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Tuesday August 31st -
Corn - The market remains
nervous over forecasts for next week. The market tried to go lower
today when forecasts moderated but it is possible the market is looking
at other factors. Season bounces in August after a bear market are
common. We talked about this several weeks ago as you can read
below and in the archives. Right now, I expect this bounce to end
by Friday and next week the market will look at more weather issues.
In any event, I think one more push down is likely.
Soybeans - The bounce today is still
associated with weather. I'm going to 63% sold at $6.30 in
November and then 75% sold at $6.40 if we can get there. Odds do
not favor a frost next week given the current weather forecasts.
Rice - Spec buying and commercial
selling, that is the story. Near term, we may see the specs win
but the fundamentals remain bearish. The September WASDE report
will be important for price action dead ahead.
Cattle - The market came roaring back
today after being down over 100 points in Live Cattle. I see a
bounce here as I've mentioned the last few days. Right now, I
think it should be sold and will not lift any of the current hedges.
Monday August 30th -
Corn - There is an
argument brewing amongst weather men and agriculturalists alike.
First, there is two different forecast out and one has a frost next week
and the other doesn't. Then the question is, will it affect the
corn yield even if it does occur. I learned a long time ago not to
play weather man. I'll just say here, if there is no frost, we
will see a hard sell off in the corn for one last probe of the lows.
We could go to $2.20 in the process. Long-term, frost or no frost,
this market will go higher once we get through with the supply bear
market.
Soybeans - Frost could help the beans
stay over $6.00. They need some help. We are out of futures
and 50% sold in cash hoping for one more good bounce.
Rice - Spec buying has put the futures
in line with the cash market. World market tomorrow shouldn't
change but that is usually when it does. This next WASDE report
will be watched very closely for demand information. Texas and
Louisiana yields are down so now we wait for delta to check in.
Cattle - We got the bounce in cattle we
thought would happen last Friday. The chart says this bounce could
last awhile. We remain short for now and will take a hard look at
cash prices this week.
Friday August 27th -
Corn - Please read
last nights
comments. Today's action sets us up for a run to
$2.22 in December; however, PB tonight on the 15 minute chart is at 8%.
We should consolidate in this level early next week which would allow
the market to rally back toward $2.32 to $2.35 and still be setup to
make new lows. This sell off is the last one and on the daily
chart out PB is at 39.6% which means we can go below $2.20 before with
little or no bounce before we finish off this leg. The downside
risk here is minimal but there is another 8 cents likely.
Soybeans - We broke under $6.00 in
November ending in the lower portion of the range. Long term we
think the beans should test $5.50 in November but it will take perfect
weather to go much lower than that. We are still 50% sold in the
cash back over $7.00 and will ride this out for now.
Rice - The Sep/Nov spread keeps trading
back and forth. PB in Sep is 55% and Percent Bullish is 46 in
November. Looks like we are not going anywhere for awhile.
Cattle - We remain short in the cattle
and the trades are working very well. Cash prices will direct the
futures in the next few days.
Thursday August 26th -
Corn - There was no
bounce in the market today as once again good spec selling started the
market lower and held the buyer at bay for the whole day. I must
admit, the odds of the correction high now being in place went up today.
Let's restate our long-term idea. Once harvest is about over, this
market will have bottomed and be going from a Supply driven market to a
supply-demand driven market. This will last about 4 to 8 weeks and
then turn into an all out demand driven market and it will go higher.
In the mean time, we must finish off this supply driven market and a
test of the lows at $2.25 is a possibility. From the close today,
that is another 9 cents down. I think this level could be taken
out but it will not be down there long because it is at loan level and
farmers will not see much below loan even with an LDP.
Positions - We wanted to sell this rally but so far
have missed it. I'm not selling the market with a 9 cent
potential; however, don't be long futures if you speculating. If
your holding cash corn, its OK because the basis is bad right now anyway
and you shouldn't be selling cash unless you absolutely have no other
choice.
Soybeans - $6.00 is still holding but
will be tested again tomorrow. Remember, the old adage says, "a
market will go in the direction of its major trend on Fridays." We
will see if that is the case tomorrow. I wouldn't be surprised for
the market to take out $6.00 to see of there are any stops.
Rice - Still nothing to get excited
about. The spread widened back out today which is bullish near
term. We need to see if can get wider than 20 cents for the market
to run higher. Technically, the market looks OK but there is not a
lot to go on.
Cattle - Our short positions are
working great now. The down side objective of $83 remains our best
guess of major long term support in the December contract. A word
of caution, PB is at 33% tonight which is bearish and the strength index
is expanding indicating the trend is good; however, $84.80 is the
extreme market boundary which says the market should not go below that
level the next few days. This indicator shows a possible bounce
ahead back to $87.60. We closed at $86.00 tonight. This is
not a suggestion to lift hedges, it is a warning to be prepared for a
move the other way in the next few days. Is it possible for a
straight down move to $83? Yes, but it is not likely.
Wednesday August 25th -
Corn - The USDA was
quoted as saying the frost damage was over done and the market broke 5
cents today. There is another forecast for frost but some weather
forecasts don't agree and the market is showing its nerves.
Today's close does two things. First it puts the PB below 50%
which is a sell signal and two, it puts the market back under the
$2.40 1/2 level which we said last night might happen as the Market
trades across old support and resistance levels. Tomorrow will be
important as the market looks for more news to trade. Today may
have been a flash in the pan or it could be the beginning of another leg
down. I don't know but the next few days will be
critical.
Soybeans - We did two things today
here as well. First, we tested the $6.00 support level and two, we
test the $6.25 resistance level. Unfortunately, we tested the low
after the high. Tomorrow could be important but I wouldn't be that
surprised to see the market trade sideways for awhile and consolidate a
little more. Weather still has a big impact on this market.
Rice - Not much here today. Rice
needed a little break and the bull spreading on Sep/Nov looks to be
over. We will stay out waiting on more news to trade.
Cattle - The market rallied a little
today but then sold off going into the close. We remain short here
and could see more of a bounce ahead but long-term we have a downside
target of $83.00 for December cattle. We will sell a rally but it
would need to be a good one.
Tuesday August 24th -
Corn - Exactly as we
wrote about last night (see below). The question now is will we
use the $2.40 1/2 level as support or "trade across" the level.
This means the market will trade down trough the level, back up trough
it and again back down through it just like when you write with a pen
and go over and over the market again and again. If we can kiss
off this level and close higher tomorrow, I think we could go on toward
$2.50. Then just as we said last night....As it approaches that level we may start replacing shorts
in the market. It depends on how the market gets there and the
news on yields.
Soybeans - $6.00 could still be tested
but a move back through $6.11 sets us up for $6.25 and then $6.37.
I still want to see this rally but hopes it gives a much better price to
sell.
Rice - The chart still looks good.
The market found resistance at $7.85 in September and November is
against its resistance as well. If I had to trade it I'd be
long...but then, I don't have to do I?
Cattle - Today's action is what we
expected yesterday. We remain 50% hedged in live cattle and went
to 63% in feeder cattle on the 111.30 stop which was hit today. We
will see how the market reacts near term to this sell off but I
can see another rally but not new highs. We will add to sales on a
good bounce. Our target is to get to 80% sold near term.
Current average is $111.74 in October Feeders and $88.54 in December
live cattle futures.
Monday August 23rd -
Corn - Talk of possible
damage to the northern crop and more cold weather on the way has the
market moving higher and over our resistance point of $2.42. Now
that level and $2.40 1/2 will act as support as the market tries for
$2.50. As it approaches that level we may start replacing shorts
in the market. It depends on how the market gets there and the
news on yields.
Soybeans - Look for the market to head
easily for $6.25. This market has acted just as we thought but now
comes the hard part. What can beans do above $6.25 and what news
will it take to keep them there. Right now, I look on this rally
as one to be sold.
Rice - The chart looks good.
Notice the Sep-Nov spread is now working. This is bullish.
If we se the spread give up, I'll look to short the market.
Cattle - Today's action after the
cattle on feed report was really a big nothing. I expected it to
be down harder with more selling. The fact that didn't do that has
me thinking we may test resistance again. Cash markets this week
will be followed closely.
Thursday August 19th -
General Comment - Corn rallies again
today setting up move over $2.42 resistance. Short covering could
continue for awhile. Upside objective on close over $2.42 is
$2.50. We will need some really cold weather to help move that
high. Beans having problems mounting charge to $6.00 in November.
I think we might get above there near term and move toward $6.25;
however, the weather still will have a major impact here.
Cattle - Tomorrows cattle on feed will
have a hard time being bullish. Not that it can't be but the
expected numbers are very bullish and if they don't come in at the
expected numbers, we could see a hard sell off here. One more
thing, remember, there a re a lot of calves at heavy weights on grass.
With all the rain, ranchers are not pressed to move calves and they have
allowed some heavy weights to build. In the long run that might
tip this market into a corrective move.
Wednesday August 18th -
General Comment - As stated last night,
corn is consolidating the gains of the last few days. If we can
take out today's high we may assault Monday's high and the $2.42
resistance level. A close over this would be impressive in the
next few days. Look for a lower trade tomorrow at the start and
then a turn higher. Soybeans were higher today closing over their
21 day moving average but a long way from the 9 week average.
Percent Bullish is 46% tonight so it is still negative but indications
are growing that a low has been put in for Soybeans. The next few
days will be interesting.
Rice - Limit down at one time.
The market finished off 38 cents and I see no reason for the market to
rally near term. I also see no reason for a major break near term.
WMP was down 11 cents but why the futures sold off so hard is still hard
to understand unless we should have never been up here to begin with.
Read our comments from last
night on this one.
Cattle - We remain short on 50% with
the market down today. The cattle on feed report Friday will give
us the next direction.
Tuesday August 17th -
Corn - Read our
comments last night. We said then to look for a rally to close the
gap in December at $2.41. That happened today thanks to the crop
condition report dropping 3 points as the market was up 8 1/2 cents at
one time. The market finished up 6 1/2. Now what?
Technicians sold the gap closing and there is obvious resistance at
$2.42. A move over that level sets up the $2.50 level for testing.
The market has rallied 15 cents in two days so don't expect another 15
cent up by Friday. With that said, the $2.42 level will need some
strong buying to breach and I would expect the market to consolidate the
gains of the last two days before trying to get through this level.
We covered all shorts at $2.29 and will now look to re-enter when the
time is right. Tomorrow, we will watch and hope. By the way,
Percent Bullish tonight is at 47%. Right against the 50% level
which is a buy signal. The 9 week moving average is still up at
$2.51 and dropping about 1 cent per day.
One more thing, we cautioned on the amount of Spec
shorts in corn. That is the Achilles heel of this market as anyone
who has gone short since July 21st, now is in a losing position. We
may see more of the specs come out of the market and now question is,
where the commercials start selling? I don't know but I would
guess below $2.50.
Soybeans - Condition levels
dropped on the beans as well but they didn't have the push today that corn
did. They still closed up 14 cents in November 4 cents down off of
their highs. We are hearing more and more farmers in the Mid-west
say that the crops are just not as good as the windshield shows;
however, the tours currently underway right in the Mid-west are showing
the USDA projections to be very close. Once the current condition
worry ends, we may still see new lows in corn and beans. This
rally needs to be sold for now.
Rice -
I don't know.
I don't know. I don't know. Let me say it one more time, I
don't know!!! The world picture is tighter than it was last month,
the yields in Texas are now starting to really show being off 10-15% and
in some cases more. Demand is not showing anywhere at the present
time. I mean, there are a lot of fundamentals but no real
direction. I'm out and will stay that way. The USDA may raise
WMP today (I'm writing this at 1:30 PM) but there is little reason for
premiums to go with it so a higher WMP will result in a lower premium.
The result, farmers are caught in the squeeze. If the USDA doesn't raise
the price, then premiums should start about the $1.25 to $1.50 range.
If they lower the price, then we may see some firming bid under the
table. Oh, did I say...I don't know. If not...I
DON'T KNOW!!!!
Cattle - We remain 50% hedged in fats
and 50% in feeders. I expect the market to really die here in
front of the USDA Cattle on Feed report Friday. I like being 50%
hedged so I'm not wrong on everything. I think this may be a huge
report for the meat complex the next 90 days.
Cotton - LIMIT UP...ENOUGH SAID!!!!
Well almost, the market exploded from low levels with huge buying so
tomorrow will be important.
Monday August 16th -
Corn - Up 4 3/4
today...Our comments last Thursday...."We have
covered all short positions today at $2.29 3/4. It may not be the
best thing to do but I think the bearish news is in the market."
With the rain back in the forecast, the market pulled a massive Key
Reversal Up today as the market failed again to make contract lows.
Are the contract lows in? Not sure. I can see a nice rally
back to the gap at $2.41 and still sell off to make new lows IF the crop
size grows to over 11 billion bushels. Near term, we may see more
strength especially if frost talk picks up.
Soybeans - The rain forecast for
beans was bearish and the market took it on the chin but rallied to
close off of its lows. Again, no new contract lows so near term we
may see more strength waiting for the weather and final crop picture to
become clearer.
Rice - I don't
know. The market in September rallied but then sold off and
finished lower. The chart shows a gap in up to $8.00 in November
but the market is having a hard time getting up there. We are over
the 21 day moving average but below the 9 week MA.
Cattle - We remain 50% hedged in fats and
50% in feeders. This is the week for the Cattle-On-Feed report
which comes out Friday. Most analysts expect placements at 93% of
last year which is bullish. Technically, the market appears to be
topping but has not confirmed a top at all. We will stay where we
are for now and see how the report comes in on Friday. Hopefully,
the report will be bullish and give us one more chance at selling closer
to the $96 range in December.
Dow - The Dow rally today is a relief
rally. There was no problem with the Olympics and the Venezuelan
elections were positive for oil price stability. How do you spell
relief?.....SELL!!! That is what I will do on this relief rally.
Friday August 13th -
General Comment - Markets closed well
today with corn near its highs and beans in the middle of the range.
This weekend we will put our take on the S&D report and the world
picture as presented by the USDA. Next week could be an important
week as we look to be accepting the report at this level and the market
is now looking out to the final weather feature for the 2004 growing
year. Cold weather may be the talk of the trade starting next
week. With no weather premium in corn at all, a cold snap during
the first of September could put 20-30 cents on December corn.
Notice I said COULD. We have lifted all hedges for now and will
start buying calls if the market starts lower next week. look at
our comments Sunday night for details.
Thursday August 12th -
General Comment - August S&D reports
were bearish except for beans but the action in beans wasn't enough to
stop the selling in corn. I wonder if a frost will.
Corn - We have
covered all short positions today at $2.29 3/4. It may not be the
best thing to do but I think the bearish news is in the market. We
have fooled around and pulled 8 cents out of the market in the last week
on 25% and today we covered the other 25% with big gains from our $3.00
sales back in June. I may wish I hadn't lifted the hedges later
but the weather is looking colder and colder. The beans held good
today and again, what other bearish news is there for corn.
I think the damage is done and for you who sold cash corn, we may want
to buy some options dead ahead. We will have our WASDE report out
tomorrow night but right now, I will start buying this market as it
breaks using options. More on this later.
Soybeans - A 39 bushel yield in
the report today caught traders off guard and beans exploded out of the
shoot. Well, maybe not exploded. They started up 15 cents
and set there for a while and then exploded higher. We need to see
some more follow through here as well but the market looks like it could
rally a little more and maybe even get over the $6.00 market in November
very quickly. I will sell more on this rally but we now start
watching that cold weather. It is going to be much colder than
anyone expected for August.
Rice - Again, I don't
know. The chart looks good and as I wrote about the last month,
the USDA did increase the average farm price by 50 cents which is
better; however, the carry-over number on ling-grain is up to 17 million
cwt. and I'm not sure rice futures can get much over $8.00 facing that
kind of number. The southwest monsoon is picking up and if that
continues, I don't know what can cause this market to run substantially
higher except a weather problem somewhere.
Cattle - Another sale today as we sold
13% of our live cattle position at 88.90. We are now 50% hedged in fats and
50% in feeders. I will sell another 12% in the feeders at
$111.30 on a stop for tomorrow. This is really looking like a top
now but I will give it a chance to finish off the formation and not get
too excited. I will sell a rally here with contract highs as the
place for a stop.
Dow - Look for the market to see what
is below the 9800 level. Percent Bullish is 38% tonight, so there
is room to roam lower for sure.
Thursday August 12th -
10 AM -
General Comment - The market is
trading as advertised. Down 5 cents in corn and up 15 in beans.
My guess is something has to give. Either, beans will give up the
gains as corn goes lower or corn will rally as beans go higher.
The first question has been answered however, the 10.9 billion bushel
crop estimate of the USDA this morning is NOT in the market. This
would indicate another 10 cents lower from last night's close or 5 cents
lower from where we are. At the same time, if the market was
really trading a 10.85 billion bushel crop, then the current price
weakness may be enough. Here is our suggestion. The proof is
in the close and how we get there. If the market moves over the
current high of 2.29 1/2 in December, we want to exit shorts for now.
If the market closes close to unchanged or higher on the day, I'll go
home a little long in a spec position. For now, we are 50% sold
and will stay that way. We have been looking for a spike low and
this may be it but if it doesn't close close to unchanged or higher,
specifically, if closes down 3 to 5 cents, new lows are almost a
certainty.
Thursday August 12th -
8 AM -
General Comment - The USDA report this
morning has a surprise in it for the beans. The rest was to be
expected and in fact may be in the market. Corn may not open as
bad as they are talking as beans may take the focus on the day. If
corn gets up on the day, I will buy in shorts. THAT SHOULD NOT
HAPPEN so if it does, I'm out. If we can drive the market lower in
corn toward the $2.25 level in December and it holds, we will want to
get out if we trade above yesterdays close. It is day's like this
that define a market. Everyone expected a bearish report in corn
and we got it. Everyone expected a bearish report in beans, and we
didn't get it. This may be a big day for trading.
Wednesday August 11th -
General Comment - August S&D report
tomorrow morning. We will have comments on the page by 8 AM CST.
Corn - Market sold
off in front of the report. As we said yesterday, it is going to
be hard to get a bullish reaction out of this number as the trade guess
is lower then the market is trading. We went back to 50% sold on
the open as we said last night and now will wait on the report before
doing anything else.
Soybeans - New lows in November.
The report needs show some signs of the crop not being as big as the
trade expects. I doubt that happens. I look for beans to hit
our $5.25 target.
Rice - Anyone trading
breakouts will like the looks of the current chart. Today's action
continues the buying we have seen of late. The report will have a
lot to say about the near term action of this market. I'm still on
the sidelines looking for a reason to sell this rally. There is
something wrong with the USDA numbers right now and maybe that will get
fixed tomorrow.
Cattle - We are 37% hedged in fats and
50% in feeders. We will sell another 13% and get to 50% sold in
fats on a move through $88.90 tomorrow. On the feeders we are now
50% sold on the break through Monday's low. We sold them at 112.10
so our average price is now $111.84. I will sell another 12% at
$111.30 on a stop for tomorrow. This is really looking like a top
now but I will give it a chance to finish off the formation and not get
too excited. I will sell a rally here with contract highs as the
place for a stop.
Tuesday August 10th -
General Comment - One more trading day
before the August S&D report. I would expect it to be dull ahead
of the numbers but then again, it doesn't have to be.
Corn - After 5 days
up the market allowed some long profit taking but there was no real push
to the downside. The average numbers from trade analysts show a
guess of 10.78 billion bushels which I think is lower than the market is
trading. That would mean to me that it will be hard to get a
bullish report. We are now 25% sold looking to sell if we can
close the gap in December. We may not get the chance. We
covered 25% at $2.31 1/2 so I'm going to get back to 50% sold for the
report on the open tomorrow. That still leaves me 50% long but I
doubt we can rally that much tomorrow. Remember, we covered the
position because we were heavily oversold. Today we aren't as the
PB is up to 33% which gives us a lot of room to the downside.
Long-term I like this market, but again, on the other side of harvest.
Soybeans - November just can't pull
away from the $5.60 level. That sets us up to go down through it
and test our objective of $5.25. PB is at 29% so I don't think the
beans can push below that level very far before correcting. Maybe,
there is one more scare left in this market.
Rice - USDA raised WMP to
$5.97 today which lowers the LPD to 53 cents. World prices are
increasing but if the USDA is correct, not for long. Maybe the
USDA made a mistake in their July report and will change it back
Thursday. Well, don't hold you're breath. Even so, the chart
is bullish and the price action, even today, is not that bearish.
Near term, we may get some more to the upside on this one.
Cattle - We are 37% hedged in fats and
feeders tonight. Nothing changed as the market remains just above
major support. Cash boxed beef is weakening again down over $4.00
for the week. One has to wonder why the market rallied in the face
of lower margins. If we can get another rally, we will add more to
our positions. I think this one is acting even more like a top.
A move under yesterday's lows is bearish and we will get to 50% sold in
feeders and fats if that happens.
Monday August 9th -
General Comment - Report dead ahead.
I would expect the market to slow down and trade sideways ahead of the
S&D report on Thursday but then again, this market has been anything but
normal. Everything was higher today and I think it was more short
covering.
Corn - The rally in
the corn continues today. This was the 5th day in a row higher and
when you look at the at the chart you can see that $2.40 3/4 gap level
dead ahead. We want to re-enter some shorts going into the report
on Thursday. We lifted 25% of our total position at $2.31 1/2 so
we are going to sell 12% at $2.39 1/2 tomorrow. Crop conditions
were unchanged tonight but up for beans which may put them under
pressure. If the market can close over $2.45 we will re-think our
strategy as the bounce will be going higher than we expect; however, up
to that price we will be adding back our shorts.
Soybeans - Crop condition report showed
good/excellent up 3 points from last week. Poor to very poor
dropped 1 point. The rally in beans is short term unless the
weather changes. These is some talk of it being too dry and that
could help for a small bounce but a turn in the fundamentals will take a
cold weather snap that damages the crop. We will sell this rally
but give it some room for now.
Rice - What is it with
Monday????? Another huge move up today as futures touched limit up
in November. Fundamentally, this is a hard one to call so I'll
just come out and say it. I don't know!!! If there is
problems with the monsoon it is not showing up yet in the press.
The USDA numbers should indicate a futures price about $1.00 lower;
however, world exports are up and so are prices in Asia; but, their
price is still a huge discount to the US export price; however, China is
still not producing what they consume; but, they should produce 7
Million MT of more paddy rice this year; however....(gasp!!)...
Like I said, it is too hard to call.
From a technical picture, the market has a gap at
$7.90 in November so we will see how the market reacts if it closes the
gap. The Strength Index is falling indicating no strength in this
rally. The PB is now over 53% indicating a possible bull move but
we remain under the 9 week average which is up at $7.97. All in
all, a good one to watch but I'm looking for a reason to sell it.
Cattle - Nice rally today and we sold
another 12% in cattle futures at $90.20 and another 12% at 113.75 in the
feeder cattle. We are now 37% hedged and 63% long in the field.
A move under today's lows is bearish and we will get to 50% sold in
feeders and fats if that happens.
Friday August 6th -
General Comment - Soybeans are going to
have a hard time of it unless there is more weather concern for cold
weather. Corn will have its hands full getting 10 cents higher
than it is tonight without a frost scare and that is not likely in
mid-August.
Corn - The rally in
the corn continues today. Look for the gap at $2.40 to be closed
and a possible test to $2.45 if we can hold on to the "it's too cool"
cry of the bulls. Today the PB on corn is higher than it is on
November soybeans so we are correcting the oversold condition nicely.
If you read back on our comments you will see that we originally had a
target of $2.36 and today's close is right at that level. A 10
cent bounce is possible still from here but I am loading the gun to sell
back the 25% covered at $2.31 1/2 the last two weeks in our scale down
buying approach. I am going to stay 25% sold no because it is too
risky given the chance that corn rallies to close the gap and then falls
apart to test the $2.25 low.
Soybeans - November need weather help
of some type. Near term I still see the $5.25 to $5.50 window as a
target but we might get another bounce before it happens. Read our
weekly comments Sunday night.
Rice - Another dull day.
Nothing to comment on right now.
Cattle - Still holding but if this
market is good it needs to go higher and soon.
Thursday August 5th -
General Comment - The talk from
Chicago was short covering. This is what we started forecasting
three weeks ago and now it appears to be occurring. Better late
than never. Remember, Specs are the big shorts in here and they
are not strong position holders. If they start coming out, the
market could bounce in the grains near term especially ahead of next
Thursday's S&D report.
Corn - The rally continued today as
short covering dominated the market. Good export sales this
morning helped get it going on the day. Yesterday open interest
dropped over 5,500 contracts and I would expect that number is higher
today. Even so, the specs are very short and they are not strong
holders so a continued rally could spark more buying. We are now
short 25% of our total position and will had to shorts on this rally.
Daily percent bullish is up to 27% and I expect that number over 35% at
least before this rally stalls. Look for an attempt to close the
gap at $2.40 and if it is closed, we will get back to 50% sold unless we
are seeing some other change in fundamentals.
Soybeans - Good bounce today but it
looks entirely like short covering. Next weeks S&D report is being
talked about a lot with many thinking the USDA will not go over the 42
bushel mark. I don't know but again the market was oversold and
just 7 cents away from out objective so this bounce may let us get our
last 50% sold. We have not covered any of our cash sales which
were done months ago at the 50% level.
Rice - The market had a boring day
today with nothing to talk about. Yields in Texas are off on
average but some of the producers in the west are seeing better results
than last year. In general, it looks like Texas will be off 5-10%
but the increase in acres from last year will offset the impact of the
decline. The market will await the USDA numbers and it will be
interesting if the weather in Asia changes the world production numbers
for rice.
Cattle - Well, the market closed lower
but not by much. The volatility indicates a top. We will
remain in our short feeder cattle position and sell the fats at 88.25
tomorrow. Remember, this market likes to follow the financial
markets at times and the sell off in Securities today occurred after the
cattle close. We may see some pressure here tomorrow depending on
the jobs report.
Dow - Ouch...These type of sell offs
have led to buying in recent weeks, we will see if that happens
tomorrow. A move under 9800 is going to lead to a much lower level
in the Dow. We are out, waiting for a reason to own it. In
fact, we are long the Rydex funds which are short the S&P. Long
term and I do mean long term, this market is going nowhere and its range
may include values much lower than where we are.
Wednesday August 4th -
General Comment - Corn is finally
correcting its oversold condition with a nice bounce today; however, the
beans sold off and finish lower with new low closes for the move.
Remember, the USDA report is next Thursday so there will be some traders
squaring positions.
Corn - The best we can tell the market
is trading a 148 bushel yield with some forecasting a 150 bushel
national average. That would mean there is still some room to the
down side but the over sold condition and the small spec in the driver
seat may need to be trimmed. Unless there is another weather
scare, such as frost (it will be in the 40's tonight in Minnesota), this
rally should be sold. I hope for a move to $2.40 but will start
setting up sales areas on an advance.
One more thing. We have been suggesting a lot
lately that the market had to bounce to balance technical indicators.
That bounce is underway. The past two weeks we have talked a lot
about the mathematical Percent Bullish. This indicator hit record
lows at 11% in December the last few weeks and prompted us to start
covering short positions. Tonight's number is 20% which is
still extremely oversold. A rally of this number over 40% would
balance things and setup a possible test of the recent lows. We
have cover 50% of our shorts and wanted to cover another 25% on a close
over $2.31 1/2. We missed that by 1/4 of a cent tonight.
Tomorrow, if the market closes between $2.31 1/2 and $2.33 we will cover
only 15% more and hold the 35% short position for a while. I think
odds favor another test of these lows in the future. If the
market closes over $2.33, we will just stay where we are and look at
selling the rally.
Soybeans - New lows for the move today
and just 7 cents away from our first target level. A close under
$5.50 sets up a move to $5.25 to $5.30. Long term, we could sell
off even more if we start to see a 42 national average likely.
Rice - The monsoon in Asia is not doing
that well, starting and stopping. Tonight it looks like it is
starting again. If it stops, all HECK will break out in this
market. In 1987, the monsoon failed and rice rose over $8.00 in 6
months. Watch this one.
Cattle - The rally today puts the top
in question. Tomorrow is a key day. If we close lower, it is
highly likely we are putting in a top.
Tuesday August 3rd -
General Comment - Today's
market was encouraging but still no positive sign that a rally is about
to begin. As long as the beans are in trouble, corn will have a
hard time moving up. I look for sideways trading to continue until
the trade figures out more on the yield. The grains in general
should remain on the defensive until something in the fundamentals
shifts.
Corn - Open interest went up today
indicating new buying on the rally; however, we may have seen heavy
selling early that then give way to small short covering going into the
close so it's not for sure if there was new buying or new selling.
Tonight the market is unchanged but there is 750 contracts for sale up
to the $2.30 price in December corn. That tells me we aren't going
much higher in tonight's trade. There is no new news out there but
apparently there is some heavy buying at the $2.25 level giving us some
support, which also means there is going to be some large stop orders
under that level. I think odds now favor taking out the lows and
if they do, $2.22 is support after that. A close over
$2.31 1/2 should set up a test of the $2.40 level.
Soybeans - After going lower we rallied
into the close and finished up just over 1 cent. Not much to write
about but that did let the corn finish strong. $5.50 in November
is still our target. With no change in fundamentals expected near
term, this market will stay under pressure. If the news changes,
we could see a nice bounce in the November contract.
Rice - World market was lowered tonight
by 16 cents and the change on the loan rate was also factored into the
new crop year which began Sunday. If the market run the last
few days was on an increase in WMP than we should see pressure; however,
if the market is looking at other factors, we may see the market rally
near term. $7.75 in resistance in November.
Cattle - IS THIS IT??? If you
read below, we started talking about a top in cattle and right now odds
favor exactly that. We sold 25% of our feeder cattle position at
110.75 today and sold 25% of live cattle position in December cattle on
the close. Cash cattle looks weaker. Expect a nice break
here and we will sell more on a rally. Cow-Calf operators should
avoid buying anything right now and should be culling aggressively.
We have just sold all cows over 12 years old and all calves down to 325
pounds. Hold your cash receipts for a while as I think there will
be lower prices ahead to purchase inventory.
Monday August 2nd
General Comment - Tonight's
crop condition report dropped for corn and went up for soybeans, just as
we had suggested would happen last week. A drop in the condition
report may be enough to fuel the market higher in the next few days as
traders realize the highly talked about 150 bushel national corn yield
is not certain. Soybeans on the other hand, may continue to head
for their target zone. That could continue as a problem for corn.
If the beans get hit real hard in the next few days, corn may test the
waters under $2.25 to see if there are any stops. DO NOT GO LONG
right now.
Corn - ADX is now at an all time
high of 70% for September. We need to make some higher highs to
turn this number down and tonight's crop condition report may help us do
that. Not only did they drop the good/excellent by a point, they
also raised the poor condition by a point as well. Traders should
look at this and realize a 150 bushel national yield is not in the bag
yet and that is what the market is currently trading. Today's price
gains along with the friendly crop condition report, could be the start
of a good corrective bounce. A close over $2.31 1/2 sets up a
challenge of our upside correction target of $2.40. A move down to
$2.22 remains possible but is not as likely given the current situation.
We still have orders to buy at $2.24 on 15% of our original short
position and since we have covered 50% of our original short, we stand
at 25% sold tonight. If we get over the $2.31 level, expect some
healthy short covering from the speculators. In any event, we will
want to sell the upcoming rally.
Soybeans - Market news remains bearish
and oversold conditions are not severe. It will take bullish news
to get a bounce and in the mean time, we see November down to $5.50.
We could bounce before that level is hit but nothing would surprise me
near term. The crop condition report could have beans down
tomorrow unless the weather changes and that is doubtful. Again,
don't be long and do not buy this one yet.
Rice - Big move up on a several
concerns. The first report was that there was speculation of a
major change in WMP tomorrow for the annual "WMP adjustment". Some
talk surfaced that the monsoon rains were in trouble but Global weather
forecasters are saying that the rains should arrive big time later this
week. Other talk was fueled by first yield results in Louisiana
and Texas indicating 10 to 15% reduction in yields from last year.
Is this new buying or short covering. We will know later tonight
but it may have been a bit of both. This week, harvesting will
pick up big time in Texas and we should start to get a better handle on
yields. Follow through buying is necessary to see if this move is
more than a rally in a major bear market. According to USDA data,
that is all it is; however, the USDA numbers may not have all the
factors in their number either.
Cattle - We are still watching for a
top. A further rally from here will set up a move to 95 cents for
December.
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