Grains move higher on weather concerns
May 18, 2009
While I’ve been a strong seller on rallies, (above $4.35 in December corn and $9.80 in November beans), I did not believe the market would break as hard as it did on Friday and early Monday. While I enjoyed the break, I frankly don’t believe we have the fundamentals right now for it to last long—profit taking yes, but new down trend no. This is why I’ve strongly encourage a long put strategy rather than short futures or short cash sales. As for call selling, I still suggest one wait until mid-June to early July before implementing an aggressive call selling program.
The market is going to see the crop progress report today and be a little disappointed.This plus the strong exports and weaker dollar all led to some bottom picking in mid-session trading.
As for the rest of the week, I have to expect a sideways to higher price action. Yes, weather is getting better so some plantings are going to occur but the crops overall are going to look very rough for several weeks to come. In fact, of the crop that’s been planted, there is going to be some solid replant necessary. I talked with several producers in the wet areas and they have said even as late as it is, they still would like the corn in the bag rather than in a cold wet field.
My expectation is that December corn is going to try one more time to get a technical breakout of the $4.50 level which we will use to roll up puts and start selling calls. As for the beans, I continue to suggest there is little reason for November beans to trade above $10.05 in new crop at this time. Bottomline: We will need some strong weather problems but it will be August before those types of problems materialize. I want to remain in my long put strategy and only roll up if the market moves higher.
If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or email me at firstname.lastname@example.org or email@example.com. Tomorrow we will talk a little about the bonds, gold and crude oil.
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