Free Commentary

This will have been another banner week for the bulls in the grain and soy markets as we have extended to higher highs once again, and on the combination chart should record the highest weekly close since the mid-summer 2014.  The advance has most certainly been led by beans this week, which are up another 50-cents, with corn adding around 17-cents to the coffers.  Wheat as a whole has just tagged along for the ride adding in a couple of pennies.  I believe this will be the first time we have seen these markets post, what would be considered an actual advance into Thanksgiving since 2014. Does all of this mean that we are finally emerging from our years of wandering aimlessly through the desert, searching for the route that will lead us into the promised land?  I would suggest that yes, we do seem to be on the right path and currently, the bridge that will lead us over the river Yangtze into the land of milk, honey, as well as corn and bean demand, appears to be under construction and nearly completed, but that does not mean there will not be a few more bumps in the road along the way.

While we have yet to really show any definitive signs that this move is exhausting for now, here are a few things to keep in mind.  As I already mentioned, we have pushed values up against crucial resistance and to levels little witnessed over the past half-decade.  This overall rally is now 14-weeks old, with only minor interruption along the way, and you would be hard-pressed to find many, if any, rallies that last longer than that without a correction. The two surprises that began this drive, bad weather that impacted U.S. crops and the resurgence of Chinese demand, are now old news, and while there remain concerns about South American weather, that sword can cut both ways.  Finally, we need to keep in mind that next week we officially enter the holiday season. Unless there is something extraordinary, many in the trade will be more focused on liquidating positions for the end of the year than they will be on adding new.  Also, keep in mind the old adage that if bulls get Turkey for Thanksgiving, then the bears will have it for Christmas.

Looking around the macros as we come to weeks’ end, we find gold down $17 for the week and threatening to breakdown, Brent crude oil up $1.70 and pushing back against key overhead resistance, the S&P 500 fractionally lower for the week but still at what would be the second-highest weekly close on record and the U.S. down 40 points, and sitting just above key support.