Week Re-Cap

  • Posted on: July 26, 2013

1) The Sep/Dec corn spread came in again another 2 cents, to go off at 16 cents.  Not long ago it was at 42.  I believe it could go another 16 cents to “even” with Dec.  I do not believe all of the longs are out yet.
A good rain forecast over the weekend  could push CZ to take out key support at the trend line at 4.75. Sunday night’s trade could be interesting.  I do think that since the funds are short corn and wheat, they will put the pedal to the metal and sell more if they get the chance Sunday night. 
George Soros, the Billionaire liberal,  once was Jimmy Roger’s boss.  I am not sure if it was Jimmy or George who was quoted “when you are right, you have to have the courage to be a pig”.  I think  a lot of fund mangers who are short grains here are moving closer the the trough,  looking to gorge over the next two weeks.

The American farmer, if he hasn’t sold by now, will be lamenting the fact that its “a rigged game”.  The reality is,  farmers wouldn’t sell when basis was high,  prices were high, because like all human beings, they “knew it was going higher”.  CZ is a stones throw from 4.65. Contract highs were 6.65.  A failure to sell or hedge or both,   has them looking at a 30% loss on paper.  If they are not careful, and if they continue to be stubborn,  they could see a $2.00 move turn into a $2.50 move or worse.

My advice?  Sell grain.  If you are worried about it going higher,  spend 8 cents on some 5.50 calls.  That way, if you make a sale here, and we drop another 50 cents,  you’re only out the 8 additional cents.  If you are selling it in the hole,   and we really are going to have a $1.00 rally, well then your 8 cent investment could be worth 80 cents over the next 4 months.  
Me personally, if I am a producer. I’d rather have the sale behind me and the 8 cents at risk.

November beans looked to be trying to build support at the $12.07-12.20 level. If you are bottom fishing here, my advice is to run fast if we take out $12.00 support.

As for the Dec corn outright short,  A good rain forecast should get us below the 4.75 support and down towards the 4.60 chart support. That being said, there’s a chance we could have a 20 or 30 cent short covering rally, however, I am in the opinion that that is a rally which should be sold.

Dow Sep Futures: apparently a lot of other shorts had the same idea early this morning after we were down triple digits.   I am still short.  I want to be short vs the 15,500 level.  My opinion has not changed.  That being said.  I will be happy if my shorts are stopped out in the event the Dow finds new gasoline and motors higher.   I just think, odds are, we are more likely to have a corrective sell-off here after such a massive rally we’ve had in the past 6 months.

Finally: August Gold.  It does not like trading above $1350.  Interesting trade. Looking at the charts,  I still think if we can get trading above 1350, we should see 1418.  In fact, a real bull would look at the 3 trend lines above and see 1534 or even 1560 as potential upside targets.   Bottom line, I would rather buy dips in gold with reasonable sell stops looking for a pop higher. 
One good thing, I am not hearing too much on TV or Radio about gold. That’s the first thing we need to quietly build a real base.  Dis interest from the “experts” and talking heads.
Have a great weekend.
CER