The market was trading higher electronically as late as 7:30 a.m. before the selling took over and pushed the market to the low end of the range. Most of the open outcry session was spent in a narrow 50 pt. range between 64.00- 64.50.
Volume remains light as the floor only traded 2,000 of the 9,000 futures today and options were under 6,000 contracts. This size volume has been going on since the correction began 2-weeks ago and looks like it will last until we break out of the current trading range.
We are expecting the spec hedge report to be slightly lower tomorrow, but not a big change from the current level of 31%. Overnight trading in grains and energy were all down as well as the stock market falling hard on Friday's close.
However, the stock market made back all of what it lost on Friday during today's session and soybeans only closed down 11 cents.
There seems to be a tone to the market that is happy to trade in this range until we get the USDA S&D report on Friday. Hot weather is picking up across the cotton belt which is a very good sign for West Texas which needed the heat units.
Technically, we closed below the 9-day moving average and the 50-day moving average is getting much closer as we continue to trade sideways. The market feels like it may go lower based on the lack of demand at these levels.
If we don't get a friendly USDA report on Friday we may try and test the lower end of the trading range for Z'07 @ 62.00.
marketing@alchempro.com
