February 13, 2015 Written by Chris Robinson Corn: March corn settled up 4 ¼ cents at $3.87 ¼. New crop CZ15 settled up 4 ½ at $4.17 ½. For the week March gained just 1 ½ cents, while December gained a whopping ¾ of a cent. Typical pre-holiday trade today with choppy 2 sided trade. Funds bought an estimated 2600 contracts. We saw more corn/wheat corn/bean spreading today as we finished the Goldman roll yesterday. US markets are closed Monday. Chinese are expected to be off line as they have a weeklong Lunar New Year Holiday. Traders are positioning for March options expiration next Friday. Weather in South America continues to be non-threatening and hence we finish another week without a “weather-scare” to bolster the bulls. In the absence of fundamental fireworks, traders are looking more at money flow and technicals. There is a formation on the longer-term weekly chart for new crop corn that may come into play. We appear to be moving towards the apex of a 4-month triangle formation created by two long term trend lines. A break out above or below the respective boundaries could spark the next move higher or lower, depending on which trend-line we blow through. Take a look at the following chart with the triangle outlined in blue. http://www.topthird.com/images/dec-corn-2015.png. Hedgers: March options expire a week from today. Call your Top Third Broker for recommendations. Wheat: March closed up 11 ¾ cents at $5.33 which is a 3-week high settlement. For the week, WH gained just 6 cents. New crop WN gained just 1 cent on the week to settle at $5.32 ¼. Things remained in flux in Russia regarding the definition of “cease fire”. Apparently Mr. Putin has his own dictionary. A fresh blast of winter air reminded everyone that it’s still winter and some bulls were grousing about “winter kill”. Two weeks in a row of higher closes in the wheat gave the perma bulls reason to puff out their chests today. Managed funds still have a small short position and we will have to see if we get an INCREASE in open interest on these rallies, which is what’s been missing so far to confirm the lows are in place. Certainly the fundamentals remain negative based on the large US and worldwide carry-outs. One can’t forget the drag that a strong US dollar has on our wheat. Perhaps Washington has a couple more $100 million dollar wheat give- a -ways to countries other than Egypt hiding up its sleeve? Technically we have some light-at-the-end-of-the-tunnel developments. A bearish trend line on the weekly charts was breached both last week and this week. For the bull’s sake, let’s hope that light is not the headlight from an oncoming freight train. Hedgers: No change in recommendations. Soybeans: March beans settled up 6 ¾ cents at $9.90 1/2 which is the highest settlement in 1 -month. Early on, beans let the bullish band wagon today, at one point coming within 2 ½ cents of challenging the $10.00 level. For the week SH gained 17 cents. New crop SX gained 11 cents on the week to settle at $9.71 which is also a 1-month high settlement. Chinese demand was better than expected this week. We have also not seen a cancellation in about 3 weeks, which seems completely out of character for Beijing… With harvest going well in South America and Brazilian meal $53/MT cheaper than our US meal one has to wonder what’s levitating beans to 1-month highs? This rally seems to be more about funds jockeying pre March option expiration, and the holdover of folks who got run over taking the other side of the Goldman roll which ended yesterday. With a holiday shortened week on tap, combined with the Chinese being on hiatus for Lunar New Year; traders most likely will focus on March option expiration and which options they will target for oblivion. Hedgers: No change in recommendations. We head into the Ides of February on a high note. The screens were green across the board. From cattle to hogs to cotton and crude oil the market ended the week on a positive note. The S&P 500 closed at a new record high of 2096.99. The Dow came within 70 points of a new high settlement as well. The lone “losers” I could spot were milk futures and the 10-year note and 30 year bond. On the plus side, US farmers saw a $10.00 print on the May board, while March just missed that $10.00 print once again! I wonder again, how many bushels are on line at elevators around the country trying to get that $10.00 print. Wouldn’t it make sense to drop your price target a penny or two at the elevator? My point is, don’t leave 50 cents of profit on the table trying to get the last 2 cents on the board price. If you’re worried it’s going higher after a cash sale, then re-own those bushels on paper with a call option here with us. Manage the risk and keep your eye on the big picture. Have a great and safe long Holiday weekend! We will back in the office Tuesday morning. CER
