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Market volume better than average
Aug '08
We either trade in a 50 point range or 300 pts, there is no in between. Today we had a limit up move after a very friendly S&D report was released. The biggest change was a cut in the Indian production of 1.5 million bales, however, there was some speculation that this cut represented the fear several weeks ago when the monsoons had stalled.

But that has since changed so this may have created a buy the rumor sell the fact as we came back down close to unchanged by the end of the day. Volume was better than average today with 13,000 futures and 22,000 options as open interest continues to fall lower.

At the end of the day, the USDA report was very friendly with a cut in ending stocks of over 2 million bales, but there is still much concern over the consumption number which remains on the high side.

We may be setting up for a short term sideways rally as there is still enough uncertainty over the crop and hand to mouth scale down demand to keep the market supported on the down side. We should see a good export sales report on Thursday as well.

The grains managed to put in a bounce today and the dollar slipped back for the first time in several days. Will have to monitor oil prices in the short term, but we are looking a bit oversold in the commodity complex.

Technicals continue to look negative as we broke the support of the intraday trading range on Monday at 69 cents. The bounce back to the top of the intraday trading range today was quickly sold off, but we are seeing good support near 69 cents and sellers near 72.

We could get a few bounces on some over sold technicals down the road, but based on the performance of the dollar recently, this correction in commodities feels like it may have started a long term move downward. However, there is still quite a bit of time in Dec so expect some more sideways trading.

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