The grain market is taking a wait and see approach, with the market teetering below resistance marks at the old highs in wheat, corn, and soybeans. That's the good news for bears, as the market has yet to push though the old resistance levels and it starting to look like it is having trouble moving through them.
However, the market has also been able to hold recent gains, hanging on on charts to recent gains on what could be a recovery in an otherwise bear market. But we are hanging on too long, helping charts to form a pendant or flag formation on charts, a bullish technical formation. For typically markets break out to the upside in pennant (wheat) or flag (corn and soybeans) formations, with the market usually making significant gains after this formation. That makes a strong case for the bulls, which seems particularly strong for wheat bull traders due to the long time that wheat has formed its pennant formation (since last summers highs on weekly charts). That suggests a breakout to the upside is possible, a unlikely development just a few weeks ago when corn, soybeans, and wheat all broke sharply following the Nov. 9 report.
It's interesting that this should be the case, and although US exports are projected sharply higher for 2010, still we have a projected carryout of over 800 million bushels of wheat - higher even than projected corn carryout. It spite of all the world production and quality problems, the US is still forecast to have over 800 million bushels of milling quality wheat leftover from last year (which virtually every bushel of US grain was milling quality in 2010). Read more...
This blog is written by Martin Little The Global Miller, published and supported by the GFMT Magazine from Perendale Publishers.