March 25, 2011

Published on: 10:42AM Mar 26, 2011

Today, before running CoT numbers, I want to compare current crop with new crop for Oats, Beans, Corn and Wheat. I don’t always know what will help you… or maybe I do, but I don’t have the ability to predict accurately how much of which crop should be planted to optimize net income to each farmer, not counting the ConAgra’s of the planet.

On the left side of my screen is Oats. May oats have been trending down since the third week of February. December oats are on the fence between up and down. The direction of lessening volatility, short term, is up, so I’ll guess up. If not totally overshadowed by the next great world scare, if and when, some thought will be given to growing conditions over the next six weeks; after that, fundamentals should dominate. That should be true for the entire grain complex.

Wheat looks almost exactly like oats. My gadgets are ever so slightly more bullish for wheat, both old and new crop, than for oats. Mostly, that means the gadgets are waiting to see whether Thursday’s price action promise of usefully higher promises are fulfilled.

Beans are slightly more bullish than wheat, and the new crop chart is more bullish than the old crop. That isn’t a guarantee, but it is hopeful.

Corn is the most bullish of the lot, with December corn being the most bullish of the eight charts.

With all that said, it looks to me as if we are likely to have another effort by the bears before the bulls come back in force. Inasmuch as this is the end of March, not the end of May, considerable backing and filling is entirely within reason. In the end, Russian, Chinese and Australian wheat crops, or lack thereof will be added to the productivity of American farms to price December wheat later this year. There are weather issues in Brazil and Argentina that will affect the bean crop especially.

CoT results look like this: Wheat finds both funds and commercials long, meaning the shorts could find themselves in some trouble soon – or maybe they already did, with the two days of sharp up from the prior week, as those numbers are just now showing up. In beans, the funds got longer, the commercials shorter. I expect funds bought either expecting the rally or after the rally, depending on their algorithms. Oats have everyone heading towards the middle, as they have been for four weeks now. That ‘oughta’ dampen price swings a bit. Corn looks like oats on the CoT: four weeks of selling by the funds, who are very long, along with buying by commercials who carried the lion’s share of the shorts.

Another spin on the CoT numbers is wheat up for sure, beans may be getting ready for volatility, while both corn and oats find the major players moving towards neutral. Not much news in corn and oats; China news in wheat, South America news in beans. Yas.