Last week July Soybeans opened at $13.83 per bu. and closed the week at $14.42½. In July Corn we saw an open of $5.84¾ per bu. and a close of $5.91.
I will tell you that I am shocked by the weather, but not surprised. Why? Back in 1999 I was speaking to a customer in Ottawa, Canada who was a professor at a university there. Here is the shocking part. While on the telephone with this person, he told me to watch out and be prepared for 2012. He said I would see an unusually warm dry winter, which already happened, and America will see a drought like it saw back in the 1930s; he said heard of the “dust bowl.” His reasoning for this was planetary alignment. Alignment we have not seen since the 1930s and the “dust bowl.” I always had that in the back of my mind, and all I have to say is thank goodness for that.
In the daily charts below, you can see Soybeans in a weak trend with ADX at 24.75 but rising and DI+ is over DI-. MACD is bullish and Stochastics are overbought. On the daily Corn chart you also will see a weak trend with ADX at 19.8. MACD is bullish and Stochastics corrected from overbought territory last week, but are on the rise especially with today’s price action.
Proceed to Page 2 for the latest COT Data...
On the weekly charts below you can see the large difference of how big money was posturing in these markets starting at the beginning of 2012. Even now look at the how big money is posturing in both markets. In Corn, producers are net short -291,953 contracts, Swap Dealers are net long 285,609 contracts and Managed Money is net long 63,271 contracts. If you look closely, you will see Corn’s net short is far from its extreme net shorts of -690,000 contracts. And were does Corn prices go if we see Producers start adding to net shorts?
On the weekly Soybean chart, you can see producers are net short -320,761 contracts, Swap Dealers are net long 103,490 contracts and Managed Money is net long 197,153 contracts. I am sure you can see the large differences on the charts.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
So here in Chicago this week it is going to get hot once again. Weather reports show the heat topping 100 degrees and not much in the way of rain. Some is expected, but it will be isolated. The Crop Progress report from the USDA will be something you will want to watch if you trade grains. We may soon see signs of yield damage. If we see July and August following June’s weather, the drought of 2012 will be one for the record books.
A story from the Chicago Board of Trade (CBOT) — I heard this some time ago.
Many years ago, possibly in the 1930s, a large corn trader at the CBOT had gotten short a substantial number of contracts. Over time the lack of rain caused Corn prices to rise putting the trader’s short positions into a bad loss.
Well one morning this trader came in telling everyone it was going to rain today. They all thought he was nuts as there wasn’t a cloud in the sky. If you have never seen the CBOT, it has very large windows facing LaSalle Street to the north used to help light the trading floors. At 10:00AM water started hitting these windows and initial reaction was that it started raining. Well Corn prices dropped so this trader could get out of his short positions without a loss. Why the water hitting the windows? This Corn trader was good friends with the Commander of the Chicago Fire Dept. Because he owed this Corn trader a favor, he agreed to wash the windows that morning using the fire trucks.
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