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Wednesday
April 30th -
Corn -
Higher on wet weather. Yields will be affected after May 10th in
many areas so this will cause some supply concerns and make the summer
months critical. For now we are not doing much. I have put
on a long corn futures position and sold July 630 calls against it.
I would like to sell some Puts but for now, I'll hold off.
Wheat –
Still flirting with $8.00. We are out and waiting for a reason to
be long.
Beans
– Higher as a lot of things spook traders these days. Weather can
be a concern but I still think overall fundamentals support a run later
this summer. I am not trading here at all yet.
Rice
– Limit down again and not too surprising but I doubt we are limit down
tomorrow. I expect a bounce in here but we may need one more hard
push down to finish off the first round of selling. There will be
a couple more rounds of selling more than likely as long liquidation
runs its course. We are short and will just add to short positions
on a bounce. There will be one for us to sell so be ready.
Cotton-
We are not trading here at all. Its following the grains for
now.
Natural Gas
– Unchanged in front of the injection report tomorrow. We have
bought this break lightly using UNG instead of futures. Today's
low is now major support in my book and if it is taken out, the break is
going to be bigger than I thought.
Gold -
Reversal up today. It came late so the question is can it
run higher tomorrow.
Dow -Down 11 with a .25 Basis point cut by the Fed.
The market hit is perfect so now what does the Dow do without any more
signs of credit easing by the Fed? Look for down say tomorrow if
it is a buy the rumor sell the fact day and the market has been up on
Fed pricing. If we can go higher, than the market is telling us it
likes the GDP number and fact that the recession is going to be short
and not too deep. The next 5 days should be watched carefully.
Cattle
– No
changes in our ideas here as we like the cash cattle longer term.
Tuesday
April 29th -
Corn -
The market opened sharply higher only to be greeted with heavy selling
as profit taking came in on fear of dryer weather. From the
comments from our own weather man at
www.WXRisk.com , it is gong to be dryer for two days...then all heck
will break lose. This time of year, weather models have a tendency
to flip back and forth which is what is happening right now. If
the rain is coming back into the picture in a large way after tomorrow
and the weather models start picking it back up, look for the market to
make new highs and this time hold them.
Wheat –
That was close...we almost sold some $8.00 puts after yesterday's action
but held off to see if the market could hold the gains of yesterday.
It didn't and we sold off right to $8.01 which is close enough.
Now we start looking for a reason to own this one and we will start by
selling some Puts. For now, we will give it some room.
Beans
– Firm on ideas of lower acres. Someone is dreaming but let them
dream. Longer term I want to own this one but not until the
acreage numbers are no longer news.
Rice
– DOWN HARD!!! Limit
down at 75 lower with over 1300 contracts offered at limit down.
Now some of these were OCO orders for sure which means "One Cancels the
Other" but even so there were over 900 alone offered in July and that is
a raw number. It is also the highest pool I have ever seen in 20
years of trading rice.
Vietnam announced
today that they too would export rice and maybe up to 9 million tons.
Couple that with Brazil, Thailand, Vietnam and Cambodia, there is going
to be a large supply of rice available even as the press keeps talking
about rice shortages. As more of the market comes to grip with
this, the more selling you can expect. If Wheat is a model of the
break that is coming, we can see that July Wheat broke 36% off its
highest close. If we see just a 30% break in rice, then support is
at $17.50 in July and if we get the same magnitude of break at 36% like
Wheat, then the target would be $16.00 in the July. Now that is
just one scenario and many would say we should not use wheat as an
example, its too much. I agree it probably is too much but if
gives us a worst case scenario. It just also matches the
current cash prices out there...think about it!!!
The first support for
July is at $21.75 and we could be there tonight with a $1.35 limit;
however, let's back track and say again just as we said going up.
When they expand limits to $1.35 many times the market exhausts the
move. We could get a bounce tomorrow from early selling pressure
but a word of caution. The selling was so heavy today and there is
a lot of pent-up selling now waiting for a bounce. With that said,
the funds may be selling hard over any rally.
We are short a
whopping 12.5% and will probably add some on a bounce. We are
firmly in the bear camp for now. Longer term we see rice right
back up in these levels but...we could be wrong about that!!!
Cotton-
July is headed for support at $70.00. Could easily get there
tomorrow. We are not trading here at all.
Natural Gas
– Sharply
lower as crude oil collapses $3.37 cents. This break could test
$10.80 down to $10.50 but it still looks like it should be bought.
The first buy back point was violated today signaling a bigger break but
not a major sell signal. We will watch it near term and see what
happens. Major selling tomorrow could signal an even bigger break.
Gold -
Well, I should have waited one more day to buy a little more gold.
We are now long 50% of our base gold position as we buy this major break
from the March highs. The dollar may fall another 10% which should
let us own gold near $850 an ounce in August. We still are in buy
mode.
Dow -Down 40 and still trading as I write this with 5
min left before the close. I still see it lower near term.
Cattle
– Down $1.05 in a general commodity market sell off. No
changes in our ideas here either.
Monday
April 28th -
Corn -
Sharply higher on more wet weather which is forcing some farmers to
switch to Soybeans. Corn could easily make new all time highs in
the next few days as a real scare for supply grips the market.
Some covered calls may be a good play here in the morning.
Wheat –
Well I have
been hoping for a check of the $8.00 level in July and the market today
told me it was going to be hard to get there. We will be looking
to short some July $8.00 Puts on a break near term. By the way,
today was a massive key reversal up.
Beans
– Lower as the
idea of huge Soybean acres grips the market. The more rain over
the next 10 days the more likely the bean acres are even larger than
first thought. Farmers are not shy about moving to beans with
fertilizer costs as they are. Longer term we will want own this
one but near term, some scared longs are going to dump.
Rice
– Limit
down.... Once again the market moved to limit down the second time
in a week and this time on heavy volume with several hundred contracts
offered at limit down. There is no synthetic trade available as
the options are not being traded which sets tonight up as being very
interesting. As I type this, the market shows to open 9 lower in
Sept and 8 lower in July. Sure, and I have a bridge in San
Francisco for sale. Look for the selling to keep coming in here
near term. We are 6 1/4 % sold and want to get to 12.5% NOW...
We actually got there today. Why???
The question asked me
is this...are you bearish? My answer is yes and no...I am bearish
near term but bullish longer term. Can US rice trade over $1250
ton Houston or NOLA? Sure, but can it do it right now? I
don't think so. When everyone is bullish, traders must start
looking for a reason to sell it. When Thailand comes out and says
they will sell and export rice while increasing acres...the news flow is
starting to change.
http://www.upi.com/NewsTrack/Business/2008/04/28/thailand_rice_exports_to_continue/3196/
My job is to identify risk...plain
and simple!!! THERE IS A RISK RIGHT HERE!!! Major support in
July rice futures is $4.00 lower and if the funds start for the exits,
they will come out in clumps and who is going to buy it? The mills
are out until it breaks $2.00 at least and the other bulls in the market
are already in it long. There needs to be a house cleansing here
and it will not be pretty.
A final thought. I have been
doing this for 32 years (hard to believe) and I know every market run is
different and this one is as well but this run looks to be ending like
they all do...on bullish news and as I have said before...the
fundamentals will stay bullish right through the top. BE CAREFUL.
As for me...I am selling here. If I am wrong, it won't be the
first or last but the odds have changed and the market is looking
extremely toppy.
Cotton-
Rally faded today and is testing major support at 70.00.
Natural Gas
– Up 21 in July and $12.00 is now 42 cents away from today's high.
While the market is overbought and a correction tomorrow is certainly in
the cards, conditions remain ripe for the market to move higher near
term. $11.10 is the buy back point and a close under there
tomorrow would signal a more significant correction.
Gold -
Up $6.00
and back to $900 for August Gold. We are buying a little more of
the GLD ETF right here.
Dow -Down 20 in a quiet Monday.
Cattle
– A little higher...we remain bullish and believe more good news is
coming. Owning cash cattle is good here.
Friday
April 25th -
General Comment
– I have nothing new to talk about tonight. The rice rally
Friday sets up a test of the contract highs. Corn is back and
forth looking at weather and ethanol pressure. Longer term
we may see some problems with ethanol but near term I doubt that stops
the advance later this summer.
All in all, nothing
has changed this weeks so our comments form Wednesday and Thursday
remain our ideas. We will watch the market on Monday and take a
full look at everything Monday night.
Thursday
April 24th -
General Comment
– In
Chicago today on a quick trip to the trading floor. Market action
continues to be dominated by non-agricultural participants and it has
many traders there concerned. A dip here could be much bigger than
expected in all of these grains as funds dump positions they were going
to keep.
Corn -
I must admit I am more worried about corn near term. The talk of
dropping ethanol subsidies is bearish to corn big time and while I am
not sure anything can happen in the short term, some traders think just
the talk will bring in heavy selling. We will may need to get more
protection on. Note Friday is the last day for options and our
short puts will expire out of the money unless we are down over 16
cents. If at 11:30 we are lower by more than 12, cover the
560 Puts at the money.
Wheat –
July heading for $8.00. If general commodity selloff continues,
$8.00 will not hold this break.
Beans
– Lower with corn and wheat. No reason to hold prices at these
levels if general commodity selloff continues.
Rice
– Limit
down.... Every time we have sold off the last month it has never
been to limit down....today it was. In the over night session its
down another 60 cents. Look out below as this one may have indeed
topped. A key reversal down is now followed by follow through
selling. The tide has turned and we could see the market limit
down again in the Friday session. We want to Sell NOW our first
25% of our base position which is 25% of out total production. So
in other words, sell 6% of your production now using futures.
Cotton-
Sharply lower with the other Ag markets.
Natural Gas
– Higher and looking to go even higher still. A major break in the
dollar may hold this one back a little but there are a lot of concerns
as to the ability for Nat Gas to sell off a lot in front of Hurricane
Season.
Gold -
Under $900... We want to own it down here but will wait for
a buy signal.
Dow -Up 85 as inflation fears are falling with the
commodity break.
Cattle
– Firm
with little to talk about.
Wednesday
April 23rd -
PLEASE
NOTE.... NO UPDATE UNTIL FRIDAY MORNING AS I AM IN CHICAGO
THURSDAY
Corn
– Lower
in a back and fill market as we consolidate and look at planting
progress. I expect the market to test the recent lows just because
there is enough of a break in weather to let out some of the air.
Seasonally, the market likes to work lower this time of year; however,
weather will continue to become a major issue longer term.
We will let the Puts
we have expire worthless...we hope. No other trading is
recommended.
Wheat –
A nice rally from early lows was totally erased by the end of the
session. As I said last night, July should test $8.00 and maybe
lower before the pre-harvest lows are in and we want to own it again.
Beans
– Down 4 with
a rally erased here as well. Funds are selling and maybe they are
starting to feel some heat. (Read our comments from this morning
on the CFTC). We want nothing to do with this market right
here but longer term we like it higher.
Rice
– Another
strong day with fair volume. Thailand is now seeing $1000 per ton
according to some sources which has been a lot of talk by exporters over
there. No sign of a top again today as we held firm from last
night and couldn't sell off. Today's close was again into new
contract highs.
Until I see
volatility associated with a strong day down, I can't see any reason to
sell this one yet. $25.00 is still possible and even higher but I
am looking to sell not owning it here for a couple of bucks more up.
The break is going to be the next big move in my opinion.
Cotton-
Unchanged in quiet trade so nothing to do here.
Natural Gas
– After going
lower early, NG came roaring back and finished near its high. We
bought UNG today as thee is no sign of a top here either and the market
looks like $12.00 in the July.
Gold -
Down $20
with the dollar sharply higher and crude oil over $17.00 in the July.
I am wanting to buy a break under $900.
Dow -Up 37 with 25 minutes left. No comment
here.
Cattle
– Up 42 as we inched higher. That could be the thing near
term as selling is not near as aggressive as it was.
Tuesday
April 22nd -
Corn
– Bouncing
back to touch limit up ay one point, the market finished strong as funds
were in buying all commodities across the board. The dollar traded
down to $1.60 for one Euro but held just over that ratio. The
dollar is almost free for world participants and that is hurting us and
helping us at the same time.
We remain short the
May Puts that expire on Friday. We will look at June options early
next week.
Wheat –
We ended higher and well off the lows but this was an inside day which
means we never took out the range from yesterday. We will wait but
we feel longer term we will be higher but it could start from neat $8.00
in the July.
Beans
– Sharply higher on fund buying and general feelings of bullishness
across commodities. The funds were buyers and took the market
higher. Just like corn, there is no reason to sell here.
Rice
– Limit up
today and in the night session we are another 40 cents higher with a 75
cent limit after today. No sign of a top as the market keeps
hearing bullish news. We see no reason to do any selling here but
we are watching the action closely. Wet weather for Arkansas has
some traders nervous and while yields could suffer on plantings after
May 1st, the driving force here is not Arkansas rice. Keep your
eyes on the ball and that is Asian rice prices which were 30% higher
this week. When we start to see a strong supply of rice from
Thailand exporters, things will get bloody but at what price.
$25...$30. Who knows but it could happen anytime so be ready to
move here. No matter what, at $25.00 I will sell something...no
matter what!!!
Cotton-
Strong day today as it could not escape the buying in all commodities.
No change in our stand aside approach.
Natural Gas
– Lower today consolidating the breakout to new highs the last few days.
Looks higher from here for now with maybe $12.00 written all over it.
Crude Oil closed over $119.00 today.
Gold -
Up $8 with everything else higher as well. Another push for
$1000 could be around the corner but a close over $950 is needed to
shift it into another uptrend.
Dow -Down 105 with crude oil worries.
Rightfully so....
Cattle
– Cattle
tried to break with corn up but couldn't and finished right around
unchanged. The battle was won but has the war been won on the
current bear dominance. Looks like it to me. Stay long cash
cattle and increase if you can.
Monday
April 21st -
Corn
– The
market touched limit down before coming back 10 cents to finish down 19
to 20. Planting progress was lower than expected in the after
close report; however, the market is lower tonight after starting firm
and running 5 cents higher. We will get this crop planted but the
selling here is bigger than I expected. Today's low will be tested
again more than likely so for now we will hold where we are.
We will remain short
the Puts as they expire on Friday. We will also look at selling
some June Puts but not just yet as the market needs to work through some
selling her near term.
Wheat –
Down sharply
and still falling in front of harvest pressure. We will buy Puts
when the time is right.
Beans
– Sharply
lower today and lower again here tonight. We are long term bulls
but near term it looks weak.
Rice
– Down sharply today on profit taking but the selling dried up once
again. The commercials have been on the buy side according to
sources along with the funds but open interest has been rising.
Tonight the market is up 48 in old crop and 36 in New crop and looks to
test limit up tomorrow. Still no sign of a top but the volatility
is suspicious.
Cotton-
Down hard today as the market looks at outside forces and old crop
fundamentals and both are bearish. We are not ready to own this
one.
Natural Gas
– The market
has broken into new highs with the funds buying it everyday. Looks
higher from here.
Gold -
August
is holding under $925.00. Another look at under $900 would be
nice. The dollar was lower again today and the Euro looks to trade
over $1.60.
Dow -Down 24 and holding gains from last week.
Looks higher near term.
Cattle
– The cattle on feed report was considered bullish but the actual
numbers are still higher than the last few years when you look at
placements. Demand is going to need those cattle but we could hold
in this level for a while. Read our comments from last Friday....
Friday
April 18th -
Corn
– A sharp break early couldn't produce sellers and corn cam back to
close down 4 in a consolidation day. Weather remains the main news
and the market broke after the showers moved through the wettest areas
of the Midwest. Even so, there are more on the way and some
concern for even lower corn acres is showing up in comments from those
affected areas.
We remain short Put
options and in some covered call positions as the market seems to be
range bound. I still recommend short the time premium in the 570,
560 and 550 calls with orders in for this week to buy them back 1/8th of
a cent. A move over $6.16 is need to re-establish the uptrend.
Wheat –
Down 43 under pre-harvest and post-rally conditions. $8.50 is
support in July and then $7.70. I think odds favor falling under
the $8.50 level before once again running higher. We remain 50%
sold and will long after harvest is done.
Beans
– Strong rally off early lows as some traders start looking again at the
possible strike in Argentina. This would affect Brazil as well and
move some of the bean shipments to the US. The rally here today
may be more of a basis change in the North American and South America
markets then anything but longer term, weather will again be the main
focus. We are not trading it right here because the
fundamentals are being affected by other sources than total supply and
demand. It is a location market right here.
Rice
– New crop finished basically unchanged to up 8 while old crop finished
in the middle of its range but still higher at $24.01 for July.
Still no sign of a top and while today had the start of the volatility I
am looking for, the selling dried up once again about mid-day and the
market has stalled. I actually shorted the market this morning in
old crop and new crop to see if this wasn't going to be the day. I
covered the old crop position later when it was obvious that it wasn't
going to finish sharply lower and I am not testing fate in the old crop
here until it gives up.
In the new crop I
held it because I had a big profit in it and will take the chance over
the weekend but I am not so sure of that either. I am still
looking for the top and want to sell it as much as I can comfortably.
I am a natural bear and would much rather make money in a down market
than an up market anytime. Read the comments below because that is
how we are approaching it.
When this ends, it will be violent and the chances to get on board (or
off board as the case may be) will be there for only a short time.
While I cannot tell you where it is going, I can tell you it is going to
go down sharply at some point but it may not start for another 5 to 10
bucks or even more. WHO KNOWS? Main point is for you to keep
your eyes on the ball. Selling some of the 2008 crop on this run
is CRITICAL.
Cotton-
Down a little more today but there is nothing to do here. We have
long term bullish factors but near term a big supply to work through.
Natural Gas
– Where is the break??? Boy oh boy this is nasty of you are short
and need to buy. Concerns over LNG and supplies longer term has
the funds in here now and buying everyday. We are running out of
time for a major break before Hurricane season.
Gold -
Down 27 bucks today as it flirts again with going under $900.
I want to own more but I am going to be patient. I am long 20% of
my base position still.
Dow -Huge day higher on Google results. The
market is looking for resistance and proof there is a recession.
Both are coming.
Cattle
– Today's cattle on feed report is bullish and the market should be
higher on Monday. We have had a $6 rally the last two weeks so the
market was already telling us that we have worked through some of the
back log on cattle. This report moves me closer to wanting to own
it in a serious position. I will look for a break but I can see a
sharp move higher here first so on Monday, I will probably sell some
Puts or buy futures after the initial buying from the report is done.
Remember, cattle has
had to work through the higher price of feed and now producers are
gearing up in size to match feed costs. That sets up a dynamic
move higher in cattle. In other words, the move from $4.00 corn to
$6.00 corn is just now ready to hit cattle prices. To prove my
point, Corn traded over $4.50 for the first time on December 12th.
On that day June Cattle were at 94 cents. Today corn is at
$6.00 and June cattle closed at $92.50. The whip saw in this
market may be getting ready to happen.
One more thing, its
one thing for the shopper to complain about high food prices like milk
and bread. IT IS SOMETHING ALL TOGETHER DIFFERENT WHEN ITS MEAT!!!
Get ready, it is coming.
Thursday
April 17th -
Corn
– Basically unchanged as the market seems to be consolidating.
This is very good for short options especially the Puts. As I type
this on Thursday night corn is up 2 cents in the overnight
session. Rain is in the eastern Iowa area and headed into Illinois
and Missouri. Right behind this system another one develops and so
the weather is going to stay wet near term. This should keep the
market firm to sideways for now.
We remain short the
Puts and they expire a week from tomorrow. We are going to hold on
to them for right now and may sell some 570 Puts tomorrow and go ahead
and cover the 530's. Next week, I expect to bleed off all these
options and then we will start looking at June options which are based
on July Futures.
Wheat –
Down 11 as once again the trend is lower and the seasonal tendency is
also for lower prices as we head into harvest. Volatility is
dropping here as well but we are not willing to sell options at this
point of the season.
We will sell rallies
after harvest and will go into the field 50% sold.
Beans
– Up 7 but the market is still working out the planted acres idea as
well as world demand as Brazil's harvest starts to finish up.
Available supplies are higher than they will be for the next several
months and the US crop must be good with the global picture still
bullish. We might do some Put selling here too but not right now.
Longer term we are bullish.
Rice
– Limit up
again as now prices in Asia soar higher as well. It is even being
reported that Asia prices are higher than the US price. Several
years ago I spoke at a meeting in El Campo Texas and stated that China
would become a major impacting country like we were told they would
become back in the 80's and 70's. This has come true but is now
being compounded by supply needs everywhere.
$25.00 is a good
number but there is no reason it has to get there or can't go a lot
higher. $30.00 may be the high...who knows. All I know is that
when this ends, it will be violent and the chances to get on board (or
off board as the case may be) will be there for only a short time.
While I cannot tell you where it is going, I can tell you it is going to
go down sharply at some point but it may not start for another 5 to 10
bucks or even more. WHO KNOWS? Main point is for you to keep
your eyes on the ball. Selling some of the 2008 crop on this run
is CRITICAL.
Cotton-
Lower as the market recoils from Yesterday's massive key reversal down.
We see no reason to trade this one but longer term we will get in here
as cotton is a sleeper as well.
Natural Gas
– New highs again and there is just no stopping it. While I can
see a break at some point, the fact is we are in a general dollar and
energy play which is bullish for gas.
Gold -
Same
thing I wrote on Tuesday....Nothing
to say here again. Short term trend is higher but there is some
good resistance between 950 and 970. We remain 20% long our base
position.
Dow -Up 1 whole point as earnings continue to come
in. Some look good some disappoint. We see the upside as
limited except for some certain sectors. The recession is not
priced in there but just how bad of a recession will we get? We
will keep an eye on it but like buying breaks in certain sectors.
Cattle
– Another day up for cattle. We are almost $6.00 off the
lows. As we have been saying, this is a sleeper and while we might
not be able to keep this run going right here, I'm not so sure we won't.
We are long in the field and ready to buy more and get to 100% of the
inventory we can cover.
Wednesday April 16th - Short one tonight
General Comment
– No changes in any comments. Corn was a little lower with
beans off over 30 while rice and wheat were both higher.
Volatility in corn, beans and wheat continues to contract while rice is
hanging in there and continuing higher. We will have a full update
here tomorrow but there has been no change in anything for us so the
comment of last night still stand.
Tuesday
April 15th -
Corn
– Higher on weather concerns and energy. Beans sold off as
did wheat so there could be some profit taking in the next day or so.
More wet weather is a concern for the corn planting issue.
We are still bullish
here and do not see the overall fundamentals of low supply being offset
even close by what is happening. We are short Puts as a small
defensive long position on the 1/3rd we have sold. Otherwise, we
want to remain long into the weather market realizing a dip is likely in
the next few weeks as we get the crop planted. No changes near
term but do not be surprised to see a pull back.
Wheat –
Strong day today to correct some of the over selling in here the last
week but it didn't hold and the market worked lower. We think the
selling pressure from harvest will continue near term but longer term,
we will return to the idea of a short supply and farmers needing a
higher price and holding for it.
While I can sure see
being short some Calls here I can't bring myself to put us in that
situation. Sure it would have worked but I like selling Puts and
following them higher rather than selling Calls into a market that can
ignite at anytime. We are 50% sold and will do some minor buy
backs using options when the time is right.
Beans
– Higher but well off the highs. I am not sure this short term run
is over as eyes remain on South America and the workers situation down
there.
We have done nothing
here...no sales and no futures. We did sell the 1240 Put and took
it off today as we mentioned this morning. If you didn't buy it
back in today want to hold it that is fine, I am looking for another
play on a short Put and wanted to be clear of this one first. I
would like some selling in July Beans to sell a Put into.
Remember, selling increases the value of the Put we are trying to sell
so it that is what we are looking for.
Rice
– Limit up
again as there is just no selling in here. Looks like $25.00 for
May is now the target but again, the limit has increased to $1.35 and
for some reason that works against a sharp move higher so don't be
surprised to see some profit taking again in here in the next couple of
days.
There is no sign of a
top and we are waiting for one as the market is attempting to ration the
supply. One bit of bearish news could send this one into a tail
spin that will be extremely volatile so again, be careful.
Cotton-
Higher again today and pushing back toward 80. 81 is a 50%
retracement of the break so watch out for that level. We are not
trading here.
Natural Gas
– More up
today as there is just no sign of a break. While I think we will
get one that we can own, it may be another week or so.
Gold -
Nothing
to say here again. Short term trend is higher but there is some
good resistance between 950 and 970. We remain 20% long our base
position.
Dow -Up 60 but not going anywhere.
Cattle
– Good day up today as cattle broke through resistance. We
remain long term friendly to cattle prices but there are some speed
bumps ahead for sure.
Monday
April 14th -
Corn
– Up 7 1/2 with Dec up 9. Market is looking at wet weather
forecasts near term and then longer term weather is also looking a
little wet. Planting is behind schedule but it is very early.
Look for more upward pressure near term but a shift is coming from too
wet to too dry and that break will be something we want to prepare for.
We will remain short
the May Puts for now looking to take profit on a sharp move higher.
We are short 530 to 560 Puts but do not want to add to them or roll them
higher for right now.
Wheat –
Still under pre-harvest pressure and looking for this selling to
continue near term with a back and fill action. Buyers are relaxed
right here thinking that they can buy hand to mouth for the next month
or so with the largest supply we are going have during the time directly
ahead. History says to be short here (sold at 50% qualifies) and
get ready to start adding a few cents by selling some Puts but for now,
lets wait and see how much more downside is here.
Beans
– Sharply higher as beans attempt to put weather premium in the mix.
Today was an outside day higher and closed right next to the highs for
last week. A move to $14.50 in May remains possible as the market
tests resistance. We will hold short the $12.40 Put for now.
We may try and take profit on that trade at 2 cents tomorrow which
should be possible if May gets close to $14.50 resistance point.
Rice
– Limit up after the market gets news that the Philippians may be in the
US market for rice. Before you laugh at that remember these
countries that need rice will pay anything for peace in their land.
If our government was smart they would step in and negotiate a long term
buying agreement and provide some cheaper rice for them but again, that
assumes our government would step up for rice farmers.
As I said last night,
there is no sign of a top so let her rip. Also, the news out of
planting season is not good as many farmers wish they had never planted
any rice just yet. Even the early rice is not looking that good
but the fact is, rice can come a long way quickly so before we write
this one off lets wait and see how things look in another two weeks.
Cotton-
Holding here as the market looks for direction July needs to trade over
80 to establish this the trend higher.
Natural Gas
– More cold weather and concerns for energy prices in general has Nat
gas higher again today. $10.50 is resistance and it could be
tested again in the July.
Gold -
Not much happening here. GLD was a little lower late in the
afternoon trade but there is no sign of a change in direction. A
move under $911 in the August spells more of a sell off and testing of
support.
Dow -Down 23 and 65 off the high. Looks lower
still and could test the 12,200 level yet this week. 12,000
remains my target near term.
Cattle
– Up 7 and just over 80 points off the low. Looking at cattle
makes me want to sell corn. I think we have a low here for now but
it could be tested especially if corn moves higher on more wet weather
forecasts.
Friday April 11th -
Corn
– Down 10 as major profit taking took all commodities lower.
The frenzy about commodities is dying here and some of the selling may
be strong enough to move the market toward $5.50 but over the longer
term, we see corn higher as weather will start to become more and more
important on the crops price action. The next few days are
expected to be dry but the forecasts for 5 to 10 days out is wet.
We raised some of our
short Puts by selling the 560 May Puts rolling them higher from the 510
and 490 Puts we had taken profit on this week. We will risk this
trade to under $5.50 in the May. Remember these options expire in
two weeks.
Wheat –
We tested the $9.00 market as we suggested would happen and with that,
still no sign we have found a major level of support. We remain at
50% sold looking for lower levels to start probing the buy side.
Beans
– Down 23 today as the commodity wide sell off hooked the beans lower as
well. We have sold the $12.40 put to add to our hedge but if this
selloff gets more severe, we will get out of that position and take out
licks. I like being short some premium in May because the value of
the options is so high but again, maybe there is a reason they are so
high. We will be looking for support early nest week.
Rice
– The reversal high of $21.55 remains major resistance. The chart
continues to look toppy but there is no confirmation and it will take a
$1.00 lower move to do that.
Cotton-
Down a little today. We have no reason to trade it....yet!!!
Natural Gas
– Warmer
weather is on the way and some of the buying here has been over cold
weather surprises. This is what I call the last sucker rally.
I look for a correction but summer is on the way...and hurricane
season!!!
Gold -
Down today but with the dollar lower, the selling here was muted.
We want to own GLD lower or on a break out to higher levels. We
remain at 20% long in the GLD fund.
Dow -Down 259 as the market looks at the second shoe
starting to drop...earnings. Hello recession. GE reported
much lower earnings and they have such a wide foot print, it is the
beginning of a series of poor earnings. Look for 12,000 to be
tested and maybe even the lows around 11,800.
Cattle
– A
little higher on the break in feed grain prices.
Thursday April 10th -
Corn
– Lower export numbers may have contributed to a surge in profit
taking as corn sold off following new all time highs overnight.
The market finished down 9 with a big hook reversal down. Maybe
the market is thinking another shift back toward corn in plantings but
that is no likely with the corn at $6 and beans back to $13. All
in all, we could see another 10 cents down but a major break in corn is
just not likely.
Wheat –
July looks to
test the $9 mark near term. This is supply pressure as buyer try
to await the harvest. As we get close, we may want to buy some
calls and sell some out of the money puts for you who want to do a buy
back. Patience is best as we see no sign of a low and it could be
another several weeks before it surfaces.
Beans
– Sharply
higher. More concern over a strike in Argentina surfaced along
with good demand in the export numbers. There was even technical
buying as beans broke their down trend line. More upside is very
possible here near term.
Rice
– The reversal high of $21.55 remains major resistance. Good
export sales along with commercial buying was talked about today as the
main features in the market. I cannot tell you that there is no
sign of a top because the reversal remains; however, the action today
certainly does not indicate we are topping. I am staying out of
this one for now but I am looking for a good reason to sell it.
Cotton-
Up 95 as the chart builds support. At some point the market will
pull back to check the support line but for now the market looks good
for more upside.
Natural Gas
– A pointing down spike today but still closing higher.
Yesterday's low becomes support near term and a possible 50 cent break
is also in cards given the time of year and current forecasts.
Tough one to call but we still hope to own a bigger break.
Gold -
Yesterday's
outside day pointing higher was met with a hook reversal down as the
market is gong back and forth. We remain at 20% long using the
Exchange Traded Fund (GLD).
Dow -Up 54 as we consolidate and take a breather.
Cattle
– Big day up on ideas that corn has stopped going higher for the
time being. Watch the corn and it will give you insight on cattle
movement.
Wednesday April 9th -
Corn
– A lower USDA carryover number brought out the bulls as most
readers look at the carryover as the highest it will be for awhile.
Corn finished up 13 in May and closed over $6.00 for the first time
EVER!!! Today's high of $6.16 is now resistance but the market
looks poised to move toward $6.50.
We rolled options
higher buy selling more May premium. The $5.60 and $5.80 Puts were
attractive and yet, there is some risk here in sell quite that high.
I like selling the $5.60 June options for 11 cents tomorrow which gives
you a break to $5.49 to worry with. I doubt the market can have
that big of break so this is not a bad way to pocket another dime as the
market goes higher. We would do it on the third you have sold or
what ever percentage you have sold to add to your sales price. We
have already added 25 cents by selling Put option premium on this run
higher.
Wheat –
Down 2 to 3 cents and looking like it is in its normal harvest pressure
mode. We are not selling anything right here and do not even want
to wade in with options. We like 50% sold and we will hold at
that.
Beans
– Last night I said there was no reason to sell Puts...that changed
today. We sold some May $12.40 puts but that option broke
hard today after trading limit up. With the Argentina Farmer
strike back on the front burner, beans could get a big pop right here.
May options expire on the 25th so we have two weeks from this Friday to
worry with it. No other sells are recommended as this one can move
a bunch in either direction and quickly.
Rice
– Read last
nights comments. Today's action puts the massive key
reversal down yesterday at risk. Technically, the market still
looks toppy but the action is not that bearish as we did a hook reversal
back up today. Last night I told you we went short, well today I
covered it and made a whole 2 cents.
The fact is we do not
have any reason to short it right here as the technical action is not
conclusive. Even so, the action of a reversal followed by another
reversal back up is indicative of a top. If we start to reverse
again, odds go way up that we are in the throws of a major top in rice.
It may not happen and we may just keep on trucking, it is too close to
call. We will watch for another reversal pattern and today's low
being taken out at $12.00 in the May. If those two things happen,
it looks a lot like a top.
Cotton-
Up 190 points as the market is looking more and more like it has
bottomed for now.
Natural Gas
– Another strong day as the market weighs in on energy prices and
weather demand. I'd like to sell this rally but
man-oh-man...I just can't do it. Look for more strength here near
term and then maybe a hard hit lower into May.
Gold -
A huge
outside day up today indicating higher prices to come. We are long
20% of our gold position and for now will hold at that but we may go
ahead and do some more buying. I am watching th4 dollar here as
well. If it starts higher, gold will break back into the low
$800.00 level with a strong green back rally. .
Dow -Down 49. No change in our comments... a
weaker tone is still our best bet.
Cattle
– Down hard in June today. The low from 9 days ago looks to
be the next level of support.
Tuesday April 8th -
Corn
– A quieter session today as the market held just above unchanged
levels all day. In fact this looked more like a normal day for
corn than what we have seen in some time. The volatility range is
dropping now with range down almost 4 cents from its high the end of
last month. This would indicate more two sided trade is coming and
the end to such volatile days. That would be a good thing
especially if we are short Puts and Calls (Covered calls only please).
We bought back some of the Puts today and sold some June 540 and 550's
but we didn't do it all. The bear spreading today seemed to be
telling us to wait for now. It may have been a one day thing but
the market really didn't show the same power as it had last week and the
spreading looked a little negative. Tomorrow we could continue the
upward track and if so we have done some of the selling in Puts we
wanted to do; however, on a dip we will get more puts sold at lower
strike levels and increase our position.
Wheat –
Still no reason to do anything new here. Volatility range is
dropping as well and is now 20 cents off of its highs last month.
This means things are settling down here too.
I don't
see any reason to be trading here right now.
Beans
– Lower today
but in a quiet session as well. I would love to sell some Puts
here but no reason to do that right here.
Rice
– Massive Key-Reversal
Down Today...We could knock $1.50 off this one pretty fast IF and that
is a BIG IF...we see more downside follow through tomorrow. I
couldn't stand it so I shorted the market today. Not very big but
I needed to scratch that itch and will probably have it spread like
poison Ivy all over me if the market turns right back higher.
Three big things
today. First, the expanded limits set up a failure of the market
to advance. Unless we pegged the market limit up early, we were
susceptible to profit taking. Second, this was Tuesday and for
some reason, reversals happen a lot on Tuesday. Thirdly, all the
news about shortages are in the market by now and the buying is becoming
weaker and weaker in who is participating.
In general, I don't
like the market but can actually see it still higher if panic buying
comes back into the market. For me, tomorrow is a huge day to see
how this one responds. Tonight should give us some clues.
Cotton-
So much for looking like a bottom.... It still could pull it off but
today's action is negative and may allow more selling near term.
Natural Gas
– A little
lower. I would like to own it a lot lower. Time is on our
side for right now but nit for that long.
Gold -
Lower today. We will own it around 88 in the June on a break
and only with at a 25% level. We still like trading the GLD
Exchange Traded Fund.
Dow -Down 36. No change in our comments... a
weaker tone is still our best bet.
Cattle
– We will switch to June now. Market was quiet today.
we would own a good break.
Monday April 7th -
Corn
– Lower
today but how low can it go. We want to use this break to roll our
May short Puts into June. Remember, this uses the July futures as
the basis for the option. We are going to sell the June $5.60
calls for 15 cents or better after the open but if the corn is not
lower, we are going to do it at the market. We will risk this
trade to futures trading at $5.65 in the July. Once those are in,
we will place orders to lift all 490 to 510 puts at 1/2 cent. I
still see corn higher but beans and wheat can bring them a little lower.
Wheat –
No change in
our position. I see the market lower over the near term followed
by another rally after the harvest pressure ends. It may not be
near as powerful as last years run but it should net us higher levels
than what we have right now.
Beans
– No sing of bottom here as today's action is bearish. It also
sets today's high as major resistance. IF that is taken out we
could rally a bit. Until it is, we will remain out of the market
looking for some safe option plays.
Rice
– All the news
is bullish. I was on Bloomberg TV this morning in a phone
interview because of all the Asian issues over rice. It is and
will remain the top story for awhile overseas. Thailand has
announced that they have enough rice to export to their clients and will
do so without taking any rice out of their strategic reserve.
Remember this market is up on supply fears and hording. As the
governments address those issues, we could see a major correction.
Here in the United
States, futures are higher as no commercial selling is occurring
anywhere. You and I are not guaranteed that we can get even close
to the new crop futures price as basis levels remain at historical low
levels and no one is offering space for deliveries at this price.
In other words, this is a paper rally and cash prices are not
representative. Tomorrows limit will be 75 cents. Watch it
closely as expanded limit days are key days.
Cotton-
Up 190 and looking like it is trying to bottom. Let's see how it
goes near term.
Natural Gas
– Cold weather
has it higher along with the whole energy complex. If crude does
not make a new high, we could see some major profit taking and a price
correction. If it does make a new high, we could see a leg toward
$120 a barrel and that isn't going to let Nat Gas correct much if at
all.
Gold -
Needs a
move over $9.60 to reestablish a bull move.
Dow -Up 3 and bracing for earnings.
Cattle
– We need a close over 92 to change this bear market.
Friday April 4th - Very short
tonight as I am very slow connection...
General Comment
– OK...Nothing
is happening any different than what we have been saying and we have no
changes. Just hang in right where you are. The markets still
look higher as now fear is setting in that the world is out of
food....not true but tell the buyers that. The safe rather than
sorry scenario is going to drive prices even higher...
Thursday April 3rd - Very short
tonight as I am very slow connection...
General Comment
– Everything was higher again today. No new news to talk
about in any markets so we will remain where we are. A full update
on all the markets over the weekend.
Wednesday April 2nd - Very short
tonight as I am traveling...
General Comment
– Everything was higher today as the market starts to focus in on
planting weather instead of intensions for the summer crops.
Shortages are everywhere in everything so while we might see breaks in
the market, longer term we see it all higher and will not be making any
changes in the market advise tonight or tomorrow for that fact.
Since I will be traveling, I'll make this short and sweet. Also
please note there will not be a morning update tomorrow.
Tuesday April 1st -
Corn
– Nice reversal back higher today rejecting yesterday's selling.
We need to move up through $5.88 to setup the move to $6.05.
Market still looks bullish to me with downside breaks limited and buying
opportunities.
I am still selling
puts. The $5.40 today looked ok closing at 7 cents...its like they
are giving money away. What odds does May have of going under
$5.33 over the next 24 days. I also like selling the $5.60 Put and
buying the $5.40 put on a break. You need to be able to do that as
a spread for about 1 cent to make it look better but its not a bad risk
for a credit spread with such a short time left before the options
expire.
Wheat –
Still lower as the marker embraces a bear move for now. Once we
get closer to harvest bottoming action should occur but that can come
from lower levels. We are in position her at 50% sold.
Beans
– Nice reversal here today catching the bears by surprise. The
selling just dried up. Let's see how high it can go.
Rice
– Well we got
follow through selling from the reversal spike yesterday so the chart is
turning negative. As I type this we are down 15 overnight.
We could get a sharp break but again, this one is very hard to call.
We have been very straight forward with everyone here that 1st, the
market will be bullish through the high. 2nd, the hording issue is
not that bullish overall because the supply is still there its just not
free to come to the market. It is bullish near term but it is
artificial and when it ends, well, it will bring about lower prices as
the selling overpowers buyers.
The real problem for
most technical traders is that the strong sell signals are still $1.00
lower.
Cotton-
Up 11 and reversing higher today. We may have found some support
for the time being.
Natural Gas
– Lower today as the market looks to work lower. We want to own
this one especially if we can get a break under $8.50.
Gold -
Lower
again today as the luster is off of this one right now...don't worry, it
will return.
Dow -Up over 390 points on news that the banks in
Europe are writing off debt and that indicates we are about through all
of this write down stuff and the economy is about to turn...ok...sure!!!
Cattle
– Still
weaker and and no sign of any support. The hog's aren't helping
either. Still looking for a low but it may not come for a while.
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