Thursday Night January 29th - It will be a short one tonight.

Corn and Beans - Not much to go on today.  The charts are not real friendly right now so we may see another wave down.  Corn needs to move back over $2.74 to turn up and beans need to go over $8.24.  Tomorrow could be interesting. 

Rice - My little trade worked for a whole 7 cents.  Tomorrow is important as we can confirm the worst is over with more strength.  Today was a hook reversal up. 

Last night I said the open interest figure would be interesting and boy was it.  2240 contracts traded Wednesday and open interest drop under 350.  What does that tell us.  It says the the rice moved from weak to strong hands yesterday and the day before.  In the words of George from "Its a wonderful life", "Mr. Potter is buying while everyone is selling."   The bad news is that the new buyers may sell the market later to keep it from going a lot higher.  I look for the market to return to the $830-$8.60 level in the next few weeks but with the bullets the longs have, you know, the ones who want the market to stay under $9.00, they are firmly in control.  We may have just lost $10.00 rice without major fundamental news to drive it.

Wednesday Night January 28th -  Long one tonight

Soybeans - This is what you call an inverse thrill.  That is if you are long.  If you are short its right down fun.  I'm not either so for me it's like kissing my sister, which I don't have one but it must feel something like this.  I guess the main point is that a bull market must be fed.  There has been little food on the table for bulls here much less meal in the trough.  Today's break below $8.18 set us up to really wash out the longs.  I won't know until the morning what happened to open interest but I understand from my guys in Chicago that there was heavy fund liquidation today.   Markets like this usually go lower than anyone thinks they can (look at rice).  A move back over $8.24 could turn the bulls back around and send them heading for the feeding trough.

Corn - The fundamentals are not bearish here and lower prices could spur more demand; however, when traders get to trading money and not fundamentals, things can get nuts.  Just look at rice futures.  When people ask me why I am a technician, I just show them days like today in corn.  Near term $2.69 is major support but I think it could be taken out.  A move to $2.65 is a buy but once again, let the market tell you its turning.  DO NOT BOTTOM PICK.

Rice - OUCH!!!  I said yesterday that the market was about to show us what it was really made of.  I guess the answer is NOT MUCH!!  I got to admit, I didn't see this coming.  I expected $8.00 to hold March but today the funds got the heck out of dodge and the question for me is who bought it not who sold it.  Open interest tomorrow will be interesting.  I'll comment on that tomorrow night.

This does not appear to be rice commercials and co-ops selling today.  Heck, I think they even bought the break.  If they did, we just loaded the slingshot and pulled it back as far as we could.  If that is the case, who is there to sell it once the funds are gone, and they might just be gone given the way the market closed today.

Lets Talk...I bought the close in March.  It's a short term trade and if it doesn't work quickly, I'm history.  Here is why, when the market sold off to $7.90, the low of the day, it hit that low price at 1:19 PM.  Volume was heavy for the next 6-10 minutes with my sources saying well over 200 contracts were traded but the buying stopped the price decline.  My guess, and I'm betting my money on it, we finished off the major fund selling at the close.  We may see some early selling in the morning as traders who didn't watch the market today get the heck out on the open but after that, I'm guessing the damage is done and it's over.  As  I said, if I'm wrong, I won't be in it at the close tomorrow night.  Do not get me wrong, I see support at $7.75 and then $7.60 but at some point we will stop trading bank accounts and start trading fundamentals again.  We shouldn't be down here.

One more thing...Cash rice traded today in Texas 90 cents over futures.  That is the highest basis I've seen in years.  No wonder mills turned to the buy side today. 

Dow - We took the sell signal at 10525 today and then came the big number.  We moved through 10440 but couldn't close below it.  The Dow punched trough it by 3 points and then bounced.  I will put a stop at 10510 and give it some room.  If we don't trade back up to 10565 which is the low of the high day, we may have a top for awhile.

Dollar - Market still looks good but there is a lot of things to consider and we may see some volatility near term.

Bonds - Near term interest rates are going no where.  Long term, they will go higher ONLY if we see job growth which would put pressure on inflation.    

Tuesday Night January 27th -

Soybeans - We said a few days ago in our weekly comments, we didn't like the open interest situation here.  Even so, yesterday the market showed signs it was going to push into new highs.  Today we failed on the open and the market closed with a sell signal in our first line system.   Look for the market to try lower again tomorrow with support at $8.18.  Weather still is a factor and if the promised rains don't arrive in Argentina, things are going to exciting very fast. 

Corn - We wanted to buy a break a few days ago but the market didn't give it to us.  I sold calls expecting a pull back in the next few days and we are getting that right now.  We are a little over bought and I expect the market to at least start weaker tomorrow.  After that, its anybodies guess.  Long term higher here and I'll buy this break when it looks right. 

Rice - We ran stops today and that should have cleaned out a bunch of little longs.  This market is tough on the little guys.  Sounds like a certain mill I know.  Anyway, I sold calls and puts several days ago putting on a strangle here against some long positions.  Today's low needs to hold on a CLOSE ONLY basis.  That means we do not want it to close below that level or $8.10.

Think about it.  Today's break was fueled by selling that was strong enough to push the market below the major support at $8.26.  Once that was done, the stops helped fuel massive selling as longs ran for the exits.  Now what?  Well, those stops are not there anymore.  The market has cleaned itself out so the next time we take out support, there will be very little stops to foster a big break.  The market is about to show us what it really is made of.

We had buy signals yesterday but they were negated right after the open this morning just as I expected they would be. (See yesterday's remarks)  The new buy signal is at $8.37 tomorrow.

One more thing...I have traded this market for 20 years and what it is doing is nothing new.  The fundamentals can be bullish and the market drop $1.50.  What is happening now is not a change in fundamentals, it is a change in money supply in several trading accounts resulting in a clean out.  When the low finally comes, it will be quick and explosive right back up; however, that could be 4-8 weeks away or it could start tomorrow.  Remember.....

The market can be irrational longer than you can be financially solvent.  That is unless you are a co-op!!

Dollar - 85.90 is support for tomorrow.  Low is still holding but we may test it again.

Dow - It is still trading as I write this but I can tell you the sell signal is now up to 10525 with the major sell signal still at 10440.  Today's action has me thinking that another rally could occur before we get the big sell signal we are expecting but then again..... 

Monday Night January 26th -

Soybeans - This market has new highs written all over it.  The fundamentals are supportive and I think we may see it happen fairly soon.  The bullish news today was about dry weather in Argentina and there is talk about bone meal restrictions for cattle feed here in the US.  A move over $8.60 should see a good move toward $9.00.  I personally still like to day trade it.

Corn - Good move up in corn.  Even thought I'm short a few out of the money ($3.00) calls, I expect some sell off to drain premium before we get to that level.  Open interest is high and some of the action could get real volatile as we approach a temporary high.  After March, I won't be short any calls as we could still see a huge move up with bad weather later this year.

Rice - I think we may have had some covering of sales to Central America today.  The run up by one firm may have been some pricing.  At the end of the day there was some selling by commercials according to floor sources so my guess is that some of the cash rice dumped on the market two weeks ago is being sourced.  Technically, we had a buy signal today.  A move back under $8.35 in March negates it.  This is a signal that has worked very well of late and so it is due to be wrong; however, long term I still see rice prices higher.  I didn't change any positions today.  (In other words, I didn't buy it even though a buy signal was generated)

BTW - I recently saw an article in an Arkansas newspaper criticizing a large rice co-op in Arkansas.  The author was a member and wasn't happy.  I wonder if this is the tip of the ice-berg???

Dow - Still charging higher in an expansion style move.  I don't have a target but have seen this many times before and it indicates volatile conditions ahead.  The sell signal is up to 10520 tonight but I doubt it's hit tomorrow.  The absolute sell signal remains at 10440.

Dollar - Still looks like a short term low in the dollar.  88.20 is now resistance on rallies and a move over that should take us toward our target at 90.

Thursday Night January 22nd-

Soybeans - I am out of this one right now looking for a good trade.  The market may have some downside in it unless there is a good number on the export sales sheet in the morning.  Even so, I'm not wanting to be short, just out right now.

Corn -We did sell some out of money calls as I expect the market to cool off a little bit IF there is no big surprise on the export front.  Don't go crazy and sell futures short as that is NOT the thing to do.  Remember, March options expire Feb. 21st, so time decay is going to be aggressive near term if the market pulls back much more.  Open Interest is high and will support a correction.  Support on Friday is at $2.69 and I would buy back some calls at that level.

Rice - The market came back a little today but it is not impressing me at all.  The decay of premium in the options tells me the traders have reason to believe the market will not advance near term.  When you look at the cash market, it is flooded with rice.  This condition could hold on for a few weeks.  Then, I still see a charge at the highs.  I'm short calls and long futures with the ability to see what's under the $8.20 support zone.  A move back over $8.60 and I'll be buying in calls.

Dow - Key reversal down followed by a key reversal up today.  The market is showing its age but another rally is still possible.  As stated before, a close under 10440 is the short signal right now.  I can also see selling it at 10490.

Dollar - We are right on support at 86.06.  Frankly, I'd like to see the dollar even lower since I am a grain trader and a weak dollar is good for exports. 

Tuesday Night January 20th -

Soybeans - Market is working sideways between $8.25 and $8.50 but we are at the lower end of support tonight.  We need to push higher soon or we may have a test of $8.16 and the gap left by the report last week.  If corn is going to correct from here, beans could too.

Corn - I do not like the last 30 minutes of trade today.  If you'll look at our comments on the 16th, we talked about a move to $2.77.  That occurred today but we couldn't hold it.  If we take out today's low then we may see a good correction.  I might want to sell some March out of the money calls for some protection if this starts to happen.  

Rice - Market has paused and may stay here for several weeks.  We have sold some call premium to protect futures.  If you are in March call spreads it might be time to look at moving them to May and taking some money off of the table.

Dow - Today was a key reversal down. If we head lower tomorrow this will confirm a top.  We have been buying some bear funds and will push into a higher percentage of a short position if we can confirm a sell signal.  The major sell signal tomorrow is at 10440 or down 88 points. 

Dollar - The market headed lower today in what could be the setup for a Kondratieff low or a high in the Euro.  86.06 is support tomorrow.

Friday Night January 16th -

Soybeans - We had an upside projection of $8.50 as stated below on the 12th.  That was hit this past week (or close enough).  Market may settle here near term but still should work higher into February.

Corn - We still see the market moving toward $2.77 but one must look at the open interest and wonder if a correction is not likely in this market soon.  What is interesting is that the small spec is short the market.

Rice - I just came back from Mississippi where we learned that the big sell off on Monday was led by funds and possibly a large cash marketer who needed to sell some of his long cash position.   Without the US government changing the carryover to show increased supply tightness, the market sold off as these two large market makers sold long positions.  There was good commercial buying on the drop and there has been good buying on the dip to $8.40.  Look at our weekly comments for more on this.

Dollar - We stated on the 7th that a bottom might be forming if we didn't go into expansion phase on the bear leg.  We didn't and indeed we have had a good bounce.  Is it the low?  Could be, at least for now.  The sell off in Gold should help.

Dow - We said on the 7th that we thought the market would correct before the 14th.  We got the correction between the 9th to the13th.  Now the market has rallied back to its highs.  As we have said before.  When a market gets this over bought, breaks and then heads into new highs it goes into an expansion phase and that maybe what is happening.  Or...it could be a bull trap.  Ready our weekly comments.

Monday Night January 12th -

Soybeans- Up 30 cents...A cut in production and a lower stocks report than expected fueled a sharply higher day today.  Interesting enough, they didn't change the carryover in the report.  That indicates, as we have said, the USDA does not want a number under 125 million bushels and will change what ever they need to meet that objective.  Best way to meet the number is cut off demand and that means a higher price.  Upside objective is $8.50 near term and it could happen this week.

Corn - Up 14 cents....A huge cut in carryover sets up a move to our target of $2.67 which was hit on the open.  The high of $2.68 held fast.  Market may give us another 5 to 10 cents near term.

Rice - DOWN 50 cents...Ah yes, wonderful rice.....The USDA increased long grain carry over by 1 million hundred weights or 10%.  They did cut the world carryover by 10 million cwt. which is a drop in the ocean.  Are their numbers good?  Well, here we go again...of coarse they are not good but they are what the market trades and trade it they did today with a limit day down washout.   We have support at $8.63 and then $8.25.  Is the top in?  Doubt it, once again, read this sentence carefully.  We are advertising to sell something we do not have. 

Let's talk....The USDA has determined there is no way we can have less than 10 million cwt in carryover when you consider every grocery store shelf, truck in transit, or mill on July 31st.  As they would say, "it is impossible".   OK, I kind of agree with that.  It's called the "pipeline minimum".  Here is the problem, with a lower price, we will sell more rice.  Think about it.  Corn today $2.66/ bushel.  Rice is $3.81/Bushel.  It costs 4 time to grow rice as it does corn.  Soybeans are at $8.30/Bu.  Wheat is $3.98/Bu.  Rice is not expensive.  In Brazil, rough rice is $12/cwt., in Central America it's $11.50/Cwt. In Texas its $8.50.   So when exports keep on going and the balance sheet shows less than 10 million cwt, they have to find some rice somewhere.  It couldn't come from the stocks report since everyone learned their lesson in August, so the USDA increased production by 3 million cwt.  Where at?  In Texas and Louisiana  of all places and you ask me, 'are their numbers good?'  Absolutely not.  Texas and Louisiana farmers are laughing out loud on this one; however, we cannot have a number lower than 10 million so we have to manufacture it from somewhere. 

Bottom line:

Why is the market going down today and after every report the past 5 months?  Answer - The USDA says we have more rice because we have to.

Why has the market been going up in between every report?  Answer - The world supply is down and end users have been major buyers.

Which side do you want to be on...Where the buying is or where the USDA is playing the only game it can.  The guessing game.

For the record, I sold out of futures and stayed with calls.  I saw this coming and was willing to take the chance that the USDA would be up to their old games and the mills would buy on a scale down basis.  Now I'll buy it back.  Thanks fellows. 

"We cannot advertise to sell something we just don't have."

If we have learned anything from this it's the USDA rice guys haven't a clue what is really going on in this market.  Heck, if you'd been following their bias, you should still be short at $5.00.  If that was the case what a wonderful day you had today...but at the same time, what a terrible year your having.

Wednesday Night January 7th-

Soybeans - Market remains hung up at the top of its recent range.  I wouldn't be surprised to see the market hold in this $7.80-$8.06 range until Monday's S&D report.  As we said last night, the $7.80-$7.90 range remains good support.  If that is taken out we could get a quick 30 cents down.  Technically, the market down 6 3/4 today in March is not that bad given the low was made in the first few minutes of trade 8 cents lower than we closed. 

Corn - $2.45-$2.48 remains support zone for March corn.  It too may slow down and wait for USDA numbers on Monday.  Long term we still like it.

Rice - New contract high close today.  Market maybe a little over bought right now but tomorrows sales numbers will be interesting.  We still have an upside target of $9.80 after our $9.25 target was hit yesterday.  We could settle down into a trading range here as well but there is little room for mistakes and if we keep advertising for buyers, we are making a big mistake.  Remember, Central America is buying rice in their own countries at $10.80 to $11.20 right now.  If they need rice, they will come after it at the current prices in the states.

Cattle - Limit up today with news that the animal with Mad Cow was from Canada.  The question is whether that news is enough to bring back the foreign buyers.  I doubt it.  I would expect at least a few weeks to pass before we get the sales going again and it might take several months.  We will see where the selling comes back in from the big longs in this market.

Dow - I know I sound like a broken record, but there is still no sign of a top here.  We have a great warning signal but it has been flashing for 12 days and 200 points.  IT WILL CORRECT.  This time of year, a lot of managers are putting money to work and when that ends, we may see a good pull back.  When? Well, it could happen anytime but my guess is before next Wednesday.

Dollar - The very same warning indicator we are getting in the Dow occurred two days ago on the March Dollar contract.  Today's up move has balanced the warning and now we wait to see if the market wants to expand and head lower into new lows.  This occurs much of the time but I don't know if it will this time or not.  Bottom line: An intermediate low may be forming.

Tuesday Night January 6th-

Soybeans - The market is trying to hold this level but there continues to  be selling forcing the market back from new highs.  I can see it either way but if there is any positive news this market will take off in a big way and send the shorts running for cover; however, a test of support could still occur near term and that would mean a test of $7.80 to $7.90. 

Corn - The chart looks great and the not so great.  I think a lower move should be bought and I think the odds are better than 50-50 that we will get that pull back.

Rice - Big run up today as a lack of selling was in the pit for the open.  Once we got the run up here came the selling.  This is what is wrong with the rice pit as no one wants to put in orders until there is a big move one way or the other.  Today, the Specs got hurt on the sell off at the end of the day and the sellers won as they waited for the run up to come in and sell.  This is what makes the funds not want to trade rice and that hurts all of us as traders.  I think you all know who I am talking about here.  The "Blue Plague" strikes again.  If the El Nino talk continues and we start to see more damage in the Southern Hemisphere, the shorts who won today will be the losers in the long term. 

Cattle - It was confirmed today that the Mad Cow animal was from Canada.  This is good news for the US but it could still take a long while for exports to return and that is 10% of the market.  As I wrote below, this market must test support to make sure it is there and that maybe back at 71 cents or lower.  At the same time, it may be at only 73 cents which is where we almost are tonight.  I still wouldn't trade it.

Dow - Down 5 points in a quiet day.  Still no sign of the top but there is one very near.

Energy Market - Holding gains as we await the weather conditions near term.  I think we could still go higher on the short run but not a lot.  Then I'm coming in with a long put strategy to catch the break.

Monday Night January 5th-

Soybeans & Corn - Nothing new here.  We could see the beans and corn both back off the next few days but I do not see a major break right now. 

Rice - Market is approaching contract highs again and I think the odds are 50-50 we can take them out right now.  A pull back to support may b the ticket near term but who wants to sell this right now.  We still like it long term.

Cattle - Limit up today.  I think a rally to 77 cents is possible in February but after that it will be the news on Mad Cow that drives the market. 

Dow - We still do not have sell signals but the market is approaching a blow off top now and a good correction is near.  As I said in the weekly comments, it will top hard and right now I still do not have the signals to sell it.  I learned along time ago not to try and pick a top.  When it rolls over, there will be time to get in (I hope).   Also, we wanted to take a short at a short on a quick run up this morning but never got it as the market ground higher all day and no sign of a blow off.  That could occur tomorrow on Turn Around Tuesday. 

Energy - WOW...We needed follow through to the down side but I would say we didn't get it.  Once again the market is testing highs in many of these months.  No reason to be short if your a hedger so we will wait it out.