Everyone’s excited about wheat these days. And with good reason. The U.S. Department of Agriculture says the wheat carryover at the end of this season will be the lowest in 60 years, and wheat is battling with corn, soybeans and other crops for a bigger share of 2008 crop acreage as all have hit unprecedented price levels.

As the only type of wheat not yet sown for 2008, the Minneapolis spring wheat contract has been leading the charge for wheat. Since topping an unheard of $11 a bushel on Jan. 15, it has had at least 10 limit-up (30 cents) days, and there is talk of $20 wheat.

But the exchanges have increased daily limits to 60 cents a bushel beginning Monday, sometimes a sign the end of a bull move is near. And one of wheat’s acreage competitors, soybeans, posted another shooting star candle top warning Friday on somewhat bullish fundamental news – a 15 million bushel decline in the carryover estimate – as traders rejected higher prices, reflected by the shooting star’s long upper tail.

It’s too late to get onboard the rise in wheat with a long position and too risky to go short at this stage. But while wheat is doing its thing, has anybody noticed what is happening in coffee? Coffee futures have broken above 2005 and 2007 highs – in fact, coffee futures prices on Friday surged to their highest level since early 1998 and have posted six years of higher lows.

Looking at the daily chart from VantagePoint Intermarket Analysis Software, the indications for an uptrend are all there: (1) short-term difference crossing above the long-term difference and above the zero line, (2) Neural Index moving to 1.0, and (3) a predicted medium-term moving average crossover to the upside, which would have gotten you into a long position in the vicinity of $1.35 a pound. To that, you might add (4) a multi-year breakout to a new high and (5) a big bullish white candle Friday on the breakout.

And take a look at cocoa futures, which may be setting up a similar scenario.

I am not a big fan of New York markets, but it's a good bet the hedge funds, the big players in various commodity sectors, have noticed. We’ll see what happens.

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Posted by The Mystery Trader at 10:31 PM | Permalink | Comments (0) | TrackBacks (0)

We're not saying that soybean futures peaked Tuesday, and we don't know what fundamental sent them to a new record high of 13.73 a bushel, March contract (other than panic buying in wheat, primarily the Minneapolis contract for spring wheat that is still in competition for acres with corn and soybeans this year). But when traders rejected the higher price levels and closed the market lower, it left what appears to be a shooting star on a candlestick chart (or a key reversal on a bar chart).

Maybe soybean prices aren't ready to sink yet, but note on the chart what happened after the last prominent shooting star on Jan. 14. VantagePoint charts based on intermarket analysis data show several signs of at least a temporary top: (1) the predicted short-term difference crossed below the predicted long-term difference, a sign of a weakening trend, and (2) the predicted neural index dropped to 0.0, an indication that the short-term trend will be lower.

The last shooting star didn't start a bear market but a $1.52 a bushel decline from the high at $13.41 1/2 on Jan. 14 to the low at $11.89 1/2 six trading days later left a lot of room for a short-term trader to make a nice profit on the short side.

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Posted by The Mystery Trader at 02:01 AM | Permalink | Comments (0) | TrackBacks (0)