"I have wondered at times about what the Ten Commandments would have looked
like if Moses had run them through the U.S. Congress."
-Ronald Reagan
Commentary
On July 17 I said, "The price high should be seen in corn before the end of the month. A similar year was 1983 when the rally started on June 30 and ended August 15. Information moved slow back then with no internet, and today everyone knows everything the same day info comes out. I would say the high is in before the end of the month, with next Monday July 23 a key day for a high". Recapping what has happened, beans and wheat peaked on July 23 and corn peaked on July 30, before the end of July.
So, are the highs in? An emotional trading high that marks the end of the easy trading , yes. But that the actual crop year high is in, the answer I believe is no. Unlike 1988, 2008, and 2011 we have to much demand for too little supply. You don't ration an impossible situation by putting it back on sale right when you start to see signs of demand rationing. In the short crops have long tails categories, I think the real high will occur in September or right after the October crop report which will be the first acres, times population times kernel count report we will get. That number will be the first real sign of what we really have, and markets that peak at harvest suffer a long and excruciating volatile up and down decline, where every sharp rally is just a little lower than the last one, and every break is just a little lower the last one as well.
The US and European models are in good agreement through 5 days, fair-poor agreement days 6-10. Subtropical high pressure that has brought the severe drought to much of the central US grain belt will continue to dominate much of the US during the next 10 days. The jet stream will feature low at two times moderate amplitude flowing across southern Canada and the northern US. Disturbances embedded within this jet stream will be rather fast moving and contain only limited amounts of rainfall as gulf moisture cannot flow northward into the Midwest due to the effects of the dominant subtropical ridge. This ridge will also promote above to much above normal temperatures with the hottest weather in the southern states and the southern Midwest. Only brief periods of less hot weather can be expected behind the stronger disturbances.
The US dollar seems to have made it's turn on time back to the upside that we have warned could happen by today. Look at the arrow on the chart below that marks today. We have shown this chart several times in the past two weeks.. This is part of the problem with grains today. With the FED saying they won't inflate ( or continue to print and destroy the value of the US dollar) investors saw it as a time to just cash in on some of their "inflationary" bets.
US Dollar Daily Chart
Corn
Corn dropped 35 cents from last night's high, violating and blowing stops out below 8.00 and the purple line at 791.4. The strong recovery into the close will be interesting to see if there is follow through tonight. 810-815 seems to be the ceiling that Dec corn struggles to crack. For now assume a trading range with your selling point in the 810-815 area with 822 the stop and reverse. Some of today's trouble came from a 120 congressmen fighting for the oil companies looking to reduce or eliminate the RFS. Go ahead, eliminate it and watch gasoline go up a $1.00 a gallon in front of the elections you fools, and corn that would have been feed to livestock as Dried Distillers Grain will just be feed as corn. Corn will still be high.
Dec Corn Intraday Chart
Beans
Soybeans found legs at the 1600 value which represented plugging a gap on the charts. 1660 looks like a "B" wave recovery rally high, with a "C" wave decline objective of 1510. Sounds crazy I know that we could go down there, but then when haven't the markets been crazy since 2008. A close under 1600 would imply that is what is going to happen. In really bullish markets, and that should be this one, 1540, the "A" wave low should hold and cause the "C" to fail it's objective.
Nov Bean Intaday Chart
Wheat
Unlike corn, beans and the other wheat charts, Minneapolis HRS wheat has been doing lower highs every day since July 23 because of a good harvest. 895-905 should be pretty good support that causes a bounce in here if corn doesn't head back up.
Minn Wheat Daily Chart
Live Cattle and Feeder Cattle
Cash cattle was still quiet for the week at midday, with bids at 113 and asking prices at 118. Trade is expected to take place later today or tomorrow. Choice beef is trading 177.50, and packer margins are 4 bucks per head positive. Weaker corn gave feeder cattle a little reprieve. Everybody and their mother knows that the market will be extremely bullish once the herd liquidation is over, and the burdensome supplies are chewed through. The exact timing of this, however, is anybody's guess, and will no doubt catch everyone by surprise.
October Live Cattle Daily Chart
September Feeder Cattle Chart
Gold
The FED did not excite the gold with any QE policy today, and that caused gold to drop back to the breakout area. The thing is, was it the FED why gold had broke out to the upside last week, or is it Europe? So if it is Europe, gold should find legs in the 1595-1600 value and mount an end of week rally.
December Gold Daily Chart
Crude
The US$ was higher today, short circuiting a bullish inventory number that could have seen oil run above 90.00 but didn't. 92.00-93.00 is big resistance.
September Crude Oil Daily Chart
07-30-12
Link (in blue) below to view the latest market prediction interview on KFYR - TV:
NOTE: With the exception of livestock, all trades will be entered in the electronic markets unless otherwise noted. Hedge recommendations and Trade recommendations are totally separate, and may sometimes conflict with one another. It is strongly suggested that Spec trades and Hedge trades be done in separate accounts.
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A word to the Wise
Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable to Heartland Investor Capital Management , Inc. but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK of LOSS involved in trading futures and / or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL . NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. The information contained in this newsletter is privileged, confidential and protected from disclosure. Any further disclosure or use, distribution, dissemination or copying of this message or any attachment is strictly prohibited.
Newsletter provided by Heartland Investor Capital Management, Inc. a registered CTA with the NFA, of which Eugene Graner is principal. This entity is a separate legal entity from the Introducing Broker Heartland Investor Services.
July Minneapolis put in quite the performance today (plus 42 cents), most likely because of drought concerns in Europe. September looks like it wants to go the red line 810 resistance area at the very least.
Higher corn is weighing on cattle futures, and the drought is leading to herd liquidation. Add a potential seasonal high in beef prices (choice now $193.50), it is likely that cattle have put in a short term top. What's bearish now is bullish later. Supplies will get very tight later in the year and into next year.
Friday's Cattle On Feed report was deemed neutral (On Feed 103 vs. a 102.5 estimate, Placed 100 vs. 99, Marketed 94 vs. 94). The semi-annual inventory report was viewed as bullish at 98%, showing less expansion than the trade estimated. That will affect 2013-2014 prices more than this year's prices. For the time being, it's all about corn...feeder cattle moved inversely with corn all day long. Cash offers started the week 116-117, choice cutouts are trading 179.00, and packer margins are 4 bucks per head in the black. Prices will likely get worse before they get better, but as we get into next year, bidding will be fierce for cattle.
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