NEW ALL-TIME HIGHS?

Feb 12

WEEKLY GRAIN NEWSLETTER

This is Jeremey Frost with some not so fearless comments for www.dailymarketminute.com

Choppy trade or fireworks?

Last week was a rather choppy two sided trading week, up until Friday when all of the sudden the same news that started a massive rally a year ago came back to the forefront. That being the Black Sea war between Russia and Ukraine, as it appears Russia got much more aggressive as numerous reports are that will continue in the next several weeks.

Magically it mattered again and we saw our big 3 take off on Friday with wheat up around 30, beans up nearly a quarter, and corn nearly a dime.

The price action left the charts for wheat looking very positive, with upside breakouts. Beans had a new high close for the move, while bean meal made another new contract high.

This all happened at a time when the CFTC has stopped reporting and it appears they won’t have a report this week either. Typically that uncertainty does not keep investors at home. How much fund short covering has happened in wheat and how much could happen in the near future is a harder question to answer when you start playing cards in the dark.

Will the Ukraine-Russia escalation continue to increase? That is a question that only time will tell, but I think we will see history repeat itself.

Momentum and History

As mentioned I think history repeats itself, I think the reasons we had massive rallies starting around this time last year will once again come to the forefront. Including the tensions in the Black Sea, the issues with world production, along with the funds driving prices higher. Seasonally we are ready for our markets to start rocking and rolling much higher in the coming months.

The fact that so many elevators and advisors have been preaching for farmers to fear selling for months, has been able to help us get to where we need to be to actually get much higher prices. See typically we don't see higher prices when everyone has sold nothing, we see higher prices after plenty of grain has been marketed.

They used to say once the American Farmer had thrown in the towel then we would rally higher. I think plenty of farmers have sold plenty of new crop grain. I know talking to various end users they seem to have a pretty good book on. Some are well ahead of typical in terms of the amount of coverage they have.

To go higher sometimes we need to have things checked off of a list so to speak. Such as;

Farmers having sold a high percentage
Both bears and bulls, if everyone has bought who is left to buy?
Funds interest
Fundamentally reasoning
Take out certain resistance points on the charts…..such as
- 3 month high
- 6 month high
- Calendar high
- Contract high
- Multi year high
- All time high
Demand or Fear based
- Demand rallies can live longer than fear of supply based rallies.

Final Destination - New All-Time Highs?

We haven’t recently made new all time highs in any of the grains, but we do have several that have started building momentum in a manner where I believe our final destination is going to be new all time highs…

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