We have been waiting for a fresh signal to buy grains and now we have two. Soya beans made a bottom extension yesterday while wheat compressed and may now be breaking upward today. It is too early in the day to be sure of the wheat signal but we advise buying soya beans (or soya meal, for reasons often repeated here*) immediately. Buy wheat if it holds above the compression for the remainder of the session, thereby confirming the break. If you like risk, buy it sooner as grain prices generally were depressed yesterday by spill-over selling from plunging equity markets – usually a good time to buy. Buy December wheat as September (shown here) will be deliverable in a few days.
*Demand for soya beans has burgeoned in recent years due to shifting dietary preferences in Asia as prosperity spreads. Meat is more in demand and soya meal is a major component of livestock feed. In addition the impending ‘El Nino’ roiling Pacific surface currents has one predictable effect among all the other possibles – it sharply reduces the anchovy catch off the Peruvian coast so slashing the supply of fish meal that is a competing feed source. This is an extra reason to buy meal rather than beans. There is an added benefit – cheap pillows stuffed with chicken feathers won’t smell of fish for a year or two….
