Corn: December corn settled down 5 ½ cents at $4.80 ¾.. Weather remains the main issue. One private forecaster cut its forecast for the second time in 8 days, down to 152.4 bushels per acre for a US average corn yield. Although we rallied Sunday night and Monday based on “hot and dry” fears, I found it interesting to hear bulls still calling for an early frost which would hurt corn. Since posting a 5-week high Monday at 508 ¼, CZ has fallen 29 cents in three days. All of these gyrations have been fueled by one thing and one thing only: the weather forecast. The funds remain net short corn. One potentially negative impact today came in the wake of the CME raising margins on futures positions. On the charts, CZ found support at the bottom of the gap from Sunday night’s open at $4.79. The gap extends back down to last Friday’s high at $4.74. A move lower into this gap would be expected if we continue to have non-threatening weather forecast. Hedgers: No change in recommendations.
Wheat: December Chicago settled down 4 ¼ cents at 6.59 ½. KCZ settled down ¾ cent at $7.10 ¼. Although WZ had spiked to a 1 month high on Friday’s high at $6.76 ½, the follow through has been lacking as wheat follows corn. On the export front, Egypt is tendering for roughly 60tmt of soft wheat but no one expects the US to see any of that business due to present world tensions. Reports of cold weather Argentina seem to have not impacted the crop there in any material way. For the bulls, Germany’s Toepfer projected a crop of 24.18 mmt this year down from its earlier 24.24 mmt estimate. Worldwide, there continues to be a plentiful supply of wheat. Continued Chinese buying is the one card that US bulls are grasping with white knuckles, as we bounce around 14 month and contract lows posted just 10-trading days ago. On the charts, we have support at Monday’s gap ($6.51 ¼ – $6.48 gap). Resistance above comes at $6.76 ½ and $6.80. Hedgers: No change in recommendations.
Soybeans: November Soybeans settled up 2 ¼ cents at $13.72 ¾. Beans opened lower after seeing a lot of over-night action as the Asian and European traders took turns outguessing the weather forecasters. On the pit opening at 9:30 we saw two sided trade posting an early session high at $13.78 ¾ at 9:45 only to slip to a day session low at $13.66. . Technically, we have a double top, at $14.09, (granted it’s not a PERFECT double top, because we didn’t match the September 2012 contract high exactly at 14.09 ¾, but we came within ¼ cent). That $14.09 level will remain the milestone the bulls will tout after we rallied $2.47 cents from the August 7th 14- month low up to Tuesday’s 11-month high. Support below comes at $13.48 which is the top of the gap down to last Friday’s high at $13.31 ½ . Hedgers: No change in recommendations.
Today’s trade was a typical whippy Wednesday, where most of the action took place overnight. European and Asian traders play the “outguess the weather man game” while traders in the US either sleep, or sit in front of their trading screens trying to play the same game. Top Third’s strategy eliminates the need to be awake at night with eyes glued to the trading screen like it’s an on-line poker game.
In the past 2 weeks we have taken profits from both our puts and our calls as the markets have swung with the changing weather maps. Top Third’s core strategy remains the same; manage the risk and stay balanced. With the state of the world currently, it’s easy to see how events we are powerless to control can really impact your bottom line. Make sure your plan is balanced as we head into the long holiday weekend. When the weather man speaks Monday night, you really don’t want to be playing the “would have, could have, should have” game.