Written By Chris Robinson
Corn: September Corn settled up 3 ¼ cents at $3.81 ½. After falling to a new low for the move in the electronic overnight session at $3.74, the contract trended higher, regaining 7 cents from that low. Crop conditions came in at 3PM and came in at 76% good to excellent. This is 1% better than last week’s 75%. Corn pollination was reported at 34% vs 15% last week. Focus will be turning almost exclusively to the weather forecast and the bet size and direction of the managed funds. The 6-10 day as well as 11-16 day weather forecast held no bullish surprises, predicting close to average precipitation and average to below average temps in most of the Mid-west and Northern Plains. Technically, traders looking for a further rally have upside targets on the charts. The first hurdle for Sep Corn would be the 3 cent gap back at $4.06 to 4.09 which came after the 4th of July weekend. In December, this gap is from 4.10 ½ up to 4.14 ¾. Hedgers: No change in recommendations.
Wheat: Chicago September wheat settled up 11 ¾ cents at $5.37 ¾. Wheat fell to a new low for the move overnight at $5.24 ¼ and then bounced 14 cents on short covering. The bounce was most severe in the markets with historically thinner markets, Minneapolis and KC. KC posted its 5-month low last Friday at $6.32 ½. Any leftover KC wheat bulls will be measuring any further losses against that milestone. There is a trend-line intersection on the September KC daily charts which comes into play at $6.92. As for Chicago, that bear trend-line above comes into play at $5.51. These are levels which might be in the sights for any traders who are looking to pick a bottom in the wake of the $2.23 cent sell off which began May 9th. Friday’s USDA report left any remaining bullish producers and speculators up in the crow’s nest with a telescope searching the horizon for a bullish story. Hedgers: No change in recommendations.
Soybeans: September soybeans settled up 8 ¾ cents at $11.08. November soybeans settled up 11 cents at $10.86 ¼. September posted its low on the opening of the overnight session, down at $10.93 and then trended the rest of the day on relatively low volume. For now, last Friday’s contract low down at $10.78 ¼ will be the milestone all remaining bulls measure any progress towards the upside. September bean bulls are still reeling from the $2.58 cent melt down from the May 22nd 20 month high posted at $13.37 ½. This marked a loss of 18% in value in the “old-crop”. As for November new crop, last Friday’s contract low at $10.65 will be the low-water mark the bulls will be hoping will hold-fast. A quick look back to the contract high for this November contract came on September of 2012, that high was $13.33. Last Friday’s contract low gave us a spread of $2.68, or a loss in value of 20%. Is there another 10% to go for a correction? If the answer is yes, that pencils out to a down-side target of $9.34. HOWEVER: The beans are not made until August so there is plenty of time for a weather issue to come into play to boost prices. Today’s crop condition report released at 3PM showed 41% blooming vs.37% blooming average. Good to excellent ratings were unchanged at 72% but the index improved by 1% in the excellent category. Hedgers: No change in recommendations.
The outside markets were volatile today, while the grains seemed to take a breather today after last Friday’s fireworks. The stock market moved to a new all-time high as it settled above 17,000 for the first time in history today. The broader S&P 500 is closing in on the 2000 level. Gold had its biggest drop this year, moving towards the $1,300.00/oz level, dropping 28 bucks today, but losing over $40.00 in the past 3 trading sessions. Crude oil fell today, testing the $100/barrel level.
Now more than ever these markets move like a 3-dimensional chess game. Money flow goes from one product into another at the speed of light with electronic trading. Keep your business risk on paper with hedges and away from purely the cash market. If you are looking for direction and are not sure what’s available, please call us so we can help put a plan in place that minimizes your downside loss, while keeping your upside totally open.
CER