February 6, 2015 Corn: March Corn settled up ½ cent at $3.85 ¾ which is the highest settlement in 2-weeks. New crop corn settled up ¾ cent at $4.16 ¾ which is also a 2-week high settlement. Corn moved sharply higher overnight, posting its best level in 2 weeks, and the highest tick so far for the month. Corn sold off early but then fought back through the rest of the day. In the absence of fresh fundamental news, corn remains at the whim of the funds and the technical traders. New crop CZ pushed up to within ½ cent of $4.20 overnight, but also couldn’t hold those gains once the day session began. Technically, both CH and CZ rant into big technical resistance today on the charts. The high in CH stalled just below $3.91 ½ which is half-way-back from the recent 52 cent melt down from December’s 6-mongh highs down to Last Friday’s 3 month lows. CZ breached its half-way -back point ($4.18 ½) by a penny before it dropped 9 cents in the first 30 minutes of the day session. Next Monday should see more choppy two sided trades as the market awaits the Tuesday USDA crop report. The funds remain long an estimated 170K contracts of corn. Hedgers: No Change in recommendations. Make sure you are properly hedged before the report. Wheat: March wheat settled up 1 ½ cents at $5.27 which is a 2-week high settlement. Wheat had another wild day of price swings. Overnight it spiked to a new 2-week high. However, on the open of the 8:30 bell, March actually gapped open lower on the 10-minute chart, and then skidded to its low of the day dropping 12 cents in the first 20 minutes of trade. After the first half hour, however, wheat clawed back to finish the day higher. The US dollar rebound was the biggest fundamental impact on today’s trade. It also looked like we had a lot of folks taking profits as WH had a 42 cent bounce after last Friday’s 4-month low at $4.92 held. After a 6-week, $1.85 sell off in the wheat; it was no surprise to see a week of profit taking prior to next Tuesday’s USDA supply/demand and crop report. Was this week’s bounce the start of anew bull leg? By this time next week we should have a good indication of the likely hood of a continued bull-run. Technically, there is resistance above at $5.50 and then $5.63. The funds remain short 22K contracts. Hedgers: Hopefully you followed our recommendations and rolled down deep in the money puts over the last month of downward spiral. We are keeping the upside open, hoping for a cash rally. However, it’s important to take risk off the table when it fits our rules of engagement. Soybeans: March soybeans settled down 7 ¾ cents at $9.73 ½. New crop SX settled down 4 ¾ cents at $9.60. Soybeans posted their highs overnight but spent most of the day on the defensive chopping lower through a 10 cent range. Spreaders looked to be evening up their long corn /short soybean spreads heading into the weekend. We have also not seen the usual dock strikes as of yet in Brazil; certainly those are to be expected sooner rather than later. Certainly we saw very little follow through after Tuesday’s volatile, stop-hunting rally which saw SH flirt with $10.00 with its high at $9.99. South American farmers knew what to do with a 50 cent rally in 48 hours— they sold grain and a lot of it. Will the American farmer get a second chance to sell $10.00 beans after Tuesday’s USDA report? The funds remain short 40K contracts of soybeans. Hedgers: No change in recommendations. As we prepare for Tuesday’s USDA crop report we continue to watch the funds. The managed funds are still long 170K contracts of corn. This week we saw them defend that position. Who knows what next week will bring? As we sit here in Chicago in the grip of 2 feet of snow and minus 9 degree temps here this week, I thought about the summer and fun on the water. It’s always fun to take the kids tubing and try to get them whipping around the wake of the boat. This makes me think of what all the markets have been chopping through lately. The last few weeks of volatile trade, all commodities have been riding that tube, rocking and rolling in the wake of a lot of macro events out there. Here’s a list, in no particular order of significance. 1) The collapse and rebound of crude oil. 2) The 14 year highs in the US dollar 3) The Stock market repeatedly moving through at 900 point trading range. 4) Feeder cattle dropping 42 bucks in the last 8 weeks. 5) Finally, live hogs have dropped from record highs in July down to 5 year lows this week. Next Tuesday, the driver of the boat for the day is the USDA. Make sure you’re ready. CER
