- New Science in old markets -

Things to do on a rainy day in the grain markets

Today we are expecting a turn in most grain markets. As ever, the nature of the turn is dependent entirely on the prior market trend – uptrends result in high points and downtrends lead to lows. The prior trend in several of these grains is unclear but there has been a brief rally in soya markets. This comes after a daily scale compression recently formed and broke down in soya meal (1st chart), so we would already want to be selling this rally. Now that prices have risen (briefly) into the turn day, we have a second reason to do so.

We would usually advise selling soya oil as it has consistently rallied less and fallen more than the other two soya contracts (2nd chart, above) and it may well be just as good an idea to do that now, instead of selling meal. Actually, oil has recently risen more than meal very recently, so this preference that we developed throughout last year may be a bit stale. Selling oil does provide a more obvious place to put a buy-stop on the position however – somewhere above 51.25-51.50. Sell one of them.

This may seem odd in the same week as we advised keeping long positions in soya beans - albeit with a much tighter stop. The fact is that we are past the ideal time horizon for that ‘long soya beans’ trade and the reasons for being in it are gone.  There is an updated weekly-scale soya bean chart (below right) that shows last week's compression. This would have to break downward to get any real momentum going, but the soya products seem to be pointing that way. Get out of soya bean longs and sell one or other of these soya products short.

There is also a turn day due in corn. Today this has dropped back to the level of recent compressions, where we expect support – there is an update in the chart above. Regular readers will know what to do when a compression is re-visited like this - buy as the price approaches that level.

RE