In two recent OEs –”Are Commodities in a New Bull Market?” released on February 24 and “Will Ukraine Crisis, Weather & Technicals Fuel New Bull Market in Wheat?” on February 28 – we discussed the potential bottom we saw forming in grains and made bullish recommendations in both corn and wheat. The crisis in the Ukraine may have jump-started upside breakouts in both, so the time has come to adjust our risk points.
Let’s start with corn.
Events in Ukraine generated enough buying interest to push prices above the neckline of corn’s 5-month basing formation in the July contract, confirming the moving average crossover we wrote about in our original OE Alert.
The key is what happens now. Corn is very overbought, so it would not surprise us to drift sideways, and maybe a little lower. However, all bets are off should the situation in Crimea get worse. Shots fired could send the yellow grain to our first target in a hurry. Corn’s apparent breakout means we can move our risk point up from the old low at $4.20 per bushel to $4.48 per bushel. Two closes below $4.48 would blunt enough bullish momentum to make us consider exiting our positions.
And now for wheat…
Given Ukraine’s key role in supplying the world with wheat, we are not surprised to see a much bigger move here than in corn. Like corn, wheat has broken out and confirmed its moving average crossover but also like corn, wheat is overbought. Let’s go ahead and move our risk point up from old lows at $5.59 per bushel to swing lows at $5.94 – not too far from our recommended entry level on Friday.
RMB trading customers should contact their broker directly for further specifics on these trades. If you are not an RMB Trading Customer and want to know more about how we are playing the grains or other markets, contact us or give us a call at 800-345-7026 (toll free) or 312-373-4970 (direct) and we’d be happy to go over a fixed risk strategy with you. You can also e-mail suerutsen@rmbgroup.com. Put the words “wheat & corn” in the subject line and we will contact you.