Bears get Caught in a Trap in the Grains !

  • Posted on: March 20, 2015

We had a nice snap back today in the grains. A weaker dollar today, combined with some talk of winter kill in Kansas wheat set the weak shorts running. What are weak short? Those who sold it late in the hole, probably on Wednesday’ 5-month lows in corn and beans. Funds remain short a bunch of Chicago Wheat, so it doesn’t take much buying on their part to get us these sharp bounces. Funds, over the past 2 weeks went from net long 80K contracts to short probably 30K contracts. Open interest grew by 90K contracts over the past 8 trading sessions. This was people selling more as the price fell. The move below that wedge or triangle formation also caught a lot of “technical” traders technically wrong, when they didn’t take profits when they had them.. Today’s action looked like all those johnny come lately bears folding up their tents and heading home flat for the weekend. I wrote before that this wedge formation gave great opportunity. It did. For both the bulls and the bears, as long as they didn’t fall in love with their position.

March 31st Planting Intentions looms. Over the last 7 years, the average move on that report has been 24 cents in corn, 40 cents in beans and 30 cents in wheat. Plan accordingly. For now, we won’t know until next week if this was a head fake, or just a return to consolidation pre-report. We haven’t had much follow through in corn for the past 20 weeks. CER