Grains June 25

The price action in wheat has been terrible for the bulls. Since the WADSE, July prices have come down nearly $2 and December prices have come down about $2.25. As of Tuesday last, the commercials were in sole possession of the longs, holding them at levels last seen in the last two weeks of last November. Similar, and higher levels were held last summer. In both instances prices moved up $2 or so. And, for what it is worth, December prices are camped out on the normal move target, right at $7. I’m not so bold as to assert that prices will go up from this moment on, into December, but I’m certainly of the opinion that the next big swing is up.

There has been blood spilled in the bean market as well, with prices of both July and November down about $1. Commercials were at their shortest of the past three months going into the WADSE, but nowhere nearly as short as they were in January and February. It seems that beans are going along for the ride.

Who is driving? Corn, as everyone knows, is driving. The two largest corn producers are the US and China. I’m still of the opinion that the Chinese corn crop will be hugely reduced by the massive flooding across about half the growing area. However, to the extent possible and economic, lower quality wheat will be substituted for corn in livestock feeding, the main use of corn in China. The commercials reduced their shorts going into last Tuesday, and likely did so again this week as prices continued to fall. We are still looking at funds being very long and commercials being very short, so no inference is available – except for those of the old time book writers who contend corn must go down. Of course it must, unless it doesn’t, and we have seen this level of commercial shorts since last August. December prices are down about 80¢ since the WADSE and July down about $1.15. None of us expect July prices to recover in the next two weeks; December seems likely to move up, according to how crops actually do. 

Week-end update

Bonds are still in bull mode across the maturity spectrum.

$A are sideways against USD, and seem to want to go down.

Euros could rally from here, but look to be a 10:1 favorite to go at least as far down as USD 1.35.

Sterling is in a bear swing against USD, as is $C.

ChF is the lone bull.

Crude still looks to be headed for the middle $80 range. 

An S&P close below 1230 should take it down to 1120 or lower.

Gold looks sickly.

Wheat has had the stuffing beat out of it for nearly two weeks.

The summary seems to be: USD up, (nearly) everything else down.

USD weaker because...

Because there is no bad news to send shivers of fear into the trading community. Stock markets rose a bit today, as did crude. Bonds and gold were pretty much flat. Worries about a Greek default have been shelved, yet again, until June 28.

Forex Position Trade June 20 2011

USD/ChF: Swissies still in an uptrend/USD in a downtrend.

USD/$C:  Neutral with a tendency towards USD headed up.

USD/$A USD still bearish but looks like the USD is trying to at least go sideways

Euro/USD: Euro has formed a top, should be headed down or maybe sideways, though rallying this second

GBP/USD Sterling looks for all the world like it wants to go down, though hasn't started yet

Crude: further to go on the downside