Mid-day Update 10/29/08

A sharp rise in crude oil and the fall of the U.S. dollar pushed grain and soy futures to limit or near limit gains at mid-day.

Chicago Board of Trade (CBOT) markets are followers of the macro trends, and the shorts are caught from their sales of yesterday. Volume has been active, and chart buying has been widespread.

Corn, soybean and wheat futures are trading limit-up at mid-day. Option values have corn trading at $4.24-4.25 with December soyoil trading at $34.60-35.00. Wheat and soybeans are trading just a few cents above limit up.

The fund demand has been sizeable this morning on short covering. CBOT floor brokers estimate that funds have bought; 12,000-14,000 contracts of corn, 6,000 contracts of wheat, and 10,000 contracts of soybeans.

In soy products, funds have bought 5,000 contracts of soyoil and 3,000 contracts of soymeal. The big unknown is whether traditional trend followers are getting out of their short positions or if this is now money returning to the commodities.

We’ll have to wait for Friday’s Commodity Futures Trading Commission report for confirmation.

Jim Daven
Commercial Grain, Inc.
501-505-8000