Friday July 30th -

General Comment -   July trading came mercifully to an end today, going out on a low note for sure.  Soybeans were again under pressure and our target window of $5.50 to $5.25 is just 17 cents away in November.  We are still trying to cover part of our short position in corn but the market ran out of gas to the downside only losing 1 1/2 cents in December missing our buy order by 1 cent.  That is not a bad day given the beans got hammered.  Is it about over?  We think so but where can it go from here before harvest.  It will take something big to turn the markets back up and there is nothing on the horizon to indicate a turn.  Of course, that is when it sneaks up and bites you.  We will take a look at the Commitment of Traders report along with the technical picture and write our outlook for the upcoming week on Sunday evening.

Cattle - Rallied off of the lows in December and now look like they will head higher.  This may have only been a test of the breakout as we mentioned last night.

Thursday July 29th -  Long one tonight

General Comment -   No change in general outlook.  No weather problems to talk about and this weekend should see great rains for most of grain belt.  We remain heavily oversold in corn but the beans are not at critical levels.  We may need to get into next week before short covering surfaces. 

Corn - The ADX in September at 67.5% and rising.  It will take a strong move up tomorrow to keep the number from going over 68%.  Mathematical percent bullish is at 7.4% which means 93% of the action is bearish and again brings up the question, who is left to sell it.  The answer remains the funds.  Their net short position is not that big but it is there and it is growing.  Now the only long in the market is the commercial.  When the market does turn, they will be the sellers and the question is at what level will they sell it.  Remember, they sell the market only if some one is buying it from them.  I think the end-user who has done a terrific job of not buying this market on the break, is about to cash in their chips.  The main reason is the fact we are getting very close to loan.  There is no reason for corn to move if the farmer can get about the same amount of money and out it in storage.  The amount of storage available for this record breaking crop will be a key question.

Today's action was not that good as it opened higher, ran to resistance and then sold off to yesterday's close; however, the market had every chance to make new lows and close below yesterday's action and it failed to do that either.  A close over today's highs is our signal to lift 25% of our original short position and move to only 25% short.  We will probably stay at that level through any bounce and look to sell a rally if we can get one. 

The market may try to form a "saucer" bottom which is common in corn.  Imagine a coffee cup setting in a saucer and you will have an idea of what we are talking about.  Time will tell but if it occurs, we may remain stuck in a sideways saucer type formation for 8 to 10 seeks.

Soybeans - New crop beans have a long way to go (remember, there is such a thing as frost); however, there is nothing on the horizon that appears bullish except for low prices.  As the saying goes, "the best cure for low prices is low prices."  New crop ended higher today but down near the lows.  Today's high at $5.96 in November now becomes resistance.  Percent Bullish in November is 34% which in the stratosphere when compared to September Corn at 7%.  There is no way to get around the bearish fundamentals controlling this market.  A move over $6.00 is needed to shift the idea that beans will be in loan at the current price level.   

Rice - Just as stated last night, November made a new low close for the move today and is now just 6 cents away from the low and is indeed testing recent lows.  I think this market is joined at the hip with the grains and if they can rally so will rice.  Long-term I still see a good chance at $6.50 November futures.

First yield results indicate Texas yields down 5 to 10%.  Some are saying the next set of fields combined will have had more rain during pollination then the first fields being cut and will be off up to 15%.  It is still to early to know but this time next week, we should have a better handle on results.

Cattle - December cattle closed off 100 points as boxed beef prices backed off of highs.  The chart is looking like a bull trap but also one could see the market is testing the recent breakout of a flag formation.  The flag is too high in my opinion so we may be seeing the first signs of a top.  Don't sell it yet, but start watching it very close for topping confirmations. 

Wednesday July 28th - 

General Comment -   Once again the lack of follow through to Monday's rejection brought in more selling from funds today.  On top of that, the weather forecast as flopped back to perfect conditions following a few days of warm weather in the Mid-west.  Odds are we will still go lower based on today's action but again, we are at levels of oversold indications that I have never seen.  It may get worse as basis levels in beans slipped over 25 cents this morning with soybeans losing over 35% of their value between the basis and futures this past week.

Corn - Funds were heavy sellers today and no one wants to get in front of this train.  I have never seen the ADX indicator over 64 in corn until tonight.  It shows 66.  December is at 58 so it is still under its all time record.  Percent Bullish is at 7% in September and 11.1% in December.  In less than 2 months we have dropped 96 cents in December with no correction.  Out of the last 39 days, 31 of them have not included a high over the previous days high.  Over 23 days have had a close under the 2 day moving average.  All of this to say it is very oversold but it can get worse.  I said last night that I would exit my shorts in the spec account on a close under $2.26.  I didn't get it but I expect it now.  Look for $2.22 in December as the next downside level of support.  If you are long, I feel for you but you need to face the facts that if we bounce, without weather help, a rally will be short lived.  Near term, we could continue into the teens for December and September might even drop below $2.00.  One thing that would help is for the beans to hit their target of $6.17 in August and then bounce.  We will buy in another 15% of our shorts on a move to $2.23 tomorrow or in the next few days.  A close over $2.32 will signal an end to this debacle.     

Soybeans - Like I said last night, "if there is a fly in the ointment it's the beans".  Down 37 in August today and there wasn't a bounce in site.  The weather forecasts have again shifted back to perfect weather forecasts for August.  While the corn is made, if the beans come off with record yields, we will see lower prices into September and October before finding the bottom in the beans.   The market is certainly over sold but that doesn't mean anything.  It can do what its going to do.  We are 11 cents from our $6.17 target but that doesn't mean it can't go lower.  Don't be long here right now and at the same time, I wouldn't be short either.  Again, I'm not trading it at all.  Even day trading doesn't make sense right now. 

Rice - Even with WMP up 14 cents yesterday, rice couldn't hold gains with the bearish selling in the corn and beans.  We still have little information on Texas harvest but will pass it on here we have more details.  Look for the lows of $6.90 in November to be tested again.  Long term, I think the market may trade inside the USDA numbers posted at $6.25 to $6.75; however, the rice is showing signs it will follow the grain floor for the near term.

Tuesday July 27th - 

General Comment -   A disappointing day as there was no follow through to the upside.  While the market failed to take out yesterday's lows, it is fair to say that we rejected the higher price levels on the day just as we rejected the lows yesterday.  Today's highs now become critical points and a move over them will bring in more short covering.  We also have some early warnings of a change in the weather to hot and dry around August 4th for up to a week.  This is very preliminary but is showing up on the extended forecasts of most models.

Corn - Bearish indicators are entering record low levels indicating a market in desperate need of a higher close in the next few days.  The action today was selling based on perfect weather and more talk of 150 bu. yields.  The market is now accepting that situation as fact and the questions remains, who is left to sell it?  We have covered 50% of our short position and will cover another 25% on a close over $2.33 or on a break down to $2.23 we will buy another 15% of our short position in, which ever comes first.  Odds favor a higher close tomorrow based on the chart action today.  We mentioned last night we went long in a spec position yesterday.  It will take a close under $2.26 for me to exit.

Soybeans - If there is a fly in the ointment it's the beans.  If there is no weather problems in August or a scare, November looks to be headed for $5.25 to $5.50.   There still should be a bounce of some type here near term but the fundamentals need to change for there to be an extended move higher.  I'm not trading in this market at all. 

Rice - WMP was up 14 cents today.  Recent price improvement in Thailand & Viet Nam is the reason.  First yield reports are good in Texas with yields down only 5% but this is the early rice that missed the large rains the bulk of the crop received.  Most producers still expect a 5 to 10% decrease over last year.  Chart action on the futures is supportive with the spike yesterday but the lack of follow through today should have the bulls nervous.  I'm out waiting for a reason to trade.

Monday July 26th - 

General Comment -   Rejection at last!!!  Is this the low in the grains for now?  One thing is for certain, today's action was rejection of the lows, a signal we have been looking for, for two weeks.  Is it THE low, not sure about that but this is the time of year when you have to be looking for a turn and until we see something else, look for a reason to sell it in about 3 to 4 weeks. 

Corn - Please read our comments on the 21st below.  Today we covered another 15% of the total position at $2.27 just before the market turned to run back to Friday's close.  This covers us now on 50% (I had early stated we were 55% covered but that was a mistake) of the short position and tomorrow we will cover another 25% if we get a close over $2.33.  Then we will begin a market following scale down buy approach that I will write about later.  Our scale down buying strategy is averaging $2.31 1/2 which is 1/4 cent below where the market closed tonight.    

Some questions you might be asking....

What is so important in today's action?  A spike is the usual way for the corn market to make a low or high.  I don't know why but just look back at chart formations and you will see a spike as a normal type of day action that ends a long term move.  Couple that with a Percent Bullish calculation of 11% and a significant low is very possible. 

Why should it rally?  If you are short, don't be greedy.  Look at the time of year and what everyone has been talking about.  A huge crop but who doesn't know about that.  The problem is this.  The increase in demand will take much of this increase in crop size.  The lower the price, the more the demand so we are advertising for buyers and my guess is we are going to find more than enough at $2.30 in December corn.  Read our long-long term outlook again and realize we are not too far from changing from the Supply driven market to the Supply-Demand driven market. 

Will it make new lows later?  I think odds favor another dip later this year once supply is known; however, if there is a decrease in crop conditions in the next few weeks reports, which I suspect, we may not get that much lower then the current level.  Right now I think the market may rally toward the $2.45 level and then we will want to start putting back on short positions to ride until harvest arrives in the Mid-west. 

Should a Speculator buy it now?  Well, I am a hedger by nature and that is what this site is all about but....My spec account bought corn today.  Stops are at today's lows.

Soybeans -  August beans also spiked today climbing 36 cents off of their lows.  Last Friday I said the market looked like it had not cut off the buyers but the weather this morning backed them down and the sellers came after it to let them have it much lower on the day.  At the end of the session, anyone who sold August beans today is the proud owner of a losing position.  November beans didn't do as well as August and in reality there is no spike here.  Tomorrow we need for the market to move higher in November and if that happens, look for November to turn higher as well.  A close over last Friday's high is a major buy signal. 

Rice - What a day!!!  Rice collapsed early and then fought back to get within 8 cents of unchanged only to sell back off and close down 15 cents.  Today's low was a new low for the move but the bounce looks like a spike.  Can it rally from here?  Sure.  Yield results in Texas are still expected to be off by 5 to 10% but no hard yields to report just yet.  I'm not sure that will have any effect on futures but if it does, it should help the September a little.  We have been watching the Sep/Nov spread believing it might widen but it has come back to even for now.  If I can buy Sep 10 under November, that is where I will take a shot at the spread.  I wouldn't own it right now. 

Friday July 23rd - 

General Comment -   I'll write the weekly update Sunday night after doing some research this weekend.  Today's action was nice but not that convincing.  I would have loved a lower open and then the rally to up 4 in corn but as is all we did is open higher.  It wasn't strong buying that put us there.  Next week will be put up or shut up.  Even so, we still believe a market rally from here is possible but it will not be easy unless there is a change in yield ideas. 

Corn - Today's action felt like short covering and not aggressive buying.  Percent Bullish is still at 12% in December corn but a move over $2.33 1/2 will set us up for a rally toward $2.40 and I can see us up at $2.50 as well.  Depending on why we rally, I'll start a scale up selling program to resell any shorts we just took off and the rest of the crop as well.  The only thing that could put this market substantially higher is an early frost.  If there is no weather problems, I think corn will make its low later this year in September or October.  By years end, we will want to be long for sure.   

I said last night that in December, $2.32 is the turning point for corn.  Today's close is $2.32 so we need to see more follow through early next week.  If that happens, we will change our buy in of shorts process to a more aggressive approach.  We originally sold 50% of our crops and have now covered 35% of that position, which means we are now 18% sold and looking to increase sales on a move higher. 

Soybeans - Beans gapped higher this morning just as corn.  Here to there was no real drive after we opened higher.  I wouldn't be surprised to see this one try and go lower early next week unless something is starting to change in traders ideas of crop yields.  One thing to remember, crop ratings, even in great years, have a tendency to drop after mid-July.

Rice - $7.30 in November seems to be a good price level.  My guess is we will test the recent lows and maybe take them out.  Things are a little better in overseas prices but not enough to really lift the market.  The Indian monsoon appears to be a little dryer than normal but it's still early.  If the monsoon were to fail, this market would explode!!!  The last time that happened was 1987.  I'm out here and looking for a trade.  The real risk is higher on problems with the Asian crop but there is no sign of that yet. 

Thursday July 22nd - 

General Comment -   Today's action is another reason not to be long.  If your long your wrong and on it goes; however, if you are looking for moral support for a long position you are married to, I'll help you.  The market is close to a bottom.  How do you feel now?  You want me to be more specific.  OK, the market will bottom in the next 6 months.  How is that?  OK, I'm having fun at your expense.  Believe me I've been there.  Last week one my customers called me wanting to buy the market and I told him to go slam his hand in his car door until that feeling went away.  For what it's worth, we are getting close to the end of this down draft but it may still go lower before we bottom.

Corn - Make sure you read last nights corn comments.  We are buying in SHORT positions here on a scale down basis.  So far we have lifted 40% of our shorts at an average of $2.33 in December and will take off another 15% or so tomorrow at $2.27.  That still leaves us short 45% of what we started with and will slowly buy that in if this break continues.  This is removing short positions from the books.  We are NOT GOING LONG FUTURES!!!.

Tonight, September is at 8% on the mathematical Percent Bullish.  This indicates 92% of market participants are bearish and I have never seen it that low.  December is 11.9% and our next price objective is $2.22.  As I said last night, "When there is no one left to sell, markets will rally and this market has put a HUGE number in the final yield and there is still August to go".   I expect a sharp rally as we are exhausting the sellers and when we head higher, there will be very little for sale.  It's just how it goes.

One more thing, the national corn basis average is 21 cents UNDER nearby futures.  To get the national average price in the market today we use the March futures, which is at $2.35.  Take 21 cents away and the Market is averaging $2.14.  The USDA said the average price would be $2.30 to $2.70 or $2.50.  Now I'm not saying that prices follow USDA, on the contrary, the USDA sets its range from market forces; however, to drop the national average by 36 cents, it will take an increase in carryover of in excess of 300 million bushels which is a 149 bushel yield per acre.  Then one would have to assume that corn demand will not change, which is not a correct assumption.  Bottom line, the fundamentals are bearish but this market will, and more than likely already has gone too low.  PATIENCE.

In December $2.32 is the turning point for corn.   

Soybeans - 50 cents lower locked Limit down in August.  I have a chart objective of $6.17 for August which could be hit tomorrow.  I'm of the opinion it will take a low in beans to help the corn.  November closed below $6.00 as we expected now let's see if we are right on the other part of that prediction.  The part where I said it wouldn't stay below $6.00 very long.  There is still room for lower prices so here again, DO NOT BE LONG.  If you are, get out and buy some options to help stop the bleeding and limit your losses.

Rice - Our comments last night...."The rally continues but now we approach resistance.  November is trying to close the gap between $7.84 and $7.90.  $7.73 is resistance tomorrow.  Here is my dilemma.  I continue to believe yields are going to be down in the South but I'm not sure about the Delta yet.  The market does not have any lower yields factored into the market price.  So is this rally a bear market bounce to test resistance or is it the first of a rally based on lower yields.  Right now, I'm going with the former."  Well the high today was $7.65 and then the market collapsed.  September touched its 50 cent down limit price before closing down 30 cents for the day.  I was surprised at the volatility but not at the action.  I think the market is set for a large crop and will wait for actual yield reports  and the grains to find support before turning. 

Wednesday July 21st - 

General Comment -   As I wrote yesterday, today was indeed interesting.  The break down may indicate the final washout in the grains.  It's hard to call but I think we are at the end of this break.  Even so, there is no reason to be long.  AT the same time, IT IS TIME TO COVER SHORTS....

Corn - Today the market hit our objective which we have written about the last several days and we made the decision to cover short positions.  Especially cash positions tied to the futures.  Here is what we are doing.  We are using a 20% scale in with 80% maximum buy back until we get a buy signal.  Today at $2.35 we bought 20% of our short position back in.  In this case we rounded up.  Tomorrow, we will buy 20% rounding down of the remaining short position at $2.31.  We then will buy 20% of the short position remaining, rounding up, at $2.27.  We then will buy 20% of that remaining position, rounding down, at $2.23. 

How does that work?  It is simple.  If I am short 100,000 bushels which is 20 contracts then today, I bought 4 contracts or 20,000 bu. and have 16 contracts still short.  Tomorrow I will place the order to buy 20% of them, rounding down, at $2.31.  In this case (16 X 20%) is 3.2 contracts, rounded down gives me 3 contracts to buy 2.31.  If that trades, I have 13 contracts left in my short position.  20% of 13 is 2.6 rounded up equals 3 contracts and so I will place an order to buy 3 more at $2.27 or better.  Now I have 10 contracts short and 20% rounded down equals 2 contracts, so I will put the order in to buy 2 contracts at $2.23.  That leaves me with 8 short which at 20% equals 1.6 and rounded up equals to 2 contracts I will buy at $2.19 or better.  And so it goes until you are down to 20% of the original position or 4 contracts.  You never buy in more than 80% until you get a buy signals.  Get the idea.  This is how I scale into a position.  I borrowed it from some stock traders who buy positions using this type of scale down buying plan.  If you want, you can always change the scale in percentage  either up or down but never, never go over 25%.

Why do this?  Today's market hit our $2.36 objective, PB is at 13.6% which is historic lows, and today, traders started talking about 150 bushel national average yields.  ARE THEY NUTS!!!  When there is no one left to sell, markets will rally and this market has put a HUGE number in the final yield and there is still August to go.  I'm taking off my short positions NOW.  FYI, a move over $2.37 1/2 should accelerate the market higher tomorrow. 

If you use this approach to buy the market long, you are very brave.  I would suggest you consider dropping your maximum number from 80% down to 50% of your desired position and then have at it.    

Soybeans - I said last night the $6.26 level wouldn't hold on a second test and sure enough, the market collapsed today.  PB is at 38%, which is not oversold.  We are closing in on the Christmas eve lows of $6.04.  My guess is we may dip under $6.00 but will not be able to stay there with all of August left to go.  Oh and by the way, look at the radar.  Where is the rain forecast for today.  THE WEATHER IS SHIFTING.  While this may not be enough to drive the market back to $8.00, I have little doubt we may see a nice bounce and it may start in the next two days.  I'm not buying this one in because I won't go long and I'm not short, but if I were short, I'd start the same scale in buying as I'm doing in corn. 

Rice - The rally continues but now we approach resistance.  November is trying to close the gap between $7.84 and $7.90.  $7.73 is resistance tomorrow.  Here is my dilemma.  I continue to believe yields are going to be down in the South but I'm not sure about the Delta yet.  The market does not have any lower yields factored into the market price.  So is this rally a bear market bounce to test resistance or is it the first of a rally based on lower yields.  Right now, I'm going with the former.  It will take a close over $8.00 to turn me toward a sustainable rally based on lower yields. 

Tuesday July 20th - 

General Comment -   The markets still show no sign of a low.  The action in beans was positive but there was no sign of a reversal in corn.  Tomorrow will be interesting.

Corn - So much for Turn Around Tuesday.  At least not this week.  How about "Wield About Wednesdays"...Ok, I made that up.  Anyway, the market is still headed lower and our target of $2.36, the one I said the market would never, ever see, is just 5 cents away.  I'm still looking for a spike low to finish this move off but so far no cigar.  We may get a bounce in the next two days but it will be hard for December to get over $2.52 and stay there unless the weather changes and in a hurry.  I know that corn is about made but remember, beans aren't and again I will mention, last years rally started August 11th. 

Soybeans - A spike low today?  Well, usually beans don't make a spike but hey, we will take anything we can get.  $6.26 was major support and it held the first time down there.  It won't hold the second time but maybe there won't be one.  Near term, I'm not trading beans.  As I have written here before, it's the demand driven market I'm waiting for and that may not be here until November or even later.

Rice - What is this???  Three days up!!!  It is a major bull move for rice!!!  Well, not really.  We have rallied back to the selling point on the charts but it could move back toward the $7.60 level and even $7.75; however, if we sell off and make new lows, things are going to get bad.  The one thing I keep pointing out is that the yields in the South may be lighter than expected.  We should know in three weeks.

DOW - We saw PB drop to 24% before this run up today.  We may be able to rally a little more but if we take out today's lows, we should sell off under the 10,000 level very fast.  As we said last night, 10,180 is a sell area for the Dow with a rally to 10,220 also possible.

Monday July 19th - 

General Comment -   Once again perfect weather over the weekend with no sign of trouble.  Tonight's crop condition report as expected, increased good to excellent conditions for corn up from 74 to 76 percent.  Analysts predicted during the day today that crop conditions would be unchanged at 74% good to excellent.  Beans held at 68.  This may be the last one to increase before we see minor declines as we head into the final weeks before harvest. 

Corn - The market has gone into expansion phase and should drop into a major spike low in the next few days.  I am looking for a day where the market is lower and then closes unchanged or very near unchanged levels.  Tomorrow, also known as TURNAROUND TUESDAY, is a prime candidate for such an event especially with the crop condition report tonight as fuel for the fire.  If we are over 4 cents lower and close within one cent lower to higher on the day, I'll buy the market and place a stop at the low of the day.  One more thing, the strength index for September is very high.  The highest I have ever seen the number is 63 and that was 20 years ago.  The indicator normally tops out in the 48-50 range.  Tonight, it sets at 50 and is going up at 1/3 of a point a day.  If we take out today's high without making a new low for the move, the indicator will signal a major low.  As you can tell, we are thinking it's almost time to see a good bounce in corn but again, it doesn't have to be this week and in the long run, it is a rally we need to sell. 

Soybeans - This is a confusing market for sure.  It seems to me that the market today indicated it was too low for this much time left in the growing season and it wants to go higher.  I said in the weekly report, I would not be long here and I am still of that persuasion.  The market closed closer to the low than the highs today and tonight's reports will probably indicate great crop conditions for beans.  I like day trading here but for now, I'm just watching.  Also, news from overseas seemed to be bullish today but the market trimmed the gains which again confirms our position that this is a supply only driven market right now and the demand phase is many weeks away. 

Rice - The bounce continues today and notice the Sep/Nov spread is widening out ever so slowly.  I'm still not going to buy it but I wouldn't be surprised to see that spread out to 15 to 20 cents in the next several weeks.  As for the top of this bounce, my guess is maybe a 50 cent bounce from the lows at most.  Be very careful here as I still want to sell it on a good sell signal.

Dow -  The close today is the 4th one in a row below the 9 week moving average and sets up a test of support at 10,000 with the real support at 9,800.  A bounce to 10,180 should be sold with a stop on out of market positions at 10,400 for right now.  I have a feeling that number will drop fairly quickly the next few days.   

Friday July 16th - 

General Comment -   Still no sign of a reversal with almost perfect weather for the Mid-west.  The forecast for a linkage high to form over the Mid-west has also been taken off out of the picture so there is little reason to think that this crop will do nothing but get better. 

Corn - New lows today setup an expansion move to the downside.  PB is back under 20% and could stay that way for several days as this one is finished off.  In tonight's Trader Report, we see the funds still not net short the Market and the small Spec is up to a whopping 57,000 contracts when you consider options.  What is interesting, is that 51,000 of those is futures.  I have been looking for a bounce but it won't come.  As I always say, if you're going to be wrong, be wrong out of the market.  That is where we are again.  Long term we see December at $2.36 and there is a chart objective to $2.25.  I still doubt that this price can be hit until much later in the year.  As of now, there is no premium in the market and we are trading a huge crop.  Once the supply is known, we will enter the demand phase and that is the market I am waiting for.

Soybeans - Still going lower.  There is more room to the downside given perfect weather. 

Rice - A bounce today that I hope can run higher.  I have been hoping for one but I'll be looking for a good place to sell.  Right now we need to correct the over-sold condition.   

Wednesday Tuesday July 14th - 

General Comment -   Looking back at last year, corn and beans broke to the upside on August 11th.  The lows were put in around July 25th.  You probably see my point.  It's not over just yet.  The weather is now indicating the possibility for it to be hot and dry with a major ridge forming which will bring heat.  Tonight's forecast increases the odd of this type of linkage which would be the same as last year.  Don't get me wrong, I doubt it happens just like last year but a weather scare is possible.  It will be one that we look to sell.

Corn - Another key reversal up today.  This is the second in three days.  Now the question, will there be follow through tomorrow.  Another thing to consider is that the corn closed higher than last Fridays close which is before a bearish S&D report and Monday nights bearish crop condition report.  Two bearish reports and yet we still closed higher.  A close over $2.56 sets up a move toward $2.67 in December.  Percent Bullish came back to 21.4% tonight so if the market wants to expand this move to the down side, we should see large selling the next two days which makes them very important to watch..  Also, you might want to look at overnight trading as it could give us a hint as to tomorrows direction.  If I can I'll comment here after 8 PM on how the overnight trade is doing.  I will also try and update the close of the overnight before leaving for the Airport in the morning.

MARKET UPDATE --

A Morning Update at 5:30 AM-July 15th -

December Corn - Down 1/4 to up 1/4

November Soybeans - Down 2 3/4 to Down 3/4  (Was down 7 cents in the session)

Over night is going to close near the highs of the night session.  I look for a positive start to the day but the close will be the key factor.

Soybeans-  The move higher today is a good sign but not conclusive.  Percent Bullish is 48% which is bearish.  We are still below the 20 day moving average and the trend is solidly down; however, all of these conditions exist at a bottom too so, just as in corn, the next few days are going to be critical.  One more thing about today, we closed at the high and there was no sign that the buyers had exhausted themselves.  Tonight will be interesting as well.

Rice - The market continues to plow toward the USDA average range which is still 40 cents lower than today's close; however, I doubt that the market gets there without a bounce.  I want to sell that bounce unless we start to hear of much worse yields than currently expected.  Right now, many here in Texas expect a 10-15% decline in yields based on the heavy rain we received during pollination. 

I continue to stay clear of this one but here is something to think about.  If Texas and Louisiana's yields are down, would there be upward pressure on the September contract more so than the November?  In plain words, would the Sep-Nov bull spread work?   This spread was at 20 cents in March and April of this year after being at a -15 (that is a minus) back in December.  Last year the spread closed at -20 1/2 cents (minus) but we were coming out of an over supply of rice not a shortage as we are this year.  Last year on this date, November closed at $7.26 while today November closed at $7.18.  Last year in the July report  the USDA said the carry-over number would be 10.3 million cwt. for 2003's crop.  Monday they said it would be 15.2 million cwt. for this year's crop.  Why does that matter?  Since November of 2003 was going to enjoy the same shortage as September, the spread should not have worked and it didn't.  In 2004, we are going to have a large carry-over but September might not see as much free stocks as November and as such we could see pressure for the spread to open a bit.  I'm not really suggesting this as a trade, I'm just pointing out that it is something to watch.  It also could be a precursor to a bit of a bounce in the rice in the next two weeks.  We will know what the yields look like in about three weeks and we will watch this spread and see if it move out any.   

Tuesday July 13th - 

Corn - After yesterday's key reversal up, today's action is extremely disappointing.  Volume was low today but the market is consolidating here which indicates the market is accepting the value.  We remain extremely oversold as the Percent Bullish sets at 16.9% tonight and the key reversal yesterday is still in control; however, you want to see the market move higher after a reversal, not sell off like it did today.  I sold out of my position from yesterday with a 3/4 cent loss and will replace it if we take out Monday's high.  Other wise, with the trading that took place today, I think odds now favor new lows and then a bounce.  We have a down side objective of $2.36 and the question remains as to the possibility of going that low without correcting the current oversold condition.  What I am looking for right now is a sell off that fails and the market turns back up and challenges Monday's high.  Still, any rally should be sold as long term, I think the $2.36 level is very likely unless it gets very hot, very quick. 

Soybeans-  The real culprit on the grain floor today.  The market bounced mid-day but then fell apart and closed nearer the low.  The basis levels came down today as well so the free fall for the old crop months is now underway.  With no weather help, this market could sink to the $6.20 level in November and the August could fall under $7.00.  DO NOT BE LONG HERE!!!!

Rice - Low volume with only scale down buying.  There is no reason to own anything here and with the USDA setting the Average price for the upcoming year at $6.50, there is room to roam to the downside.  PB stands at 19.4% tonight so we are oversold but this is the first day below 20%.  It could take several days more finish this move.  Then again, it could change tomorrow. 

Monday July 12th - 

General Comment -  The USDA reports was bearish corn and neutral for beans but the market ended higher in corn and lower in the soybeans.  Bean meal was the real culprit in the complex today as funds dumped beans and meal.  They have pretty well divested themselves of corn for now.

Corn - In our comments on the report this morning, I said I would "buy the market if it got up on the day."   After opening lower and driving into new lows for the move, the market turned and rallied 5 3/4 cents off of the low and closed 5 1/4 off of the new low.  The action is called a "massive key reversal up" as we took out Friday's low, then Friday's high and closed above Friday's high.  The only question now is, will there be follow through buying tomorrow?  Don't know but I bought it anyway and tonight my stop is at new lows in the corn.  The mathematical Percent Bullish is at 17% tonight in December corn so look for the market to correct this over sold situation in the next few days.  If we get above 20% and then start to sell off, we could expand the bear market and drive for what I think is the lowest low likely which is $2.35 for December.  This is a possible price but not that probable.  Long-term we like the market once the supply is known. 

Soybeans-  I'm not in here at all.  Day trading is still the way to go but I'm not doing that either right now as there is no real trend day type of movement.  Yes, we are going lower and the trend is down but the type of action is not that conducive to day trading.  This is normal in a supply drive market.  Once we enter a demand cycle, things will start to level out but again, that is months away.

Rice - Still going.  As we have been saying, there is no reason to own this on at all.  The trend is down and there is no sign of a reversal.  Open interest is falling like a rock and the commercials and co-ops are not doing much in here if anything.  The USDA report was bearish and the market acted like it today.  Be sure you read our WASDE analysis for our long-term outlook. 

Thursday July 8th -  Another long one.....

General Comment -  I said last night that another couple of days down could happen but wasn't necessary.  Well, I guess it is after all.  Still no signs of a bottom and today I broke a cardinal rule of mine.  I decided to pick a bottom.  OK, OK...It was dumb, I admit it but tonight the Percent Bullish calculation on corn is 15% (14.9% to be exact) and I couldn't remember when this indicator was setting at this level.  So I decided to go find out.  It took awhile but on July 13th, 1999, December Corn was at $1.96 and the Percent Bullish number was 16%.  What happened then?  The contract rallied 50 cents in 22 days.  30 cents came in 9 days and 10 cents in just 3 days.  Now past results are no true indication of future performance; however, this calculation has been very true over the years in spotting areas to expect a trend change.  I decided to buy it lightly today and wait for the weather to prove itself.  In the beans, we have no such signals as the PB calculation (percent bullish) is at 48% so there is a lot of room to roam in either direction.

Here is an interesting point to remember.  Monday is the USDA supply and demand report.  So before we go any further, lets go back and look at the June report for two numbers...First, Exports and second,  Average Farm Price.  Exports in the June report were estimated at 2.1 billion bushels up from 2.05 the year before.  The average Farm Price was a range from $2.55 to $2.95 or lets say $2.75.  Assuming an average of minus 15 cents for the national basis.  Futures would need to average $2.90 for us to have that average of price.  Where is it tonight?  $2.55 cents in December for a $2.40 national average. 

So what's the point?  The futures market is 35 cents lower than the last USDA cash price average of $2.90 and indeed has dropped 49 cents since the June report on the 10th.  This would indicate that the export number will now need to go higher not lower in order to account for the increased demand because of the lower price.  Now don't get out on the limb here.  I'm not saying that the USDA will do anything in this report but the fact remains that lower prices increase demand.  If the price is 35 to 50 cents lower than expected you can count on more corn going out the door or being consumed.  This report on Monday may not be as bearish as some people are thinking.  It will be interesting to see if the USDA picks up on this price decline and lowers the average price but doesn't change the demand side of the equation. 

Bottom line...This market has many reasons to turn higher and in the long term, demand is going to be the driving force.  A turn is just a round the corner.  But remember, I am now talking my position.....

Rice - Oh boy.  This is a tough one tonight as we closed 10 lower on the day but up 20 off of the lows.  Long-term we see the market higher than current levels but there is no sign of a bottom here either.  PB is at 22% so there is not much room to the downside but you should remember, this 22% number was set today with the market down 30 cents on the day so there is still 30 to 50 cents of room to downside from where we closed tonight before this indicator would indicate buying; however, it is in the buying zone so we start looking for a reason to own rice.  Today was a type of spike so a close over $7.82 tomorrow would indicate an interim low and a good chance to push the market toward $8.20 in the November.  This will be interesting to watch and that is still all I'm doing.

Wednesday July 7th -  WHAT A DAY!!!

General Comment - July beans had an 80 cent range today as the market is trying to determine supply issues.  Current weather indicates a change to hot and dry but that is good for the crops right now.  Many out there think the corn is too far along and won't get hurt that bad.  Obviously they don't understand the new varieties and the potential for a poor dry down on bushel weight.  Still, I'm not disagreeing, I have said all along, look for a record crop.  The fact is it doesn't matter long term.  WE NEED A RECORD CROP. 

In corn and beans, we could see some strength near term but a rally should be sold if you have to sell in the next three months.  I just wouldn't sell it here.  There was no spike down in corn today as I expected so another couple of days down could happen but it's not necessarily going to happen.  A 15 cent bounce in corn is possible if the rain forecast for this weekend doesn't show up like some of the weather models suggest.  Long-term. I want to own corn.  We will put out a major article on the demand side of the market right after the Governments July 12th S&D report.  This article will update the world situation and explain what we are thinking.

Rice - We said last night we might close the gap here and so far so good.  We once again closed on the highs so sellers are not too aggressive and apparently aren't sure they want to push this one down right now and rightly so.   We will address the demand for rice in the upcoming special report as well.  I wouldn't be short here after September for anything!!!!  We will tell you why next week.

Tuesday July 6th -  LONG ONE TONIGHT

General Comment - More selling today in the new crop of corn and beans as we are in a sea of corn, beans, rice, wheat, and cotton.   Sure we are!!!  If you have not read our long-term outlook read it and you will see we are in that time of year when supply is known by the cocky few.  Imagine, the most sure, egotistical person you can think of  (sounds like some people I know) and then realize they are counting their chickens a little too early.  Now don't get me wrong, there is a real chance we are not going to have any problems anywhere with this crop in the ground; however, if you get to close to Niagara falls without a rope to keep you from going over the lip, a life jacket just ain't going to help.  OK let me make this clear.   Who is short the market in corn?  Answer....the small spec.  What happens when he tries to come out?  He has to buy the market or think of it in another way, he has to buy it from the power brokers and boy it isn't going to be cheap.  Here is the bottom line...on bearish news, the market will head higher and that is the signal that the lows are in for several weeks.  I'm still saying it happens this week. 

Tonight the crop condition report is bearish rising 2% in the excellent category but then again...74% now compared to 74% last year but 7% very poor to only 6% last year??  Wouldn't that mean we are not on a coarse to set a new record yield/acre and in fact, have a lower yield per acre than last year?  Yep...and without that....we have more than enough demand to use the crop size.  But I'm not one who will count the chickens this early.  If we see a lower opening tomorrow followed by buying, we will start to see corn firm up and profit taking start to enter from the specs.  If the funds and Commercials are not selling now then don't look for them to be selling just a few cents higher.

I still haven't bought corn or beans and we are sold on 50% of what we need to sell here at harvest (which is underway here in South Texas).  I'm looking for that bullish response to bearish news.  Tomorrow could be the day.  

Rice - Another terrible day down as there seems to be no one worried about this crop.  Here in Texas and Louisiana, the crop has had so much rain, the disease pressure has been in the fore-front.  Have we controlled it?  In most cases I think so; however, there is going to be some fields in both states that have reduced yields due to late fungicide control efforts.  If we start to hear of lower yields in these two southern states, things could get interesting.   From what I hear, there is not much mention of problems in Arkansas.  I don't have a clue in the delta but in the south, we are bracing ourselves for some damage.

As far as prices today, how low can it go?  If the gap holds up, we have a target of $6.40.  That is too low so my guess is the gap will be closed and the market start to base here.  I said my GUESS.  Long term I like the market with increased demand.  We will be featuring a deep study of the China situation after the July reports.  The world demand for rice will increase a lot this next year and I think into the 2006 year as well.  Right now we have some traders thinking that things haven't really changed.  We will go back to the same fundamentals of the last 5 years.  Right!!!  And we can look for $15 per barrel crude any day now.

Keep your powder dry and read again our long-term outlook.  This is a supply driven market that can be a killer, wait for the demand market to take over and your position will be safer.

Friday July 2nd -

General Comment - Today's Commitment of Traders report should put major fear into traders hearts.  As of Tuesday night, small traders were short 40,000 contracts of corn and both funds and commercials were long.  Here is the line:

CORN            Funds long  34,507 contracts.  They were net sellers of  2,463 over the week         

                       Commercials Long  5,730 contracts.  They were net BUYERS of 4091 over the week. 

                       SMALL SPECS are short 40,237.  They were net sellers of 1627 contracts over the week.

Here is the point....the small spec is the weak holder of positions.  With corn setting at lows on July 4th, the weather expected to be perfect, and every thing pointing to record crops....why are the commercials LONG the market against SMALL Specs.  OK...Here is a bet.  I'll bet BIG that by next Friday, July 9th, the corn market will be higher than the close of today, July 2nd.  The weather is turning and there is NO premium in the market.  While the chances of major damage to the corn crop is nil, the odds of hurting beans remains and corn will turn with the beans. 

We are putting in lows near term.  That doesn't mean yearly lows, it just means to prepare to sell the next rally.  It will start very soon.     

We try and let new readers see how we have done over the past months.  So here it is in all its glory.  I recommend you print out a chart and then go through and write down on the dates where we said what.  I get more clients that way.  Enjoy....