Dollar Keeping Grains In Check

As I expected and wrote about in the last post, the dollar is in a sustained move higher.  With the FED threatening an interest rate hike next month, and the upcoming Brexit vote looming, the dollar should have enough strength to tag or break its intermediate trend line.  This should keep pressure on grain prices.

Soybeans have finally run out of buyers and is in the midst of a correction.  With all the bearish soybean news, (higher dollar, higher planted acres, low export demand), soybean prices have been incredibly strong.  I think this correction will push soybean prices lower until sentiment gets back to bearish levels and more buyers materialize.  That should coincide with the timing of our summer weather markets in late June.  At a minimum.....a minimum, soybeans will pull back to the 23.6% Fibonacci, but realistically, a pull back to the previous consolidation area of $10 would be much more realistic.

Corn took out the resistance line I wrote about in the last post.   Corn looks to me to be trading a lot closer to fundamentals than the soybeans are.  Informa cut corn acres by 220 million acres in their last estimate.  With a rising dollar, I think corn will remain in this price range until the weather markets begin.   The summer 2015 high should be a reasonable target. 

The CRB Index is now up to 185.  Don't forget, we are still in the early stages of a commodity bull market.  Surprises will be to the upside.