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April 9 CoT update

Published on: 10:37AM Apr 09, 2011

 Finally, we get to see the effects of the WADSE of 9 days ago. The funds increased their positions in Wheat, Corn and Oats, and picked up a couple of contracts of beans. Such a surprise, that isn't. 

Commercials came out of net long wheat to go net short. Farmers remained net short. The wheat chart looks pretty favorable to the bulls. It won't take a lot of fear to push July beyond $9 and the most bullish spin I can now put on the December chart is $10 or higher. The final price will be -- another surprise -- weather/production dependant. Chinese, Russian & Ozzie wheat as well as our own will all be part of the outcome.

In corn, commercials got shorter & funds got longer. The difference between July and the new crop is huge. I can't even make a decent estimate for old year corn. Has it hit its high? I'd think not, but maybe. I'm going to choose 820 is the 'official' target price, but 800, 843 and 918 could be put forward as well. I really don't see how 918 would be reached in the next 10 weeks or so. December, on the other hand, has a target of only 673 with a couple of reasonable estimates between there and 780. Clearly, the marketplace is hopeful that American farmers will produce a lot of corn this year.

Beans don't look nearly so bullish. I'm thinking 1474 or 1536 for July. For the new year, maybe 1523 or 1563. Again, it is awfully early in the year for me to have a lot of confidence in those numbers, but...

Oats are suprisingly bullish. At the moment 460 to 470 looks very much in reach for the new year. 421 or 453 are July's targets. Both are believable.

Sure is a good thing food and energy are excluded from the core CPI numbers, else we would not be looking at official numbers that allow the Fed to subsidize the big banks by charging little more than 0% to borrow from the Fed. $110 crude, engendered in part by our government's failure to enforce contract limits on big banks (oh, no -- not them again!) which allows the large hedge funds to partially corner the markets, pushing prices about 50% above what usage would command. It is the difference between a FREE market and a COMPETITIVE market. Capitalism doesn't work well without competition -- not that socialism, communism or any other baloney lable that one can find work without competition. But the whole point of a competitive market is efficiency with resulting benefits to the consumers. To have the oil industry dominated by half a dozen firms world wide, then add to that collusion with huge hedge funds (lot of oil state money in some of those, by the way)... that ain't capitalism even if it is a " free" market.