Looking back over the newsletters for the last week I realize that I may not have properly stressed the risk of carrying Grain positions into reports. I apologize if there was any confusion or if you felt you were not properly warned as the report had a significant impact on the Grain market. Also, to clarify, all market suggestions and trade ideas were made this morning prior to analyzing the Grain report as any Grain analysis is likely not valid anymore.
You have most likely already looked at the report, but there obviously was very little bullish news to take from it. The old crop Soybean market was severely caught off guard this morning as bullish sentiment was building in the market going into the report. There was a tri-fecta of long covering on the open as money with long outright positions, beans vs. corn spreads, and old crop vs. new crop spreads scrambled to liquidate. This made for a very attractive short on the open in the May and July contracts if you came into the report flat Soybeans. The May contract already looks like it may have found support for the day, but there is stronger support from $9.23 1/2 to 9.27 near the lows of the range this month.
The July - November Soybean spread completely tanked on the open today as the stocks number was bearish against a prospective planting number that was near the average market prediction. Furthermore, there are rumors today that strides have already been made in resolving the Argentina strike situation. I do not see any reason to be bullish July-Nov anymore and would not recommend buying it because any potential further gains appear limited after the break.
For May Corn I still have a bearish head and shoulders pattern intact that has a projection to $3.30 1/2. I also have a continuation leg down projection for May Wheat to $4.48. Although the May Soybeans look disastrous the biggest story of the day is the break in Soy Meal. The Meal chart looked even better than the Soybeans, so it took most of the downside brunt on the long covering break opposed to the Bean Oil.
On important Grain report days in the future I intend on providing a market update after analyzing the reports prior to the open so any Grain trades and predictions are up to date. I will also give more ample risk warning leading up to the report so that more passive Grain traders are not caught off guard.
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