I know you want to be optimistic, but consider the facts...
Apr 19, 2010
CORN: Just to recap, corn rallied big last week due to very strong export sales, the funds starting to get back in the market, and very little selling from the farmer side of the business. The big thing holding it back is the ideal planting conditions we have seen here in the US. Globally corn is back on the move, in fact the Chinese corn market is back to over $6 per bushel, and there is continued talk that China might be importing corn into it’s southern regions. With heavy demand and continued buying from the funds I wouldn’t be surprised to see July futures eventually rally and get to $4. If we reach that level I think we will see a flood of heavy farm selling, and we will continue to slide lower as the market prepares itself for another record size crop. I like the thought of selling the rallies. *Selling some out of the money higher up calls might be an idea.
SOYBEANS: With continued strong demand for old crop beans and the carryout down around 190-210 million bushels, many of the big traders think the near term futures contract we be trading around $10. If we do see a rally I think it will be short lived. We have a huge South American harvest, and don’t forget we had a drop in our winter wheat acres this past fall. These acres are often double cropped with beans. No winter wheat means full season beans, a better harvest and better yields. Take advantage of the next few big rallies there may not be too many down the road.
WHEAT: I am hearing that the funds are still heavily short this market. The farmers have very little supply left to move, so if the funds start to buy back their short positions there will be very little resistance there to keep prices from moving higher. Right now we are entirely fund driven. Until we get more competitive with our exports, or the funds start to reverse their position I think you will see the market continue to chop around.
I am thinking we might see an additional push higher, but from there a probable pull back is in order. Look to exit any long positions and move to the sideline.
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Kevin Van Trump