It’s May 4th and the US corn crop is 55% planted. The Soybean crop is 13% planted and Spring Wheat is 75% planted. No doubt the US farmer wins hands down as the world’d most effecient and productive producers in the world. With less than 3% of the population involved in row crop production, they are taken for granted by the rest of the country and the rest of the world. To have prices sitting near 5 year lows for corn wheat and beans, it makes it that much more difficult for farmers marketing their crops in 2015. So far, it looks like the best mareting opportunity came in the week before Christmas 2014. Prior to that, the last, best time to hedge or market 2015 crops came in May of 2014, just about a year ago. With New crop corn CZ15 trading well below 4.00, ( $3.77 3/4) today, we are looking at prices precariously close to the contract low posted October 1st down at $3.64 1/4. So we are just 13 cents away from testing that low. As a speculator you have to ask yourself, what’s possible. Currently the managed funds have already made thier bet. Lets look at that position. According to the COT report, managed funds are short 107K contracts of Chicag wheat. They are short 95K contracts of corn. They are short 40K contracts of beans. Relatively speaking, the wheat position is at or near a record size short bet. Corn, at 95K contracts is large, but not nearly as large as the 250K contracts they owned in long positions at one point during 2015. And 40K contrats of beans is a relatively paltry position. Its not unusual for the funds to morph into the 100K to 150k contract positions if they are adding to winners. The bear story is well known and well discussed. We may very well be on the precipice of heading below old levels we have not seen since 2010 or earlier fot the row crops (corn, wheat and beans respectively). Looking at the charts tonight I’m just going to concentrate on CZ15. New crop corn. That has the most uncertainty, because its currently being planted. No one knows if this year will bring drought, floods, or garden of eden perfection when it comes to the growing season. As for corn, the four biggest statess to watch, Minnesota- 83% planted. Illinois, 69% planted. Iowa, 68% planted. Indiana is the laggard, at 21%. With the funds short so many contracts, it wouldn’t take much to get the ball rolling in their face. Like a crowded theater, if everyone decides to head for the exits at the same time, the exit doors get awfully small. The window right now between May 4th and June 30th is the window that will determine if we continue to grind lower in a bear market, or if Mother Nature has some fireworks in store which would damange yield. It’s an opportunity. If you want to fade the herd, now’s your chance. If you think the managed funds are wrong, now’s your chance to step in front of them and look to catch a bull wave if they have to flip should we get a real weather bull market. With wheat at 5 year lows both in Chicago and KC, the call options are on sale. With corn just 13 cents away from testing the harvest lows posted October 1st, the call options have not been this cheap in 7 months. Or, if you think the die is cast, and you want to throw in your lot with the managed funds, you have an opportunity here as well to try to catch the next leg of a bear move which really started a year ago. If you are a producer, don’t assume that you know where the prices are going. For 4 1/2 months we never went above 4.20 or below 3.95 in any meaningful way. That 25 cent trading range lulled a lot of you to sleep. Make sure you have a plan to protect yourself should the Harvest low of $3.64-$3.65 be tested here in the next several weeks or months. Remember one thing. No One Knows where prices will be 3 days from now, much less 6 months from now. What we do know is that today, CZ15 is at $3.78. Back in 2012, when CZ15 corn was at $6.00, a lot of farmers thought “we’d never see sub-$5.00 corn again”. We have been in a down trend since then. CZ15 has posted lower major highs and lower major lows since September of 2012. 32 months of a lower grind. As a net long speculator, you have to have a plan if corn heads south. If corn rallies $1.00 or $1.50, that’s a great thing. You will have dodged a bullet here on these lows. If corn continues its slow melt-down just make sure you have hedged your business bottom line. Barring a weather market, it could be a long year for the perma bulls. I like using put options because they let you set a floor, yet keep the upside completly open. If you don’t know how to use options to manage a long cash or future’s position, you need to educate yourself, or find a trusted advisor who can help guide you. This material has been prepared by a sales or trading employee or agent of Top Third AG Marketing And is, or is in the nature of, a solicitation. This material is not a research report prepared by Top Third Ag Marketing’s Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and Agree that you are not, and will not, rely solely on this communication in making trading Decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THA’r YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, TilE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader Must consider whether this is a suitable investment. Past performance, whether actual or Indicated by simulated historical tests of strategies, is not indicative of future results. Trading Advice is based on information taken from trades and statistical services and other sources that Top Third Ag Marketing believes are reliable. We do not guarantee that such information is accurate or Complete and it should not be relied upon as such. Trading advice reflects our good faith Judgment at a specific time and is subject to change without notice. There is no guarantee that the Advice we give will result in profitable trades.
