Grain Alert: Two important factors one must consider, first is the counter seasonal low that the grains made in the summer of 2010. If the counter seasonal trend continues look for highs in February or correcting seasonal buy running up into March.
Secondly is the amount of record new positions coming from the Long Index Funds, Long Small Funds and Long Money Managers. For every long there is short and across the entire raw commodity spectrum all commercial hedgers are taking the other side and have accumulated huge losses. The memories are so short; it was only 2007 when the hedgers sold in to a mega-bull! Currently the beans are $2 above, corn is $1.25 above and wheat is $.75 under the mid November 2007 levels. (I recommend viewing the small funds and index funds charts on the cotlive website.)
Looking across some other important commodities we are witnessing some impressive 20- year highs or new all-time highs: in Gold, Silver, Copper, Platinum, (all metals) Sugar, Coffee, and Cotton. Wow! Most course grain farmers in the U.S. can't compute that; the supply of raw commodity has no relevance to the supply of money. The money of the world wants to own raw commodities because of the skepticism of the value of paper (stocks and bonds). If there are more buyers then sellers in the market it WILL go up, regardless of fundamental data.
Now for the big question, are the grains going to follow suit in way of the Gold, Cotton and other record markets? Obviously, there are no guarantees in the markets so take my next comments as opinion only not fact. For those of you that are customers and for those that have followed my in the past, know that I truly believe in following the flow of the money and power the money flow has. "You either try to paddle up the rapids or go with the flow of the fast moving rapids." Since the Index Funds are the big dogs of the commodities, one must watch the Dow and other Indexes, If the Dow goes up the grains will go up. If the Government pin needs to pop the bubble the Dow charts will give the first warning shot over the bow.
So, yes I believe all grains will make new highs, with a slight exception in the Minneapolis Wheat. Remember demand driven markets tend honor major support and tend violate minor support areas, meaning, there are corrections. The charts should be speckled with all kinds of pennants, flags, and triangles to ratchet this market higher. We will know more of price projections after the first of the year, but timing should be in 20 days either side of the spring equinox on March 21st.
So, yes I believe all grains will make new highs, with a slight exception in the Minneapolis Wheat. Remember demand driven markets tend honor major support and tend violate minor support areas, meaning, there are corrections. The charts should be speckled with all kinds of pennants, flags, and triangles to ratchet this market higher. We will know more of price projections after the first of the year, but timing should be in 20 days either side of the spring equinox on March 21st.
Note: Gann traders would be looking at near term high this week.
http://wdgannmatrix.blogspot.com/2010/11/wd-gann-soybean-forecast.html
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