Market Commentary

Past Updates...  Click here for Archived Updates Prior to July 1st, 2006 -   

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Monday July 31st -

Corn - The rally today is based on heat for the next few days and the damage or condition report this afternoon being lower.  We will sell this rally and soon.  The downside is not that great but could be 20 cents in a big down draft of later selling.  One thing I like is the chart shows a very steep down trend line that needs to be corrected.  This could allow for more of a rally if the heat and conditions allow.  Even so, the down side from here is limited longer term and we want to be buyers on a major break.  If you are a big bear in this market...you are living extremely dangerously. 

We sold what we couldn't store at higher levels and will wait to buy anything we can back on bottoming signals.  That could come earlier than in years past.  

Soybeans - We will sell a rally here.  One thing about beans, it will take a major problem to get them a lot higher near term. 

Wheat - We remain long a little and the market did ok today.  I like long wheat short corn for a few more cents.

Rice - Boring... Nothing to really talk about here.  Texas yields seem to be coming in big but acres are way down so the average should be higher.  No reason for the market to move higher right now so look for nothing to happen here near term.  Down moves remain possible and should be bought but again, there is no real hurry.  We aren't missing anything yet.

Cattle - Building some support here.  We are not that bearish but could see some down drafts if corn and meal catch fire which we highly doubt now.

Natural Gas - WOW!!!  Our call options are working very well and now we have to ask how high can it go?  Let me get back to you on that!!!  For now, breaks have to bought and I see NG getting crazy. 

Dow - A nothing day so no changes in our ideas...read last weeks comments.

Friday July 28th -

Corn - I covered shorts in the spec account yesterday thinking we would bounce and we did at first but then the buying dried up.  The market finished a little lower as no real selling came in to push it down.  Remember, a market goes because buying is more aggressive than the selling.  Today neither was aggressive and we ended a very featureless day a little lower.  I remain in the bear camp until proven wrong.  Even so, the trend is very steep and I can see a bounce here over the next few days and I would sell a bounce.  Longer term, nothing has changed, we want to own this market but from a lower level.

Soybeans - Next 10 days should tell the story.  The weather forecast is supportive right now with uncertainty.  Once that is gone, we should sell off and make new lows.

Wheat - Nothing new here.  I still see the market against support with a rally possible near term.  .

Rice - The market may be trying to accept this value for rice which would open the door for a test of the $9.30 level.  There is no big reason for rice to rally right now.  Longer term yes, but near term we may see it lower which will be a great buying opportunity. 

Natural Gas - It is now a weather market.  The heat will bring about more demand but I doubt that sustains the market longer term.  Once we get into Mid-August, we may start seeing those tropical storm and hurricane threats start to happen.  I remain long call spreads but would add on breaks.

Dow - So much for the reversal down day yesterday.  Good strength today and good fundamentals indicates we can test the 11,500 level.  No change in our longer term outlook as we see the market struggling against the highs.  

Thursday July 27th -

Corn - OK...today was a key reversal up.  The market looked bad this morning in light of hot weather and that should have brought in more selling.  It didn't and we got a reversal.  At the close there was little selling which tells me the selling may have dried up from the funds for now.  This sets up a bounce for tomorrow.  What the market knows and has factored in is the hot weather for a few days and then rainfall coming back into the corn belt.  With beans down and wheat sideways in a consolidation day, corn should not have reversed.  So, we covered all spec shorts going into the close.  We are not lifting any hedge shorts since they are a hedge but if you are short, there may be a few day rally coming. 

Soybeans - Lower move again today with little sign of sustained heat to damage the bean crop.  We remain in the bear camp but wanting to sell strength not weakness. 

Wheat - Interesting day...it was consolidation day as the market paused its downward thrust for now.  I look for December to rally and find its resistance point again.  We day traded long early this morning and then got another buy going into the closing 5 minutes.  Our stop is under $4.02 for now.  If corn can bounce, wheat may find buyers as well.

Rice - Hook reversal up here too.  Market failed to go lower after yesterday's action so no follow through sets up the market to rally back to the $9.60 to $9.70 level.  I don't see any reason to get in a hurry here as breaks like yesterday can happen again.  I want to buy more rice but am glad to wait on the market.

Natural Gas - Looks like the buying has dried up for now.  The gas report was not bearish as we had a draw down instead of an influx of gas last week.  I want to buy a break and look for the market to go down to find support over the next few days. 

Dow - After climbing close to our main resistance point of 11,200, the market pulled back.  As I write this it is up 6 points but it has been lower.  If it closes lower, we will have a reversal in the Dow.  Tomorrow will be interesting.

Wednesday July 26th -

Corn - The heat dome is not setting up fast enough or even looking strong enough to move this market higher right now.  Bounces should be sold from this price level.  No real downside target but $2.40 in Dec seems reasonable; however, the trend line is very steep so a bounce from the $2.50 level would be in order.  For us, nothing has changed.  This is a good market to walk away from for a while if you have been trading it a lot.  We sold it right and will probably sell any rally until we get in Mid to Late August.

Soybeans - Nothing new here either...we still see it lower with some rallies that can be sold. 

Wheat - Market gave up today as bulls not willing to set through a correction headed for the exits.  Right after the open we told subscribers that wheat had targeted $4.04 for the buy point and sure enough, that is where it went.  No I didn't sell it and no I am not buying it yet either.  I do not like to pick bottoms and with the corn and beans under pressure and maybe more pressure tomorrow, why should wheat bounce???  So, we will wait for a buy signal and we will give it to our wheat farmers who subscribe as soon as we have it. 

Rice - Well now...WMP up 8 cents and the futures break 26 cents.  Go figure!!!  Please read our comments from Sunday night as we warned traders not to get too long where they couldn't ride a 40 to 50 cent break.  Today's action shows us how fast things can roll over.  With that said, we bought in 10% on the break today and actually went home with a profit on that.  I may not be in this new 10% very long and retreat back to my 50% long safety level but I still ask, where is it going???  As harvest starts, there is going to be a slug of rice on the market but farmers will be very slow to let go of it as the price is not above breakeven.  We want to store as much as we can and certainly the mills have to know now, there is no way farmers can stay in business at this level.   Major support is at $9.20 and then $9.00.  Make sure you can ride such a break.

Natural Gas - Well heck...no break to buy back in and at the close we had major buy signals.  This does not indicate a major bull move, it indicates that the short side of this game is now over.  Near term we could bounce very strongly into September and Mid- October...then we will want to be short...so near term, if you need coverage...buy any pull back.  We are long the call spreads as we have written about below and will ride a storm scare to take profits.

Dow - As we said last night, we can work higher near term.  We want to sell this rally but it could last a bit longer.  Nothing has changed in our longer term outlook.

Tuesday July 25th -

Corn - Market tried to go up today but the selling was apparent all day.  We sold more just after the open in our spec account and will exit it on a good buy signal.  It could happen at higher levels with something out there to cause the market to run higher...right now I see that possibility as being limited. 

I want to be clear here.  Near term...next 4 to 6 weeks, the market may grind lower and then we may see a sideways consolidation start to occur.  Longer-term, we still see the market working higher as the demand is going to be extremely strong.  We have sold what we had to sell and plan on storing the rest.  If you have sold what you cannot store and are looking for buy backs with options and/or futures, look to buy it back lower.  LDP should also be in play near term, why I don't know but look for it to work higher once this last weather scare falls apart...yes, I assume that it does.  

Soybeans - Market looked strong at the open but faded all day long.  Near term weather can still affect the market big time; however, it is a golden selling opportunity.  I am not ready to predict how low beans can go but if yield exceed trend line by any amount, $5.50 to $5.60 is going to be very possible. 

Wheat - This break is good for us.  We are out of the futures and long cash wanting to buy a break and we are getting it.  I will be looking to buy around $4.10 tomorrow early in the day and later in the day I will switch down to $4.08.  On the upside, a move through $4.20 will signal a buy but after today, I'm not really expecting it.  As I said last night, today was a pointing day and it sure points lower as of the close. (Read last night's comments)

Rice - WMP up 8 cents...WMP today so the market was very quiet.  I don't know why that happens but it does.  Seems the market ignores WMP anyway or does it?  Last week the WMP was up 17 cents and the market closed at $9.66 on Tuesday.  Today the market closed at $9.65...yep, it doesn't pay much attention to it, does it!!!  Well, at least not now.  Also, starting next week, the WMP will come out at 7 AM on Wednesdays...

Natural Gas - Profit taking day??  Yep...no reason not to pull it in as nothing looks to be happening on the low pressure area currently over Northern Mexico.  If that low comes over the gulf...it will strengthen rapidly but for now it looks to be working right up the coastline with heavy rainfall expected over the next several days.  So, no storm yet...we'll add right back if we can get another 20 to 30 cents down.

Dow - Nothing today...we could still work higher near term.  We want to sell this bounce.

Monday July 24th -

Corn - The chart shows how over sold this one is but the bounce today had nothing in it.  We could easily run up another 10 cents but that would be a selling opportunity.  We remain in the bear camp for now realizing a dome of high pressure over the eastern corn and bean belt in the next three weeks could light a fire under all the grains.  I doubt it happens but it could.  Instead of betting on that happening, we will maintain the idea to sell rallies.

We did have an LDP today here in Texas at 4 cents...DO NOT LOCK THAT IN!!!  Look for more over the next 6 to 8 weeks...assuming the USDA keeps using the basis that they are...don't get it but we'll take it!!!

Soybeans - Higher today but with no zing!!!  We'll sell a rally if we can get more comfortable with the idea of not August heat problems for the bean growing areas. 

Wheat - Same comment as last Friday... "No change in my opinion.  There is no reason for a major bull move right now with the other grains getting hammered.  We will buy breaks but not get crazy long." 

I might add that one of our systems closed today setting up a direction day tomorrow.  This will be interesting to see if it develops.  I am not going to trade it but the direction of the close, if large enough, points the direction of the market.  Here is where I say...TRADING FUTURES CAN BE VERY DANGEROUS AND PAST PERFORMANCE IS NO INDICATION OF FUTURE PERFORMANCE...in other words, you could lose money trading this. 

Rice - Very small trading action today.  I can see this market in either direction short term but as we have been saying, over the longer-term, the market is poised to work higher.

Natural Gas - Well now...a small depression in the gulf??  It sure looks like one is trying to get it together.  We will take profit's on this one fairly fast.   

Dow - No change in our thought process.  This bounce could run to the 11,200 level; however, the market is stalling in this level and when the FED comes in with another rate hike, the market will test major support again.  I still see multiples well under 20 before the lows are in.   

Sunday July 23rd -

Corn - Last week we went from long to short and sold on any corn needing to be sold over the next 6 to 8 weeks.  Turned out to be the right decision but one that still makes me nervous.  The COT report on Friday was just plain bearish.  Funds are way too long so look for a move lower to be fueled by selling.  In other words, the market looks to be able to go lower easier than going higher. 

In the over night trade tonight, corn is down 1 1/2 to 2 cents as I write this.  I expect there to be an LDP in south Texas in the morning.  I have no idea why since the cash market is 30 cents over loan....makes no sense.  In any event, we start the week still firmly in the bearish camp and it is going to take a big change for us to switch near term.  Longer term, this is a great buying opportunity but there could be another 15 to 20 cents down in the corn before its time to go long.  Look for the market to get too low before the low comes. 

Soybeans - I still see it lower.  Saturday's 6-10 was hot and dry but today's is hot and wet...Give it time, it will flip back a couple of times before we get finished with the next 10 days.  Even so, there is no reason for this market to rally without a major weather problem.  

Wheat - No change in my opinion.  There is no reason for a major bull move right now with the other grains getting hammered.  We will buy breaks but not get crazy long.

Rice - Nothing new...we will buy breaks or buy it higher.  Market is moving higher when it normally goes lower.  That is good but remember, this is a small market and can get pushed around.  Do not get over extended.  Make sure you can ride a break of 40 to 50 cents.

Natural Gas - We have found another level of support but in the past they have not held.  We are long some calls but just because we think the market is cheap in light of a gulf hurricane scare.  I think one is coming.

Cattle - Cattle on feed was bearish on Friday...look for the market to start weak.  We'll see where support comes in but for now, we think this one can move lower over the next few weeks.

DOW - Nothing new from us.  We think the market is going lower; however, it is going to go down very begrudgingly.   

Thursday July 20th-

Corn - Consolidating at this level is not good news.  I see the market lower but it may have a bounce IF beans can get something going.  The weather market is about over and there is nothing out there to even hint at problems with soybeans.  In any event, the market is setup to sell rallies and that is what we'll do...if we get the chance.  We have sold 100% of necessary sales for the next 60 days and buyers of corn should wait for lower prices before buying coverage.  

Soybeans - Just not trading it...I see it lower but a weather scare could still materialize for beans. 

Wheat - We remain long and will buy breaks or good buy signals.  We are not long big in the futures; however, if you read this site regularly, you will know we are long all the cash we can store.  We are looking for some risk on the downside to put some hedges back on but nothing close right now.

Rice - Sideways as harvest begins.  Nothing to get too excited about...we will buy breaks if we can get one.

Natural Gas - More upside today as the market looks like it may have found a low for now.  We are long call spreads and will buy more on a good buy signal.

Cattle - Market worked back lower today...we are not trading it yet as we have no real direction indication from our system.

DOW - Who knows...near term we see it back and forth but Bernanke's comment of no recession may be believable to some...but not to us.  I give it 20% odds.  We will trade it from lower levels as we cannot get bullish at this level...at least not yet.

Wednesday July 18th-

Corn - Spike Low today????  Well, it was a spike for sure and I think the low today could hold for a few days.  IT will be interesting to see what the open interest does.  This formation is called a hammer head and it usually points to higher prices.  We would wait to sell anything further to see if we can get a bounce to sell more.  The gap this morning, had it held, would have set the market to work toward $2.35 in the December but that chart objective is gone with the wind before it ever got established.  For now, we'll still sell a rally but only for the short term.

Soybeans - Just not trading it...I see it lower but a weather scare could still materialize for beans. 

Wheat - We bought a very small amount of wheat yesterday and today there was no follow through at all.  A move back over $4.15 would confirm the original buy signal and today's low establishes a sell point.  We still like wheat to move higher but there are going to be some of these down drafts.

Rice - We gained a bit here with the WMP but what I really liked is that we tried to go lower earlier in the day and found nothing but buyers.  This sets us up to go  ahead and move another 20 cents higher or so as we will pull away from this buying level.  We remain long.

Natural Gas - Corrective bounce today but no sign of a major low.  We are still 4 weeks from the start of the real heart of storm season.

Cattle - Read last night...today the market moved away from the sell point and no positions were established.  Tomorrow will be interesting if the corn can bounce some more.

DOW - Big move higher as fools rush where angles fear to tread.  We'll sell this bounce but there is no rush.  As I said last night, 11,050 is  next resistance and then 11,200.  This is one interesting market...by the way, a move over 11,285 tells me I am wrong and would setup a test of the highs.

Tuesday July 18th-

Corn - Follow through selling today as the market started a little higher and then sold off.  While a bounce is possible here near term, the weather is just not threatening enough to keep old crop sellers away from the market.  Sell a bounce here is my only advice and hopefully we will get another one.  I have enjoyed the break the last two days as a natural bear it's like putting on an old set of shoes.  Problem is, this old set of shoes is going to go right back on the shelf once the harvest break is done.  Longer term, we like the market but picking the buy point is going to be a challenge.  For now we are 100% sold on anything that has to be sold over the next 30 to 60 days and we will sell rallies.

Soybeans - Just not trading it...I see it lower but a weather scare could still materialize for beans. 

Wheat - We got a turn to day and we liked it for a long swing trade.  We are not long in a big way but anyone needing buying coverage should be in here long.

Rice - WMP up 17 cents  - Don't expect this to translate to the futures up 17 tomorrow but I would expect a little support from the number today.  Cash prices are going higher right now in the south and that is exactly what we expected given the coverage already taken by some mills and the producers intentions to store almost 100% of the coming crop.  Combines will start very soon here in Texas.  We are 50% long and wanting a break to buy other wise, we'll buy it higher when we can do so on their money.  Long term, this market must be higher to buy in acres in 2007.  That isn't going to happen at this level.

Natural Gas - Follow through selling with new lows for the move.  We came very close to buying more calls but didn't.  I expect a low in the next few days that will act as an intermediate low.  It could come from 30 to 40 cents lower in the September contract.  Without a hurricane or even a storm, the fundamentals are so bearish here, under $5.00 is logical; however, there will be a storm and it will have an affect.  Stay the course for now and lets see just how cheap we can buy it. 

Cattle - More down today even with corn off 5 cents.  The reversal down set us up to sell the close today.  We will get major sell signals with a close 40 points lower so for now we will wade in and get 25% established on the short side.   If corn could get one more weather bounce, we could see a quick 200 point break here.

DOW - Key reversal up today with the market setup to test 10,875 tomorrow and then 11,050.  We think any bounce here should be sold as the bad news is not finished at all for the stock market. 

Monday July 17th-

Corn - We pulled all calls today right after the open and went into full hedge mode as the market looks to be finished for weather scare number 2...can we mount weather scare number 3???  For us the time is now to get locked in on positions that must be established over the next 6 to 8 weeks.  If you are speculating, that is one thing but for producers who have corn in the field that they will must sell and cannot store, its time to ring the register and then see what happens as we head into the first of August.  We can always buy it back.      

Soybeans - As I said Saturday, there is no way I am trading this market in a long position.  So far there has been no weather scare in the beans and today's market indicates there is little chance of one happening over the next 10 days.  I see no reason to sell beans for hedgers because we are below loan right now and have the LDP for protection.   I am day trading only here and so far that has been the right call.

Wheat - Read Saturday's comments.  This break should be bought but we will be patient.  The close under $3.95 may bring more selling in September.

Rice - Back and forth...we still own 50% and that is all we want on for now...it's a nice base position.

Natural Gas - Huge break today...looking at the fundamentals, this one should really be lower; however, we are on the wrong side of the weather curve to crash and burn.  One storm in the gulf will make some people crazy.  We are are going to buy some more options on this break.

Cattle - Showed its hand today as the market sold off with corn down.  Look for more downside pressure here near term.

DOW - Another close under 10,800 but staying above the major 10,700 support zone.  Looks like it is accepting value.  Sell a bounce here but with the events overseas like they are, if the peace returns to the middle east then a big bounce is likely...but not for long!!!

Saturday July 15th-

Corn - It is Saturday afternoon and it is hot in the western corn belt.  It should stay hot for the next 7 days with the next real rain chance a week from tomorrow.  The weather charts out today say about the same thing that the charts said yesterday and that is after this week, things are going to cool off and rain chances will improve.  Monday afternoon's crop condition report will be watched very closely as we can assume the number will be much lower a week from Monday after this next week.  If we do not rally in the first few days of next week, the forecast had better change later in the week to take out the rain or we will move lower.  As we have been saying, the whole crop is not in trouble so it is going to take a real problem in a major production area to move the corn sharply higher...time is running out.  If we sell off early this week while it is 98 in central Iowa...it is time to hedge some of the crop for 2006.

Soybeans - No scare for the beans with the eastern belt almost in perfect condition; however, it's not August yet and there is a long way to go.  I'm day trading this one and not everyday. 

Wheat - The break last week put PB under 50%...that is not a sell signal by itself and no sell signal was generated.  We are close enough to the point where the charts go negative to actually buy the market and place a stop on the selling point.  I can see a break here but not much of one.  I like this one higher longer term.

Rice - Up 20 cents today and I don't know why other than the sellers were not in the game.  We remain long wanting to buy breaks and trying figure this one out. 

Natural Gas - We remain long a little here with option spreads and will add on a break.   

Cattle - Tough one to play with the corn trading directly opposite and we have a good sized position in there already.  We are out for now watching the corn.

DOW - PB is at 29% after yesterday and the Dow really doesn't like being under 30%.  The last time it was under 30 was in June on the break to10,700.  Before that, October 13th, 2005 when it hit 10,196 and a 26% PB number.  All of that to say the market has a higher tilt even today but that tilt may be changing.  In any event, I would not be surprised to see a bounce out of here but it will take some good news.  As I type this on Saturday, there is certainly none in the middle east.  If 10,700 is taken out and a test of 10,200 is likely in the longer term.   

Friday July 14th-

Comment - I will come back later this weekend with linger comments...today's action is typical with a weather market like we have.  At this point, there is a large portion of the corn crop NOT in trouble.  That is going to moderate the move higher...longer term, I have little doubt that the market will he higher so I want to buy a good break.  We have spec money in here now on weather problems and they need to sell if there is no problem or the scare ends...I just would remind everyone, damage is not over when corn tassels.  We'll check weather later today and forecasts tomorrow and come back with full update tomorrow afternoon.

Thursday July 13th-

Corn - We moved all positions to calls today and then hedged the delta on an intraday sell signal to protect ourselves from the rain for tonight.  As I type this, the market is down 4 cents on top of the 4 we made in the hedge but I have just lifted that hedge entirely and am back long 55% all in calls.  Looking at the radar tonight, it looks wet in Iowa but I've seen this before and guys, they are not getting that much rain.  If it turn 100 degrees behind this in the next few days, goodbye moisture.  Could this be the end of the second weather rally of 2006???  Yes, but I am not a believer yet.  Right now the market is going up on hot and dry and selling off on wet...when it doesn't do what it should...it will have told us the direction.  I will be going through the weekend long unless the market is sharply lower tomorrow and right now, I don't see that when the market closes at 1:15 tomorrow...

Remember, the western corn belt is huge but right now, it appears to be the only area with a problem and the rest of the country seems to be doing very well.  Let's not get too focus in on one area and ignore the rest of the country.

Soybeans - Nothing new here...we are day trading only and until the beans see weather as a real problem, I'm still saying corn is not going to move much higher than its current high for the year.

Wheat - Major rain coming for the wheat area...not much and not when you consider the heat coming.  Market is too low here tonight, I am buying in the over night market.

Rice - Market can still correct a lot and not violate the uptrend.  The sales number this morning was horrible but so was every other commodity except wheat.  July 4th is a big holiday so I doubt it means that much.  We will still buy breaks.

Natural Gas - We bought some calls here today but lightly...at this price it has to be lightly.  Buy breaks but use option spreads as your vehicle.

Cattle - Stopped out with a 20 point gain and now we'll see how it does against the gap and against corn if it starts higher with the coming heat. 

DOW - 10,800 is the number for the bulls to defend...let's see if they do.  As of now I am doubting it big time but I do see things changing.  The interest rates are no longer the main problem dragging the economy, it is the consumer losing his buying power with this inflation situation growing and it is now starting to roar through different industries.  I expect a washout with the energy markets moving higher and get ready for some other commodities to put pressure on it as well. 

Wednesday July 12th-Be sure to read all of our comments from this morning as well!!! 

Corn - What a day!!!   Let's start with the USDA numbers.  Carryover dropped even though acres increased by 1.4 million acres and the yield stayed the same!!!  Think about that.  Demand is growing and more and more this is not your father's market.  The report was bullish and if we see a 5 bushel drop per acre in the national average yield, we could be under 650 million bushels.  Think about that and then realize soybean carry over is going to be 560 million bushels???  Is it possible for there to be fewer bushels of corn than beans????  Just the thought should scare corn bears to death.

Now, let's talk weather...I don't have a clue so that was easy!!!  Actually, we provide the links on our home page but here you go (6-10 day).  Take a look and then you can also  see they have moderated the heat and bring more rain into the 10 to 14 day out look.  We'll see if that happens.

What do we do???  Here is the main thing...do not get crazy bullish here!!!  Several people have already told me they were stopped out on the corn break and don't have the ability to re-enter.  Here is my main suggestion...do not add more long positions that will raise your average price more than a 30 cent break could be handled.  If you are 50% long adding 10% here or on breaks may be OK but then wait for price appreciation (if it is going to happen) before adding any more and then again, follow the same rule.  With this volatility, under no circumstances should you have more than 33% of your account value tied up in margins.  Here's why...with a $300 margin a 33% number gives you $600 of cushion per contract which is 12 cents.  That is a very real possible move in a matter of days or even hours should the weather really change.  Will it?  Don't know, all I know is that your leverage is extremely high with a $300 margin and markets moving like this.   

So with all of that said, we are 55% long tonight after buying the dip and we are working right at the 25% of total the account value in futures which gives us the ability to buy breaks like today.  Money management will be the key to the game near term. 

Soybeans - Well, we just can't get the beans to gain any more traction here.  Maybe it is South America selling but for what ever reason, the market can not close higher on the day and near the highs.

The USDA report was friendly but some commented on the cash market being weaker in their forecast...OK, give me a break.  Who cares what the USDA says cash bean prices are going to be?  They know this year but they are terrible forecasters of basis levels.  All in all, the market could rally sharply IF THERE IS A WEATHER SCARE IN BEAN LAND!!  That is a big IF!!  For now, we are day trading only and today, well, it didn't work so well!!!  The market wants to go down and until something changes, there will be heaviness in the market. 

Wheat - Corrective break today after the big run yesterday.  I wasn't surprised.  PB in wheat is 63% so it is still in buy mode indicating to buy breaks and there is no technical reason to be on the sell side.

Rice - Report wasn't that bad.  China added 17 million Metric Tons which is about 14% of their yearly consumption.  It buys them a year or two but I just don't see anything that bearish here.  We remain ling 50% and still want to buy breaks but we are glad for it to move on higher into a break out before we buy a break.     

Natural Gas - We are looking at some October call spreads.  It's about time as I don't see them getting much cheaper.  We may do some tomorrow.   

Cattle - Still short here.  A move under $83.20 in August should propel the market lower near term but the gap overhead could be closed as well.  The corn market may have some impact on the direction in cattle the next few days.  We will not risk a short position here for very long since we are long corn and these two markets are working in opposite directions.   

DOW - I said several days ago to look for the Dow under 11,000.  It did it today.  A move under 10,800 will send some long time bulls for cover.  Even so, I am not ready to say we will do that real soon...but we could.  We are out looking to buy this break.

Wednesday July 12th- 10 AM   MARKET NOT RESPONDING AS EXPECTED

Comment- The report this morning was bullish but we have uncovered profit taking and it has setup a corrective day in corn and beans.  The weather has not changed but there are some saying the damage from the current forecast will not lower yields and when all is said and done yields will be higher on a national average...are they right??? Who knows.  What I do know is that when a market does this, it can be extremely volatile and you must make sure you are not over extended in a futures position.  This is why we have been only 50% long wanting to buy more positions on their money not ours.  Beans could test $6.20 in the Nov by the end of the day.  Corn should find buyers 2 to 4 lower.  It all depends on profit taking activity.  This is Wednesday and a corrective day would not be that bad for the bulls...just be careful...that is the main point today. 

Wednesday July 12th- 8 AM   USDA REPORT IS BULLISH

Comment- OK...there is nothing bearish in the numbers this morning and that includes the revision of rice stocks in China.  It is hard not to get extremely bullish with the weather pattern looking like it does...today could be one of those incredible days...

Corn - Carry over set at 1.077 Billion Bu. compared to last months 1.091 and the trade's estimate of 1.257.  This is bullish big time because if we cut the yield now by 5 bushels per acre...the carry over is under 650 million bushels and that would be tightest stocks to use ratio I have ever seen.  Market should be sharply higher on the open...weather will be the focus after 30 minutes today.

Beans - Report is bullish but not in a big way...beans could follow corn and wheat higher...it will be interesting to see if the selling we have experienced on higher opens shows back up today after these numbers.  Trade was expecting 586 on the carry over and it came in at 560.

Wheat - Called 1 to 2 higher.  It will probably spike higher after the open with corn but yesterday's big run may temper the action here.

Rice - They increased China's inventory by 17 million metric tons...that is not that bad as it just gives them another year of supply without importing form Vietnam or Thailand.  As expected they cut the US carryover down to 14 million cwts in the long grain...no reason for a sell off here but if someone wants to push it down this morning, I'll be glad to buy it lower.

Tuesday July 11th- USDA REPORT TOMORROW MORNING

Comment- No reason to have major comments tonight with the USDA report in the morning.  I'll have an update here by 8:30 with an opening call.  In general, the report will be traded for about 15 minutes and then we'll go back to weather UNLESS there is a real shocker.  I think rice is probably the one that could have a real surprise.

Wheat really took off today with major buy signals...we are long 100% in the cash and have no reason to change that position.  We wanted to buy the market at $4.25 (read last night) but we chose to await the USDA report first...a decision we may regret.  We'll re-look at wheat after the numbers in the morning and assume a "buy a break" for anyone needing to buy wheat.

Nothing new in any of the other markets...watching Natural Gas very close for a reason to buy some calls...

Monday July 10th-

Corn - Having fun yet???  The weather dome of 2006 is going to establish itself over the next few days and now we start the process of waiting to see if damage occurs.  It is very important at this stage to recognize the difference between scare and damage.  So far this is just a scare.  The corn has not been hurt in any of the major growing areas so a change in forecasts is a change in fortunes at this point.  Technical indicators are useless right now but if you want to know, they are long and suggesting to buy breaks.  We sold some of our corn in the high risk account today near the highs and then bought it back near the close.  For us, there is currently more risk out than in.  The weather system cutting across Iowa does not appear to be dropping that much rain and the longer term forecasts remain dry; however, it still comes down to the fact that we need damage to the crop in an area that can affect the national average by 5 to 10 bushels to send the market substantially higher in the short term.  We remain 50% long the base position and like trading it with our finger on the trigger.  We will buy more if the market starts to indicate damage.         

Soybeans - I would like to see the beans rally more than they have so far.  The USDA numbers Wednesday will be more bullish than last time but that is in the market.  If the dome of high pressure starts to leak off more to the east then is currently forecast, we could see some moderate fireworks here.  The thing is, if beans go higher, corn will really go higher.  As long as the beans find selling, I think the corn market will be held down a bit but even so, corn could easily challenge the highs without beans participating. 

Wheat - $4.25 is the buy point in December wheat.  Could happen tomorrow but we would like some confirmation of the buy signal so we will probably wait on the USDA report before getting too long here.  A small position is OK for the report but we won't be in big. 

Rice - Down 4 today with the USDA report hanging over the markets head.  As I wrote last week, the USDA is going to be changing the world supply number and I'll bet you it won't be a bullish change.  It is what it it is but apparently, they don't really know so they are basing the numbers on a perception.  In other words, China is not acting like they have that little of rice so they must not so let's increase the supply.  Sounds logical for the government doesn't it?

Natural Gas - Moved up from $5.50 today and we are looking at some tropical waves no forming. $5.76 is the buy point tomorrow.  PB is 33% after today so we are in that buy zone on a reversal but I'm not sure we will get it.  Still, a call option now is looking really good. 

Cattle - We sold on the open this morning.  I would like confirmation here which could come tomorrow by taking out today's lows.  A move back over 85 and we'll take the small loss and get out.  If you are bullish corn but don't want to take the risk, sell cattle as they appear to be opposites right now.

DOW - Nothing new from me here.  Dow was up 80 and as I type this, it's up 2.  I still see a move under 11,000 and then a possible test of 10,200 in the longer term. 

Friday July 7th-

Corn - The American Weather Model (AWM) came through again as it always seems to do and flipped back to rain for July 10-12th in the driest part of the corn belt.  Most forecasts are calling for scattered rain but the AWM moderated some of the rainfall late in the trading session.  Who knows???   There is risk to the downside if yields are going to be any higher than the 149 in the current forecast from USDA.  Monday's market will probably be up a good amount or down a bunch as this turns out to be one of those place your bet weekends.  Technical's just don't matter right now. 

Soybeans - Still a major weather market possible here.  We are long out of the money calls and waiting for developments.  Remember, the big difference between corn and soybeans is the loan price compared to the current market.  In corn there is more to lose.

Wheat - Nice break today as the market develops a sideways trading range.  Looks like we know where resistance is so lets see where support comes in.

Rice - Up 1 cent today with no pressure from the other grains.  We remain 50% long here and watching for a possible break out.  Right now, the July 12th USDA report is going to be a factor.  (Read last night) 

Natural Gas - Market moved under $5.50 today and closed just over that level.  There is a small set of storms being watched for development.  If that starts to grow over the weekend, look for short covering on Monday.  If not, selling may keep market under pressure.

Cattle - Market moved lower after the reversal day yesterday but stayed over the $85 level in August.  I will be selling the market if that level is taken out.  We could get a nice correction here. 

DOW - Market down good today as once again, the economy numbers are better than they thought.  Go figure!!!  Look for more downward pressure as the fed starts to talk about another 25 points in July.  I could be wrong on this one but if the dollar gives up more ground, the US bond market will sell off advertising for buyers and that means higher interest rates and a lower economic base to work from.  All in all, the Dow under 11,000 seems logical.

Thursday July 6th-

Corn - Market showed good buying throughout the day and we closed with a major buy signal in December corn even though we were off the highs.  Tomorrow, if we trade up through today's high, we should have confirmation of the buy signal.  6-10 day forecast is bullish as is 10-14 day forecast.  We remain 50% long tonight and will see what we get tomorrow.  Subscribers should listen to the mid-date phone update as we could extend coverage.

One more thing, the last major sell signal was at $2.71 and today's buy signal occurred on the close at $2.70 3/4.  The last major buy signal before today was at $2.67 which is also close to the last two signals.  What does it all mean???  Nothing, I just thought it was interesting!!!  :-)

Soybeans - We remain long options in a very small way here and want nothing to do with a huge long position...at least not right now.  Market is against resistance.  If we take that out, we will buy more options and then start rolling them up taking profits.  November is our target month for the play near term.  Again, this is only if we make new highs and get a breakout.

Wheat - As we have been saying, the downside risk is not that great here.  We are long 100% in the cash after taking 40 cents out of the short hedge last month.  Nothing new here.

Rice - Hello to the US Rice Producers meeting here in Houston.  I presented our outlook for the market there today.  One of the things I learned is that the USDA has issued a statement that they will be addressing the China ending carryover numbers in the July 12th report...why not just say, "we are going to increase the China carryover for rice in this report????"   Look for US production to drop and for the USDA to cut carryover while increasing the world carry over.  The only question is by how much and how will the market respond?  We'll talk more about that next week.

Natural Gas - Saucer bottom is now gone as the market moves lower to test the $5.50 level.  We'll keep hoping that the market tests is before a blip on the radar screen shows up in the gulf of Mexico.  We are ready to buy calls here and will roll them down so we cannot put more than 20% of our capital as risk in the trade. 

Cattle - Another reversal day today.  I don't like the action here so if $85 is taken out in August, I'll be short.  Otherwise, we remain long in the field with no hedges.

DOW - Chop, chop, chop!!!  Read below...we think the market is putting in a rally top and will test the recent lows once the Fed sends the message that they will once again increase interest rates. 

Wednesday July 5th-

Corn - Today was entirely inside of Monday's range and we closed at the lows.  Once again, July weather scares prove tough to swallow as we are running out of time.  The 6-10 and 8-14 day forecasts remain hot with normal rainfall. If this scare fizzles, there will be some good downside risk in the market so we will be watching every forecast now to see where we stand.  Long-term, nothing changes.

Soybeans - We are long some options in a very small way here and want nothing to do with a huge long position...at least not right now. 

Wheat - Look for more back and fill near term but the risk is not that great to downside right now.

Rice - Nothing new here.  Profit taking after the big run-up was fueled as the market failed to find buyers after new highs.  We'll buy a break here.

Natural Gas - Saucer bottom was violated today with a big down day. We'd like to buy a weather position ere but we'll wait a while with this action.  $5.50 in August is support.

Cattle - More upside here today.  Looks like the reversal is going to be tested and if it is taken out, things will get interesting.

DOW - Lower day today...could be the beginning of a few more down days if we start to get the idea that the Fed is not changing course.

Monday July 3rd-

Corn - As I said last night...here we go with round #2; however, this round has more going for it than the first round.  We went back to 50% long on base positions today for buyers in the market.  This is as far as I was willing to go in front of the Holiday tomorrow.  So far there is no sign of a change in the forecasts for July and just as cold and wet as June was, July may be hot and dry to the other extreme and that could be a huge problem.  Today's up market gives us a taste of what could be coming if there is a weather problem.  The question I have is, "Who is going to sell it?"  If this is just a scare, I'm going to be selling it along with everyone else when the scare ends; however, if there is a problem and by that I mean a yield decline of 5 bu/acre or more...Who is going to sell it???  OK...at some point everyone will sell it but not at $2.60.  For now, we will wait and see and if it appears this is just a big scare and the forecasts start to change back to the cool and wet side, we will be selling for you who need to hedge some of the 2006 crop. 

Soybeans - We are long some options in a very small way here and want nothing to do with a huge long position...at least not right now.  If there is weather problem it will more than likely be in the western corn belt.  That will affect the beans as well but with the acres in the eastern belt so large and the weather so good, it may not be the severity of the corn situation.  Especially when you factor in the world supply.  For now, we'll take our chance at getting another 30 cents up in the beans and watch the weather from hour to hour.

Wheat - This move has little resistance to $4.40 in the December; however, the market may do some back and fill along the way.  There was good profit taking at the highs today so that becomes resistance.  I'm not sure how strong as the other grains will put pressure on wheat if they continue to advance.

Rice - More follow through today.  Market is set for break out advance.  $9.85 is next target for November.  Trend is too steep but could continue to advance with no major sellers over the top right now.  We are long 50% and will buy breaks only near term.

Natural Gas - Saucer bottom still is possible with no weather concerns for now.  I am going to buy calls if September will dip under $6.20. 

Cattle - There is no follow through from the Massive Key reversal down last Thursday.  As I said that very night, we could see an expansion type market here in the next few days.  It is still too early to tell. 

DOW - Nothing new here...short trading day as the rally in the market continues.  Market data is not showing anything that would signal the Fed is going to pause just yet. 

Sunday Night July 2nd - 

Comment- Market is higher here tonight with corn up 4 1/2 and Beans up 6 1/2.  Weather forecasts remain dry for next two weeks but the question remains the heat.  The overnight forecasts will be watched carefully buty here we go with round two.  We will want to sell this rally in everything as we expect the next four weeks to have fireworks in the grains and give us a chance to sell some before we head into harvest.  We look for a break into the main harvest and then we want to own EVERYTHING!!