Corn: CH closed up 5 ¼ cents at $7.00 ½. CZ settled up 3-3/4 cents at $5.61 ½. Funds sold just 2,000 contracts. Today was a quiet news day for corn, with most of the overnight trade focused on more rumored sales of beans and wheat to China. Traders will have an eye on Thursday and Friday’s Ag Outlook Forum from the USDA from Washington D.C. The trade is expecting a bearish tone from that meeting. We are also just 5 weeks away from the March 28th USDA planting intentions report. Resistance above for CH comes at 7.09, 7.17 and then 7.23. Support below comes at 6.87 and then 6.78. New crop has support at the 8-month low down at 5.52 and the trend-line intersection at 5.50. That trend line extends back to Jun3 28th 2010. Resistance above for CZ comes at 5.68 and 5.80 Hedgers: No change in recommendations.
Wheat: WH closed up 6 ¼ cents at $7.38 ½. WN settled up 6 ¼ at $7.48. Overnight Egypt bought 60K tons of US SRW. Rumors continued that China had come back from the holiday shopping for US wheat as well. Over the past 10 trading days, there have been unconfirmed sales of 8 to 10 cargoes of US SRW and HRW. That would equate to close to 600K tons of wheat. Again, wheat at 8-month lows seems to have bought out the bargain hunters, but a confirmation of these sales would be appreciated by the bulls. Hedgers: Over the past week, we have been able to take good money off the table by rolling down deep in the money puts. WN 8.00 puts purchased for 30 cents back in December traded for more than 84 cents recently. Call your Top Third broker and make sure you are on target.
Soybeans: SH closed up 12 ½ cents at 14.82 ¾. SX closed up 12 ¼ cents at $12.87. Overnight, SH traded up to 14.92, however we never made a serious run up to challenge the resistance up at 15.00 We had traded through a 20 cent trading range, at one point trading down to 14.71 before rebounding 16 cents. The market seemed to want to punish day traders who were searching to catch the next 20 cent wave. Fundamentally, we had more weather concerns from SA. No rain is expected until Saturday and again until next Thursday in Argentina. Brazil has the opposite problem as too much rain delays bean harvest and attempts at double crop corn plantings. There were more rumors of Chinese buying old crop US beans, but nothing confirmed. SH has major upside resistance at the $15.00 level, failing to take that price level out close to a dozen times in the last 3 months. Hedgers: No changes in recommendations.
Another commodity fund today was rumored to have liquidated its positions and gone out of business. This drove livestock prices down sharply again. Last week it was Barkley’s Bank liquidating its positions without regard to price levels. There is an unconfirmed rumor that the recent rise in gas prices has been sustained because one large speculative trader is short and is being squeezed as he tries to exit the position and take losses.
These are examples of markets moving completely opposite to what “common sense” or the fundamentals would suggest. They are also yellow flags for us to pay attention to when planning a risk management strategy. Because we do not know what the future holds it’s important to stay balanced. This means having put options to protect your unpriced grain. The flip side requires call options for grain already marketed. A balanced approach can help us ignore the emotions of the market, and instead focus on protecting the bottom line of your business. This prevents us from falling prey to fundamentals when they act more like “funny-mentals”.