Crude Oil Posts 6 year low

Corn: December Corn settled up 7 ¼ cents at $3.75 ¼. Overnight weakness was met with a nice bounce in the wake of Wednesday’s USDA flop. Exports of old crop corn were only 29,200 MT which were down 87% from the 4-week average. New crop exports were 501,000 MT, of which 206 was “unknown” and presumably China. The managed funds remain long an estimated 155K contracts despite selling close to 40K contracts on Wednesday alone. The mid-day forecast called into question the duration and target of expected rains heading west. Exports gave us a glimmer of hope as new crop corn exports posted their best numbers of the marketing year. Yesterday’s contract low at $3.57 ½ punctuated a 1-month, 97 cent “correction” lower from the July 13th 13-month high at $454 ½. Short covering and a general lack of anticipated selling from the funds gave us a breather/consolidation day. Tomorrow’s Friday trade should be more impactful as the funds decide how they want to head into the weekend. Will they sit tight or will they brush the dirt off of their selling shoes and come in guns-a-blazing? Bulls looking for an upside target can hope for $3.94 ½ and then $4.06. $4.06 would be the proverbial “half-way-back” point should we get a meaningful, sustained turn around in price direction. Hedgers: No change in recommendations. Wheat: December Chicago Wheat settled up 11 ¾ cents at $5.09. Wheat followed corn today in quiet, back filling, and lighter volume trade in the wake of Wednesday’s USDA. Exports came in at 421,600 with one to 2 cargoes noted to China, which was interesting. This was 50% lower than the previous week’s exports. Overnight, the US lost out once again to Russia and the Ukraine as Egypt purchased 175K MT. Reportedly the price per ton was between $2 to $8.00/ton less than their purchases last week. World wide stocks remain plentiful. While the USDA numbers were more neutral to wheat than anything, else, wheat will continue to follow corn. The managed funds are now short an estimated 13K contracts. Bulls noted that WZ did not take out its previous contract low at $4.85 ¾ posted on 5/5/15. It’s true that yesterday’s low at 4.88 ¼ did not pierce that technical level. It was still the lowest price in 3 months, and capped off a 7 week, $1.35 “correction”. The 9-month high at $6.23 ¾ holds as a beacon for the bulls. Hedgers: No change in recommendations. Soybeans: November soybeans settled up 17 cents at $9.27. The soybeans opened higher and then found their legs once the noon weather forecast adjusted the anticipated rain heading east over the next 7-10 days. Exports of new crop beans were disappointing as we are well behind last year’s pace, which is worrisome from a longer term demand standpoint. Net sales of 96,300 MT of old crop were lower than last week, but higher from a 4-week average basis. Net sales of new crop were 660,500 MT, with 330K to china and 226K to “unknown”, and are running well below the pace we enjoyed last year at this time. China’s problems obviously have far reaching ripples through the world-wide S/D picture. Reports from North Dakota of bean conditions noticeably slipping due to lack of rain popped up on the bullish screen today. Technically, we saw a rest and relaxation day in SX after taking a limit down move to the chin briefly yesterday. The managed funds are long 39K contracts, down from the 60k they had been long prior to Wednesday’s report debacle. Resistance on the charts comes at $9.50, $9.62 and then $9.96. Support comes at 9.01 ½ (Wednesday’s 9- week low) and then $8.95 ¾ (the contract low posted 6/15/15). Hedgers: No change in recommendations. Today was a “rest and recover” day for the markets, as we drifted higher posting “inside-days-up” on the charts. Chatter continued amongst analysts and gurus as to the accuracy of the USDA yield and carryout figures. At the end of the day, while some may argue their numbers are difficult to swallow; that cliché of “it is what it is” seems to cover the current situation. Yes the USDA can update numbers in September, October and November. Will they adjust enough to pull us away from these 5-year lows? Only time will tell. Crude oil fell to a new 6-year low today. The CRB index fell to a new low. China had more fireworks overnight in their currency, which spilled over to another volatile day in the bond and stock market. These are not the grain markets of our fathers and grandfathers. Volatility and choppy trade has become the norm. Failing do have a risk management strategy in these markets can expose you to tremendous risk, and can lead you into making emotional decisions as opposed to making objective business decisions.

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