Busy day today so this will be brief.
USDA was bearish but not as bearish as a lot of folks had been predicting. You can look at all the break down of the data yourself. There are plenty of good sources out there, and I am really not going to reiterate 6 pages of data.
Key points are 1) lowered corn acres, balanced out higher yield 160.4 yield on lower acres. USDA lowered acres 2million. also USDA increased feed usage by 100 million bushels, and increased exports of 175 million. My biggest bearish concern? They increased world wide carry by 900 million bushels.
As for the beans, The yield came in at 43. If we had been lower, we probably would have been limit up. USDA only lowered planted acres by 700 thousand, which offset the 1.8 bushel yield increase. ending stocks increased by 20million to 170 million, which is still closes to pipeline supplies.
Beans ended the day on its highs. November took out 13.00 to land at 13.06… January landed up 30 cents at 12.96. The speculative long position I suggested 3 days ago worked well so far. Next week should see proof in the pudding.
I also bought some very cheap December 4.30 calls today for 6 cents. With 2 weeks left to go I think next week by Tuesday or Wednesday those could look pretty good. Trade is still bearish. If we get a rally here, I’d tell all my hedgers to price grain. A rally in CZ to 4.50 would squeeze out all the week longs, suck in weak bulls, and then set the stage for a complete chopp fest for the herd.
As for the Stock Market and the Gold, I don’t see any reason to sell the Stock Market. next Stop for the Dow is 16,000. We could see 17,000 by year end if we get window dressing from the Goldman Sachs of the world. It wants to go up. Stay long your core position, but use cheap puts as an insurance policy below. We will definitely be getting an 800 to 1600 pt correction some where, but you could go broke selling into this rally. On new major highs, I’d sell, but I’d use very tight buy stops to limit $ loss if the trend continues to move higher.
As for the Gold, Once again, the round number $1300 failed to give support. Next stop for support in the Gold December is 12.50. This is a range trade being fueled by hft. If you don’t use stop loss orders, you are inviting disaster.
Have a great weekend.
CER