USDA holds few surprises

Corn yield was lowered to 123 bushels to a 10.7 Billion Corn crop.  Bean yield 36,  2.6 billion bushel crop.

Bullish number.  We had a 30 cent spike and break in corn.  If the carry out gets smaller, beans show possibility of going higher,  I just don’t know how much higher.  We are past the supply part of the rally.
Now we head into the demand part of the equation.  Higher price equals less demand. 

I’d continue to be short, either with puts,  or with buy stops to limit potential losses.  CZ traded up to 8.49.  could not get the 8.50 put.  CZ13, traded up to 6.50  I think that is an interesting trade, and one I’d look at buying  CZ13 5.50 puts for 30 cents a bushel.

For you Fibonacci fans,  the low on June 15th for CZ was 5.06.  The high on the number was $8.49.  That is $3.43 from top to bottom.  3.43 is 68% gain from 5.06.     Fibonacci fans look at 50%, 62% and then 68% as targets.

AS for current positions, I’d continue to hold my shorts and look for a break.  So far today, CZ has had a 33 cent trading range.  Initially people bought the corn when the 123 number popped up. However within 60 seconds we were leaking and actually broke down to 5 lower on the day, down at 8.19.  We are at 8.24 right now, unchanged.  However,  30 cents on a one lot is $1,500 bucks.   As you can see, trading futures within the first 4 minutes of a number is not for the feint hearted and basically equates to roulette.  Guess wrong and you are smoked.  Period.  That’s why I like stepping aside when those numbers come out.  The risk/reward is non existent.  We have 6 more hours of trade.  Plenty of time to put in orders where and when you need to, as opposed to flipping and getting chopped up.

SX still 45 cents away from the high up at 16.91 1/2.   The numbers were bullish.  We could be looking at buy/rumor  sell fact type of ending.

Currently we are spinning and its only 9AM.

One thing I wanted to talk about was the Dow Shorts.   If you scaled in sales between 13,100 and 13,200 as per my suggestion,  you are looking at a small profit.  I would take some profits and place stops where worse case its a push.   It looks like a double top  which needed to be sold.   This was my opinion.  I am not changing it now.   All day yesterday, the cable news talking heads were singing hosanna in the highest, with the S&P flirting with 1400 and the Dow at approaching 13,200. 

This being August and therefore,  historically thin and choppy trade,  it made the possibility of new highs doubtful.  Also,  we are now less than 100 days away from the election.  How can you make new big bets with that type of uncertainty looming?    That was my thinking to be short the indexes.  Of course,  if I am wrong, then that’s why we are long options and also have protective buy stops above, should we get a surprise rally up. 
For now, I am happy being short here. 

China’s exports were surprisingly low.That was enough to spook Europe.  Its Friday.  I wouldnt’ want to be long over the weekend.
Too much uncertainty.  If you are long,  have some protection on with a cheap put.

Have a good weekend.
CER