Written By Chris Robinson
Corn: December Corn settled down 1 ¼ cents at 499 ¼ which is a 2 week low settlement. Corn gapped open lower last night from 5.02 down to 4.99 ½, before grinding sideways through the night in a 4 cent range. On the opening of pit trade at 8:30, the story continued, with sideways grind through a 5 cent range. Late in the day on short covering, the gap was filled with a run up to 501 ¾. Exports were better than expected. Old crop came in at 152.9 TMT while new crop exports were 1.59MMT. The trade had been expecting 600 to 950 TMT. The bulk of these sales (1.26MMT) went to China. Despite the good exports, December corn performed poorly, posting a 2 week low and a 2 week low settlement. We continue to focus entirely on the updated weather forecasts. Support comes at $4.90 and then $4.60. Resistance above comes at $5.30, $5.40 and then $5.70. Hedgers: We are rolling down deep in the money puts. We are also looking to take the value of any short-dated puts and buy more time for your downside protection. For new hedges; protect $4.80 corn for the next 126 days for 20 cents a bushel.
Wheat: December wheat settled down 4 ¾ cents at $6.73. KC December settled down 3 at $7.16. Exports were decent at 996.6 TMT, while the trade had been looking for 1.0 to 1.3 MMT. Japan completed its weekly buys, taking 23 TMT HRW and 25 TMT of Spring wheat. Wheat held up very well early as the funds bought wheat and sold both corn and beans. The afternoon, we had some profit taking in which moved wheat lower. One indicator we are watching is the spread between WZ and ZC. The difference is currently around $1.72. Back in November of 2012, the spread had been over $2.70. It recently traded down to the $1.60 level. There is a seasonal historic tendency for wheat to put in a near term bottom in July. If that holds true, this spread could widen in the coming months, as wheat prices rise more quickly than Corn. More news today in the wires that China would continue to have its buying shoes on for the wheat to cover short falls in their domestic production. WZ has support at the contract low at $6.66 ¼ posted on July 1st & 2nd. A settle below $6.66 opens the door for a test of $6.05. Hedgers: Wheat is at a critical juncture. Stay balance in your hedging, protect your unpriced bushels as well as priced bushels. Have your risk on paper, rather than in the cash market. A case could be made for a 50 cent snap here, either higher or lower. It all depends on the weather.
Soybeans: November closed down 17 ¾ cents at $12.65 ¾. Beans traded both sides of a 15 cent range in the overnight session. On the pit open at 8:30, beans snapped 15 cents in the first hour and then spent the rest of the day punishing those who sold it, looking for follow through lower. That’s the best description for day trading soybeans lately. An early move, no follow through, and then equal pain dished out to both bulls and bears. In other words, a typical summer bean trade. Exports were110.6 TMT. New crop sales were 591.7 TMT. The trade had been expecting less, at between 350 to 700 TMT. It was interesting to watch beans break early after what many considered a bullish export report. It probably was more interesting if you were short, however, rather than long. SX continues to trade between the 50 day moving average at $12.55 and the 100-day moving average at $12.68. While the bean crop won’t be made for another month and a half, it won’t stop us from trading the weather reports. Hedgers: Protect $12.00 beans for the next 98 days for 27 cents a bushel. If you sold grain on the board at $13.00 or higher, re-own those bushels with a $14.00 call for 15 cents a bushel.
The Dow Jones traded to a new all-time high today at 15,589. August Crude oil posted a new 2 year high trading above $108/bbl. The Chinese are in the market for our wheat. The US Dollar remains 2 cents below its recent highs, and looks to be trending lower. All in all, if you took that information and just looked at it in a vacuum, who would blame you for being extremely bullish? Yet, CZ is within a stone’s throw of 2-1/2 year lows., Wheat is within 3 cents of contract lows, after melting nearly $2.50 from its November high. If, back in 2009 with the Dow at 6,500, a person had told you that by summer 2013 we’d be 9,000 points higher—my guess is that you would have disagreed, to put it lightly. In 20 weeks, you might be saying the same thing about overly bullish OR overly bearish opinions being expressed right now. For now, we are in the hands of the weather man. And we sit within a stone’s throw of new lows in the corn and the wheat. Let your hedges do their job. That means the puts on your unpriced grain, and the calls on your priced grain. 20 weeks from now we’ll have the answers to the test. For now, Hedge and sit tight.
CER