"My life is in the hands of any fool who makes me lose my temper. "
- Joseph Hunter
Commentary
Panic selling because of the fear of increased taxes and growing thoughts that we have no supply concerns are permeating the grain complex into a likely panic low. With interior basis levels climbing, and farmer selling becoming absent now, as government insured prices in corn and beans are well above current levels.
You need to keep in mind; there is still a very strong possibility that final US production and/or quarterly stocks in the January crop report will be bullish. Yield data from many national crop scouts does not appear to agree with the USDA, while others point out that harvested acres are likely still too high.
1: It needs to be considered that the early harvest and very short supply in August likely led to some "borrowing" of new crop corn into the old crop balance sheets.
2: it looks like the 40-year low in projected US corn exports will be tested in the weeks/months to come as cash sources indicate that US exporters are on the verge of taking back their place in global corn markets.
3: South American corn production does NOT look to rebound sharply like we're expected to see in soybeans as acreage shifted dramatically to soybeans and may have even more after delays in corn planting in Argentina/south Brazil.
4: There remains ample concern that prices will have to stay high enough over the winter to continue rationing AND buy new crop US corn acres after corn/corn yields again took it on the chin this past year. Dryness in the central US will not be resolved this winter, which may lead WCB/NWCB farmers to shift away from less-drought tolerant corn and towards soybeans. A rise in wheat profitability is also thought to be stealing acres in the ECB. Dec 12 futures have thus far held support at $7.15, with major support at $7.05. If that price falls, we could see a quick test of $6.76.
5: It should be mentioned that commercial longs moved their long corn position to 398,072 contracts according to Friday's CFTC report, the largest position for that group since November 22, 2011, which preceded a major seasonal low in corn prices which followed on December 6th. This occurred as of last Tuesday and does not include new buying since that time.
The markets are free falling and it looks scary if you haven't sold much crop in August/early September. Better prices are likely 6 months ahead of us now. So there is a saying in the commodity brokerage business that I need to you remind you of. "You can't run with the big dogs if you're going to pea like a puppy." It may get worse before it gets better, but even the commercial grain trade is liking these prices and buying.
US Dollar Daily Chart
Corn
Corn fell under 732 and is in a very sensitive area that needs to find initiated buying. A close above 732 on Friday is needed or the bears will have Thanks Giving. In price negative fall years, Pearl Harbor day (December 7) has consistently turned this market up. The question is, will 705 hold, or do we see 675-676 before positive price action returns.
December Corn intraday Chart
Beans
The LaSalle Group out of Chicago put out some good points with regard to the long-term implications of Friday's report that should serve as a warning to long-term traders who are considering liquidating at current values. It was interesting to hear some the trade chatter after the release of the report suggesting there was no longer any need to ration soy/restrict use now that there was 111mb more in the US and world balance. We strongly disagree with such logic. Based on our estimates of US and world use during Sep-Feb, US and world soybean stocks on March 1 will still be the tightest on record. While the SA harvests in March-May will resolve some of the world tightness, the reduction in US crush and exports in Mar- Aug needed to allow for a minimum US carryover will be largest on record relative to Sep-Feb crush and exports, and heavily dependent on a smooth transition in world use to SA/no logistical problems in SA. In the short term, technicals point to the $14.00 January soybean area as a downside objective. If the market goes there, we would then look for a $14.00-$15.00 range to develop into the end of the year and until there's a lot more assurance on SA output and their ability to perform logistically. If you are considering liquidation, it would likely be much smarter to at least wait for a minimal retracement rally rather than panicking out in what remains a very tenuous global supply situation.
Jan Bean Intraday Chart
Wheat
Minniapolis wheat is still caught in the same trading range of the last 4 months. Wheat hthe ability to turn up in the grain complex first. I expect 915-919 to hold on a closing basis.
Minn. Dec Wheat Daily Chart
Live Cattle and Feeder Cattle
Cattle futures continue to chop up both the bulls and bears alike. Cash activity is quiet, with feedlot offers of 128. Choice cutouts are $194, with packer margins still in the red at -$68 per head. The Northern Plains picked up some moisture this past weekend. If that can happen in the Central Plains sometime this winter, the bull market will begin again in earnest.
December Live Cattle Daily Chart
November Feeder Cattle Daily Chart
Gold
Gold fell under the purple line briefly, but was re-embraced on the buy side unlike grains, energies and other commodities. The purple line defines that enthusiasm. Support is 715-720.
December Gold Intraday Chart
Crude
Crude oil is caught right in the center of the support and resistance zones we had identified weeks ago.Not much to say other then resistance is 88.00-89:00 and support is 80.00-81.00.
December Crude Oil Daily Chart
11-12-12
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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.
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