Market Commentary

Thursday August 31st - 

Corn - More upside today after early sell off.  This market looks strong in here.  We will buy a break as far as futures and just want to hold the cash.  I expect the market to start talking about the USDA S&D report as being bearish which might give us a break we can own. 

If you read our setup for the day you will see a day where both the bearish and bullish setup worked.  Very unusual and very bullish as the sell signal totally failed.  We like where we are right now, short some puts and waiting for a good break to own futures.

Soybeans - Nothing new here as we are dead in the beans.

Wheat -

As we said last night, this market is going to work higher into major resistance and that level hasn't been found yet.  We will buy a break.  We are holding 100% of our cash and that's a perfect place to be.

Rice - Nothing new to talk about as the market stayed unchanged.  My question remains the same, what is Iraq going to do and what will the USDA set the carryover number at in the upcoming report.  I didn't trade it today and am out right now.  I may be out for a while waiting on the market to give us some answers.  (Make sure you read Tuesday and Wednesday's comments if you haven't already.)

Cattle - Market is accepting this value and I think odds are growing we will work higher and climb toward the 94 level.  We are looking for a sell signal to hedge some October sales. 

Natural Gas - How fast things change...we sold all positions today and went back to all sold as the market gave major sell signals when $6.10 gave way this morning.  For now, we will stay out and hope we don't get surprised by a storm over the up coming weekend.  I may start buying back some of the shorts we are in at $5.70 tomorrow.  Remember, this is a three day weekend coming up.

Dow -  Very quiet.  Nothing recommended.

Wednesday August 30th -  Long one tonight!!!

Corn - My biggest fear has been that everyone will want to buy this in the middle of September so a rally will start the end of August and I'll miss it.  I have tried to keep my hands in my pocket and have been hoping for another test of the lows.  While we are right in the cash market as we have been saying, "eat what you need to but store the rest",  we might have missed the lows in the corn.  Today's action sets up a gap tomorrow that if it happens, will signal an Island reversal and a move back toward $2.59 in December corn.  On the other hand, if we start higher and reverse, we could still fall all the way back to $2.40 in the Dec which might be a gift. 

In general, the news from the floor today was short covering and a short covering rally will only go so far.  If the locals were short and covered, which is what I was told, then tomorrow, we may run out of buying just a few cents higher.  So tomorrow's action is going to be very important.  The cash basis is increasing which is what we cash holders want.  National average is up almost 10 cents in two weeks.  SO...NOW WHAT???  This is what I get paid for...from a technical approach, a higher move tomorrow needs to hold...if we start higher and go down on the day taking out $2.43 3/4's, then the market is setup to move back to support. 

OK here is where we are...Short the $2.30 December put at 8 cents on 20% (we never got the other 20% at 9 cents unfortunately).  We will hold these for a target of 2 cents prior to October 1st.  After that, we may hold them until they expire.  We are long all the cash we can be long and we will keep you advised on other trades in the futures.  If I can get that option back up to 6 cents, we will probably sell another 20% in the Puts which will give us an average of 7 cents.

Soybeans - Market was a little overdone to the downside. 

Wheat - After day trading short yesterday, I missed the big move up today.  Just didn't see it coming.  Question...short covering or new buying.  We will know for sure in the morning but over all, the market is good and we have been long cash thinking a good price improvement was likely (read our prior comments for weeks).

This rally is not to be sold but breaks are to be bought.  I think the market is looking for where the sellers will really enter and that maybe another 10 to 20 cents higher.  All technical's look good...we will buy breaks.  

Rice - I don't know where to start!!! The market broke hard today with rice down 44 cents.  As you know we were short coming in to today but we covered the short exactly where the market closed.  NO!!!  I didn't go long.  For now, I'll wait for more information before doing anything...at least I think I will.  Why are we down so hard??  Two reasons. One, there is just no aggressive buyers in here because of the GMO issue and Two...the stocks report was bearish this morning with 3 million cwt more than the last WASDE report showed.  From what I can see, this is going to increase the USDA number by as much as 5.3 million cwt over the last WASDE report.  That is indeed bearish; however, we had a good chance at an increase in exports to deal with some of that extra long grain...I said we DID have!!!

Notice I haven't said...NASS screwed us again!!!  Do I need to!!!

Rough Rice Stocks up 18% from August 2005.. (read the PDF file yourself... NASS Link). 

The other factor remains the cloud from the GMO issue.  Read last night and the link provided if you didn't get here yesterday.  In general, I will sell a rally near term but am wondering what on earth could give us one.  PB is down to 22% so there is still room for it to go lower.  I will sell a bounce here near term depending on if I can figure out why it's bouncing.

Someone asked me today, "I'm still long, what do I do???"  If that's your situation, get comfortable.  The key to trading is being OK with taking a loss.  When you are able to do that, the losses won't pile up on you.  If you are going to ride this out, you have made the decision.  If you have decided this too much, divide your position up and sell a rally tomorrow on part so you can start feeling good about either selling...because its lower, or on the part you still have... because its higher.  This is not your fault...it's just life in the rice industry.  We will survive it (I think).  

Cattle - As I said last night...my eyes are on 93.50.  I hope I'm not too high on this one. 

Natural Gas - Well...we are short some gas and locking in as we dip.  We went to 50% today at $6.37 and it's a loser.  The market is down to 21% on the short term PB and down to 47% on the daily.  This is a setup for a sharp rally.  Why??? I don't know!!!  It is just setup to do it.  Remember, a setup is a technical condition where the market for what ever reason, does a certain thing a higher percentage of time.  What we are looking for is something that gives us good odds.

Dow -  Hard to call.  I can see it either way. 

Tuesday August 29th - 

Corn - Market finished lower today pretty much as we expected.  $2.35 may be tested near term in December as the market looks ahead to the September crop report.  We want to start into buying mode soon but it is still a few weeks away.

Soybeans - Just barely lower today.  We still see more downside here with little rally potential unless we see some very cold weather very early. 

Wheat - As we said last night, profit taking and a lack of follow through buying allowed for a setback here but I doubt it lasts long.  We day traded it short and were rewarded into the close but longer term we want to own the market.  We may start wading in if the market can test $3.95.

Rice - The rally from yesterday didn't last and again we are faced with a test of the lows.  Remember...rice doesn't make "V" bottoms but this is no usual market to say the least.  If we take out $9.13 then $9.00 is the next level left for support.  There has still been no wash out of longs so that hangs like a cloud over the market.  Also, no sales in Texas again and this could continue for several weeks...let's hope not but who knows at this time.  Longer term we should be OK but near term the market has a lot to digest.  One more point...if the EU and Iraq both decide not to take rice for the foreseeable future, the market is set to regain the carryover we used up and the September report could set us up to go right back to 22 million in carryover supplies.  That's loan level guys...again, let's hope that is not going to happen but there is risk in here right now that must be considered.  CLICK HERE FOR USRPA LATEST UPDATE

Cattle - We dipped below 92.00 but couldn't close there.  So far the market is holding in very well.  If we can rally to the 93.50 level we may start scale up selling fall sales.

Natural Gas - As we said this morning, 6.50 in October seems like a good area to add right now on the long side but again this is very short term in nature.  Everyday passing that has no weather scare to the supply side, is a day the market can drift lower.  The rally off of the $6.50 level didn't hold in the evening session as we are down 24 points as I type this.  Even so, its that time of year when things just pop up and if a storm does, so will the market.  The risk down here over the next two weeks is minimal.

Dow - Staying just under 11,400.  We could move toward the 11,600 but we see the upside as limited right here.  Things could change but I don't see it just yet.

Monday August 28th - 

Corn - Today was an inside day as we never got out of Friday's range.  The setup is bearish with a move under $2.40 very likely (67%) in the next two days.  It will take some bullish fundamentals to turn the market sharply higher.  We want to buy a break here and are looking for a break back to $2.35 to buy some for a longer period of time. 

Let's talk... When you have a large crop and a supply that gets bigger as you go from month to month, we usually get a market with what is called "accordion action".  This is where one month collapses into the range of the preceding contract month.  So, December should drop into the range of September in its last month of trade IF we are going to see this type of action.  My guess is we will not see it for very long but December is vulnerable to accordion down into the September range which is a 13 cent break from where it is right now.  This may be hard to do but the cash action may allow for December to stay under pressure near term.  Even so, we want to buy the market longer term as the fundamentals require acres to be bought for 2007.   

Soybeans - As I said last week, the market is set to continue lower near term with $5.40 in the November is the next level of support.   

Wheat - Today was a consolidation day and the market is set to continue higher; however, this action is coupled with some weak internal indicators which may allow for the market to find some profit taking here and fall back to test the $3.95 level.  This is where we would buy it.  We remain long 100% in the cash and wanting to buy a break in the futures. 

Rice - You mean it goes up!!!  Is the break over????  Great question.  The answer is I don't know.  Technical indicators don't mean much here but today the market couldn't push lower when it broke support so for now at least, we may need to rally to find where the selling really is. 

We covered our shorts today and went long as the market reversed after taking out support at $9.22 in the November.  When I say we went long,  we are very lightly long at 10% of our base position and from a price of $9.24.  I am going to trade in and out of this market and not put a base position in and hold it until the cows come home, or I should say until the GMO issue settles down.  Today the market should have had more pressure after breaking $922, it didn't so when it dropped to $9.13 and then rallied back through $9.22, it was time to reverse and see what happens.  The technical's indicate $9.56 is major resistance with $9.42 as the first layer of resistance but again, I don't totally trust these numbers given the current situation.  The market is still50 cents below where we took off longs so we have some room here to see what happens.  Tomorrow this time I may be short again.

Cattle - Still no sign of sell signal and no short positions are recommended. 

Natural Gas - Easy come...easy go.  We stayed long through the week end and got our head handed to us. Today's action was  not very impressive as the market gapped down and then basically stayed inside its early trading range.  We remain long 40% of our base position and about even in our long position.  I hated to see the profit get away from us but that is a Hurricane weather market.  For now we will hold where we are as there is still about 10 days to go in this weather cycle.  Longer term we want to get short and will use a weather scare to do exactly that.  Next time, we will be more aggressive with selling covered calls.

Dow - Right back to 11,400.  Where is going to go if we clear that level??  The economy is slowing down and for some reason the talking heads of MSNBC think that is a good thing???  Look for earnings in the third quarter to start to slip. 

Friday August 25th - 

Corn - Market finished lower with a reversal down of sorts.  We didn't make a new high over yesterday but we matched it and then we took out yesterday's low and closed lower for the day when the last gasp rally at the close failed.  With wheat off its highs but still up on the day, I'm not sure this reversal means anything.  Cash marketers should be storing, no futures hedges are recommended right now.  We will watch the new Tropical Storm of over the weekend as this could have an affect on the market next week.  We still want to sell Dec 230 puts but will now concede the price down to 8 cents. 

Soybeans - No reason to trade this.  Market gave up the whole weeks gains in the last two days and made new contract lows.  If we trade here, it may be in the oil side of the mix.

Wheat - OK...we covered all longs today as the market moved higher but then ran into good selling pressure.  We still closed higher but we are glad to take off the the long spec in the futures.  I really wanted to be slick for the weekend anyway.  Just one thing not to have to worry about some surprise on Monday morning. 

Rice - Open interest dropped over 400 contracts in yesterday's trade.  The setup was negative today but buying right near yesterday's lows started the market higher and that held for most of the day even though we finished near unchanged with little action going into the close. 

Most of you reading this know as much as I do at this point.  While I don't think there can be a lot of news one way or the other here Monday morning, there is a tropical storm out there and next week we may start getting some ideas about the scope of the GMO problem.  Look for more bad press over the weekend as "green peas"  (some call them green peace) stirs the pot as much as they can.  It will be next Friday at the earliest (IMHO) before we start getting any definitive news one way or the other.  If you are not getting the US Rice Producer's email update on the GMO issue, email me at pfm@progressivefutures.com (corrected link...sorry) and I'll forward your address to them for updates. Also, here is the link to the Advocate publication with a report on the GMO issue this past week. 

Read our comments from Wednesday and Yesterday if you need more information on this issue. We did cover half of our short position at the close today which is a very small position to begin with.  We already have enough to think about over this weekend.

Cattle - Market tried to go lower but once again, cash beef prices held the futures up.  No change in our position.  We will look for a sell signal next week.

Natural Gas - Higher again today as all eyes remain on the tropics and Ernesto.  We stayed long here with a surprise in the market for Monday more than likely bullish.  Some traders said the storm may die like Chris but Chris was not a September 1st storm.  I know we could be wrong here but this time of year, several storms could be on the horizon in the next few days so we chose to hang tough.  Besides we still have nice profits here to protect us from a big break.

Dow - Nothing happening here at all. 

Thursday August 24th - 

Corn - We did indeed sell more corn today selling Dec at $2.44 and getting to 40% hedges on long inventory for a short term correction.  The news here today was buying by commercials looking for longer term protection. That kind of buying is short lived usually so we feel OK getting a little more sold here.  Remember, this is for hedgers not specs.  Specs should be out right now and enjoying a little R&R  before taking on a long position.  You can try and say the action today was fundamental buying but it wasn't, it's all technical so when the market sells off in the next few sessions, the news will miraculously bearish...go figure!!!

Soybeans - Nothing happening here as corn moved higher.  We will sell a rally here.

Wheat - We remain long 15% but will sell that out tomorrow.  The action here today was a trend-day higher which sets up at least an early morning attempt to push over $3.98 in Dec...we will sell our longs there OR if we get a sell signal before reaching that area.  Yes, we still like it longer term but near term we think we can buy it better and sellers are just over head in this one.

Rice - At today's close, Nov rice was down 18 1/2 cents and it is at the lowest closing price since Monday's GMO news broke.  Lower by another 10 cents.  Open interest went up again yesterday still indicating that longs are not budging...some think that is good news...I am not one of those people.  Where does the selling really start to happen and an open interest of over 15,000 contracts start to reduce itself?  My guess is under $9.10 and maybe $9.00.   

OK...we are officially out (slick, flat, clean...) as hedgers, short 20% as specs and telling everyone we talk to...get comfortable.  If you are comfortable long OK but be ready to ride another 60 cent break.  Now before I go on...don't anyone go out and say "PFM says the market is going down 60 more cents!!!"  I am not saying it will, although it might, it might go to $10.20 too; however, what I am saying is get to where you can ride the extremes if you plan on just riding your position out.  

I'll ask the question again, where is the good news going to come from to turn this one around???  Frankly, I see more bad news and part of that bad news is today's close.  If this is a great buy, we should not have closed at this level today.  I will admit this is not the typical market and I will also admit, technical analysis is useless; however, human tendencies are what technical trading is founded on and human tendencies in this case indicate another leg down and it won't be pretty.  The market is running out of buyers as it moves up and sellers as it makes new lows.  Key sentence...makes new lows.  This one is setup to go down near term.  I hope I'm wrong but for you trying to decided what to do, Florida is a great place to visit this time of year...go for a short trip!!!  In other words, when in doubt be out!!!   

Long-term we think this will right itself and out strategy right now (subject to change) is to start buying it when everyone starts selling it...that has not happened yet.  When it does...everyone will know it!!!

Cattle - Yesterday I wrote this..."Tomorrow, I may sell 20% if I can get a some sell signals early in the trading session."  Well, no sell signal a close over 92 destroys the signal for now.  Tomorrow we need the market to stay higher or we could have a sell signal on a Friday. 

Natural Gas - Higher today.  All eyes on the Tropics...We are long 40%.

Wednesday August 23rd - 

Corn - We said last night (read below) the action of yesterday setup an up day today but a trend-day higher was not what I was thinking.  In one day we moved to our first resistance point of $2.42 and we could rally a bit more to $2.45.  There is a lot of talk that yields may not be as good as first thought based on crop tours; however, these things can be over quickly with the next day in an other area being better.  Who knows???  We sold the rally today for our hedge account just as we said we would do but we sold it lightly.  Tomorrow we will sell more at @2.44-$2.45 in the Dec. we can get up there.  The overnight trade will be interesting. 

Soybeans - August is a big month weather wise for beans and right now the sellers just don't want to be out on a limb.  We will sell this rally as well but need the market to roll over first.

Wheat - Nice move higher today right up to resistance.  We are still a little long here in the spec account but dropped down to 15% on a 30 minute profit taking signal today.  It closed about at that price so just as in corn, tomorrow will be interesting.  Longer term, we want to own cash wheat in the bins. 

Rice - Not much has changed from last night but in general I'll say again, I will not buy the first rally.  Why??  Two things bother me here.  First, today's rally only did one thing, it rallied back to where we had support yesterday.  If you think about yesterday's trade, when we were up by 15 cents today, that made yesterday's sell off only down 34 cents compared to Monday's close.  Then at the end of the day today, we sold off to up only 8 cents on the last tick which is the same as down 41 cents from Monday.  Second, according to the open interest, we didn't get anyone out yesterday as open interest went up.  This means new sellers in the market and new buyers on the break.  So, this rally today makes perfect sense and its not that good of news if you are long the market.  Many people are saying this is going to be over very fast and buy it now.  This is not going to be over real fast and there is a lot of rice still in the field. 

Our problem remains the scope of the issue.  Today in Texas at a weekly rice sale, every mill passed on the bid sheet.  Never seen that before!!!  This means no bids by the buyers...they want to see how bad the issue is before buying any more rice.  No bids!!!  So do you really think this is about over??? 

We sold more rice on the rally today have recommended a cautious approach.  Long-term things are going to be fine but near term...it is going to be hard for me to tell anyone what to do.  So...be careful and keep in touch.   

Cattle - Same comments as last night...The market has closed three times (make it four) in a row now under its re-buy line.  This indicates a move down to $89 near term.  A close back over 92 re-establishes the move higher.  Tomorrow, I may sell 20% if I can get a some sell signals early in the trading session.

Natural Gas - Crude down big...a big injection number tomorrow...and another Tropical Depression may be forming.  All in all a fun market to trade right now.  We remain long here and will follow it closely tomorrow. 

Tuesday August 22nd - Long comment on rice tonight

Corn - We said this morning in our morning setup comments that we might stay within our first hours range and we pretty well did just that.  Since we didn't go lower over the day and the market really was setup for a trend day down, that sets up a higher move tomorrow.  I'm not going out on the limb here, but if we close higher over night, I might come in buying in the morning.  Longer term we like, near term, there is risk in both directions.

Soybeans - Higher today but only by 1 cent.  Nothing new here as we are out.

Wheat - There is no news here and no news means the trend continues.  Long sellers are still exiting but this move is about finished longer term.  It may still take the corn shifting gears before the wheat can rally.   

Rice - If you read our setup comments, we talked about the market setup for a down day but this was ridiculous.  We got out of all of our spec positions today right after the open to wait out the news on what the EU (announces tomorrow) and other countries are going to do about the GMO rice issue.  I thought it best to just stand aside...I had no idea this was going to happen.  Futures ended LIMIT DOWN in September and 49 lower in November as we find out the problem is not with cross pollination  but cross "contamination" in FOUNDATION SEED.  This is bad news but we don't know how bad it is yet, so let's talk...

First, the over riding factor is that this too shall pass!!!  There is a great buying opportunity dead ahead but right now it is going to be hard to get any good news.  That is why we went to the sidelines...(I wish I had gone short).  Look for the market to keep heading south but I doubt the cash market breaks very much near term so another 20 cents down sets up the sell cash and buy futures strategy.  That is not to buy futures as a speculator (non-producer) it is to sell cash and buy futures.  Don't get that confused.

Second, we want to buy this break and get the positions back we sold today because the market will, over the long term, forget about this gene issue in long grain rice; however, it will take some time and rallies near term should not be looked at as the market going right back up.  We may start back in by selling Puts.  Start thinking that way but remember, it could take 30 to 60 days to work through half of this problem.  Before Bayer gets approval for LLR601 they need to get it into the Federal Registry for 30 days.  Thus the 30 to 90 day window to get this over with.

Third, is it time to sue the HECK out of Riceland Foods???  What is wrong with this picture...they are short the market...they submit their own samples showing contamination...they know where the rice is and how much is affected....they have been sitting on this since January....I ask you, how many of you would have planted a variety in March or April if you knew there was a cross contamination problem with the seed????   Their arrogance once again surfaces and the rice farmers of the United States get the ole Big Blue kick again.  Who likes these guys???  I for one am checking into their liability in this matter and I want an investigation of their trading in the rice market with inside information since January.

Fourth, the USDA's handling of this is pitiful.  All they care about is covering their tails and to heck with the producers who now will face selling their rice way below the true value of the crop.  All in all a terrible job and we will pay the price for awhile.

Fifth, Bayer...well, these guys are really going to pay the price but rumor has it a certain University in the land between Texas and Mississippi may be the ones really to blame.  Bayer is working and paying to solve the problem as fast as they can...that is refreshing.  Big Bad Blue could take some lessons from a class organization.   

What do you do if you haven't gotten out???  Don't lose your head.  That is the key to trading, keeping your head while others lose theirs.  This situation just may have insured less rice acres next year and so for the long run, it will take a more dramatic run-up to buy the acres in so don't despair and don't give it away.  We wouldn't sell cash rice unless you have a plan to buy it back on the board.  If you do that strategy here, be prepared for a 30 to 60 cent down draft from here.  That would be extreme but look who is short.  Patience.... 

In general, nothing has changed except the the outlook of uncertainty for the next 30 to 60 days.  Long term, this market will go up but not before we have a much better handle on things.  

Cattle - The market has closed three times in a row now under its re-buy line.  This indicates a move down to $89 near term.  A close back over 92 re-establishes the move higher.  Tomorrow, I may sell 20% if I can get a some sell signals early in the trading session.

Natural Gas - We remain 30% long tonight as it looks like the weather is indeed changing.  The wind sheer affect seems to be dropping and that may allow for more convection and more storms.  This news was enough to rally the market today.  What is going to happen if we actually get a storm headed for the gulf...well, we will still sell a big rally here but will hold our longs into the middle of the storm...literally, the middle of the storms life in time.   

Monday August 21st -

Corn - Not much here today.  Market never had a chance to create an up or down day and even though we closed higher and on the highs, there is nothing to get from this day at all.  Near term, the market is factoring in perfect yields and I would expect for the market to still work a bit lower over the next several weeks.  Longer term we think demand will be very strong and require more acres in 2007.  This will require higher prices.

Soybeans - While I like the new fundamentals, the world supply of beans is up and there is a harvest to get in that will keep buyers in a hand to mouth situation.  We might own this market at a lower level but not here.  Beans are below loan so there is little reason to be hedged.

Wheat - Closed higher today after the reversal on Friday.  This could put the wheat into a sideways market for the time being.  We like it longer term and are long 30% in the spec position with all hedgers long as much cash as they can hold.

Rice - The futures finished sharply lower as the news of the GMO problem hit the market.  As we said last Friday when the news broke, this probably a tempest in a tea pot but the market can be fickle when it comes to news that there is product out there not approved by the USDA.  We understand there are a lot of rumors flying around and we don't want to be source of false information so, we'll just say that the market action today was interesting.  We put in the low of the day early, tried to rally and then sold off back near the lows.  We still like the market longer term but this is one of those times when it is best to wait it out and see what develops. 

Riceland foods did put out a statement that rice had been found in their rice back in January by one of their customers.  They have asked Bayer for an explanation.  Now comes the effort to find out just where it came from while Bayer goes ahead and gets it approved.  The percentage of the gene in the rice is the same as 6 kernels in 10,000 kernels.  Not much but enough to to get all the green peace idiots up in arms.  For now, we will hold where we are and wait for more information and market action.   

Cattle - Cattle higher after the report last Friday had nothing for the bears to sink their claws in.  We like the market near term but will watch it for a chance to hedge. 

Natural Gas - No storm and little heat.  Market worked lower today but not much and there is new evidence that the storm season is about to change gears...we are long and will hold those positions and buy additional contracts a on a break.  On the next big rally we want to be a HUGE seller.  Longer term we are bearish.

Friday August 18th -

Corn - Market sold off but short covering lifted the market off of the lows to close up 1/4 of a cent.  Some may call this a spike but it sure is a small one.  Monday we'll follow the market closely to see if we can rally back toward the $2.45 level in December next week which should stop a rally right now. 

We did not get any more Puts sold so as of now we are short 20% at 7 cents and looking to sell more at 9 cents next week.  We will get to 40%. 

Soybeans - Nothing different...market grinding lower

Wheat - Yesterday the market broke below major support but today it bounced right back closing over $3.80 in the December.  One day does not a bottom make so we'll watch the market into next week for a buy signal.  PB dropped to 31% on the down move today.

Rice - There is something in the air!!!  It may be bullish but it could also be bearish.  Uruguay cancelled meetings with the US next Monday and there is talk of the government having a hold of something...who knows but odds are by the time Monday rolls around, we all will!!!  Technically, the market still looks good but news is news and we may be affected by such a thing come next week.  We chose not to buy anything on the break today and that may or may not be a good thing. 

4:40 PM....OK...It is official...click on the link below and/or read on for our take...

USDA Rice GMO Statement

OK, in a nut shell...a protein modified rice variety that has not been approved has been found in other Long Grain rice as a result of cross pollination; however, this protein has been approved in two other varieties and poses no threat to the food supply or the environment.  So what's the big deal???  Well, if history is to be repeated, we may see a knee jerk reaction and find early selling on Monday and a sharply lower day from the opening.  My comments are as follow:

The USDA has done everything to cover their own tails in this situation and nothing to cover the long grain rice producers.  The rumor's have it that the rice is from Louisiana which would make this a localized problem and yet the USDA said they didn't know where it occurred and wouldn't say so if they knew since they wanted an investigation.  They have know two weeks about this and yet didn't bother to look at the scope of the problem (which it really isn't a problem but that is not how the press is going to write about it especially with the comments that occurred in this press conference).  Why didn't they tell us where, how much, and what long grain markets are probably completely clear of the protein?  Why?  Because they were only interested in covering their own tails. 

All in all, my guess is this will blow over in a few weeks as the Bayer company gets approval of this same protein enhanced variety; however, until the scope is known and the approval is gotten, we could see a hard sell off.  If it holds, imagine the pressure on the finances of long grain farmers everywhere.  Just when you thought it was safe to get the planter out for 2007!!!!  OK...maybe it won't be that bad but my guess is this will be a bump in the road that will shake things up for awhile.    

Cattle - Cattle on feed report today was a nothing and should have no impact on Monday.  Sharply lower today and looking for support.  Could work lower early next week especially if the grains are higher early in the week.

Natural Gas - Market could not hold the rally today but this is classic for Natural Gas.  Odds favor the market going right back up to the levels near the high today early in the week if not Monday.  We are long 30% which makes us 70% short and that has me nervous.  I like the market higher near term but then look for a break into the winter months. 

Gold - Nothing new here...we are out and watching for a reason to trade it.

Dow - Nothing happening again today.  Market against resistance.

Thursday August 17th -

Corn - I thought today might be more of a consolidation day but the markets started lower in the grains after the first hour and that set the tone for the day.  The trade is beginning to think a 155 bu. average is possible.  I doubt it but the trade can certainly talk it up.  It doesn't matter a lot now as we approach loan everywhere, the fact remains, it is next year where the fireworks are going to be intense and once the inventory starts to drop after this harvest it's going to go lower and lower.  The market has to buy acres and that will be the main factor once this harvest is complete.  We are selling the 230 put here and will sell more tomorrow at 9 cents or better.

Remember we said the market would go lower than it should???  Well, it has done exactly that and there is no sign that specs should be buyers.  Short traders should start covering by selling Puts right here just as we are doing. 

Soybeans - Nothing different...market grinding lower

Wheat - Today was not a good day as wheat broke through major support and closed near the lows.  I want to start selling puts but need a reason.  If the PB drops under 30% then I will sell some puts to cover short positions only.  PB tonight is 34%. 

Rice - Market sold off tried to rally but couldn't do it and finished off the highs.  Sometimes you have to break a market to rally it but as we have been saying, you must be able to ride down drafts in this market.  Just like corn, it is long term we are really interested in and near term we could see a downdraft in prices with the harvest in full swing; however, farmers can not make the budget work at this price and while the cash buyers don't care, selling this market at this level will leave an air pocket when the market turns higher and it will leave some shorts in the dust.  With that said, do not be short and buy breaks but just keep your self from getting in too much trouble.  This market is notorious for swings to try and get traders in trouble.

Cattle - I still see this higher but I'm not going way out  on a limb in that camp.  Cash prices are holding so look for the market to try the next resistance point of 92.80.

Natural Gas - This is sounding like a broken record...lower again but again off the lows.  For those needing to buy Gas...that makes you a short...we went to 30% long today buying it right near the lows for a change.   No storm in the Atlantic and no heat to speak of so the market is still finding sellers.  If we see a storm...we will gap higher into thin air as no sellers will be there.  We will hold at this level for now.

Gold - General sell off with all the other commodities.  No reason to trade it one way or the other. 

Dow - Another slow day.  11,400 resistance remain.  If the Dow gets over that, where is it going in this environment?

Wednesday August 17th - Short and sweet

Corn - No changes...sell puts on breaks and look for market to grind around here as it looks for an early harvest low.

Soybeans - Good weather could put more pressure here.  $5.60 is support in Nov. and we are here.

Wheat - Nothing new...probing for low.

Rice - Market sold off but couldn't hold it.  DO NOT SELL CASH AT THIS PRICE OR TIME!!!  The idea of selling rice and allowing a mill to buy futures for you should scare the pants right off of you.  DON'T DO IT!!!  Basis is horrible right now so just eat what you can and store the rest!!!  Also...make sure you read last nights comments...

Cattle - A little bounce but nothing to say one way or the other.   

Natural Gas - Another move lower but again the market  came off the lows.  Major support was tested today so we'll see if the don't test it again.

Gold - Nothing new...bounce today means nothing except the bears decided to let the bulls win one.

Dow - Nice move higher today and we could test 11,400.  It will be interesting to see what the market does if the fundamentals start to show the economy stalling here.  If that is going to happen, it is still a couple of months away.

Tuesday August 15th -

Corn - We said in our setup we figured consolidation and that's pretty much what we got.  I was a little surprised at the selling early and used it to get more puts sold.  Here is the thing, if you are speculating, we would be out right now of all short positions and if you are a short hedger, we would be short on no more than 50%.  On that 50%, we would sell the Dec 230 Puts so you would have a covered Put situation.   Specs who want to start taking on some long exposure, wade in by selling the same 230 Dec puts but no more than 40% of your base.  I like selling the Puts at 7 cents or better.  If I had none on, I would do 20% at 7 cents and see if I can't do 20% at 9 cents.  

Soybeans - Market could bounce near term to find the major selling power in the market.  We are long 10% but holding a loser right now.  The action today is constructive but one day is not enough. 

Wheat - We are out of futures and want to own it longer term.  We could start owning a little here very soon but there is no technical reason as of yet.  We may sell some Puts here as well.

Rice - I said last night to look for the 10.20 level to be tested soon...soon is here!!!  Again, the market may work right up to the $10.45 level with little down drafts as we go.  Here is the recommendation and I need to be very clear about this...

There are two groups we make comments for...let's start with hedgers.  Long hedgers are 100% long the market and holding right now.  We have very large profits here from way back....if you are not at that level and have been trying to buy a break, today's action was key in getting to at least 50% long.  Remember we said we would buy it higher or at $9.20...well, higher won out.  We will still buy a break in the near term to get to 70% long but if we spike toward $10.45 quickly, this would change the risk analysis of the market. 

For the Specs, we sold 1/3rd of our spec position last Wednesday and put a stop at the highs and that was hit on Friday.  We left 12 cents on the table on 1/3rd of the position and moved right back in.  So as of tonight we have three groups...

Specs..100% long 

Hedgers who have been in the trade from the get go...  100% long

Hedgers trying to catch up...50% long  This is a money management issue as we have limited cash to play with and need to be able to handle a 40 cent down draft.  I am going to write a special page on money management in the next few days to explain this condition. 

Cattle - Second corrective day...we will look for a reversal in the two days or we may have a top forming. 

Natural Gas - Market moved back off of lows as selling again dried up.   We remain 20% long and wrong right now; however, time is on the bulls side for the next 4 weeks and then the bears will come in with a vengeance.   

Gold - Another down day...looks like $600 will be tested.  We remain on the sidelines.

Dow - Up big but it gapped higher and then did nothing the rest of the day.  I think we may hold here or higher near term but there is still no sign that we have not broken out of the overall sideways range.

Monday August 14th -

Corn - Market lower as expected.  It did make new lows later in the day but didn't stay down there and came back into the early morning range.  Look for more consolidation here near term.  We do not see a major bounce yet so little risk in being short; however, we think we are probably getting close to a low and the market will go sideways for awhile.

Soybeans - I think today may have been the end of the connection with corn.  We bought beans for long hedgers going into the close so we are now 20% long there.  Specs can buy it here too but place stops under today's low. 

Wheat - No sign of a bottom yet...we will buy it when we get a good buy signal.  Look for the market to test resistance.

Rice - I can see it 30 lower and 70 higher.  The risk is up not down.  I think a lot of profit taking has occurred here and the market has not sold off much.  I expect $10.20 area to be tested near term. 

Cattle - A correction day but still no sign of a top.  Hang in there long in the cash.

Natural Gas - No sign of any problems so the market is testing support levels.  We are 20% long and will get more bought very soon.

Gold - Market in a sideways to lower drift.  We are not trading it right now waiting for direction.

Dow - Dow did not hold big gains so now we test support...again!!!  Sideways is the big picture.

Friday August 11th -

Corn - Don't you just love these reports!!!  If you read the morning comments we talked about a trend-day down and sure enough, that is what we got.  The corn numbers were bearish but were they that bearish???  I guess the main point here tonight is that the funds wanted out and headed for the exits.  I see this market as a buy in the $2.35 to $2.40 range but with the funds this short, we will go lower than we should.  Long-term we want to own it but near term we will let the market trade through this.  Coming into Monday, I think most of the pressure on the market is off after the collapse today so we may consolidate within today's range.  We lifted some shorts today with the market down 12 cents but overall remain slightly negative on the market near term.  Open interest changes will be closely watched.

One more thing...I wrote here several weeks ago to NOT take a 5 cent LDP on corn.  Now I hear there are some saying I was dead wrong not to take it.  Let's stop and rethink this for a moment.  Let me ask you the question I asked myself that very day.  Do I want to give up a whole years worth of market activity...before harvest... before hurricane season peaks ... and before we get a good look at the final yield?  The answer then was the same as it is now.  NO!!!  Maybe for 15 cents but a nickel???  Made no sense then and makes no sense now. 

Soybeans - The report was bullish but the market just couldn't shake off the corn action and the world numbers as well.  I think the market will rally once corn finishes its down thrust.  We will look for a trend-day next week to own some inventory.

Wheat - I said last night the market is pointing to a bearish report and indeed we got one.  I like this break.  We will want to own it but we will give it some room.  We remain long cash with no futures.  $3.90 is support near term and a likely place for the selling to dry up early next week. 

Rice - Report was bullish but the market couldn't trade out of Wednesday's range.  Look for more consolidation near term as profit taking may get more intense next week.  We will buy a good break. 

Cattle - October worked higher again today.  We still are not that overbought but there could easily be a correction near term.  We remain long in the field with no hedges. 

Natural Gas - More downside as the market see's no weather problems to worry with.  That could change next week but every day we don't see any sign of tropical weather development is a negative for NG prices; however, we had one of our systems give us a buy signal today on the break which is most unusual.  We took it, getting another small chunk of gas in place for the next 4 weeks.  That puts us 20% long our base position. 

Gold - Down $5.00 today but the market holds its bullish setup.  Even so, we are not trading it right now looking for a hard correction to own it.

Dow - Not much to write about.  PB is exactly at 50% so we have no clear direction.  Our two other systems are both long but not showing any upward strength.  We'll look at it in more detail over the weekend and have an update for you later. 

Thursday August 10th -

Corn - As expected, we were quiet in front of the USDA report.  The thing on my mind is the current basis play in the south where the harvest is winding down.  Meanwhile, producers in the north have a lot of corn in their tanks that need to move into the pipeline before harvest starts.  If the numbers are not really bullish tomorrow, I can see the market take a move down over the next 3 to 4 weeks under pre-harvest pressure; however, if the numbers are really bullish, we could see a pop out of this level and then another down turn to test the lows.  Bottom line remains long term you need to own this market.  Also, remember the beans and wheat have numbers tomorrow and the corn could see some pressure from the out side markets if there isn't a real bullish corn report.

Soybeans - The sell off late today tells me we still have a ways to go on the down side.  If the corn number is not bullish the beans may have nothing to hang on to.  We are bearish and short. 

Wheat - While I like this market long term, the near term action looks bearish.  The USDA numbers may be bearish tomorrow but it will be the actual price action that we need to follow.  We are out of futures and long cash.

Rice - Up 46 cents yesterday and down 6 cents today.  That is a trade I'll make all the time.  The USDA report will have a hard time being bearish as we continue to hear of lower acres and yields being off in the South.  We want to try and buy more rice in the $9.60 to $9.70 window but are going to need some help in the report tomorrow to get back down there.  If we make new highs, we will close our eyes and buy more. 

Cattle - Up 195 points in October today.  PB is up to 73% indicating an oversold condition is just a few days away at this pace.  We want to sell on a good sell signal but right now we like the fundamentals and the technical action so until we run out of new buyers, we'll keep to the bullish side of the market.  Remember, the end of a bull move occurs when you run out of new buyers or as they say "everyone's in that is getting in.". 

Natural Gas - With the terrorist action and concerns, the market is a little spooked at this point.  Crude down over $2.00 and NG down a bit.  Look for more selling near term unless we see a storm really pop up and look threatening.  We will buy the break if we can get the September back near $7.20 

Gold - The sell off today was more of "I think I'll get out" then a technical / fundamental selling thing.  The market remains concerned over

Dow - Tough day on the securities as the market sells off then rallies and then sells off.  Right now as I write this it is about even on the day.  We do not want to be long here on the Dow index but there are some good ETF's (exchange Traded Funds) we may start watching and mentioning here.

Wednesday August 9th -

Corn - Technical bounce today off of the $2.52 level in corn yesterday.  Read last night's comments again.  The action at the close indicates we can test the $2.58 level in December tomorrow and possible $2.60.  The USDA report on Friday is expected to be both bearish and bullish.  Bearish near-term and bullish ling-term.  For us, we remain in bear camp but nervous that an early low for the year is possible.  The problem will be the beans.   

Soybeans - Not much of a bounce.  We remain bearish here and if the corn sells off through $2.52, selling will get very heavy. 

Wheat - Rally with the corn and ahead of the USDA report.  We will wait for reason to buy it and a safe signal void of the influence of the corn. 

Rice - Major confirmation today that a bull move has begun.  This shifts us into the mode of buying breaks.  The market failed to get to limit up today but moved against the major resistance levels.  This is the highest close for November.  Frankly, I expect the market to pause right here and consolidate UNLESS there is something else going on like a problem in Asia with too dry of conditions ala 1987.  We are long, have been long, and will now buy breaks when and if we can get them.  The nice thing is, we buy the breaks on their money not ours. 

Cattle - Another strong day.  Hang in there and get ready to do some sell hedging in the future but not now.

Natural Gas - DANG IT!!!  We didn't get more options bought and the way things have gone, we may still get our chance but the market is EXTREMELY nervous.  We will try again and hope there is a break to buy.

Dow - Nothing day today so the market remains range bound and we will sell rallies and buy breaks.

Tuesday August 8th -

Corn - We came right to MAJOR support at $2.52 and stopped.  Today was a modified trend day down as the market made new lows on the 30 minute chart in almost every 30 minute period starting with the second one.  We have been expecting what I call a "pointing day" as we have been mentioning in the morning comments about a trend day.  So now what???  If you have followed what we have done, you are sitting pretty and we are going to stay in the bear camp for now.

The 30 minute system is screaming oversold and that a bounce or pause is imminent.  A bounce off of the lows on a 30 minute chart may last only a day or it could indicate we are going to consolidate into the report on Friday; however, in times past, when we go from bullish to bearish, it is not uncommon for the market to just keep on plunging.  For now, we remain short and have no reason to take profits. 

Soybeans - New lows today again and the market is not that oversold at all.  We mentioned this morning a trend day down was possible and we got one.  We sold beans today right after the market started down into the modified trend day down formation.  We did take profits and made it a day trade just because of the oversold conditions here.  So we are out again and will wait for another chance to short the market on a bounce or another sell signal.  If you need to sell futures, then sell a rally here.  

Wheat - As we said last night, long term we like wheat once corn is out of the woods, but today's action was worse than we expected.  Yes, every once in a while we are wrong!!!!  Today we day traded wheat and lost the nickel we made in day trading beans...oh well.  For you producers, nothing has changed for us.  It can go lower with the rest of the complex but longer term we like the market and want to store for now.  No long futures on buy backs at this point.

Rice - Well now...  I'm not sure why today happened but my guess is that someone thinks this Friday's report is going to be bullish.  The fact is Rice has little selling overhead right now and the crop is not in that great of shape.  For us, we want to just stay long and look for better prices once we really get into the Arkansas harvest. 

Do we buy it here???  I don't think so at least not yet.  I have a "take profit" sell  signal at $9.58 tomorrow.  On a move over $9.60 we are going to have a major decision to make.  Check back with our Mid-day comments tomorrow.

Cattle - No change here.  Cash prices remain firm and we want to own in the field. 

Natural Gas - Back and forth we go.  Today the market finished higher erasing all of yesterday's sell off.  One storm headed into the gulf and intensifying will give this market a real boost.  Man what a tough one to trade as there is 50 cents risk down and $2.00 risk up...yes...I said $2.00.  Oh, and if that happens, I will sell the tar out of it.

Dow - FED holds interest rate as they see the economy slowing...ok guys...think about it!!!  Economy slowing and the Dow making new highs????  Shouldn't happen so now we will hear the debate about how much is the economy slowing...are we headed for recession???   We will buy good breaks here and for now, sell a good rally. 

Monday August 7th -

Corn - Market works down toward support in a very quiet day.  Once the market broke early, it just died with no trend day occurring.  Tonight's crop condition will be watch closely but it appears to me we can take out the current uptrend if the market works down through $2.53 1/4 in December.  $2.48 is major support.  Our short positions are correct right now and certainly profitable but there are a lot of questions still to be answered.

While I see the market strong longer-term, we are put in the position of trying to give short term advice and right now, we are bearish but very cautious in that position.  Here is the question for all of us.  Given the yield at 150 bushels per acre and the current demand, how low can corn go?  Our answer has been $2.35 in December.  Now, I'm not so sure as the cash price is telling us something different.  So here's what we need to do.

On short positions, we are going to start taking them in a little early.  Our first point right now is $2.46 or another 10 cents down.  My opinion is we can't rally sharply higher right here but we could stop going down and consolidate or start building a base...so we need to be patient and let the market tell us what we need to do. 

Soybeans - Closed on the lows today and consolidated the loss.  More technical selling is likely here tomorrow if we don't see the beans higher in the early going.  Funds may load the boat on shorts even though it is very unlikely they will ever go short corn on the next break.

Wheat - Closed near highs and still over $4.10.  Could get drug lower by the grains but we like the wheat longer term especially once corn is finished going down.

Rice - Down a little more as the bears sell in sympathy to the other grains.  This could continue down toward the $9.20 level and to be honest even lower.  This is a time question not a price issue.  I said months ago to watch for rice to put in a bottom as harvest gets going in the delta.  We aren't there yet.  We might be able to have a hard push down but it will be met with aggressive buying when it turns and the sellers that have pressed the market will get the thrill of see what an "air" move is about.   

Cattle - We still like the market near term as the feed prices move higher.  No targets yet but we may get one this week.

Natural Gas - Market still working lower with no sign of any weather problems.  Bears are getting a little too sure of themselves and they may have a surprise in the next few weeks.  We want to own more option spreads but we too will be patient and watch the satellite images every 6 hours for developments.

Dow - Not much to talk about today.  We may still work a bit higher as there is nothing pushing us one way or the other. 

Friday August 4th -

Corn - Today was a key reversal in that we traded above yesterday's high and then traded below yesterday's low; however, the market closed up 1/2 cent which means it was a key reversal nothing!!!  The market is waiting for more weather and yield news.  Here is what we know as we head into the weekend.  Cash prices are very firm.  I have never seen the basis this high in South Texas at harvest.  There is a need for cash supplies right now.  Second, the weather scare is not taking hold.  If it were there would not have been the sell off we got today from the opening highs.  Think of it this way.  The market sold off 5 cents from the opening and while finishing 2 cents off of the lows, the activity was light enough to signal a wetter forecast Monday will lead to strong selling while a dryer forecast will keep the market in a holding pattern waiting for damage. 

As per our setup comments this morning, we sold corn as it went to unchanged on the day and our short in the spec account and hedged fully in the hedge account.  Cash producers should be storing as much as they can and if you need to sell something into the cash market, go ahead as the basis is very strong.

Soybeans - We are 7 cents over major support and just sitting here.  The market looks weak and we remain firmly bearish near term. 

Wheat - Rally fizzled as the corn couldn't hold gains.  Remember when one of kids in a small group would run out ahead of everyone thinking the gang was right behind them??  Well that is wheat today and the rest of the gang wasn't there.  We could hold in this price range and for now, we want to buy a break.  No spec position and cash producers should be long all of the cash they can hold. 

Rice - Nothing new to talk about.  A 20 to 30 cent break is possible but the bears are running out of time.  We will buy breaks.  $9.30 is our first buy back point that I will add at going into Monday.  If corn can sell off, we may get some pressure here to buy.  I am not paying this price yet.

Cattle - Nice move today as corn couldn't hold early gains and cash movement is not that great right now.  It is a complex issue but technicals are bullish here and feed prices, while higher than normal, are under pressure.  We want to sell cattle higher for hedge purposes only.  Monday, look for cattle to follow corn or should I say, go opposite corn.

Natural Gas - With no storm to worry with, the market put in a quiet day.  We are looking at Sept options but would like a cloud cluster out there before buying options spread.

Dow - Today should not have happened if your a bull.  Major support is at 11,025 technically and from a chart pattern, 11,080.  Monday will be interesting.

Thursday August 3rd -

Corn - A big nothing day.  We never could mount a move higher and at the end of the day, the market looks like it has consolidated the gains of yesterday.  A move over today's high may bring in more buying.  The 6-10 and 10 -14 day forecast remain hot and dry but again, if the beans don't go...neither will the corn.  August is looking like it could be an up month if the beans can catch fire.  We need a solid sell signal to sell anything else right now. 

Soybeans - We close down 3 cents from last Friday's close.  What does that tell us??? It says this market has not been able to catch any strong buying even with the heat in the bean belt.  A move over this weeks high would signal an advance but the market seems too lack luster to move away from this level. 

Wheat - We are long cash wheat except for what we couldn't store.  Last night we got a buy signal and today it failed and we picked up a sell signal.  Typical weather market and especially when the market is sideways to begin with.  unce there is going to be a good reason to hedge some of it up.  The sell off at the close today looked like institutional selling so we may not see that type of selling in the morning.

Rice - Little news out there to trade and the technical's have good room for a down swing without changing trend.  For us we'll buy a break but 4 cents is no break.

Cattle - Read last nights comments.  Market closed higher today but lower that its open.  Yesterday's low should be support.  Nothing new based on today's action.

Natural Gas - Chris fell apart and with it this storm rally.  The next one is right around the corner.  We may get more downside action but I doubt it falls too far. 

Dow - Still looking good as it chips away at resistance. 

Wednesday August 2nd -

Corn - Between a hurricane affecting energy and heat bringing damage to the mid-west, the market moved higher today with a trend-day.  Is this for real??  The answer to this question lies in another question.  Let's ask that first.  Is there damage to the corn and bean crop form this heat spell?  Answer...Not Yet!!!  So, is this real???  Not yet!!!  Could it be real??  You betcha!!! 

On August 2, 2003, November beans were trading at $5.20...on October 29th, 2003 they were at $8.00.  Yes, the carry over is larger but the point is the corn market can go higher in August.  By the way in August of 2003 December corn rallied 30 cents from the first day of August to the 1st day of September.  The key thing was damage occurring to the beans. 

At this point there is no damage to the crop and if  that remains the case, selling the rally is the right thing to do.  For now, we must wait for a sell signal to show itself and not stand in front of a train.  The technical indicators will point the way, we'll be patient and see where it happens.  I will not try and pick a top. 

Oh and by the way, in 2003, there was no damage to the corn crop so by the time November got here, corn was all the back down to its July lows, wiping out all of the August gains.  Will history repeat itself???   You betcha!!!

Soybeans - Well now!!!  At last some reaction to the heat.  The forecasts remain hot and after some rain in the next few days...dry.  Read our comments above regarding August of 2003.  Even with the big carryover number, we could see some dramatic price movement here if we can get some damage concerns for the supply.  We would not be selling anything here unless we can get this one really moving higher.   

Wheat - We took off our wheat corn spread today and that puts back long corn and wheat in the cash market.  You should be long 100% of your wheat now in cash and that's where we'll stay until things look to change based on technical indicators.

Rice - WMP came out this morning and it was the big revision report on grades.  Without boring you to death, let me say WMP was down 4 cents but totally from a change in the by-products.  The market was up a bit today but again, there is nothing to move the market higher near term unless the actual condition of the delta crop is in doubt...and it should be!!!  Look for the market to watch and follow the grains right in here but longer term, it's going higher after it hops around for a while.  To those say its going to loan...I'd love to hear the logic on that one.  Not a chance!!!

Cattle - A close under 86.95 is still a sell signal in the October cattle.  I can still see a wild trade in the meat complex as grain prices go through drought scare #3.  We are not in the futures at all and are long the cash market looking to buy pairs.

Natural Gas - Monday...way up...Tuesday...way down...Wednesday...Up and then down!!!  Well not really down, just off the highs.  The heat is one thing and the Hurricane to be is another thing.  Look for this rock and roll action to continue.  We are still holding the call spread but may take profit tomorrow or as soon as Chris gives us a better feel for his direction into the gulf. 

Dow - Good day today with Gold higher, Oil higher, and commodities in general higher.  You got to like today.  Look for a move higher near term in the Dow. 

Today was a big day for us on two fronts.  First, we have switched to a username and password as you know since you are here and second, the Chicago Board of Trade went to Side-by-Side electronic trading today.  This is a huge step toward killing the grain pits in Chicago.  While I will miss those days of screaming and jumping up and down trading, I realize that the future is in trading directly by computer and it is coming very fast. 

The first days' reaction was one of surprise with the amount of volume in the corn electronic trade.  I was not at all surprised.  What this means is that as a trader here in Houston, I can now see the bid and offer along with the number of contracts and the depth or where the next best bid is and then the next and so on...  In other words if corn is trading at 2.57 I can tell you how many contracts are bid at $2.57...$2.56 3/4...$2.56 1/2 all the way down to $2.50.  It is called "Seeing the deck".  Same thing in rice.  I can tell you where every bid is, what size and what price for 10 cents either side of the current market.  That is great information. 

Side-by-side just says that there is still pit trading but that you can trade the electronic contract at the same time along side of the pit.  For corn, the size today signals the end of the corn pit first.  The comes beans and then the wheat.  Rice will take a while as the traders from around the world slowly put there orders into the electronic flow.  Eventually, it will all be electronic. 

Now for the comments on the day....

Tuesday August 1st -

Corn - While I remain bearish near term, this bounce could go another 5 cents higher.  I think odds are 50 -50 on that and I want to sell corn over $2.60 in December but if we can get there, I want a sell signal as the 6-10 day is a barn burner.  We will give it some room but good rains tonight in the corn belt may take corn lower tomorrow.

As I type this update, the market is trading 3 cents higher in the over night trade.  This is a good sign and with that 6-10 day out there, we could see even higher prices into the weekend; however, I do not want to be long...out is OK but there is some downside here that we need to deal with. 

One thing to remember is that next week is the USDA supply and demand report...it will be hard to get a real bearish report out of the USDA.  Leading up to this report, we may see some reluctant sellers but look out for buy the rumor sell the fact.

Soybeans - Nothing new from us...we are firmly in the bear camp unless we can get some weather scare going.  The forecast is very hot...so why aren't beans headed sharply higher???  They still may but for now we'll go with the technical view and it is not very bullish.

Wheat - We are still long here and have a little profit.  We still have buy signals but they could fail if we are down hard tomorrow.  I'll stop out longs at $4.10 close only basis...that is something I would never have written in the comments before today and the members page....

Rice - WMP comes out at 7AM tomorrow morning.  You can check the main page for the WMP link see what it did.  The futures was a little soft today and we are hearing good yields in the south but not on the East side of Houston.  This market could pull back to $9.20 in November but it will be a buying opportunity.  There are some people saying rice could head back to loan but that makes no sense.  Not that rice can't do what makes no sense because we all know it can but logic says farmers will not be selling at loan when it costs this much to farm rice.  I will buy in the $9.35 to $9.20 window. 

Cattle - A close under 86.95 is a sell signal in the October cattle.  With the heat forecast as high as it it is, things could get crazy in the meat market as well. 

Natural Gas - Another WOW day!!!  The storm looks to be fizzling and the heat seems to be priced in so the market pulled out most of the gains from yesterday.  $7.45 closes the gap in September and $7.09 is the buy point.  Our call options are doing fine and we will add a little more if we can get a good enough break.   

Dow - PB is setting right at 50% tonight which means it can go either way.  I can see it that way too; however, I think rallies need to be sold and breaks should be bought.   

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