Market Monitor

By Marlin Clark

Chicago Markets sneak higher

Maybe I have just been asleep at the switch. Maybe I am loafing through the day, not paying attention. Maybe there is something finally going on in the markets and I am slow to react. There must be some good excuse for what I told a farmer this morning.

"On, nothing much going on. We gained overnight what we lost yesterday."

Well, it seems like that, but it isn't true. It has felt like the markets were just see-sawing around for no real gains. It seemed like we were in a trading range with no real direction. Problem is, I looked at all the charts this morning and we are making real progress with real short-term uptrends in place and a fairly dynamic wheat chart in place.

What happened? If I look carefully, we have been up and down on opposing days, but we are gaining a little in each swing. In the case of wheat, the last few days we have gained a lot. While I have been trading corn and beans, the wheat is back to the highest price since just after harvest.

For wheat, it is that time of year. We stop pushing away cash bushels at elevators that want to use space for corn and soybeans. We start to look around at what is going on in the world. We start to think about all the things that can happen to the winter wheat crop before spring. We look at world-wide supply and demand and remind ourselves that there is no more wheat until the Australians hit the fields late in our winter.

Somewhere in the process we made a low at 6.56-1/4 March Chicago futures, rallied slowly over 8 trading days to 6.90-1/2, then screamed higher. Overnight going into Tuesday we hit 8.09-1/2, which makes the move over $1.50. Where have I been while this was happening? Was there money to be made? Someone is cashing in on this.

Meanwhile, we have seen gains in the corn and beans. They are not steady gains, but steady by jerks. March corn futures had a low just back on November 23^rd of 5.20-1/4. Overnight we have traded 5.75-3/4, 55 cents higher in a few days. We closed the overnight session on the high. We are still a long way from the recent high of 6.17-1/4 posted November 11^th, but we are starting to think about a two-thirds retracement of the move lower. If we get that, we will get ambitions of one last leg higher.

The soybeans are a similar matter. The low was November 17^th at 11.75-1/4. The high was Monday at 13.06-3/4. That is now just 36 cents below the recent high of 13.48-1/2 back on the 12^th of November.

So, now we look for perspective. Are there fundamental reasons why we are rallying? There is nothing large that I notice, but I already admitted I have been asleep for a week. Or, are we just reacting to a big break lower that had little fundamental news to support it?

There is talk that the corn and bean carryout is going to continue to tighten. That is the kind of talk that helps a market retrace, but does not blow it out the top. I continue to view this market at a selling opportunity. These are historically high prices, having been seen only once before. The last time the cash buyers had to stop buying because they ran out of margin money to risk.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.