continue to expect to see a lift in prices but nothing too dramatic at the moment. Resistance stands at US 17.50 which is the top end of the range.
Produced by Jonathan Barratt direct from the trading desks of Commodity Broking Services, Barratt's Bulletin provides expert analysis of commodity markets, global indices and foreign exchange movements. Click here to take a no obligation 21-day trial to Barratt's or to learn more visit www.barrattsbulletin.com. Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).
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