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Volatile January not over yet market wants to settle
28
Jan '08
Last week we managed to trade in a range between 70/73 after 2 limit up moves which found very firm support at 70 cents. This shortened holiday week began with a gap down move followed by a limit as well and gave us a similar situation with good resistance near 70 cents.

The moves higher were based on huge cuts in the corn ending stocks while the pull back was based on the global equity meltdown in stocks from recession fears in the U.S. Any way you look at it, we have had a very volatile January and its still not over! However, short term the market looks like it wants to settle into the current range of 67/70 cents as we settled near the middle today.

Volume was average with 22,000 futures and 15,000 options, but the sales report was much lower than last week with only 170k most bought by Turkey and 180k in shipments. Volatility and open interest are coming down quickly as the market is starting to feel a bit weak even though grains as well as metals and energy had a good day and closed stronger.

However, the stock market continued its volatile pattern and closed lower after the commodity markets closed. This could have a negative effect on Europe and Asia on Monday and may allow us to test the 67.00 level which should find good support.

Obviously, the technicals are holding the low at the 50-day moving average near 67.00. But after seeing the stock market fall again today, we have to be concerned about how the market will react to the Fed meeting next week as they have already priced in a 50 point further cut.

The dollar is managing to hold up pretty well in spite of all the interest rate cuts, but the key short term will be the global stock markets and whether they can hold these levels short term.

Demand remains slow, but next week should be a more friendly report and the specs probably lowered their spec long position this week as well.

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