Biggest 2 day drop in Corn History

Corn: CK settled down 53 cents at $6.42 ¼ while new crop CZ settled down 3 cents at $5.35 ½. Old crop corn has left a gap of 16 ¼ cents between Friday’s low and today’s high. Both old and new crop corn posted 9 month lows and 9-month low settlements. At one point today, May got to within 1 ½ cents of the expanded LIMIT DOWN price before rallying 12 cents late in the day on short-covering. Due to expanded limits, we have seen CK lose 99 ¾ cents between last Friday’s high at 7.36 ¼ and today’s low at 7.36 ½. That translates into a 13 ½ % loss over two trading sessions. Export inspections were 19.1 million bushels and obviously had no bullish impact on the trade. The market continues to swoon in the wake of the left hook to the jaw delivered by the USDA’s ending stocks report which discovered an extra 400 million bushels of corn that the trade did not expect. Hedgers: We adjusted protection and took profits on deep in the money puts today. Call your Top Third broker to make sure you are pulling money out of puts where it fits our risk/reward parameters.

Wheat: WK settled down 23 ¾ cents at $6.64 while WN settled down 22 at $6.69. KC July dropped 15 ½ cents to settle at $7.16 ¾. This was a new contract low and low settlement for WK. WN posted a 16 month low and low settlement. Between last Friday’s high and today’s low, WN dropped 61 ½ cents a bushel or 8% of its value. Crop Condition came out 38% good to excellent vs. last year’s 58% GTE at this time. 30% were rated poor to very poor as compared to just 12% at this time last year. While normal market conditions might have found this supportive for prices, currently with the liquidation of longs in corn, fundamentals have been cast to the side. Hedgers: Today we rolled down deep in the money puts in both Chicago and KC. Contact your Top Third broker for specifics.

Soybeans: SK settled down 14 cents at a 2 month low of 13.90 ¾ while new crop SX settled up 1 ¼ cents at $12.52 ¾. Interestingly, new crop fell to an 8 month low at 12.45 ¼, but then rallied back and settled higher. This is a bullish-hook-reversal on the daily charts and may give solace to bulls who just sat through a 36 cent flush between last Friday’s high and today’s 8-month low. SX stubbornly holds to that key support at $12.50, testing it 9 times in the past 5 weeks. SK posted a 2- month low today at $13.86 ¼ and has support on the charts there and then at $13.60. Export Inspections were 16.3 million and were higher than the average guess. Now that we have an acres number at 77.1 million acres for 2013 crop, some analysts are arguing that this number will only get bigger. Hedgers: Make sure you are taking money off the table on any deep in the money puts. Call your Top Third broker to touch base.

  This week has reinforced the cardinal rule of risk management: Stay Balanced. Try to put your opinions on the table and realize that market moves often make no sense, especially in the short run. The last two days’ sell off in grains was sparked by a USDA report. You might be interested to know that we have one USDA report every month for the next 3 months. April 10th and May 10th are USDA supply and demand reports. June 28th, we get a supply and demand report combined with the all-important planted acres for 2013.
At that point, all the guesses and speculation go out the window. The numbers will speak. Just as the numbers spoke on Friday.