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Sunday July 31st - 9:00 PM   -

Markets started higher tonight but corn has turned lower and beans are up just one cent and about 7 cents off their highs.  Once again, we have weather models in disagreement over conditions for the Midwest next week.  This week they seem to agree in warmer conditions into Wednesday but not as hot as a week ago.  There is nothing major to report tonight so we'll wait and see how the market handles the longer-term forecasts tomorrow.  I just can't get over the Commitment of Traders Report for corn.  This could get very ugly.

One more thing - A BIG up tonight for crude and natural gas.  Out target of $8.25 for September Gas could be hit fairly soon at this rate.   

Friday July 29th - 3:00 PM   -

Some big things to think about today as a couple of bearish pieces of information surface after the close.

First, check the 6-10 day link above as things have changed dramatically from yesterday.  If this is right, corn has made the top for the year and beans may have as well.  Of course, they may not be right.

Secondly, I am stunned at the Commitment of traders report this afternoon showing the funds still long over 100,000 contracts as of Tuesday night.  They have been buyers since then so they are probably long 110,000 to 125,000 tonight.  If this change in the weather forecast holds and December falls to the recent lows, things are going to get ugly in corn town. 

We pushed sales today to 75% as the market traded for the last time in July.  Forecasts continue to show some hot and dry weather coming to the belt but the market sure isn't trading like it.  Looks to me like there is going to be some cooler weather in the future and the rainfall is questionable.  For the corn, I keep hearing it needs to rain for the plants to fill the ears.  We in the south, know the corn plant will start to "fire" from the bottom up as it brings moisture to the ear at all costs.  Northern corn varieties do not die like they do down here unless it extremely dry and it needs the moisture to fill out the ears.  Bottom-line is that the plant will fill out the ears in most cases even with it as hot and dry as it has been.  Longer-term, I expect the market to start see better yields ahead as much of the corn belt has seen enough rain and moisture to give us a yield of 137 or greater and to me, 137 is a loan price for corn just before harvest.  That would indicate a 20 to 30 cent break in futures. 

Soybeans are a different story as we say everyday.   Even so, why are the beans not putting in more weather premium?  This 6-10 if right may hold the answer.  I'm not sure what to do right now but there is another two weeks to go before we may see where the next major leg is going to take us.  Then again, if all the weather forecasts start to put moisture in the Midwest....

Rice - Nothing to say today as trade remains very quiet.  We are not trading it as it stays inside this 40 cent range.

Natural Gas - The move higher today tore through some resistance points and exasperated the short term over-bought indicators.  The 30 minute PB indicator is at 83% and the index of the move is over 50% which indicates a short term top soon.  Again, this could be a one or two day down turn.  The longer term chart is still constructive and not that over bought at all.   We have an upside target of $8.34 and the gap today projects $8.24.  We could see a short term correction first, but a challenge of these two levels is possible especially if the weather would keep pressure on inventories.  Crude is going to keep the pressure on for a while as well unless we can break the oil back under $55.00.   

Thursday July 28th - 5:00 PM   -

This bounce continues as the weather looks to get very hot and dry into next week and beyond.  Click on the 6-10 day above and you'll see the much above temperatures for the heart of the corn and bean belt.  There is nothing to stop this move higher but for the corn, we feel strongly that any price we go past from now on, we'll see ourselves going past that level to the downside in the next three weeks.  Think of it like an elevator.  The ground floor is $2.00 and the building is 75 stories tall.  Each floor represents 1 cent.  Right now we are sitting at the 53 floor and I think we'll get to the 55 to 60h floor.  But the point is this, long term we are going to travel back down past the 50th floor.  Bottom line, it's time to sell more corn.  By tomorrow night we will be 75% sold in all corn positions.  I show $2.60 in December as MAJOR resistance,  It will take some very major buying to get us through that level.  Certainly it can happen, but it will happen with us already sold at 75% in corn.

In beans, that's another building all together.  We'll wait a little longer before selling beans and see if some damage can appear in the bean areas.  We continue to believe, corn is not hurt past the 137 bu. per acre number and beans is a completely unknown quantity. 

Rice - Nothing new here.  Market up 3 cents on no real news.  The Uruguay challenge on rice is not going anywhere fast.  I doubt it has any affect on the market anytime soon.  China currency issues will be a bigger threat near term. 

Natural Gas - Sep up 11 cents today as the whole energy complex moved higher.  Certainly the heat in the forecast is supportive and then remember, it's August and Hurricane season will be in full swing, like it hasn't already been obvious.  Injection levels were right on estimates and the amount in is less than last year at this time so the market had no reason to sell off today.  The short term indicators are setup for a correction or pause in this up move either tomorrow or early next week.  The longer term charts are still constructive with $7.76 as resistance followed by $7.89.  It's going to take some heavy buying to get us through these levels.

Wednesday July 27th - 3:00 PM   -

I will be unable to do a morning update tomorrow so our next report here will be late tomorrow afternoon.

Corn up 2 1/2 with beans down 2 1/2.  Seems to me that the market has it backwards but I won't argue with the market near term.  It is all a question of August weather and if there is rain and a good amount in the first half of the month.  Early long-term forecasts (click above on 6-10 day) show above normal temps with below normal rainfall but the 14 day outlook is a little wetter.  Very little but it is wetter.  Corn can bounce with the beans but I doubt it will move much higher than 10 cents higher.  The basis remains very low in fact, the county posted price here in Texas was below loan yesterday by 2 cents.  In other words, the futures has prices that the cash market just can't agree with right now.  For you guys up north, we finished harvesting corn yesterday afternoon with the facility full of corn.  There is still a lot of turn row harvesting underway here but should be done in one to two weeks.  Yields were above average for our area which is nice.  Now if the dang basis would just improve.  Long term I think it will but futures will fall first.

Beans remain the question mark for price as we look out to the longer term forecasts for guidance.  Looks like we could rally a bit the next two weeks but it sure is taking its time.  Our next big issue to look at is the August S&D report but there is a lot of weather to occur here before then.  I can see beans rally with the idea of damage to the bean crop but there better start being more damage reported.  This rain the last few days has probably improved the crop and may give it the legs to stand on until more rain arrives.  It's all up to the weather.  My big concern is that the next big break in corn or beans, will start the bear market toward Midwest harvest.  It may come from 50 cents higher in the beans but when it happens, we need to jump and get ahead of the funds. 

Rice - PB back under 50% tonight at 48.4% but there is still no real drive one way or the other.  I can see the market down 40 or up 40 but don't see anything yet to take us out of this trading range.

Natural Gas - The Wall Street Journal had a story today about cooling demand and that a big gas platform called "Thunder Horse" is not coming online until later this year.  That prompted spec buying in oil and gas.  Probably won't last very long as we should be right up against resistance at this point.  I look for a pull back  here but do not want to press the short side as we fundamentals and technical indicators point opposite directions near term.

Wednesday July 27th - 8:00 AM   -

Markets ended a little higher with beans up 3 and corn up 1 in the overnight session.  The rain is now past and forecasts call for dry and cool followed by a heating up with a heat dome over the the heart of the Midwest this time next week into the weekend.  Look for a rally near term which in the corn MUST be sold.  In the beans, we'll give it some room.  December corn could rally to $2.55 where it would meet heavy resistance.  Also, it's time to start looking at what the S&D numbers could look like for corn in 2 weeks.

Tuesday July 26th - 2:30 PM   -

Beans soured sharply higher today but ended looking like a dying duck at the close only up 6 cents.  Corn after being 7 1/2 higher finished up 4 cents.  Not much to talk about tonight.  A line of thunderstorms is moving toward the heart of the Midwest but the rainfall amounts may be lower than first thought.  Again. look at the long term forecasts as they have a very hot and dry forecast for the Midwest and the beans are in a position to get hurt like they did in 2003.  I'll remind you that the $2.25 move higher that year started August 6th and we aren't that far into the year yet so a lot can happen.  On the corn, the weak sister is going to remain the weak sister.  Sell rallies here and yes we could get another 10 cents out of this bounce but I doubt we get much more given the current fundamentals.  PB ranges from 50 to 52% in all of the corn and bean contracts tonight.  In fact, the wheat and rice are both sitting at 52% as well.  That means there is room in either direction for a big move.  Stay short corn and sell rallies is my advice to hedgers.  Specs might think about being long a call and a put here in September beans. 

Rice - WMP no change today and the market was quiet.  We have closed the gap which was the objective and the PB is balanced.  A new leg is possible in the near future, but I don't have a clue as to the direction. 

Natural Gas - As I said last night, yesterday's bounce wasn't what the bears wanted.  Today's bounce is right back to the 21 day moving average and PB is at 49%.  Today's low is major support for the bulls with Monday's low acting as support to keep the major trend from turning decisively lower. 

Tuesday July 26th - 8:30 AM   -

Beans up 11 and corn up 4 over night.  Like I said on the call in update last night, the reverse of the "perfect storm" was setup in yesterday's trade which should give us a bounce.  We will sell it but for now lets give it some room.  December corn could bounce to $2.55 which would be another selling point in corn.  Beans is a totally different thing.  The 6-10 day forecast is hot and dry and we have s0ome forecasters saying that will be the case for all of August.  Time will tell but for now, we will hold our guns a little longer and see if we can't challenge recent highs.  This will drag the corn but not into new highs. 

Monday July 25th - 4:00 PM   -

Crop conditions tonight show corn a little worse and soybeans about the same.  Rain is headed to the Midwest and the only question is how much do they get and then does it rain anymore in the next week.  Look at the 6-10 day link above.  It's HOT and DRY.

Once this rain is through, beans should firm up and they could pull corn back up about 10 to 15 cents which is a selling opportunity.  We will remain short through a bounce here because the fate of corn is pretty well known.  The beans can pull them if they really catch fire but it will be hard until we see what the rainfall numbers are this week.  We are short from higher levels and will sell more on a good bounce.

Rice - Nice move up today.  PB is at 48% for September and 50.2% for November.  We have been expecting the target of $6.77 to be hit in Sep now we'll see if we can move on higher.  Remember, the China currency issue has big ramifications for US Rice as Thailand and Vietnam's currency will follow China which makes US rice more affordable. 

Natural Gas - I'm not so pleased with the close today as we bounced 15 cents off of the lows.  Crude keeps pulling on the gas but there is enough news out here that gas prices should continue under a little pressure.  If a hurricane heads the gulf's way again, then things will get a little crazy again for gas.  We want to buy a nice break here for gas users.

Monday July 25th - 8:00 AM   -

Beans down 7 and corn down 3 overnight.  Good rains are headed for the Midwest and you can expect more weather premium to come out of the market especially in corn.  I now expect corn to setup a down trend which could take it long-term below loan.  Again this assumes a 137 to 140 bushel average at worst.  This afternoon's crop condition will be watched by everyone and will help tell us if the 137 number is too low.  I have a hard time seeing it below that number with the current situation.  If you haven't sold, use any rally in corn to get to 100% sold ASAP.  We will look at calls later IF things turn hot and dry for the bean in August.

Sunday July 24th - 8:00 PM   -

Extreme heat is being overridden by a major cold front which is on its way for the Midwest.  Most models agree this will be a major rain event for most of the Midwest.   The markets right now are down 4 for beans and down 1 for corn and I think the market may have to consider what the condition report is going to say tomorrow afternoon before going one way or the other.  I've already said it, I think the market is going lower near term as we are still too high in corn and I would expect beans could follow down if nothing happens to that crop; however, we have a couple to three weeks in which this could all change if the weather turns back hot and dry.  I'm not holding my breath.

One more thing, the funds are still too long.  The fact that they are long at all indicates they are too long but Friday's number showed the funds long over 100,000 contracts Tuesday night which explains the big break Wednesday and Thursday.  Funds could go short 100,000 contracts as well in the corn so we are now going to be very defensive in regards to prices near term unless that heat ridge returns the middle of August.  Check the 6-10 day link and we can see the heat but again, their is normal rainfall in the longer term forecast so we need things to turn dryer if there is any chance at selling corn or beans at higher levels. 

Friday July 22nd - 4:00 PM   -

Markets ended unchanged for the most part as we started higher but then ended lower.  Corn actually has the makings of a trend day Down but I would classify it as barely and that it doesn't mean that much.  We got hedges on today as we said we would do.  This weekend's heat appears to be a non-event and after the close the market showed funds as of Tuesday night as HUGE LONGS.  Over 100,000 contracts long.  I know they have liquidated some since then but they are still too long so if rain develops along the front next week, we will see another round of heavy selling.  For us we would just as much assume that didn't happen as we would love to sell even more higher but again we have turned a little bearish hoping for a 10 to 15 cent rally to sell more.  In beans, the long term forecasts next week will start to be the wind in the sails for the market.  Technically, the trend remains up but we aren't that far from taking it out.

Rice - Didn't hold the bounce today.  Again, I don't think we are going anywhere and the WMP still is too high so we could see a little more weakness in that situation.  The Indian monsoon is picking up and the forecast is for the Southwest monsoon over Thailand to do the same.  We are out and have no desire to trade it right now.

Natural Gas - Up today as it balances out the oversold condition on the short term charts.  PB in August is 48% so the market is very balanced right now.  We would let the market tell us where it wants to go the next few days.

Friday July 22nd - 9:00 AM   -

Markets up over night as traders consider the recent break and the fact that the rainfall, while plentiful in the areas that didn't need it, was sparse in the areas that did.  Corn was up 3 and beans up 5.  We are again seeing funds prove they are not farmers and there are a lot of traders in here who don't have a clue what 1/2 inch rain does in front of 100 degree heat; however, I've already tried to state here that given the current situation and a forecast of 137 bu/ acre as out estimate, corn is still too high.  We may sell corn later today depending on what happens after the opening.  We will use options to get it done and probably will use a December put spread to lock in coverage.  In beans, we'll stay the course a little longer as the trend is holding.

Remember longer term forecasts are not near as hot and dry for the next 2 weeks as they have been so there is not going to be much to keep today's rally afloat except current damage in corn.  My guess is that the corn condition will improve but not very much.

Thursday July 21st - 3:00 PM   -

Bounce???  What bounce???  There wasn't any bouncing this market today as some weather forecasters are showing good rainfall headed for the Midwest.  Yes, and hell will freeze tomorrow morning.  They have been so wrong on the weather it isn't funny in fact it's tragic but never the less, here we sit and the market is telling us now, at least in corn, it doesn't care if it rains or not.  They are going to get some rain over the next week but they will have some heat first and then the weather question .  The problem here is what I have already stated in corn.  I see it still too high given the current fundamentals.  It will take more damage to the crop and odds now favor the USDA will improve the crop condition on Monday not lower it.   Even so, the beans are not made and we have a ways to go for them.  The rainfall is still not there in many areas of Illinois but it's there in other places so it makes the odds of a major crop failure less and less likely.

Let us look technically for a minute at corn and then the beans instead of talking just about the weather.  I think the market will not be surprised now if it does rain.  If you have read our comments you will recall the "perfect storm" in the market we wrote about Tuesday...gee wiz was that just last Tuesday???   Anyway, the market had a perfect bearish setup with a change in weather with a technically overbought market.  Today, the weather is in the market and we are certainly not overbought.  If you look at today technically, we stayed in the first 30 minutes range never taking out the high or the low from the start of today's market.  On the 30 minute chart, the short MA is too far from the long term MA which is where the market usually pauses for a while to allow things to balance out.  Doesn't have to happen but usually does.  The weather model all the weather men are using is still CRAP and just like it didn't rain in central Illinois the last two days, it is not going to rain very much over the next 5 days but again, who really cares if we have more than enough corn.  Look for a rally in the next two weeks to sell.  It may not be much of one but I can see a move back to the $2.55 to $2.64 level in December.  It will need some help from the conditions report to do that and a change again in the weather.  Without that, a move back over $2.50 will be about it.

Soybeans are another critter entirely.  If it turns off hot and dry again in August, it will get crazy in the beans and move sharply higher.  So anyone want to bet that's how its going to work out.  Not me.  But lets look at it technically with the idea that its too dry in certain areas and if August is hot and dry, there goes the beans.  TODAY'S LOW WAS RIGHT ON THE TREND LINE IN NOVEMBER BEANS!!!   This is huge for technicians.  We hit it and bounced off that line 12 cents.  This doesn't mean the lows are in for the time being and we are headed to the moon, what it means is the market is to a place it needs to know for certain that the crop is made before breaking down and it probably can't say that just yet.  If there is any change in weather near term, the technicals are setup to push the market back up 20 to 30 cents.  We have the setup but do we have the ignition factor to make it happen?  Don't know and its plain dangerous trading with these stupid funds who don't know a grain of corn from their claws. 

So what do we do?  We sell rallies in corn and and beans.  We also wait out this next week to see if rains have developed as the American model says.  Hey, maybe it will get it right this time!!!  I mean, it has to be right one in a hundred times doesn't it??? 

Rice - Move higher today as rice is finding it harder to go lower.  I still see a correction to $6.77 and then after that we'll wait to see how things develop with the crops here and in Thailand.  Here is quote from the Ambassador to the United States from Thailand ..."The country needs infrastructure and water support because less than 20 percent of Thailand is irrigated. Most people rely on monsoon water, which is lacking this year, Piromya said."   There is no doubt the Monsoon has dropped off but forecasts are for it to re-intensify again over the next two weeks according to the Thailand meteorology department.  If it doesn't???  Whoa buddy!!!

Natural Gas - Good break today with the market accepting value at the lower level.  We are a little over sold on short term indicators but longer term numbers are now all bearish with PB even under 50%.  The market has not broken its 9 week MA which is support at $7.20 and I would expect that level to be tested. 
 

Thursday July 21st - 8:00 AM   -

Markets sold off last night as a new line of storms works toward the East and toward the driest areas of Illinois.  If this rain holds together, we could see heavy selling today at least at the beginning of the day.  This system is moving fast so I don't see a soaking rain at all.  Markets were down 12 in beans and 4 in corn overnight.  We are wanting to sell any rally in the corn.  With the extreme heat in the Midwest, one would think we could get a bounce but if it doesn't happen today or tomorrow, we'll have to face the fact that it isn't going to happen.  Beans can still go either way so get ready for the volatility to continue.

Wednesday July 20th - 8:00 PM   -

We are a little higher here tonight with beans up 4 and corn up 1.  There is a stray storm cell moving to the southeast in Illinois just below Chicago but rainfall amounts appear to be way below expectation in total and here comes the heat.  Now we look for rain in a front that is expected to move through the central corn belt on Monday or Tuesday of next week.  Nothing has changed for us in the corn, we will sell a rally and odds are pretty good we may do it in the next two days so keep in close contact with our phone line as I will update it and give the recommendation there first.   In soybeans, I am still not willing to do anything.  A big weather forecast company, one that is not that accurate but everyone likes to listen to, today called for August to be very dry across the bean belt.  It's just too early to cash in beans but corn, that is a different story.

Wednesday July 20th - 3:30 PM   -

If you read our comments from this morning, you'll see we did get buy signals on the beans today as they took out the first 30 minute high late in the session and finished up 3 1/2 cents which is 21 1/2 cents off of the lows.  As I said yesterday, this could have been the STUPIDEST trading day yet in beans for 2005.  The rainfall in Illinois, according to Doppler, is dismal at best.  Looks like more than 90% of the northern part of the state got less then 1/2 inch.  With that said, corn finished down 6 3/4 and was only able to bounce about 5 cents off of its lows and not high enough to generate short term buy signals. 

With the heat the next few days we may see a nice bounce here in the corn and on that bounce, we want to sell.  Look for corn to test today's highs in the next two days.  If it doesn't, something is rotten in Chicago.  We'll make a decision probably on Friday as to timing for selling corn.  It will either be this Friday or we'll take our chance into early next week as to when we want to sell the corn.  The market action looks like it's saying it doesn't care anymore that it's not raining that much.  That is a sign we are probably making a top. 

Regarding corn, we have been stating here that a 137 bushel corn yield is high enough to put corn at or very near loan.  If beans have a decent crop which will be decided in August, I think we could go below loan.  The last USDA number was 145 bu. to the acre so we are talking another 500 million bushels off of the carry over at 137 which is still higher than 1.5 billion for the year end carryover.  All in all, we are too high with this type of number.  So, it all comes down to what heat we have over the next 4 to 8 days in the corn belt and then, how much damage does it really cause?  If on Monday we are seeing 100 degree temps in the Western Corn belt and we are down on the day, the market is screaming, "I don't care."

One final note as a reminder.  In 2003, corn went down while beans were rallying during the month of August.  They can and probably will do it again if the beans are gong to rally this year. 

Rice - Nice come back today from being down 14 cents.  Looks like the major selling is drying up.  There is a huge spread between the 9 week short term MA (moving Averages).  The highest I've seen in a long time.   The market maybe going to go sideways here for a while and allow things to consolidate.  A bounce of 30 cents remain possible but would be met with good selling UNLESS the monsoon in Asia starts to weaken early. 

Natural Gas - Lower today but less than 3 cents.  Market looks to be looking for buyers here but didn't find them today.  Market appears to be consolidating against support but could see another 30 cents down before major support is found.  The major trend runs through about $7.30 and the market may test that level to the downside soon.    

Wednesday July 20th - 8:00 AM   -

The "perfect storm" scenario continued overnight with beans down 12 and corn down 6.  The rain has indeed formed and radar shows a good complex of storms and rain headed across northern Iowa.  This system is further north than believed yesterday but it should catch northern Illinois and specifically Chicago later today, so a rally today is going to be hard to come by.  The question today will be where is the support for the market.  With real heat right behind this storm and some areas which were forecast to get this rain not getting any, how far can the market break before support enters.  Wherever that level is, will be MAJOR support over the next few weeks. 

I haven't changed my mind here.  We may have made THE top.  It looks like more and more that the longer term weather outlook is cooling off and getting a little bit wetter.  I will use the next rally as an opportunity to sell most of the 2005 crop.   My current yield forecast remains as 137 bu. acre but I can see that actually going back up toward 140.  That would forecast loan value for corn.

Today is going to start out real bad and what I'll be watching for is the support to enter the market and what happens after that.  Look at the first 30 minutes high as resistance.  If it is taken out later in the day, the damage from this system is done.  On the low side, the first 30 minute low won't matter that much.  It's the low that is made prior to the first 30 minute high being taken out that will really matter.  In other words, I can see the market make new lows through out the first 2 hours.  If that happens, the high of the day will be major resistance and if the market moves back and makes new highs, then and only then would it be significant for the bulls.  If there is no rally the next three days or it is very muted, then odds increase dramatically that the top is in.

Final thought, if you are a small spec, don't be playing with the futures.  Play with options and then you might think of option spreads.  THIS IS A DANGEROUS MARKET IN THE NEXT THREE DAYS!!!

Tuesday July 19th - 2:00 PM   - BIG ONE TONIGHT!!!  READ ALL 3 OF TODAY'S UPDATES CAREFULLY 

It is imperative that you read this mornings comments first for this to make sense. 

Today is what happens when technical and fundamental data combine at the exact time to point the market in the opposite direction then it has been going.  Kind of like a "perfect storm" situation.  This is going to take some time but lets get to the crux of the matter.  IF IT DOESN'T RAIN IN CENTRAL ILLINOIS IN THE NEXT FEW DAYS, TODAY WAS THE STUPIDEST TRADING DAY OF THE YEAR!!!  Now, remember, I'm long here but not in futures.  I have a cash position that I own and must hedge it but I still have a huge profit in it and will give some of it back if I'm wrong.  So I'm long, just not in a big futures position.  It is always important when you talk to someone putting out advice on the market, to ask them if they are long or short.  OK, now you know, I'm long and I didn't budge from that position today.  I may also be wrong!!!

I think Dave at WXRISK Weather said it perfectly today when he said, there is a major "forecasting problem" for weathermen the next 48 hours.  In fact, it is an understatement.  So lets start here with the fundamentals.  I explained this morning that I currently see the corn too high if we are not going to do any more damage to the corn crop AND the demand stays the same.  So let's start with these two issues.

The crop is hurt and much of the damaged crop will not come back I don't care how much it rains.  Our contacts in central Illinois say that is over for them on corn.  Nothing will help.  I know they are right; however, there is other corn fields in the belt that need a rain to fill out those ears.  Fact is rain makes grain and the lack of rain can do more damage at this point.

The second issue is demand.  I have stated that I put the corn crop at 137 bu. the acre for the national yield.  If the demand holds we have 1.5 billion bushels of corn in inventory at the end of the year; HOWEVER, what if August turns hotter than HECK!!!  Remember 2002, that run of $2.25 started August 6th and lasted four weeks.  We are on July 19th.  If the bean yield is hurt and we have to use corn to replace some of the bean meal for feed, now we have another 10 to 20 cents we can add to the corn price depending on how bad the beans are.  Yes we can also say the opposite is true.  If the dry weather of 2005 is coming to an end and August is going to be more normal in the weather department, then we should have extra meal to lower corn prices.  I agree and the point is taken.

From a technical view, I said last night and this morning that yesterday's close shouldn't have happened.  The last time that occurred, the market dropped 15 cents the next day.  Gee...it did it today as well.  Go figure.  Technically, we have balanced the entire over bought condition in corn taking out the last three trading days action.  In addition, we have come back to the trend line as the market looks to the skies for the next 48 hours.    If these showers which all the models say will form over South Dakota, moves down into the corn belt, things have changed and it's time to change ponies. 

Today's action was amplified by the overbought conditions, the technical action from yesterday, and a change in the DANG American model.  By the way, I wish they would change the name of the model.  Anything that works this badly should be made in....France!!  Anyway, all of those issues came together in one day and we sank to the trend line.  The last bastion of support for the bulls. 

So, does the rain move south or doesn't it?  It is a simple question and how you answer it will either make you thousands or cost you thousands if your in the corn business; never the less, you have to answer it.   I give it 55% odds that the rain DOES NOT MOVE SOUTH and 45% odds it DOES.  Why the difference?  Because the DANG American model has been a piece of CRAP this summer!!!  It doesn't work well with droughts but everyone wants to follow it even though it has busted so many forecasts this year.  It is usually too wet so I'm going with the European model which has done much better and it doesn't forecast that much rain moving south into the heart of the corn belt.  The third possibility is that both models may be partially right.  The rain will move south into the belt BUT there WILL NOT be very much rainfall in those clouds. 

I don't have to tell you what will happen here if it doesn't rain.  Nope, I won't have to say a thing!!!

Rice - WMP - Down 9 cents

Market continues to hold in there but the other grains were selling today so someone decided to to sell the rice with it.  Actually, this market is dead and not a good one to trade.  We're out looking for a reason to do anything here. 

Natural Gas - The up trend is still in tact and the technicals have corrected from overbought.  The market is close to its 21 day Moving Average and is still a long way away from its 9 week MA.    Support is at $7.50 and then $7.20.  OH PLEASE GIVE US $7.20...PLEASE!!!

Tuesday July 19th - 10:15 AM   - Quickie

I'm getting the calls this morning so here is a quickie as the markets are down hard.  Read our comments below as they are still the best explanation of the current situation.  I know this is tough for hedgers because we have the makings of not only a top but THE TOP!!!  I think a correction is healthy but I don't want to see a free fall especially when it hasn't even rained yet.  A classic "cut up" the participants day may be underway and that makes it tough.  So, if we close higher than where the price was at the end of the first 30 minutes today ($2.62 December Corn and $6.99 November beans) the current washout may be finished until further hard news is available.

Not that I am recommend this because I'm not but if I were to recommend anything I might think about a long August $7.00 call at 7 cents for a couple of days.  If it rains, well, there goes $400 but if it doesn't, $7.20 to $7.30 at Friday's close is not out of the question.  But if I were to recommend that which I'm not, and if I were to actually trade it which I don't really recommend, I WOULDN'T LET IT EXERCISE UNLESS WE ARE OVER $7.50 AT FRIDAY NOON, which we won't be...unless things change dramatically which I don't think they will...so there, not that I'm even recommending anything!!!!

Tuesday July 19th - 8:00 AM   -

Markets finished lower overnight with corn off 1 and beans down almost 4 cents.  That was right in the middle of a 3 cent range on corn and a 10 cent range on beans.  Yesterday's action was a little confusing with the bears winning early followed by the bulls winning and then the bears were able to take back some ground and the market ended really going no where. 

We may have come to a point where the market is going to pause or correct.  In fact, we may be coming to a place where the market is going to top.  Let's thinks about this for just a minute.  In order for this to be the top, what must occur from this point on for the the next 6 to 8 weeks?  In my mind the big thing is that the weather must improve and we need to start seeing rainfall in a more normal pattern.  In other words, when there is a chance for rain, it actually occurs. In the last 6 weeks, that has not been the case.  When they have had had the chance for rain they haven't gotten any and this condition must change.  Has it?  Well, not yet, but here comes another chance.  Some rain is forecast to develop over the northern part of the central corn belt tomorrow through Friday of this week.  Then comes a very hot weekend.  VERY HOT.  Even so, the market knows this and failed to hold the rally late yesterday which by all rights should have held.  So now we wait for the forecasted rain and the heat to move through and if there is no rain, the damage to the corn will continue and it is really getting ready to begin on the beans. 

Well that is the bullish stance, what about the bearish position.  Remember, we don't want to ignore the profit potential from the short side.  There is nice ride coming in that direction and I want to ride it BIG TIME.  In order for that to happen, we don't want to be bullish through the first half of a collapse in the market.  In 2002 we had a problem with the corn crop and at this date that year, the crop was rated 42% good to excellent which compares to 53% today.  42% verses 53%.  Obviously, this years crop is not in near as bad of condition as 2002.  That year we averaged 130 bushels to the acre.  In 2003 we averaged 143 bushels to the acre and on this date the good to excellent number was 71%.  Our current forecasted yield is 145.  Is that too high?  Well, it would appear so if the damage remains at this level.  In fact it could only get worse.  So if we bring the yields, and this is very un-scientific but you'll get the point, in line with the conditions report; this years yield would be forecasted between 135 and 140.  Using the mathematical 66% standard deviation rule we'll say 137 bu. per acre for 2005.  Assuming that yield and no change in demand, we have an ending stocks number of 1.5 billion bushels.  With that type of carry over, we should see $2.20 to $2.30 as a medium price and using a 20 cent cushion either side gives us a range of $2.45 to $2.00 as the window where the market should spend most of its time. 

Do you see the bearish point?  The current price in December is $2.69.  Bottom line is there needs to be more damage done to the supply side for this market to move sharply higher.  Right now I think we are on borrowed time but that is normal.  We could still hit $2.80 to $3.00 in December and trade all the way back into the window I described above.  The point is...we have to be ready to take the other side of this one and in a hurry.  If the rains start falling when they are supposed to, the market is going to start falling as well. 

SO....things have not changed yet and we are still in drought mode with damage continuing.  We may be at 53% good to excellent today and 45% in three weeks.  We'll ride this horse as long as we can but we have already begun planning a jump to a south bound pony when the time is right. 

Monday July 18th - 5:00 PM   -

The market put in one of those days where both the bears and bulls won or maybe I should say lost.  We ended up a little in corn and down a little in beans.  After the market closed, the USDA gave us new crop condition numbers that shows the crop still getting worse in the corn but beans held their ground with the help of Hurricane Dennis.  In general the market is watching the weather and both sides have winning information in that department today; however, tomorrow will be another day.

Technically, the corn is overbought and could correct.  Beans are still below their highs and will need more threatening weather to work higher.  The 6-10 day is warm but not that dry so we will need to watch very carefully near term.  It is a weather market and more heat next week will add a lot of fuel to the fire.

Monday July 18th - 8:00 AM   -

Markets broke off of their highs as rains developed in front of the system working through the western corn belt.  Markets should opened mixed but long term weather will dictate after the first hour or so. 

Sunday July 17th - 6:00 PM   -

Markets are higher here tonight as the weather remains hot and dry and the front moving through looks to be dry as well.  Beans are up 16 and corn is up 5 at the open.  Beans could move into new highs quickly with the long term forecasts very hot.  As we have been saying here, it is hard for there to be a tremendous amount of rainfall when the forecasts are this hot.  Tomorrows condition report will also be followed extremely close.

Friday July 15th - 6:00 PM   - Next Update Sunday night....

Markets finished higher again with corn at its highest level in over a year.  Soybeans are not sure they should be any higher given all of August ahead and two weeks away at that.  After the close two things came out, the commitment of traders report and the new 6-10 day weather forecast.  The weather forecast is very hot with normal rains but that is not likely.  Its hard to get mush above normal temps in a dome and then get average rains.  The front on Tuesday is their best chance in the next 10-14 days unless Emily turns to the north which is still possible but looking less likely. 

The COT report showed the funds long 50,000 contracts and the commercials long about 25,000.  That leaves the small spec short 75,000 and explains why we are going higher with little selling pressure.  If the funds come for it like they have in the past, they could buy another 100,000 contracts and remember, their limit has been increased.  The small spec is in trouble here and will have to flip out.  Its only the commercial who can keep a lid on the market next week and I think they will be backing up selling rallies not aggressively selling.  Looks like we go higher unless something major changes on the weather front. 

I need to work on the WASDE report and will try to do that early next week.  I'll just remind everyone, that is old news now. 

Rice - Move higher today was led by funds on the buy side.  Probably short covering.  The only news is possible Iraqi rice sales but the technical picture is probably the catalyst right now.  If you read our comments regularly you'll know we said the market was probing for a low when he PB moved below 30% and was a buy with the PB below 20%.  Now its up to 37%.  A move over 50% is a buy signal but it will take something big to move the market into buy territory.  A gap at $6.77 in September is the next objective. 

Natural Gas - There is a lot of premium being held in this market for what ever reason.  PB is at 63% which is not over bought at all so there is room to the upside but the fundamentals are not that bullish.  It may be a choppy market near term as we await more news or technical action.  Crude oil should be watched as well even though gas didn't break yesterday with the crude.  Maybe the traders knew yesterday wasn't quality selling.  I didn't know it but then no one up there is calling me and telling me anything.  Oh...and vice versa.  But then I write here for free anyway....

Friday July 15th - 8:00 AM  

Corn and beans were higher overnight with corn up 2 and beans up 3 to 5.  The overnight forecasts for Emily are ore and more in agreement that this storm will go into Mexico.  The question then is what happens to the moisture she brings into the southern pacific flow.  Based on current long term forecasts, looks like there will very little moisture of Emily getting that far north.  

The market may be struggling with a syndrome called, "buyers market denial."  OK, I made that up...but the point is we have been in a buyers market for several years and all of a sudden with four weeks of no rain and hot temperatures and the market price is moving "away" from buyers.  One of the first things that can happen is that a buyer will switch from buying to selling.  Yep, I see it all the time.  They have been buying it SO cheap that when the market moves higher the first thing they do is sell it saying, "heck at this price I'LL SELL IT!!!"   Wrong move guys!!!  The point is if we are moving from a buyers to sellers market, we will start to see less and less overhead resistance at certain points.  Look at a crude oil chart.  There is no reason for $60.00 oil based on fundamentals or chart action; however, we are in a sellers market in crude NOT a buyers market.  If we make the same transition in the grains, we will be higher than we should be.  Right now, I can make a dang good argument that we are very much lower than we should be even now. 

At this point we are not in a sellers market and I'm not sure I believe we can make such a transition this year.  We might make a try at it though and that could mean sharply higher prices in the grains in the next four week.  It all depends on the weather. 

Thursday July 14th - 2:00 PM  

Markets finished higher but off the day's highs as beans came off big mid-day.  Apparently, the American model has rain increasing with a frontal passage the middle of next week   The other models don't show that much rain so, here we go again.  The break off of the days highs was 33 cents in the beans but it closed back up 6 cents on the day and 13 off of the lows.  Makes for tough trading that's for sure.  Corn didn't break that much and still closed 5-6 cents higher which is 3 cents off of its highs. 

Technically, all system point to higher prices and if the American Model flips back saying no rain, we could move higher quickly.  Corn has broken into new highs giving us a projected move to $2.80 in December.  Today's high was $2.70 and PB is at a great level of only 62% with the break out today.  This could get crazy in the days ahead so stay close to the market.

One more thing.  Corn is far from its nine week average.  Over 20 cents which is very far for corn.  The re-buy signal is at $2.54 and the sell signal to get short is at $2.40.  WOW!!!  That is a ling way down there, so we'll have to use other technicals to generate a sell signal.  Look for volatility to continue.

Rice - Nothing out of it today.  We closed off 6 cents as selling was light but it was heavier than the buying as we closed lower.  No news is bad news for prices long term but for now the market may just stay real quiet.  PB remains at 26% which is too low to start another leg down from this level.  I think we might bounce one more time.  New lows remain very possible longer term unless things change overseas in the weather department.

Natural Gas - Emily is not going to affect production according to most models so we sold off a bit today but it didn't hold and rallied back late in the session. Crude was under heavy pressure today breaking a couple of bucks.  In fact we have sell signals tonight which are strange based on the trend and moving averages which haven't turned over.  What I think is happening is that we continue to make lower highs in the market and that has the technical picture more bearish than normally one would expect.  Let's hope the gas pulls back as well but today's break found buyers, not sellers.   

Thursday July 14th - 8:00 AM  

The corn market is setup for a gap higher break out this morning.  Last night the market finished 3 cents higher after starting the night down 2.  Beans also reversed over night and ended higher.  Maybe someone figured out Emily was nit headed to the corn belt.  With the heat on the way, even though it is not extreme, the low soil moisture level is going to take its toll and the question is when will it rain enough to stop the damage.  We are long here 100% again in cash and need to sell this rally.  $2.80 in December is our first objective and to be honest, our main objective.  I have little doubt that if we can build a real fire under corn, we are going to go too high and when we start seeing over bought indicators we will start in selling calls and then pull the trigger on sales.   Beans is another story.  In relation to time, there is a long way to go for them before damage possibilities peak. 

Wednesday July 13th - 3:00 PM  

It finally hit home today that the corn is damaged and it's going to get worse.  With Emily headed into Mexico there is not much of a chance for rainfall over the near term and we should work December toward $2.80 which has been our target for weeks.  Beans didn't hold their gains as well today but this type of back and forth is to be expected.  Corn put in a trend day up today while beans stayed within their first 60 minute high and low range.  The 6-10 day weather forecast this afternoon will be interesting.  

I want to sell this rally but am in no hurry.  $3.20 Dec corn would be just fine with me!!!

Rice - WMP down but the market had no real push lower today.  This would make it susceptible to an advance tomorrow or the next day as the sellers seem not to be showing up that much.  There is no bullish news right now to send the market a lot higher but with the grains plowing ahead and the USDA saying the rice crop isn't doing that well, we may see a nice bounce here.  I think the trade is short but there is no one to help push it lower right now.

Natural Gas - It tried to correct today but couldn't.  Market close up a little after being lower all day.  A tough one to call here but it still looks like it's not topping yet. 

Wednesday July 13th - 8:30 AM  

Markets worked off of the lows made last night early but still finish down with beans off 3 and corn down 1-2.  The market to me is showing some staying power right now which indicates that there is some irreversible damage.  Contacts in central Illinois told me last night that their corn was beyond saving from the rain from Dennis and yields will be way down.  If Monday's upcoming condition report is not a lot better, the market could work toward that $2.80 level in December we have been talking about.  This would only occur if further head and dryness continues and really starts to affect the beans even more.  Point is...its not over and we don't want to be huge shorts in here at all.  That could change in a moments notice so keep your ears to the rail near term.  A train may be coming!!!

Tuesday July 12th - 8:30 PM  - Quickie

Markets are lower over night.  Click on the 6-10 day and you'll see why.  What I want to know is why they think Emily is going to end up in the western corn belt.  I swear those guys are short the market.  Oh well, they may be right.  We'll have 48 to 96 hours of someone stepping on the breaks of any rally with this storm out there and its final resting place, unknown.  Get ready, here we go again.

Tuesday July 12th - 5:30 PM  -

Markets started lower than expected sold off but found good buying mid-morning and finished stronger with beans putting in a second Trend Day Up in a row.  Corn up 1/4 and Beans up 11.  The rain is still falling in Illinois from Dennis but its really spread out and I think traders now know there was no drought ending rain.  The question now is what happens in the weather over the next few days and into next week.  There is a new hurricane coming named Emily and it right now is on the same path as Dennis but looks to be a little further south and at a more westerly direction but who knows where she's going to go.  The fact is the corn is hurt and there is little rain coming to help.  The heat is not as strong as one might expect with a lot of damage but there is still a long way to go for both the corn and beans.

The USDA report today was only the first cut on production.  The USDA never goes out too far and I think they will cut more in August and depending on the weather, even more in September.  While I can see the corn sell off 20 cents or so, I think near term it is going to be hard to get a major sell off without a major soaking rain and time is running out for that.  We have lifted short calls and are back to a long cash position.  The good news is the basis is coming up.  An increase of 10 cents in the last 10 days.  That is still not good enough to price in cash but it could get there by the end of the month.  I think we sit sideways here for another few days looking at the weather.

Rice - WMP down 25 cents.  The S&D report was bullish but the market didn't do much with it so I guess that is in the market.  Today's drop of the WMP maybe in the market too.  We have been writing that the WMP needs to go lower and they took a chunk today.  I can see the market test the recent lows with this number but at the same time, I can see the market try to go lower and then bounce.  I'm not trading it until there is better technical action.

Natural Gas - Incredible!!  My sources tell me that the trade thinks there was more interruption with Dennis than first thought.  Certainly something is going on here.  While I think we could settle off based on fundamentals, the market is not following what is but what could be.  Another hurricane is not going to help with things and the tropics are anything but quiet so this could go on into October.  We would be buying breaks over the next few weeks if you need August protection.     

Tuesday July 12th - 8:30 AM  -

General Comment  - Corn up 1-2 and Beans up 2-3.  Report bearish, weather bullish.

Two factors today.  The weather over Illinois and the new USDA numbers on WASDE.  We will update our WASDE page in the next few days but going into today I see the numbers as a little bearish corn because the average trade guess on carry over was around 2.175 billion and it came in at 2.240 billion.  I knew yesterday it was going to be hard to get a bullish number out of this report.  The USDA is very slow to put in damage.  I'll write more about that in the WASDE report later this week.

The rice report...Well its just plain bullish to me.  We'll see what the trade thinks but the USDA dropped carry over by 6 million cwts and 5 1/2 were in long grain. 

On the weather front, a look at radar shows all the rain all over Illinois.  The problem is that there is no real rainfall in these storms.  Doppler totals are for the most part under 1/2 inch.  The other side of the coin is that the rain is going to stay there for another 36 hours but it looks like the rain is starting to pull back to the southern area of the low which will mean no more rain for the driest parts of Illinois after another 12 hours. 

Even with the bearish number in corn, the weather will be the over riding factor.  Markets should open up on the day given the current overall picture.  It could be another wild day today even though yesterday was a trend day UP which would forecast the high and low to be made in the first 30 minutes. 

Monday July 11th - 2:00 PM  -

General Comment  -

Both the beans and corn came back to close respectable but they certainly didn't reverse any damage done to the bulls enthusiasm.  Yes it wasn't a bad close but we are still way off of the highs and the feeling of impending loss from dry conditions is gone.  The bears looked at today and said, "if we don't them win one, they'll quit playing."   Actually, today was a trend day UP in the beans and corn.  Tomorrow may be a consolidation day as everyone tries to settle down after a wild week in the market.

Tonight there are several things to remember as we try and keep our heads while others are losing theirs.  Let's start with bulls who need something to hang onto tonight.  First, it's July 11th and we have a long way to go.  The bull move of 2003 started August 11th and went for $2.75.  It started at $5.22 and we are currently at $7.01.  I'm not saying we are going to have a move like that again but I just want to point out, this season is far from over.  Second,  the rainfall from Dennis has to be somewhat disappointing right now.    Thirdly, there appears to be damage and it may be irreversible.  Tonight's USDA crop reports will help with that assessment.   

Major resistance for beans is at $7.33 and a close over this price is bullish.  In corn, December needs to close over $2.56 which is 10 cents away.  Odds are not that high of this occurring but I must admit, the market should have gone lower on all this rain in the corn then it has.  We are still 16 cents off of the lows about 10 days ago.  That is interesting.

Rice - PB is back to being balances.  We could rally another 10 to 20 cents but I still expect a stab at the lows in the next few weeks.  The one thing to mention here is that the monsoon in India is weakening.   This could have an affect on the Southwest Monsoon which feeds the Thailand crops.  We'll keep an eye on it just in case.

Natural Gas - Another surprising day.  There wasn't near the damage with Dennis to the offshore platforms but with a new Tropical Depression in the Atlantic, the market could hold the sell off today.  We need crude under $58.00 to get gas headed for $7.00.  What a tough one to call much less trade.

Monday Morning July 11th - 7:00 AM  -

General Comment  -

Markets opened 18 lower in beans and 8 lower in corn but finished well off of those lows as the market stabilized.  Beans finished down 5 and corn down 3 for the overnight session.  Rain is falling in southern Illinois and should over the next two days.  Doesn't look like Northern Illinois is going to get much so not all the dry areas are going to get rain.  The other thing that will be discussed is irreversible damage to some of the corn crop.  Today's trading session will be very interesting as we may see a "sell the rumor buy the fact" type trade as well.  I wouldn't be too surprised to see the first rally attempt of any kind fail.

Sunday Night July 10th - 7:35 PM  -

General Comment  -

Market had opened 18 lower in beans and 8 lower in corn.  We may stabilize overnight and find some support but it could still be a hard night down in the beans and corn.  Forecasts are calling for rains into Illinois and right now it looks like Dennis will lose is punch quickly but then stall over the southern Ohio and Tennessee Valley's.    In general, Dennis will not only do a number on Florida but also the grain markets as it has gone right where it needs to, to end the current weather market.   It could get real bad later tonight as buyers may be very much on a wait and see attitude while sellers want protection NOW!!!

We'll look at things again tomorrow morning and see how the night went and also by then we may have a better picture as to the moisture sweeping north as Dennis dies...and good riddance!!!

Friday July 8th - 7:30 PM  -

General Comment  -

There is little reason to comment here any further.  We will update the path page above later tonight when we get a discussion from the Nation Hurricane Center as to their thoughts on direction.  We play the waiting game now.  

Friday July 8th - 3:00 PM  -

General Comment  -

Once again a tough weekend.  Thoughts come to me like, "The answer is blowing in the wind" and "its like a ship without a rudder."  In any event, we are going through the weekend with a little protection and extremely nervous.  Once we know where its going then we will start asking the questions, how much rain are they going to get.  In general, we are going to watch and wait and then get agressi9ve in the market once we know the facts.  I like weather markets but I hate hurricane markets. 

Corn finished down 7 with beans off 19 1/2 in November.  If things have changed and there is little rain headed for the Mid-west Sunday night....lookout!!!  On the other hand, it things are still looking good for terrific rains in the Mid-west...lookout!!!  Sunday night I expect a sharp move higher or a sharp move lower but it won't be unchanged.  If it is, there is something really strange going on.

Friday July 8th - 1:30 PM  -

General Comment  -

Quick comment, the new path page show that the UK has changed to the easterly path.  This is no big thing as I said last night this has to happen and will soon.  At issue now is where the hurricane takes a more northerly track and that could be 12 to 24 hours or it could be later this afternoon.  I will update the hurricane path page about every update.   As far as the market goes, we bounced off of the lows at the end but traders in Chicago believe its going to rain and they sold it hard.  Sunday night, we will either open sharply higher or sharply lower.  The good news is we are about to be rid of this Hurricane weather market and have a much better idea of what is going to happen when next we are trading the market.

Friday July 8th - 11:00 AM  -

General Comment  -

Markets remain under pressure as forecasts call for Dennis to run to the driest areas of the corn belt.  All the forecasters are pointing out that the forecast is a totally unknown situation but the storm does seem to be on track to run into the middle of the corn belt or central Illinois about Tuesday.  A LOT CAN CHANGE but we are down hard in trading and for us, we want no futures on over this weekend.  We have already put on options and now will sit back and wait things out. 

Friday July 8th - 6:00 AM  -

General Comment  -

Concerns continue that Hurricane Dennis is going to provide the rain needed for the Mid-west to save their crop.  The market finish lower in the over night session with corn off 4 cents and beans down 14 cents.  If anything, the overnight conditions on the storm and the forecast for the Hurricane are unchanged but I have a full explanation and charts on the Hurricane Path page so look at it there. 

Once again we face a major decision on a Friday afternoon.  We could come in Monday morning and find Dennis heading way off to the east with no chance of rain for the Mid-west or we might find Dennis will be heading right into the central part of the corn belt.  Again I'm not a weather man so we ask, where is the risk?  To me it's to be in the market in anyway too large with the conditions the way they are.  If this thing turns north sooner than expected, we are going to see a mass run for the market, assuming we don't have a change in the "normal weather" forecasts.  (Oh give me the NORMAL weather days)  What is so tough is that normally weather changes over 24 hours while here we are changing every 3 hours and I do mean changing back and forth based on the "fix" of the center of the hurricane. 

With that said, we are going home tonight in option spreads on about 35% of our sales.  The only thing we can do is protect ourselves for the weekend and then look at things next week.  What happens to this market A.D. (after Dennis) is going to be based on what happens in the rain fall department but also, the longer term forecasts for August in the bean belt.  It is a tough call but the risk is there even though at this point, I think Dennis is going to be east of the current forecasted position. 

Thursday July 7th - 8:00 PM  -

General Comment  -

Markets are lower here at the start as one of the models (GFDL) has flipped the remnants of Dennis back to the West.  The other Models won't update for while. As I write this corn is down 3 and beans are down 10 in the over night session.  I think this is off of the current position of the storm which shows a more western movement then Northern movement and could indicate a wobble has occurred.  The runs over night will be big as to the direction of the market.  One thing I will say, of all the models GFDL has flip flopped the most so this could be short term prediction.  Again...who knows. 

It will be hard to push the market much lower with so many models still pointing a more easterly path.  Those models will run later in the morning so here we go again....  

Thursday July 7th - 2:00 PM  -

General Comment  -

OK...Let's be honest as one of my best friends would say, as of now, I don't have a clue.  The market is out of control with big players pushing it back and forth based on the current wind outside their door.  As of this writing, Hurricane Dennis, which is a pain in the neck to say the least, has a path that is hard to follow.  The newest advisory takes the storm east and could actually end up hitting Florida's west coast.  Who knows.  For now, they are saying the Florida panhandle but THEY DON'T REALLY KNOW!!!

The market is now in a situation where even the traders are praying that they have it in the right direction.  For me, I'm not going to blow smoke, the next 24 hours will tell us a lot and if tonight's run puts the storm back on tract for the Alabama, Mississippi coastline, we could see a repeat of what happened last night. 

Here is the one thing I do believe.  If it wasn't for Hurricane Dennis, corn would have made new highs today and probably would have closed up 8 to 10 cents.  If this Hurricane is out of the picture for the Mid-west, the market will move sharply higher with the longer term forecasts as they currently are.  If Dennis moves into the Mid-West, then the markets will fall BIG TIME!!!

Place your bets...

Here is another interesting point, we have never seen a weather damage bull move in this years action NOT ONCE!!!  The market is continuing to trade with a weather scare approach instead of a damaged crop problem.  I think we were about to trade that way when along came Dennis. 

One more comment, I have had several people, including my friends in Chicago, talking about the drought year of 1988 and the similarity of this drought year.  Tom Skillings, one of the big TV weather men in Chicago,  keeps talking about how much alike they look.  While I can see that in the weather, I can't see it in the market.  In 1988, we had a 4.2 BILLION bushel carryover in corn which dropped by almost 3 billion bushels that year because of the cut in production.  Going into this year,  we have 2.1 billion so a cut of similar production would create a huge rationing problem.  Second, in 1988 we started a major rally on May 15th that went from 2.25 to $3.46 by the second week of July.  That is a move $1.21 cents higher.  This year, we started a rally on May 16th that has covered a whole 26 cents to today's close...Yep!!!  26 cents.  Only 31 cents from low to high of this move.  Our move started at $2.14.  Go figure!!!  We have 2 billion bushels less corn than we did in 1988 and the price was still higher than today when we have half as much corn.  How things have changed and not for the better.  Here is the point.  IF we come through Dennis with no rain and it stays dry for another 10 days, this market is EXTREMELY undervalued. 

ON THE THE HAND....If it rains and rains big, we are overvalued.  It all comes down to the next 48 hours and the direction of the wind!!!!

Thursday July 7th - 12:00 PM  -

General Comment  -

The new forecast is in and it takes Dennis way to the east and misses the entire corn belt.  If this is right, the market could explode in the later going today and into tonight's market.  Hang on...the ride is going to get crazy.

Thursday July 7th - 11:30 AM  -

General Comment  -

I have no comment...except incredible.   We are up right now about 2 cents.  If we take out the contract high, hold on to your hats.  Beans are now 23 cents off of their lows.  Right now, we are watching and staying as neutral as we can.  Good luck to you  guys trying to trade it.  I think one minute charts are working pretty good.  Nope, I'm trading on them.

Thursday July 7th - 7:30 AM  -

General Comment  -

Quite a bit to talk about this morning.  Extreme selling overnight with soybeans off 28 and corn down 10.  I don't expect the grains to open that low.

Two things having an impact.  First, one of the weather models now has Dennis pouring in the rain into the heart of the driest areas in the Mid-west.  Is it right???  Who knows but it is the model that the market will be looking at and talking about.  I have a feeling it's not right but it may be partially right.  Dennis is a huge Hurricane this morning and I think it grew much faster than expected.  Second, the bombings overnight in London will send the US securities market into a tale spin right off the bat.  We could see the 10,000 level broken if we get a panic going on the sell side.  Also, this could push the dollar higher.  Remember, the English Pound is not part of the Euro money system so it may have little affect.  In over night trading the dollar is actually a little lower but I could see that reverse later today.  Bottom line is that we may see huge selling today in the grains because of the selling in everything else.  Remember the phrase "flight to quality" because that is what you'll see today.

On the hurricane, here is what to look for this morning.  The MRF model has Hurricane Dennis going in at Pensacola or the extreme eastern portion of yesterday's projected track.  The last European model showed it going in WEST of New Orleans.   You would think that the more easterly track would keep the rain out of the Mid-west but it is the opposite. The American model has the all the rain moving right into the heart of Illinois with 2 to 4 inches of rain.  In order for this to happen, the hurricane must turn north and clip the western portion of Cuba.  We'll see what the new European model says and have another update here at 11 AM this morning.  This type of whipsaw action is hard to trade and for us, its very painful in the fact that we exited hedges and now have to deal with the current unknowns in the market.  For now, we are going to stay out and let things try to settle down.  If the rains don't show in Illinois easly next week,

Wednesday July 6th - 3:00 PM  -

General Comment  -

Beans today were down 18 cents in November while December corn was unchanged.  When was the last time we saw that?  I don't have a clue but today showed how much of a surprise the crop condition report was that came out last night.  Tonight's session will be interesting but in my opinion, IF beans head back up tomorrow, corn will shoot higher.  I think corn is still undervalued with the crop condition this bad and another 5 to 7 days of dry weather ahead.  Will the Hurricane dump rain on the Mid-west.  Hard to say but one weather model says yes and another says no.  If is doesn't rain and the current 6-10 and 14 day models are correct, we are going to see widespread damage and it's not even August yet.  August is when the beans will need the moisture or they won't fill out.  

Sell signals tomorrow in December corn are at $2.41 with a sell signal in November beans now at $6.96.  This is a pivot point sell signal which means you sell on a close under the price and buy it back if it closes back over it.  Yep, a setup for whipsaw but that is how the system works.  Another way to trade it is if we trade down to $7.00 in beans, buy a 700 call and a 700 put or what is called a straddle. 

Wednesday July 6th - 7:00 AM  -

General Comment  -

Corn held its ground overnight as beans backed off 6 cents.  The sell signal in November beans is down at $6.94 with the market trading at $7.22 at the overnight close.  $7.15 is minor support today.  PB has turn all up in corn and beans as you would expect with a huge day up yesterday.  While not a trend day higher, we did close higher than the first 30 minute high and the limit price stopped any chance of a trend day higher in beans.  Same thing in corn.  This morning, the key is yesterday's highs.  If we take them out we could see some heavy buying enter the market especially in the corn if we go through $2.57.   If that happens $2,80 is the objective.

Weather conditions this morning are still hotter and dryer with the damage already starting to show up in the corn as we said last night in our comments.  All eyes will now move to hurricane Dennis and the forecasts for its moisture as it enter the US.  This mornings track shows Dennis going into New Orleans next Monday about 6 AM and it looks to be a major hurricane.  From there it tracks north into Arkansas where it plays out and the moisture is peeled off by the blocking high which keeps the rain out of the Midwest area. 

From here, what will the forecasts do with this storm?  In other words, the next few days will be filled with more and more models about this hurricane and where it will hit and the area it will affect.  So once again, we will be trading weather forecasts instead of current conditions.  I expect breaks to be well supported unless we see a major shift the current weather forecast.  It's going to be really tough in the days ahead as we see new forecasts. 

Tuesday July 5th - 8:10 PM  -

General Comment  -

Looking over the crop conditions I must admit I am stunned at the numbers in corn.  They have dropped the whole corn crop condition to 62% good to excellent which is down from last years number at this time of 73% and we are now only 11% over the lowest number in the last 15 years.  This type of decline is not what I expected and explains why we rallied so hard today.  Poor to very poor is up to 13% and that is just 2% off of the highest percentage in the last 15 years.  THAT IS STUNNING!!!!   Soybeans is off the highest percentage in the poor to very poor by 3%.  Heck, that means there is more damage to corn in relationship than soybeans.  Let me say again....I AM STUNNED!!!    

As of tonight, we started higher but the market has run out of buying for now.  As I write this November is down 1 cent in beans and corn is off 1/2 cent in December.  The markets started higher and have run into selling.  Maybe the question for tomorrow and the next few days is hurricane Dennis.  How did we get Dennis again so quickly, we just had a tropical storm Dennis six years ago...I think!!!  They are picking on us poor Dennis guys out here.  Anyway, where will it go and where will it's moisture go.  According to our weatherman, he says the moisture will not go into the Mid-west but stay south held out by a high pressure dome.  If he is right, and the 6-10 day is right, the damage for the crops is going to get worse.  If it wasn't for this threat to busting the drought, I would expect the markets even higher tonight.  What can I say except, it's not going to be easy.

We have gone to the sidelines and must admit, we are turning back bullish given these numbers tonight which I think are STUNNING!!!   We will buy breaks near term and watch the market for other signs of a top but now, it will take a general rain and a solid forecast for even more to finish off this move.  If December can make new highs, it should work toward $2.80.  Soybeans should challenge their recent high if nothing else develops to stop this dry spell.  When the heat gets here...there will be a mass run for the market IF no rain is approaching.     

Tuesday July 5th - 6:00 PM  -

General Comment  -

Markets held there gains today and the reports this afternoon show a decrease in the overall condition of the crop.  The corn is against recent highs and needs to take them out and soon or fund liquidation could start again.  For now, we are out and looking for the market to advance a little more as the weather still looks to be in favor of the bulls for right now with no rain in sight.  We'll see if the market consolidates in the night trade or advances a little more on the crop condition reports.  Another update tonight at 9.

Tuesday July 5th - 12:00 PM  -

General Comment  -

WOW!!!  I have a rule, when a market does something it shouldn't do, get out, get out....get out!!!!  The lack of selling with corn up 12 cents was over whelming and we have lifted all short positions in the market.  I want nothing exposed except cash crops right now as there is little reason for corn to get this high with no one selling unless there is more problems than we now know.  We are going to have to rest with our finger right back on the trigger here but another push toward the $2.80 level in December corn is possible IF we are going to experience major heat.  It appears that Dennis will go inland and head toward Kansas but if it veers to the east, it could put a bucket of water in the face for this rally.  It is going to be very hard here and I can already feel the whip saw feeling in my bones.  I hate these type's of markets. 

One thing I'm not going to be is too proud to admit I'm wrong.  We didn't make a mistake, we made the best decision we could based on the market as of last Friday; however, something has changed and the market is telling us that, at least right now it is.  Remember, the higher it goes, the farther it will probably fall and very fast when the time comes so be ready.  Let's hope it is from a lot higher level than where we are now.

My final point is this, why is corn up 16 and beans not locked the limit???  I must admit, that bothers me a great deal.  We'll see how it closes, look at the 6-10 and other forecasts and have another update here late this afternoon.  I'm thinking either corn backs off or beans goes on back toward limit up before the close.

Monday July 4th - 9:30 PM  -

General Comment  -

The rains are not that heavy and the market is higher but off their highs in the night trade with beans up 3 after being up 14 and corn up 2 to 3 cents after being up 5 1/2.  When I saw the market move to up over 4 cents in corn, I thought this is a gift but for the beans, I don't know.  Here is my concern on the corn market going a lot higher.  There is no real heat.  It is possible that the heat comes back and the longer term forecasts have that as a possibility so the beans could have problems.  The corn is a different story.  There is only one area that is having problems and yes it's an important area.  The fact is we have so much corn left over from last year that even if we cut 500 million off of the carryover, $2.40 December corn is too high.  The market could easily fall to $2.10 before we bottom out and that assumes a 500 million to 1 billion bushel cut which I don't think is very likely.  It's the beans that is the wild card here.  They could still climb to over $8.00 IF it turns hotter and dryer later this month into August.  It's not over for them yet.  Yes I know corn could rally if the beans are hurt real bad but that is what it would take.  A real big cut in bean production.

You guys in the North, remember, we start cutting corn THIS WEEK!!!  Almost all of my subscribers are in South Texas and we are starting to harvest wet corn right now with the bulk of harvest starting in two weeks or so.  This is why we have pushed sales to 50% in corn and may get to 75% again tomorrow by selling more calls and maybe even selling some futures.  It is not going to be easy pulling the trigger but we have to do it, so get ready.  You in the North have longer to go so there is more time to start getting hedged but we would still recommend selling something at these levels just based on the fundamentals.  On the beans, we are 20% sold in cash and looking for a place to sell some calls longer term but for now, let's keep where we are.  The best way to double your money in this market, is to fold it and put it back in your pocket.  A move under $6.71 in November beans is really bad news.

Friday July 1st - 2:00 PM  -

General Comment  -

"Place your bets everyone, place your bets!!!"  That was the cry from the floor of the grain pits today as everyone settles in for the long weekend.  The market finished higher in a rather dull day with beans up 18 and corn up 3 to 4 cents.  Weather forecasts, if anything, are drier going into this weekend with rain not expected now to be that high over the weekend but with chances of rain coming in on Tuesday and Wednesday.  I don't have to say what happens if it rains or doesn't, anyone can figure that out.

We decided to go home short at 50% in the corn with the drier forecast.  We have a mix of futures and short calls, so we'll take our chances with that.  We have no position in beans for the weekend and in the cash we are 20% sold.  Next Monday will tell the story and we will be prepared for either direction.  More than likely, unless the longer term forecasts turn back extremely hot and dry, we will be selling more next week no matter what the outcome of the weather.  That's it for now as we will enjoy the weekend and look at the radar every once in a while.

Rice - PB still at 17% and deliveries have almost worked out the July situation so I expect a bounce next week.  I'm not bullish so a good bounce should be sold.

Natural Gas - Higher today as Crude exploded right back up and closed over $2.50 higher.  And I thought beans were bad to trade right now.  We are looking to sell as the volatility in crude is indicative of a top but it won't come easy.

Friday July 1st - 8:00 AM  -

General Comment  -

Another bounce over night as the market recoils from another break yesterday.  No doubt the chart shows too steep of a down ward trend in beans and if the weather can give any push at all, we could see a good bounce toward out original correction price of $7.15 in November.  For corn, it will be a real struggle to bounce very far but a 5 to cent bounce is still possible.

Today is "D" day for us in the corn as we want to push the envelope on sales on a rally.  We are just over 50% sold and if the rally from last night can come over into today's session we'll go home this weekend about 75% sold in corn.  Of that, 45% is in futures and 30% is in short calls.  Those calls will become futures sales on a good rally IF we can get after the 4th.  In soybeans, we don't want to be long as we we want to get some sales on the books here on a bounce.  We've recommended cash sales in the beans several days ago and want to advance sales on a good bounce.  We aren't even 25% sold here but the situation remains different between beans and corn as there is still a long way to go for the beans.  Even so, we want to sell rallies here as well and we'll get to 50% sold if we can get back over the $7.15 level. 

If you haven't done so yet, click on the 6-10 day forecast.  It is wetter and cooler than the last few forecasts; however, one forecast is not enough to indicate that things are indeed changing.