Monday January 31st -

General Comment - Markets ended firm but not with much gusto.  Corn will have problems at the $2.00 mark near term but remember, we are in the demand phase of the market and we should have a few ups and downs near term.  I still think $1.91 will hold for the corn.  No reason to trade in any of these right now.

Rice - Nice bounce on the end as fund selling has abated.  We are oversold so a bounce to the $6.80 level is possible and then we will wait and see the action. 

Natural Gas - Nice move up in Crude may have helped the gas contract today.  We see a real war between funds and specs in this market.  Usually, my money goes with the funds and that's my guess right here.  Weather concerns will be dominating the market landscape in the next few weeks but again, we are starting to see spring around the corner so the next few weeks needs to be real cold to absorb the current volume of gas in supply.  I look for $6.00 to be tested and probably violated in the future but it could be a couple of weeks. 

Cattle - We were stopped out today with a 20 cent loss.  Not too bad as the market continued higher and closed over $88.00.  Let's see how the market trades over the next few days before thinking about establishing another short position. 

Friday  January 28th -

General Comment - Not much happening here today with COT report this afternoon expected to show little change in the grains heavily short position by the Funds and Specs.  This could still go on for weeks.  I will not be able to update the weekly comments until Tuesday of next week so have patience with me on this as I travel a lot the next few days.

Rice - Sale to Iraq or not?  According to Iraqi officials, there has been a 180,000 MT sale to Iraq but none of the big players in the US says they have the the sale.  Now it won't be the first time any of them have lied but I think they are telling the truth.  The market tried to higher off of the news but with no one needing to cover the sale there was no commercial interest and the market sold off in anticipation of a MOC (Market on Close) order by REFCO.  That never happened either and the market just set there as no one was really in position to take the market higher.  Where do we go from here?  We are still oversold and it won't take much to see a rally but who knows.  WMP may be higher this week but I haven't heard if there has been a confirmed sale in Thailand this week or not so we may see another no change Tuesday.  We are out of the market waiting for a bounce.  We may trade it for short term trends if we can get good buy signals and execution near them. 

Thursday  January 27th - From Chicago

General Comment - Not a good day as we made lows in the wheat and corn is once again testing its lows.  We have gone bearish the wheat now although I doubt it can go much lower than 15 to 20 cents from where it is.  The problem with all of these grains is that the market makers are funds and they don't have any plans on buying anything for awhile.  One wheat trader told me today, "to heck with fundamentals, they are making money selling the market and will keep on selling as long as they are making money."  That is also true in the rice and is going to be more and more true with the beans.  This correction may allow us to get on our buy back in corn for the rest of our marketing year.  We are looking now at the $2.10 July call out right at 10 cents which is just over 1 cent away tonight.   

Rice - Ugly!!  We rallied 23 cents off of the lows only to fall all the way back down and make new lows on the close with a massive sell order to sell on the close from, you guessed it, REFCO!!  The fund behind this selling has increased its short position by another 100 contracts or so and should be short 300 at least.  There is another fund short a couple of hundred as well.  Its been so bad that tomorrow COT isn't going to mean anything as they have put on a huge short position in the last two days and that will not show up on Friday's report.  We went home a little long last night expecting a bounce, wanting to sell it 20 cents off the low.  We rallied 23 cents and then sold off.  Tomorrow, I want to buy it around 10 lower and see if we don't get the same kind of bounce. 

Today, the fund was not a major seller until the close.  They put in a Market on Close sell order, which sent the market into fast conditions and spiked everyone's blood pressure in the process.  I heard at least 95 for sale in the last 60 seconds.  The locals had to back up to absorb the selling allowing their puts to help them offset the lower futures price and the market dipped 10 cents in the last 60 seconds.  This could happen again tomorrow with the fund waiting to "mark the market" at the very end of the trading session in an effort to help their huge short position.  Hey, it worked today and they now have been rewarded so it may work tomorrow as well.  Then again, we may see someone waiting for them at the close to send a little reality message as well.  It will be interesting to watch.  What we need is the Iraq tender to be announced and soon but I still don't see it for a week or two.

One more thing.  I had a good friend ask me if I had a typo in last nights comments when I talked about $4.50.  Sorry, no typo.  Notice I said "long-term".  What would need to happen for that to occur is a good year of production everywhere and the WMP to start declining.  This wouldn't happen until late in 2005 but if there is huge crops everywhere, I can see this market in a real tail spin and I am looking to short it later this year.  For now, there is also the chance we could see more rice shortages in the next several months and if the monsoon fails in Asia, look out!!! 

Natural Gas - Back and forth we go.  Bearish, no bullish, no bearish!!!  Today's trade was bearish but we need to see follow through to the downside.  This is the time of year when a weather change can have a lot of affect on the market so we will continue to say, rallies should be sold and it is possible to have a good rally in the next four weeks; however, time is running out and the fundamentals are still bearish right now on the longer term.

Cattle - My guess is we may rally a little bit more; however, I am not a major bull here.  We are 50% hedged and want to hold that as the market likes where it is right now.

Wednesday January 26th - From Chicago

General Comment - There is little reason to talk about or trade the corn, beans and wheat near term.  While I am bearish the beans we may be able to hold current levels for a few weeks.  Corn could again test lows but for the most part the demand is strong enough that even buyers on a hand to mouth basis need to buy what is coming to market at this point.  No changes from us, we are sideways and there is no reason to trade.

Rice - WOW!!!  Heavy fund selling dominated the trade yesterday and then again today as we plummeted to new contract lows.  Buyers were there but only on scale down buying programs as the market hit and then took out the $6.70 low in March.  As we have said many times, rice doesn't make a double bottom so today's action may not be the lows on this one yet; however, there is reason to believe we are too oversold to continue at this pace of selling.   

Let's talk... As of tonight, the PB is at 31% which is not that oversold.  I like to buy oversold conditions when the PB is at 20% or lower.  Second, the lack of news on Iraq has turned most buyers into a wait and see player.  We sold all of our cash rice, bought it back and then sold it all again around $7.30 in the March as you can see from our earlier comments and our weekly update as well.  I spoke at a seminar last week and told farmers there that this market was going lower near term based on the lack of demand from the world buyers but I didn't expect it to happen like this.  One more bearish thing, the open interest has not changed hardly at all in this break.  A lower open interest number would be a welcomed relief but if open interest goes up, we have the funds going short and it will take something big in the market for them to start getting out.  While they cannot corner the market, they can sure put it in free fall mode until someone big enough steps into stop it.  The people who can buy it have no reason to right now with the current supply so we could see this lower action continue for a few weeks if nothing changes on the sales front.

With all that said, I bought the market on the close today (lightly) and scaled back into a very small long position of about 15%.  Whatever you do, do not let this fact make you feel better if your long and wrong!!!  I would not recommend this to anyone else and I may be terribly wrong to do what I have done; however, the market is against several "buy points" in a collapsing market given the technical picture.  Even the funds, giving them credit for not being stupid, don't want to push the market so low that they are in trouble on the last 200 contracts they sell.  My guess is they sold about 200 on the close today after selling up to 300 earlier in the day.  Now that's just me based on what I saw and I could be wrong.  Here is the point, the cash market is now higher then the futures for some grades of rice and sooner or later, the contract comes back to the cash price.  Commercial buying SHOULD start to unfold at this level in a more aggressive process.  That doesn't mean they haven't been buying as they have, but they are not aggressive.  They just keep backing up and letting the market come to them.  The 60 minute PB is at 21% and we are against the 3 deviation Bollinger band which is usually a good place to buy short term.  Lastly, the world market price is going to be raised in the next few weeks but it may take a couple of Tuesdays to get USDA to raise it.  Futures is getting extremely close to the WMP and that level should be major support.  If the USDA raises the WMP by 20 cents, which is what I expect over the next several weeks, futures is going to have a hard time going much lower.  Finally, Iraq business has been done (I think so anyway) and it will be announced in the near future.  Behind this will come the talk of more and the funds who are now selling will stop and cover some and then wait to see what happens.  All of this to say, if your long and wrong, look to sell on a bounce if and when it comes.   A 20 cent bounce should be expected off of the lows, but where is the low?  I think the $6.58 level could be tested early tomorrow and I'm betting it holds on the first test.  After that, who knows.  The chart is bearish and weekly chart shows we could go to $4.50 long-term.  Not pretty. 

One more thing, the USDA uses the WMP to move rice.  The current WMP is too high to move much rice into exports.  This is what they expected when they put the export numbers so low.  In other words, the USDA may not be able to change the WMP lower near term and that could mean we need to see Thailand prices go over US prices like we saw in 2001.  That is not bullish the market.

If your trading this, make sure you know why and where to get the heck out.   Over the near term, sell a rally and hope for something big to change the current US fundamentals. 

Natural Gas - Today's action is bullish.  Bearly, but bullish! (Get it -BEARly, sorry, I couldn't resist)  We are trading weather and the funds are trying to forget about the fundamentals and trade for a short term winner.  The storage report will be the main event in tomorrow's trade and may once again remind traders of the supply situation.  What concerns me is the chart pattern is turning bullish which could be strong enough for a bounce back to over $7.00.  The next few days may tell the tale of the current trend.

Cattle - Another do nothing day.  We remain short 50% at 87.55 thinking the inventory is too high near term.  If we are wrong, then we are wrong on only half and if we are right, we are still wrong on half. 

Tuesday January 25th - From Chicago

General Comment - Another good start to the market that almost fell apart as corn and wheat both sold off from highs into the mid-session.  Markets closed back up indicating more buying to go.  I look for wheat to trade back over $3.00 near term but then, it could get rough going without any fundamental help.  The huge short positions in the grains is a major topic of conversation on the floor here in Chicago.  Beans continue to get buying as farmers are holding onto cash with the strong basis.  Guys, that is not going to work for long.  I look for a sell off in the days ahead but it could come from a higher level.

Rice - The aggressive side of the market action today was mainly selling all day as REFCO just kept coming with 25 lot orders on the sell side.  This may be a fund and it may be liquidation of longs too.  I see the market testing $6.85 in the next few days but I'm not convinced we can trade down to $6.70 yet.  With Iraq still out there, we might see one good bounce in the days ahead.   When?  It might be after the election.  What remains the major focus here in Chicago is the huge inventory and all talk is that acres aren't going to change much which is also a bearish concern.

Natural Gas - Interesting day.  Technically, the day is negative as we started lower, tried to rally to Monday's close and couldn't do it selling off at the end.  Tomorrow will be interesting.  Today's high is resistance and should stop he market advancing.  If it doesn't, we may need more of a rally to balance the books.

Cattle - April finished higher but not that much.  It closed right on our break even price of $87.57.  There remains a back log of cattle to come to market and I expect the market to still see a lower move ahead.

Monday January 24th

General Comment - Markets started good on export sales but there wasn't that much sold.  Rice short up but didn't hold it.  I'll be in that pit tomorrow so we'll see what the comments are from the traders about today's action.  In general, there is not much to talk about tonight as the markets continue their sideways action.  Overall, we aren't going anywhere so it is a good time to think in the Macro sense of the market and not get caught up in the day-to-day action that is nothing more than sideways.  By the way, today's action could be the result of the huge positions reported on the COT last week.  I should be able to update this site late each day (except Friday), so we'll comment more on things after we have a chance to talk to some of the traders in Chicago.  Cattle closed lower and could be set up for a good break, we will be watching this very closely.  Energy was higher as its cold out there but the usage numbers had better be really huge to keep the markets from moving lower.

Friday January 21st

General Comment - Another do nothing day.  Beans broke down after their two day rally but the markets didn't have much push in them one way or the other.  The lows are holding but the market is not rejecting the current price level which is bearish.  Next week we may see this to make new lows succeed or fail.  A good time to be on the trading floor maybe?  By the way, wheat has record short fund positions and they may have pushed too far for right now.  The COT report also shows record shorts for corn and beans.  If there is any scare that is bullish, we could see a wild ride straight up given how short the Specs and Funds are.

Cattle - April still looks weak but still no follow through.  Today's Cattle on Feed is bearish so I expect the market to head lower Monday; however, I will lift hedges if we get back up on the day Monday. 

Natural Gas - The storage report came in as expected and the market tried to go higher with crude up strong on the day.  At the end, the overlying fundamentals took over and the market closed lower after trading just above the 9 week moving average for a few minutes.  The chart looks very weak at the close and looks like a test of the $5.60 level is likely for the April contract.  Another look at the COT shows the Specs are still way too long here and if they head for the exits, we may get a sharp break.  Weather may be the key factor to watch near term.  The Specs may be thinking, it has to get too cold in the next few weeks.  The problem is that it has to be a record cold February or else we will come out of this season with too much gas to support current price levels.

Dow - We have been bearish here since the end of last year.  The close today is very bad as we close under the last support zone of 10,414; however, we just barely closed under there so lets see what happens in the days ahead.  PB is at 31% which is very low and usually where the market rallies from.  Out of the 30 stocks only 9 have PB levels over 50% and only 2 are above 60% and none are above 70%.  Again, this would indicate a rally condition in the next few days.  Our current target is 10,268 but it is a weak target.  The market will be balanced on a rally to 10,600.

Thursday January 20th

General Comment - Today meant nothing as the market moved around to balance some spread issues.  The rice didn't hold which may set up another test of lows next week.  Wheat is testing lows and with the spread against corn where its at, we may not be able to bounce wheat very much.  We are turning more and more bearish there without any weather scare to assist us.

Cattle - April still looks weak although there was little no follow through.  Hogs broke through their 21 day moving average and may be signaling a top.  We remain short 50% in the cattle and may sell hogs in the near future.  I'd like to see some follow through to the downside in the next couple of days. 

Natural Gas - The inventory report is tomorrow instead of today.  We will see what it says.  The market looks like it is building a flag which is bearish.  Our nine week average and buy signal, it up at $6.95.  Fundamentals still look bearish going into tomorrow's report.

Wednesday January 19th

Corn - A little bounce today trying to correct the oversold condition but it wasn't much and it was on low volume.  Look for another test of the recent lows.

Soybeans-  Short covering rally but the basis is still dropping and there appears to be more supply on the way from South America.  We could see another day or two trying to hold or rally, but I still see it lower from here.

Wheat -  We need some news to take us much higher and that still could happen.  If we don't get something soon, we will switch our short puts to short calls for the supply side of the wheat market.

Rice - Wake me when it's over.  Nothing to say as it did absolutely nothing.

Cattle - Not a good day...we increased short coverage to 50% today with a stop at 88.10 in the April.  That gives us an average short position of 87.57.  Good weather and lower boxed beef prices are to blame.  We have a target of 84.00 as the logical place to start covering shorts.  WE may add if the signals get stronger but for now we will hold where we are.

Natural Gas - If the forecast turns out correct, tomorrows supply report may be the last one for a couple of weeks to look bullish, if it indeed does.  If the numbers in the morning are bearish, tomorrow could be a nasty day for the April contract.

Tuesday January 18th

Corn - Not much change over the weekend as the market continues to head south.  We look for March to test the $1.91 level at some point but it doesn't have to as it has hit our targeted range.  I doubt much happens the rest of this week but a little bounce is highly likely.

Soybeans-  Nothing new here either.  We are bearish and for good reason.  Basis levels have now weakened with the futures so it's a double hit for cash producers.  We are long ago sold out here and look for $5.00 to be taken out before March expires.  We will sell more on rallies.

Wheat -  Nothing new here either.  Sounds like a recording doesn't it?  I expect the market to pause in this level and balance but longer term, if the wheat crop has no further scares, the May contract could head toward the $2.75 level.  We are going to sell good rallies which we expect one in the next few weeks.

Rice - I think I can write this one today and copy it the next few days.  We expect little change here unless something breaks higher in the world picture.  So far, the higher world prices we are hearing about has not come over to the US demand.  If we don't see a change here, it looks bleak for much price improvement longer term.  We are now out waiting for news.

Cattle - Not much action here either, we are still short 25% and looking to add more for a short term trade.  It may not ever happen if the fundamentals hold like they are.

Natural Gas - Lower today as the market holds above the $6.00 mark but it was a massive key reversal down.  Look for the market to test where the major buyers are and that might not be until the recent lows.  We can still have some good weather scares here but the Thursday report on Gas inventory will be an important number.  It looks much worse tonight for prices than last Friday, that is for sure.

Friday January 15th

Corn - Obviously the funds were not as short as they wanted to be and came back to sell corn today.  With the current supply, why would buyers be aggressive.  They know there is plenty and they will stay on a hand to mouth basis near term.  I still see the market sideways with March now firmly in the the old December range and May could join it later this spring.  Longer term, we will see some weather scares but there is no reason to own corn right now.  If March approaches the $1.91 December low, I might take a shot at some short Puts.

Soybeans-  Like I said last night, "I'm just plain bearish here.  I know there are traders who just love being long but all the fundamentals and even technicals are now pointing to lower prices.  There is no problem in Brazil and it looks like a record crop for them so why own this one.  If China stops buying, and I think they will soon, we could see beans below $5.00 in the next 8 weeks."  The sell off today is no surprise.  The only thing that may change here is how short the funds are willing to get.  DO NOT BE LONG HERE!!!

Wheat -  We were down hard today as the funds sold it big in sympathy to beans going down.  The COT showed the funds had lighten up almost 1/3rd of their position on the short side of Wheat only to run back in today to put much of that position back on.  There was no aggressive buying in the wheat as commercials backed up in the face of the funds looking for any bids at any prices.  Wheat remains in a sideways trading range but there is a chance it could head for the $2.80 level in March over the next three weeks.  If we don't see new lows this next week, we could start to see the funds getting chewed up a little in this market.  Hey, their big but sometimes they are very stupid.  They could be like the dog chasing the car.  What happens if they catch it?  We remain short some puts and believe it or not, still have a profit in all of them.  If we make new lows convincingly, we may try and roll them down to a lower strike price. 

Rice - Nothing today.  With the other grains in trouble, the funds didn't look over to the rice pit at all and say, "Oh what the heck!!"  Rice is looking for news to drive it and right now there is nothing to get excited about.  Snow in Hawaii may be an indication that weather will continue to be very strange. 

Cattle - Slow day to day in front of the long weekend.  We didn't sell anything today.

Natural Gas - Another slow market in front of the holiday.  No follow through from yesterday's big rally may indicate the current cold weather snap is in the market.  We will be looking at longer term forecasts next week. 

Thursday January 14th

Corn - With the USDA report in and no real reason for the market to move higher, we see the market continuing in its sideways range with the possibility of testing the old December low at $1.91.  We will be buyers as it approaches $1.95 using short puts in March and May.  We may also do some call spreads later as well.  Remember, bull markets need bullish news but bear markets can hibernate for long periods of time. Buyers will be on an as needed basis and there is no reason for them to buy coverage in the future so there is no reason for this market to go higher right now.   

Soybeans-  I'm just plain bearish here.  I know there are traders who just love being long but all the fundamentals and even technicals are now pointing to lower prices.  There is no problem in Brazil and it looks like a record crop for them so why own this one.  If China stops buying, and I think they will soon, we could see beans below $5.00 in the next 8 weeks.

Wheat -  $3.12 is still the main point of resistance.  The report was neutral to me but some thought it bullish.  I guess it depends on your expectations.  I remain short puts for now. 

Rice - Nice reversal today and we have some buy signals on the shorter term charts but would need some follow through.  Remember, in a sideways market, you sell buy signals and buy sell signals.  The longer term charts are still decidedly negative with $7.30 as resistance.  This market is like cor

n, who needs longer term coverage with this much free stocks available longer term.  We will need some bullish news and signs of a cut in the long-grain carryover for this market to move higher. 

Cattle - We remain 25% short here and looking to add to spring sale hedges.  Yesterday's reversal is in control but there was mo follow through today.  PB is at 58% so we we are not longer in a bearish setup so the next few days needs to take out yesterday's high in the April cattle.

Natural Gas - A bullish reaction to the storage report.  PB is up to 58% and we are just 20 points from the 9 weeks moving average line.  Crude had a big day up but closed off of its highs.  Longer term I see lower prices but near term, the threat of cold weather has the bulls pushing the market higher out of this oversold condition.   

Tuesday January 11th

General Comment - Markets did nothing as we expected in front of a report which should not be much of anything.  Rice moved sharply lower in a session described as void of buyers and aggressive sellers.  Some expect the report tomorrow to be bearish adding to the current supply gut.  I don't have a clue just like the ones doing the report.  Remember, they get the numbers form our miller friends who want this market down so they can sell more.  I'm not saying their wrong wither.  I have been straight forward in saying I don't have a good handle on this one.  Lets look at the numbers and then have a heart to heart talk.

Natural Gas - Technically, I wouldn't be surprised to see another test of the lows ahead.  We have rallied right to where we should have to balance the traders books and now we may resume the down trend.  Thursday's draw numbers will be interesting as many expect it not to reach the average of the last five years.  Looks like the fundamentals and the technicals agree, we shouldn't be going higher right now. 

Monday January 10th

Corn - Market was lower all day until the last few minutes when the funds came for the market and found no sellers.  This looks like evening up the books before Wednesday's report.  There is no reason to change our thoughts here so we will look at the numbers with everyone else and then reconsider the situation.  I continue to believe we are entering the demand phase and will work sideways near term.

Soybeans-  Beans basis levels are up and the January is in demand near term so we have a demand issue in the market right now.  Longer term, as Brazil starts harvesting, we are going to see a huge supply over-take the current demand phase which is going to be short term unless something big changes in the fundamental picture.  Wednesday's report will reinforce that idea.  We are still out of this market thinking is can be sold higher and bought lower.

Wheat -  $3.12 is still the main point of resistance and there is little chance of that level being hit tomorrow.  The report is the next big issue and I expect the market to hold close to the current level going into that.  We may see more upside tomorrow if the funds want a lower exposure going into the numbers. 

Rice - After 4 days up in a row, the market closed lower today in a very quiet trade.  We still do not have buy signals here and have backed off of our own position to 25% on this rally.  Its too hard to call as I can see it up or down from here.

Cattle - April rallied again today pushed by the spreading activity in February.  Who wants to sell with the market buying the April and THEN selling the February.  What happens when this ends which will be in the next two days?  Don't know but, I'm still short 25% and will add on this rally. 

Natural Gas - We talked about a rally here last week (including our trip to Kansas) and that rally continued today; however, it may have run its course near term.  Look for the market to test buying support over the next few days. 

Friday January 7th

Corn - There was no follow through to yesterday's move higher and in fact we reversed back down signaling another test of support.   Our ideas are unchanged.  We see the market sideways for now but not dramatically lower.  Next Wednesday's S&D report could show some demand increases but shouldn't be much of an event.

Soybeans-  Heavy fund buying has the market moving higher.  Some talk that funds are buy commodities for the long haul has traders concerned that new lows may be hard to obtain.  Beans are the funds favorite as they have the money to move the market big and they love volatility.  PB remains at 58% so the tilt of the market is higher and if the funds like to buy big, they could push this one higher over the next several weeks.   

Wheat -  Has wheat FINALLY turned the corner?  $3.12 remains resistance and a move over that price could bring in huge short covering from the funds.  I see wheat at$3.20 to $3.25 on a good rally but it will have resistance at those levels.  PB is still bearish at 48% but it will shift up on a move over $3.12.

Rice - Up another day, in fact this makes 4 days in a row and the chart is looking like a "V" bottom.  The 9 week moving average is at 7.42 and the 21 day moving average is at $7.44 with the market right back at the re-sell area of $7.27 to $7.35.  Next week will tell the story. 

Cattle - April rallied today pushed higher by bear spreading with the February contract.  This is when the index "rolls" occur so naturally the market will be watching the huge rolling of February longs into April.  A move under $86 in April will se those same longs head for the exits.  In general, this next week could see more strength but we will hold our short positions for now on 25% of our spring cash marketing's. 

Thursday January 6th

Corn - WOW - Nice rally today on terrible export numbers.  PB on March corn came back to 59% as huge short covering is blamed for the rally.  This sets the market up to find its overhead resistance which is...right where it is!!!  Upside from here could be as high as the $2.15 level.  We'll see what tomorrow holds and if there is any follow through to the upside.  As we have been saying, this market is going sideways.

Soybeans-  While corn and wheat were going higher the beans were lackluster in their rally.  Another reason to believe the short covering in the other grains were the main feature.  PB is 45% which is under corn for the first time in months.  I see the market sideways for now but a test of $5.00 is possible if the other grains test their lows again.

Wheat -  The market reacted to no follow through selling and if you were caught in the bear trap, your cussing up a storm tonight.  We remain short the puts and will look to get some long coverage back on in the future but you never buy the first bounce.  I expect tomorrow to start higher and it could go either way.  I expect good selling in the market but it might be 10 to 15 cents higher than tonight's close.

Rice -  Here is the dilemma.  Rice usually makes a "V" bottom even in sideways ranges.  The market is looking like it is setting up for a sideways trading range and today's close supports that.  The 9 week moving average is at $7.41 and we have re-sell signals at $7.30 tomorrow.  Monday's high was $7.45 in March and that is the main resistance point on the chart.  If the market rolls over and heads back down, taking out today's low, we could then test the $6.90 low and the $6.70 level longer term.  If we take out Monday's high, it confirms we are in a sideways trading range and that means, you sell it when it looks really good and buy it when it looks bad.  Not an easy thing to do.  We hedgers and looking for a buy back but if we are indeed going sideways, we don't want to buy it until it looks really bad again.  We are going to see tomorrows action before doing any thing different.

Cattle - This one will stay wild as it sorts out the fundamentals.  We are short a little and will see how things go near term.  Today's low needs to hold for the bull camp to re-establish itself as the leader.

Natural Gas - Today's action is more consolidation after the big sell off.  Today's high missed by 1 point of closing the gap in the April contract.  It would not take much to propel this market to the 6.60 level.  PB is at 41% which means the market has room to roam in either direction.  The major trend is down and rallies should be sold if we can get a good one.

Wednesday January 5th

General Comments - Nothing changed in any markets for me today.  I still see the corn sideways to a little lower.  Wheat may have a bear trap forming but it will take more than the action of the last two days to confirm that.  I'm short some puts but may sell wheat short if I get a sell signal tomorrow expecting a move to test the lows.

Rice - Nothing new here.  The market may rally to test $7.25 resistance as we have some oversold indicators pointing to a correcting.  We will use any rally to get back to 25% long or even less.  Long-term, I see a test of $6.70 as a worse case scenario.  Longer term I see the market testing the highs in the July contract.

Cattle - I went short April at 87.05 today and will hold that position for right now.

Tuesday January 4th

Corn - Good fund selling today took the market lower.  PB is once again below 40% which is not that low.  My opinion remains the same.  March will test the December contract lows but not close below them by much if at all.  The funds are the big players and they can push lower but commercial buying is not far away.

Soybeans-  The funds are short here but not by that much.  Specs are actually in more short positions.  We could see the beans test the $5.00 mark on this break.  I think the beans will work lower still.  If your short looking for where to lift hedges, $5.14 is the buy point tomorrow.

Wheat -  Triple lows are not normal for wheat.  The market, as expected made new contract lows under heavy fund selling.  We are selling puts near term (buyers only) as this market is at extreme levels given the value of the dollar (even with it up big today) and the current fundamentals.  In 2002 on this date, Wheat was at $3.09 with a carry over about the same as today.  But the dollar was sharply higher and world demand was even lower.  By March of 2003, the market had dropped to $2.66.  I can see wheat approaching the $2.80 level in March before this break is over.  I expect another bounce here by February 1st.

Another bad sign is that the wheat/corn spread turned over again.  We had bought the spread at 97 and sold it at 107 but now we have sell signals on the spread.  This is not good news at all and indicates more weakness ahead.  On a rally, we'll join the bear spread if able.  This will be interesting, short wheat/ long corn/ short wheat puts.  Can I get any more brokerage out of a trade?

Rice -  WMP down 12 cents.  The news here is not good.  Yesterday's break saw new selling which is bearish.  Today's rally was nothing as it was inside yesterday's range.  PB is at 26% which is close to major oversold conditions but we may see it lower still.  I can see a test of $6.70 in March on this break as the US fundamentals are just too bearish and there is no sign yet of demand spilling over from world prices. 

We sold rice at a huge basis and are now 50% long in a buy back.  Our average is about $7.35 so we have given up 15 cents of that $1.50 cent basis.  We said when we bought, we were going to be wrong on half of our position and that's where we are.  Do we come out and wait for the end of this move?  Its hard to call but my experience is that first loss is the cheapest, so on a rally here I'll sell it.  If we make new lows, I'll wait to add to my position.  The sell point tomorrow is $7.20. 

Remember, we don't make double bottoms in rice.  If we stay over the current low for a couple of more days without taking out Monday's high, odds are higher that we make new lows.

Dollar - A higher close tomorrow is a major buy signal. 

Cattle - Canadian Beef or not?  Here is the problem with the debate.  The US is trying to get Japan back on line with US beef and if there is any doubt that the US has the controls in place for beef inspection, we are going to be setting a two sided standard.  My opinion is that the Bush administration will hold its guns and allow Canadian beef into the US as they have stated.  Democratic congressional staffs can holler all they want, the fact is what they holler can come back to hurt us later on down the road.  This rally should be sold and that's what I'm doing.  I'm selling around today's low of 87.00 in the April.

Monday January 3rd

General Comment - We started 2005 on a weak note as the market sold off.  In our weekly comments we talked about the markets testing their lows and that is happening.  Early farmer sales after the first of the year may be enough to make new contract lows in some months but I think the December contract lows will hold. 

Rice -  Big sell off today confirming a longer term sideways market.  The market broke on huge sell stops but open interest went up 199 contracts.  This is bearish as the selling is new selling not old buyers getting out.  The market is looking for support by heading down to find where the buyers tip the scale back to the buy side.  This may be lower yet. 

Let's face it, the fundamentals here look like they are being poured out of a blender.  If you are bullish, look to the world fundamentals for support but right now they are not affecting the national fundamentals which are just plain bearish. 

If you are farming rice in a marginal profit situation, you should consider less acres of rice in 2005.   I see a very small CCP if any and there will be no LDP.  It's just you, the direct payment, and the market.  I'm sure the drying infrastructure of Texas will love me for saying this but heck, you're not in the business to support them, they're in the business to support you!!!