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Friday June 25th -
General Comment - Options expired today
with the July beans ending right at the $9.20 strike price. Corn
finished on its highs as it bounces back from the over sold condition.
Next weeks acres reports will be the next major factor affecting
direction. Weather remains cool and wet but some forecasts are
showing hot and dry conditions possible in July. This could bring
in the scare we have been talking about and some additional weather
premium. Cash marketers should not sell unless they have to as the
basis (in Texas anyway) has really dropped.
Rice - Follow through to the upside
today may be confirming the correction is underway. Rice doesn't
usually make a "V" bottom so expect some attempt to check the recent
lows again in the future. I look for a low here before the
Arkansas harvest begins. By the way, depending on options trade
today. We are set to have about 300 new shorts and 130 new longs
based on the close tonight. Open interest was still high in the
July at 1700. I think we need to get into deliveries before this
market will show us how it intends to finish off the last contract of
the great bull move of 2003-2004.
Wednesday June 23rd -
General Comment - Nice move up in
grains as ideas that it's too early to pound the market much lower
surfaced. Well DAH!!! Next weeks reports will have a real
impact on the market as well as we see acres planted numbers from NASS.
Those great surveyors of production data. What they know about the
subject could fit on a pin head. No, I didn't say they were a
bunch of pin heads, you just thought that all by yourself. Anyway,
look for the market to start settling into a trading zone waiting for
those numbers. We could still move around quite a bit in front of
those numbers but the long term outlook will certainly be adjusted by
the numbers, right or wrong.
Rice - Well it is worse than I ever
thought it would get but then again, I'm not that surprised. Like
I said, a good one to watch unless your short. More liquidation
and fund selling hit the market. We might have seen open interest
go up today but there was apparently some fairly good buying at the
lows. This could signal a corrective bounce to consolidate the
losses of the last few days. If we are lower in the morning and
higher in the afternoon, selling may dry up a bit but again it's the
long-term picture we like, not the short-term outlook.
One more thing, options expire at noon on Friday and
there would have been about 300 new longs added with the price action of
the last few days but some of the selling has been to close out call
options. Coming into today's trade, call options going into the
money this week were down to 130. If we see additional selling
today of the calls in July, we may be nearing an end to the selling
here. I might trade it lightly in the days ahead but I'll wait and
see how the market responds and the open interest numbers published
tonight. Of course, there is a planted acres report from NASS for
rice as well next week so only experienced traders and those who are
really watching the market should even consider trading here near term.
That's all I'm doing, considering!!!
Tuesday June 22nd -
General Comment - As expected from last
nights crop conditions, additional selling hit the market today and
right now the market is convinced that a record crop is on the way.
Is it right? The market is always right!!! Or is it? The
answer is absolutely wrong. The market is not always right it's
just always the market and right or wrong, it determines the price of
corn, beans, rice, etc... I learned a long time ago to never go
against the market even when its wrong. For now, traders should
wait this break out and start looking out two to three weeks. Once
the market slows down and volume dries up, I want to buy calls for one
more weather scare. We will use that bounce, how ever big, to get
more cash corn sold. Long term, we want to store corn for the
demand market that will surface later this year into next as demand will
be at an all time record pace. Read our
long-term outlook again and
remember we are in the supply side of the 2004 crop year. It's
violent, uncertain, and breaks many a producer who wants to trade it.
The real money can be made in the demand cycle of the year. That
is several months away.
Rice - Good condition reports sent rice
sharply lower. July is eating up its open interest but it is still
too high so any chance of a squeeze will be limited to the last few days
of the contracts life. Its fun to WATCH!!! Long term, we
will see demand be higher this next year and world prices will also be
higher. The market is just sizing up the supply side of the
market.
Cattle - We may be getting ready to
sell some cattle futures. A close under 85.75 in August sets up a
move to 76 cents. 88.30 would be the place for the stop. If
the market is closing lower tomorrow, odds favor a hard break and short
sales.
Monday June 21st -
General Comment - The crop condition
report tonight is friendly beans and bearish corn. Many thought
the corn would see lower conditions numbers after all the rain but it
was unchanged. They did drop the condition of the beans.
There was a reversal up today in the corn but it was low volume.
We will see what the market gives us tomorrow in the way of follow
through. Beans rallied nicely and we will see if they can hold the
gains. I still see the chances of a weather scare later in July
but there is sure no signs of one right now.
Rice - Open interest in July is too
high and maybe getting higher as there are 300 puts vs. 110 calls in the
980 and 10.00 strike prices. Sellers of puts are in serious danger
of owning long futures instead of options. If there can be a
squeeze it will come after the options expire. I think offs are
against it but this is a strange market.
Cattle - Hard to say. I thought
we would be higher today and even did the trade we told you about last
Friday under the weekly comments. It made a whole 20 points so
after commission, it was a push. Tomorrow, I may go with the
market if it takes out today's highs or sell the market if it takes out
today's lows; however, more than likely, I'm not going to anything here.
I can see it 200 higher or 200 lower over the next week.
Friday June 18th -
General Comment - The markets slipped
lower today as we head into another weekend with no real weather
problems to be concerned about. We should start probing for a
bottom in the corn and the beans over the next two weeks. Another
7 cents down in corn is likely and I'm not sure about the beans target
right now. Will we get another weather scare this year?
I'm betting on it but again it may be a scare only and then a small one.
If we have a huge crop, say 11.3 billion bushels in corn or so, we can
see December corn in the $2.50 range but at that level it becomes a long
term buy as demand will be huge this next year. We are 50% sold in
corn and beans for cash sales only, we have sold some calls for
selective hedgers and for strict cash sellers using futures until March
of next year we remain out of the market.
Rice - I'm out and have been for many
weeks. Today's crash in July rice sets up the expiration of July
to be more exciting. There are 280 puts that become short
contracts between the $10.00 and $9.80 puts. 195 of them at the
$10.00 strike price alone. This could bring in additional selling
as the sellers of puts would have long positions if the market stays
down here. There is little on the cash front to change anything so
if there is going to be a rally its going to come at the last minute.
Again, that is a big IF.
Thursday June 17th -
General Comment - As I said last night,
the bounce on Wednesday meant nothing. Today's action continues to
indicate selling in control. I see the market lower into next week
or at least not a lot higher. Once we get past July 4th, things
may start to change. Down side risk is another 10 cents with an
out side shot at 15 lower over the next two weeks. Soybeans will
follow in the new crop. Old crop July could see some fireworks
heading into deliveries.
Rice - Nothing new here. I see
the market sideways for a while.
Wednesday June 16th - From Montreal Canada
General Comment - There are more
weather men arguing about rain for the next ten days and that has the
market going back and forth but just a little. Fact remains, rain
makes grain and the more it rains the less likely of a major weather
problem long term; however, root systems are not going to be a fully
developed as in a normal year as the wet conditions keeps the roots
nearer the surface. I still see a good weather scare later but it
might be a month from now. Near term, we may see the corn and
beans stabilize waiting for further yield forecasts. The little
bounce back today means nothing
Rice - Near term looks dead as July
options expire. After that, things may get interesting but I'm not
sure about that either. According to US census reports, our
exports are on schedule to go over about 8 million cwts. in the long
grain. I've given up on the USDA as they are not going to put out
numbers indicating a lower USDA carryover number.
Tuesday June 15th....
Finally got a connection. Should be able
to update tomorrow night as well.
General Comment - Perfect crop
conditions in last nights condition reports has the market factoring in
a record crop. Odds are in their favor right now but my guess is
that a weather scare will occur about 3 to 4 weeks from now and things
will explode right back to the upside. We remain 50% sold in cash
at harvest and wish we had gotten to 67%. We may add some
positions but for now nothing new to recommend. I sold 310 Dec
calls last week and they are working as expected. I plan on buying
them back in when the market starts to level off and dryer weather
forecasts show up with some certainty.
(On Monday June 14th, we sold 50% of the cash corn
and beans with futures sales of $2.90 in December and $6.62 in November
beans.) This recommendation was made on our mid-morning tape.
Thursday June 10th -
Cattle
- Nothing like being wrong and making a nice profit.
(If you don't know what's happening here, read Monday, Tuesday and
Wednesday night's comments.) We took off our trade today with a
400 point profit as cattle fell to new lows. I expected to be
stopped out with only a 150 point winner but the market gave me a gift.
OK...I've been here before and they will want it back. For now,
I'm out and will watch the market as it begins topping or consolidating
for another push higher. I'm not sure which.
General Comments - Today's S&D report
was not that bearish but the corn collapsed under heavy liquidation.
Rain makes grain and I would say the market is now trading that way.
If you look back at our comments you will see we warned of a time when
the market would go through a "perfect season" outlook as we transition
from too wet to to dry. I think there will be one major scare in
the next 6 weeks and I want to sell that rally big time. .
Soybeans - As we pointed out last
night, there are really two markets here, old crop and new crop.
Today proved that to be true. I thought today would be a good day
trading session but again the day trading signals failed and there was
nothing to hang our hats on. New crop will follow the weather and
old crop will be following demand in China. I'm out waiting for a
reason to own.
Corn - The S&D report was a big
nothing. In fact, I thought it might be a little supportive since
nothing changed. The trade felt differently and the market
collapsed under the "rain makes grain" mantra from corn traders.
Liquidation appeared to be the feature of the day. The good news
is things are acting like they should. I do not like corn going up
when its raining. That is un-natural in June. It appears we
have gotten things in the right order and rain, while hurting some, will
be considered bearish. This means we are in the process of
pre-paring for a scare later this summer.
Today's action, in front of a three-day weekend,
indicates lower prices the first of next week unless there is a major
shift in weather. I sold December 310 calls today to take some of
the pressure off of long cash positions. Nothing would make me
happier than to be able to exercise those later this year but, I doubt
that happens unless the weather turns very hot and very dry, very fast.
Rice - Still working out excessive open
interest. No reason to trade here at all.
Wednesday June 9th -
Cattle
- Well, we got close to taking out a 400 point profit.
We are short at 91.25 in August but just missed it. (If you don't
know what's happening here, read Monday and Tuesday night's comments.)
My stop is at $89.75 and my guess it is it will be hit tomorrow.
That is OK, the trade was a quick one and worked well. The
fundamentals are still bullish here so I look for a hard top when it
does occur. By the way, I'm not saying it is not occurring as we
speak but I don't think we can know for sure for a while.
General Comments - Tomorrow's S&D
report will shape the markets for a few days. I don't expect a
major surprise but then that is when they happen. We will comment
on the report first thing in the morning.
Soybeans - Old crop and new crop on
two entirely different pages. We are trading the July still in
day-trader mode. Today wasn't a good day and neither was yesterday
as we head into report day tomorrow. Old crop looks likes it wants
to go higher if there is no surprise in the report so put a gun to my
head I'd be long the old crop going into the report. New
crop is reacting for the first time like rain makes grain instead of
rain means dead soybeans. That is a good sign. Read corn
comments...
Corn - This morning we started to hear
comments as if the market was going down today because it looked like
more rain. This is a good sign. Over the past several weeks
we have heard most people talk about rain means re-planting, lower
yields and such. Now, if dry weather becomes a major forecasted
event, we should be set up for a weather premium rally. If it
turns off hot and dry in July and into August, heaven help us all.
I still see a good rally here later this summer unless its just perfect
weather into Mid August. The report tomorrow will set the tome
near term but I don't expect a major surprise.
Rice - Still working out excessive open
interest. No reason to trade here at all.
Tuesday June 8th -
Cattle
- NOW THIS WAS FUN!!!! Read our comments from
last night...It pays sometime to read this column every morning and it
was too easy today. Sold cattle on the open and took home a 250
point profit. We have not stopped the selling in the cattle so
look for a lower start again tomorrow. I'll put a stop in to lock
in a 150 point profit worse case. I'll take a 400 point profit out
of the trade if I get it tomorrow or Thursday.
General Comment -
The weather battle will continue with again rain forecasts all over the
place for the next few days. Heavy rain is forecast by some with
hit and miss showers by others. For corn and beans, the
worry has to be too shallow of roots but once again, we must go from too
wet to perfect to too dry in order to really get a sharp move higher.
Soybeans - We rallied today but sold
off from the $8.70 resistance point. I still can see a move back
to $8.80 and fairly soon. We are still over sold. I still
want to day trade but today wasn't a good one for that. The market
is try to determine direction.
Corn - The sell off today may set up
further collapse; however, weather forecasts are starting to put more
rain in the Midwest for Thursday through next Monday. With the
three day weekend ahead, it is going to be a long one for traders of
corn.
Rice - The rally has stalled.
Open interest is still too high in the July in my opinion as we need
more liquidation. A move over $10.27 would be a good sign we are
again headed for the $10.50 level. But we may travel that far in a
few minutes if $10.27 is taken out. This is going to be very
hard to trade. By the way, my experience with July is it is all
bark with no bite. This year may be different but then again, it
may be nothing at all.
Monday June 7th -
Cattle
- I'm selling August cattle tomorrow. This is a simple
trade. I'm selling it on the open and putting a stop at Today's highs on
a close only basis. Why? Look at the chart and you will see
a spike in the August cattle contract. It is not a reversal but it
is a warning and can be seen on many charts over the years as a topping
signal. It shows that the market is rejecting a price level while
the market is extremely over bought.
General Comment -
It didn't rain and as expected the market went down for the new crop
months and corn; however, as we said Friday night, the buyers were still
active and weather it rained or not they would continue to buy and they
did. The buying has been stopped as of tonight but we got another
great rally today and a great day trading session. Tomorrow, my
guess is it will be a little slower as we wait on new weather forecasts
but then, this market has not stopped and rested very much over the last
few months.
Soybeans - The correction up in beans
is not over; however, I can see the market pausing right here for a day
or two. I think July beans wants to go higher and buyers are
hoping they get some bearish news to help provide selling for them to
buy into. If that selling doesn't show, we could rally toward the
$8.80 level fairly fast.
Corn - Rain makes grain. As I
wrote several weeks ago, I don't like bull markets led by wet weather.
We need to go from too wet to too dry in order to drive the market
higher on supply concerns. A move down to $2.80 in the July
remains possible if the weather turns off perfect for the rest of the
summer. I doubt that happens but then there is always a first
time.
Rice - We may see a rally here near
term as the market has turned back up today. With open interest on
the decline, we may see some short covering ahead of deliveries.
This is a scary market to trade. If your going to trade it, you
must be prepared for wild swings and dramatic changes in your financial
position. I can see a sharp rally here or a sharp move up and then
a sharper move down. It will not be easy to trade.
Friday June 4th -
General Comment -
Read last nights comments and you will have my ideas going into this
weekend. If it rains and the market is lower on Monday, we know
the time has come to test the lows. If it rains and the market
works sharply higher on Monday, we will be looking for a chance to sell
it. The bottom-line is simple. Without rain, this market
will go down. Its the summer and soon the rain will stop and the
markets will go lower.
Soybeans - I liked the trade here today
but again it was perfect day trading action. At the end of the
day, the market made new highs and backed off just a little before the
close. This tells me we are about to see a correction up in the
beans as the buyer were still in control at the end looking to buy the
July. Rain or no rain, the pressure will be for a bounce here. How
much of one is too hard to tell. I'm going to keep on day trading.
Rice - Open interest remains too high
for July. It needs to come down some and then we will be set up
for a sharp rally.
Thursday June 3rd -
General Comment -
Well I'm confused. What a mess!!! Our weather forecaster has
been singing the dry story for several days until last night. He
flipped to too wet!!! Oh my gosh, I though this is quite a change
for him to flip flop over to the other camp but every once in a while
they have to be right too so here is one of those times. WRONG!!!
The American model flipped as well over to a hot and dry forecast while
the others flipped to too wet. This morning, here comes the bears
out of the woodwork selling the futures like it was a the July "Plague"
futures instead of July Corn futures. (Hmm...that would be an
interesting futures contract to trade.) Anyway, I was so confused
last night, I didn't even write a comment. Tonight, well, I'm
still confused and decided I'd tell you I don't have a clue. How
do these forecasts flip over like this, I don't know; however, the last
time this happened was last Thursday, exactly one week ago when the
markets sold off in front of a forecasted dry and hot Memorial weekend.
What happened Tuesday??? Straight up when it was wet, wet, and even
wetter.
Here is the bottom-line: This is exactly what
happened last week and our guy was right, so:
If he is right - Monday will see the markets open
sharply higher to limit-locked and stay there all day. This time
they won't sell back off. The market will have to price in more
problems and will be slow to sell off again.
Both forecasts are right to some extent - (Its
neither too wet or too dry). Then the market will turn higher
because it expects a very dry and hot weekend. Then it will wait
for new forecasts for the next week but all-in-all we should see higher
prices.
If he is dead wrong - Monday will be a day of
additional pressure and corn will head back toward the $2.90 level in
July and beans will head for $7.60. (I'm still day trading here.)
As I said before, I'm not a weather man. I pay
someone to do that for me and so far he's been the man. I may go
home long tomorrow night in some options IF he holds to his guns and it
sure sounds like he will right now.
Rice - Open Interest in July continues
to drop but is not low enough to fuel the big run up in prices I expect
later this month. I'm still out but watching closely. What
level of open interest am I looking for? Hey, I'm not telling you
all of my secrets. I'll buy the market first and then I'll tell
you and the rest of the world!!!
Monday June 1st -
General Comment -
What a day. It is very rare to see all the markets limit up on the
same day but there for a while that is what we had. Is it too wet?
Yep. For now!!! The problem is the carry-over stock levels
are so low traders cannot take the chance that there will be yield
reductions in corn and soybeans. My guess, it we will go from too
wet to to too dry. That transition will see the market correct for
about 1 to 2 weeks and then we will look for a buy signal. I'm
still day trading beans, although never got a chance today, and want to
sell more corn on this rally. When do we see the correction?
According to my weather man, this week will be wet and then the faucet
is turned off. The Southeast United States is already starting to
show the affects. If the dominate high over that area hooks up
with the high in the Rockies...OH MY GOSH!!! By the way that is a
huge IF!!
Rice - I'll wait to talk to traders
tonight before making a comment here. I think the July/Sep spread
may be closing near term based on the price action today. I'm out
and not trading it for now.
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