Market was trading lower electronically, but found good support near the 65.00 level in Z'07 and the 63.00 level in V'07. This represented almost a 25% correction from the highs, but the bulls managed to make up some of that throughout the session to reach 66.50 by the end of the day.
This was also influenced by a nice rebound in the grains market which had corn and soybeans up 25% of their limit move and wheat was up 75% or 22 usc. Volume was on the light side today as the market traded most of the day in a narrow 100 point range with combined futures volume of 17,500 and 14,000 options.
We are expecting a lower export sales report tomorrow after the high prices in NY have made new sales very difficult to make. Even on the pull back in NY, there has been only a small amount of inquiry, but no business in volume has been done. The key to holding the market in a trading range for Z'07 between 65/70 usc/lb.
will be stable to higher grain prices and good demand to start coming out of China. If this fails to happen, we may see the market start to struggle in this price range and may find the October back in the low 60's in order to put together new crop business in any volume.
Technically, the market did have a nice rebound today, and we may test higher levels above the market in the short term to try and keep the bulls in control. However, the bears are sensing weakness for the first time in this long 8-week rally and will be more aggressiveto take advantage of selling opportunities.
Bears will find support at 66.00 and 65.43 in pursuit of breaking the technical strength at 65.00. The RSI has corrected significantly to only 66 from 80 which was a much needed pullback. The range short term seems to have found a top and bottom and may lead to some sideways trading on light volume between 65/69.
marketing@alchempro.com
