Another rally which ends on some late profit taking. A small export sales report of 140k sales and 170k shipments lead to a small pull back but was eventually met by good fund buying near the close as we broke through the 68 cent level in H'08 to reach the highest price since Nov 14th.
We don't see any chance for export sales to rebound any time soon as we are 500 pts off the lows and many mills are covered into first quarter and the holiday breaks which extend until Chinese New year concludes around the 15th of February. Volume was average today with 21,000 futures and 20,000 options as open interest continues to grow close to 230,000.
Business remains quiet as the funds are determined to end the year on a high note even though wheat and other commodities came off today. Soybeans on the other hand remain stable and many predict there will be further upside. The stock market remained close to unchanged as the dollar fell again today as we approach year end.
This has kept energy and metals supported as we flirt with $100 oil and will wait to see if we get additional funds committed toward commodities early next year. However, we would not be surprised to see some profit taking from the funds on Monday, which may cause some mixed signals for the technical forecast in the short term.
Technically, we broke the resistance at the 68.00 cent level, and continue to hold the upside trend line started in early December. RSI is close to 65% and the specs are adding back to their long position which could reach 25% by next week. With the 9 and 50 day moving averages getting closer to crossing, we may have an opportunity to make a run at 70 cents nearby.
However, there will be plenty of scale up trade selling which will keep a lid on the market short term. Once we get into 2008 and new sales continue to struggle and specs get longer, the market should be due for a correction.
marketing@alchempro.com
