Corn The market finished lower but off it earlier lows as soybeans supplied support for the corn market today. The USDA cut the good to excellent rating by 3 points in crop condition report released after the close. We are in Nebraska and will comment on what we have seen in the video later tonight. Sep 13 540-6s -3-2 Dec 13 498-0s -2-6 The crop appears to be pollinating without the extreme heat many feared and with the weather not looking that threatening it looks like a big crop is coming. Texas producers should be selling cash as fast as they can. Cash prices at the port remain very high. New Crop: We are 6 sold in Dec 13 corn and our target is to get to 8 before harvest. Texas producers should look hard and fast at moving corn quickly as the nearby basis is very strong. Old Crop: We have been sold in old crop for some time. We see no reason to reown this crop right now. The trend remains overall sideways with support at $4.91 which is being tested right now and resistance at $5.28. $5.16 is also resistance but it may take something in the way of news to allow us to rally toward that area. The Del Model is dropping back into the do not sell zone but this has the markings of a level three signal which means we could be in this zone for weeks. We are at 6 sold for now and hope to get additional sales on the books on a bounce but it is not looking good for much of one. We are running out of time to damage this crop and if the beans start to roll over we fear a collapse is possible in the corn. The crop looks good in the far western portion of the corn belt as long as it is irrigated and that is most of what we have seen. Still, the bears have not been willing to press the market lower and as long as they hold off, we still have a chance to sell this one higher. 5 6 December
Soybeans The market finished higher as the squeeze in the old crop beans gets even worse. The question is when will it end and the answer is, any day. Still, as of now we do not have any signal that the end is in sight. The weather could still be a problem for the bean crop but the forecasts are not that bullish right now. The main feature here is the short supply in the old crop and the steady buying of processors to keep the supply of oil and meal flowing. The problem with this picture is the current fundamentals are not sustainable and the over the next four weeks the odds favor a major break in the new crop. If the technicals start to show any weakness, we think it is time to add to sales. Aug 13 1520-2s +29-4 Nov 13 1288-4s +14-4 In the new crop, we are now short 6 in 2 in Nov using the +1260 Put 1160 Put and 1360 and 2 using the 13.20 Put /14.20 Call 1x2 ratio spread and 1 using the +$12.80 Put -$13.60 Call 1X 2. Another 1 was added today either in cash or with a +12.60 Put 11.60 put and 13.20 Call. We will hold at 6 sold. The technical picture remains more sideways as old crop holds new crop in place for the moment. 12.97 remains resistance for the Nov with nearby support at $12.65 down to $12.59. Weather markets are tricky and we still have a target of $11.85 in the November. We think that target is a good one unless there is a major weather issue and right now we are having a hard time finding it. If the corn starts to succumb to big harvest fever, the beans may not be able to hold. At the same time, the short supply in the old crop is supporting everything at the moment. Near term we could go either way but it will take a change in the overall weather pattern to push us a lot higher. The current forecasts are mixed so we will have to wait and see what actually happens. Plain and simple this is a weather market. We would be no less than 6 sold right here. 5 6 November
Wheat The market finished lower in sympathy with the corn but the harvest pressure is still holing on as 75% of the crop is now harvested. The funds remain short and right now do not look like they want to come out given the overall grain fundamentals. Same comments as yesterday With the carryover in wheat under 600 million bushels and the world supply dropping once again, you would think the market would be seeing some strength but traders believe the USDA is showing too much wheat on the balance sheet. Frankly, we have seen this many times before as the end of harvest in the wheat applies more pressure to prices. We believe we have put in a low for now and once harvest pressure is off, a short covering rally from the funds becomes very likely. New COT data shows the funds have covered 10,000 contracts of their short position last week. This would suggest we are correct that a low is in place but it doesn t mean we are going up just yet. Sep 13 659-6s -4-6 Dec 13 671-2s -4-0 We are sold in old crop. We have sold 4 of the 12-13 new crop and we will hold at that level. Also we assume revenue insurance has been bought at least to the 7 level. In wheat that is a pretty good insurance level. We will sell more on a bounce so we want to get ready to add to sales. Resistance remains at the $7.00 level in September with $7.30 to $7.40 the areas to look for in the Kansas City wheat. Harvest is expected to be at 75% at the end of this week according to the trade but we think it could be closer to 8. We remain at 4 sold and will hold at that level. A drop under $6.52 in September on a closing basis is going to be problematic but it could happen if the corn rolls over and makes new lows for this move. We feel the market is probing for a low but that the outside pressure from the corn and beans is going to keep us from seeing a lot of upside in the short run. We are prepared to hold into the fall as we think the tightness in the wheat is going to allow for higher prices later this year. For now we are holding at 4 sold. 5 4 September
Rice Lower today on the lowest volume since the first week of June. We had had 7 of the last 9 days be higher so today wasn t that big of a surprise. We could see more of a pull back but the overall situation in rice is unchanged. Sep 13 15.405s -0.150 Nov 13 15.630s -0.150 There is absolutely no change in our comments The fundamentals are not bearish here. I know some of the funds will say that s not true as do some of the articles in the press of late but always remember that when they talk about rice they talk about a world picture that is only milled and we do not sell just milled rice. We think the USDA is still too high on their numbers and we will see a final carryover number south of 16 million cwt before the year is over and that assumes an above average crop. Near term the world fundamentals could keep pressure on the market. We have sold of our cash and have exited all long futures positions as well for the moment. We are now once again sold. Cash sellers should again be watching basis and taking advantage of good levels by selling cash and buying paper. We are not selling anything for the new crop until we have better ideas of the crop size. We are on the verge of turning the technical picture to bullish as the fund may have started to exit short positions. Volume is low which means they have not come out of much of their position and the commercials are not showing signs of letting them out just yet. The upside target is still $15.90 but a move under today s low will break down that signal. We would own breaks here but see no reason to own more than 25% especially when we are long of the new crop. We think the funds are short about 2100 contracts as of today as open interest drops but only a little. If the grains sell off this week we could see some spill over selling here but it hasn t played that way in recent days. Rice is its own market. The longer term picture remains positive and by that we mean above the $16.50 level for new crop in the South and $16.00 for the delta. We don t expect anything close to $20.00 for this crop unless the Monsoon fails. 5 September
Other Markets Commodity Price Price Change Comments Cotton 86.19s +0.01 We could still see a test of 82.00 here as the weather market continues. Overhead resistance is at 87.20. Cattle 121.875s -0.100 The market did nothing even with a supportive report. We will stay clear here waiting for a better signal of direction. Diesel 3.066-0.023 We think we are probing for a high but have no signal as of yet. Natural Gas 3.67-0.112 Nat Gas was lower today with a more moderate forecast. $3.60 is support and $3.81 is now resistance. We can see it sideways for a bit. Dollar 82.18-0.04 The dollar is holding below 83.00 which should keep the commodities from seeing pressure from the greenback. Gold 1334.3 +40.0 Major resistance at $1340 but if there is enough short covering strength we could run toward $1375. There is little to stop it from going there but if it does it is a short for sure. Dow 15545s +1 We closed right on major resistance again. A move under 15,150 will be extremely negative. I expect it to close over this 15,545 level tomorrow.