Today we had some bearish news for CZ. A private service came out with some bearish estimates on Corn yields and production. We had a cooling off of the 2 dollar wheat rally which saw 5 days in a row of gap open higher trading days.
Turn around Tuesday gave us weakness in the corn and wheat, while the spreaders bought beans against those sales.
Fundamentally, Beans still have the best chance to give us a bullish surprise during August. Hot and Dry could give us a decrease in yields. How likely is that? Only your guess is as good as mine. I would have to say its 50/50. Which is most likely why we had a bounce in the beans late in the day. Bottom line, August is the time where we generally have some astounding volatility in bean prices.
I don’t suspect this year to be any different.
Generally, I am more worried about lower prices in new crop corn. We have not had a full blown bullish fervor. Monday’s trade up to 418, was met with more selling at the elevator.
My feeling is that its a veritable coin flip as to weather or not we can take a run up to our Jan highs in CZ at 450. No one believed we would have a 2 dollar rally in wheat at harvest. No one. That is a perfect example of how we have to guard against our opinions and take what the market is giving us.
Right now, I would rather be short corn short wheat and long beans. I want to stay that way until the market tells us we should be other wise.
Bearish fundamental news should have held wheat down at the 450 level for WZ. There is a billion bushel carry out, and the world is awash in wheat, yet we rallied 2 dollars, basically off of the funds speculation in French Milling Wheat, predicated on the worst drought in Russia in 130 years. As near as I could tell, there were no weather forecasters predicting this horrendous drought 3 to 6 months ago.
The point is, any thing can happen. If we are wrong to be short corn, wheat and long beans, then we will manage the position and take our loss. However, for now, that’s the way I’d like to be for the next 3 trading days.
As for the Stock Indexes, what can I say? I am waiting for CNBC analyst to trot out the Dow 20,000 crowd. Then I will know to get short.
The tone of the news over the July 4th weekend was dripping with bearishness. The vaunted 9800 level had “failed”, financial Armageddon was around the corner, and …. wait for it…. we rally 1,000 points in 5 weeks.
I’d be reluctant to to too much in stock indexes now. I think a lot of traders got short going into July, puked their losers over the past 5 weeks, and now are heading off to vacation.
I believe we will see choppy, directionless trade. Obviously, after a 1,000 point rally in a month, we are most vulnerable to a 500 point correction. Will that happen suddenly or gradually? I have no real feeling. My gut feel is to not trade stock indexes during the months of August or December. There just are not enough players around, and the market can get run up OR down depending on the vagaries of the largest players who are still around.
Good Trading
