Merry New Year! 2014 (For Hedgers)

Corn: CH closed down 1-1/2 cents at $4.22. New crop CZ 14 settled down ¾ cent at $4.50 ¼. There was little news on the wire, save a re-cap of 2014, which notably had corn in last place of 24 commodities tracked by the GSCI. Corn finished down 39% on the year, which was also the largest percentage drop for corn since 1960. Traders await the USDA report on Friday January 10th. South American weather continued to be non-threatening in the 10 to 14 day outlook. Traders continue to fret about the GMO cancellations of corn as well as DDG shipments to China which have unfolded in the past few weeks. Managed funds maintain their large short position. Some traders are looking for the index funds (which only buy and hold their positions) to come in and support the market as they re-adjust for 2014. Only time will tell if their anticipated buying will be enough to halt the current down-trend. Support comes below at $4.20 and the $4.18 ½, which is the contract low posted on 12/2/13 as well as the lowest price since August 2010. Hedgers: January 10th USDA will be here in 6 business days. With Corn at 40-month lows, now more than every you must be balanced in your marketing approach. Manage your risk prior to this historically very volatile report.

Wheat: WH finished up 4 ¾ cents at $6.05 ¼. WH fell to a fresh contract low and 18-month low on the weekly-nearest-chart with its low tick at $5.99. Late in the afternoon there was a bump higher mostly due to traders selling beans and buying wheat as a spread trade. New crop WN14 settled up 4 cents at $6.16 ¾. Today’s pre-holiday news was a non-factor. Worldwide the fundamentals are bearish for wheat. Wheat fell 23% in value this year, which is the biggest percentage drop in price since 2008. Support is spotty at best on the charts. Today’s contract low at $5.99 will draw attention; however a settlement below $6.00 opens up the door for at least a break down to $5.85-$5.50 range for wheat. The emergency air-bags have been deployed here with wheat at its lowest price level in 1-1/2 years. Managed funds remain net short a large position, which has been quite profitable for them in 2013. Technically on the charts, only a settlement above $6.75 would signal an end to the down trend which started after the record high $9.12 ¼ print posted in November of 2012. After a 34% drop ($3.13) from that contract high to today’s contract low; pretty much all sentiment has moved to the bear camp. Hedgers: Protect un-priced 2014 anticipated production prior to the USDA report on January 10th. Bite the bullet and get a floor in place with the put option and get your risk on paper and away from the cash market flat price.

Soybeans: SH fell 16- ¼ cents to settle at $12.92 ½ which is a 1-month low settlement. SX14 fell 11 ½ cents to settle at $11.35 which is a 2-year low settlement. The beans tried to rally overnight, but once the day session began at 8:30 AM the beans slid lower all day, dropping from a high tick of 13.04 down to its low tick at 12.89 ¼. This was the lowest price for SH14 in 5-weeks. More impressive was the 2-year low and 2-year low settlement in SX14. SX14 has major support at $11.24 with a double bottom there on the weekly charts going back to March 2011 and November 2011. Will that be the level the bulls choose to make a stand for 2014? Only time will tell. The managed funds are still holding a monster long position in SH. Will today’s action be the trigger for them to liquidate? What if they decide to flip and get net short? If they do what will that mean to prices? Hedgers: January 10th USDA is just 6 business days away. Get your business risk on paper and away from the flat cash price.

Today we say goodbye to 2013. 2014 is shaping up to be a year with a lot of possibilities facing all the markets. The stock market is at record highs, with the S&P and the Dow up over 30% for the year. The gold bugs took it on the chin as gold dropped from $1700 an ounce to $1200 dollars an ounce as of today’s trade. That’s a 30% drop. That 30% number seemed to be the key this year. I already broke down the percentage loss for the grains in the paragraphs above. We start 2014 with most analysts bearish. The key to remember is that analysts, traders, speculators, hedgers all come together with price discovery in open and free markets. The markets will decide where prices will be as the information unfolds in 2014.