On Monday, September 19, 2011, November Soybeans closed sharply lower at 13.36, down 19 ½ cents, as a strong U.S. dollar along with spillover weakness in equities and Crude Oil combined to push Beans below solid support at 13.45.  During the session, the USDA reported Soybean export inspections totaled 10.07 million bushels last week vs. 11.7 million bushels thee week prior. The report was within analyst's pre report estimates, however traders seemed to ignore the neutral report.  A wide range of commodities lost ground on Monday as traders liquidated positions to raise cash and reduce risk with mounting concern regarding sovereign debt failure in European countries.  Traders also liquidated positions as harvest pressure should begin shortly with buyers waiting for lower prices before they enter the market.  After the close the USDA reported 33 percent of the Soybean crop is dropping leaves vs. 15 percent last week and 47 percent the 5 year average.  The USDA also reported 53 percent of the Soybean crop was in the good/excellent category, vs. 56 percent the week prior. Most analysts had been looking for a 1-2 percent decline in the good/excellent category, so the 3 percent drop should be bullish for prices on the opening in the over-night session.

      Nov. Beans closed 2 cents higher at 13.38 on turn-around Tuesday, as an early rally attempt succumbed to profit taking, and lack of follow through buying encouraged technical selling.  Lackluster demand continues to cap rallies, although a fresh sale to China contributed to the early move higher.  However harvest pressure and expectations for higher yields as predicted by the USDA last Monday pushed prices just below even, although light buying allowed Nov. Beans to close in positive territory.   Volume was on the light side as funds remained on the sidelines for the most part.

     Nov. Beans closed sharply lower at 13.20 ½, down 17 ½ cents on Wednesday, as fund liquidation drove the market lower as traders sold longs to reduce risk as World equity markets continue to gyrate with some expecting a "double dip" recession.  Weak export demand and expectations for impending harvester pressure sparked renewed selling by the large speculative funds, with little bullish news to stem the tide. Nov. Beans posted a 6 month low which also encouraged technical selling as prices breeched previous support levels.  Funds sold an estimated 9,000 contracts during the session.

      On Thursday, Nov. Beans closed sharply lower for the 2^nd straight day at 12.83, down 37 ½ cents, as near panic selling in World equity markets caused spillover weakness in most commodities, as traders raced to the sidelines to reduce risk.  Prior to the open, the USDA reported Soybean export sales totaled 679,500 metric tons last week vs. 351,900 metric tons the week prior.  Analysts had been looking for an average of 350,000 metric tons, so the report was well over their estimates, although the sharp declines in equity, Crude Oil and the metals markets combined to cause spillover weakness in Beans.  Nov. Beans posted a fresh 6 month low, as traders liquidated a broad range of commodity positions to reduce risk in the face of uncertain World equity markets.  Technical selling accelerated the move to the downside as penetration of the 13.00 support level triggered pre-placed stops, which pushed Nov. Beans to the lows of the session at the close.

     On Friday, Nev. Beans posted a fresh 6 month low, closing at 12.58, down 25 cents, as traders continued to liquidate long positions to reduce risk in the face of uncertain World economies.  Strength in the U.S. dollar along with impending harvest weakness also contributed to the sell off, which has retraced the entire bullish trend that began in early summer.  Weather forecasts look to be mostly dry after the weekend in the Midwest, which should allow for good harvest activites.  China bought Soybeans for the 3^rd consecutive day as they apparently perceive good value at the current levels.

      In last week's report, I recommended buying the November Soybean 13.80 call for 20 cents or less, plus commissions and fees, which should have been filled at 16 ¼ cents on Monday.  Unfortunately, the option traded below my recommended risk stop of 12 cents at 11 cents on Tuesday, resulting in a loss of 5 ¼ cents ($262.50) plus commissions and fees.  Use of a stop-loss or stop-limit order will not necessarily limit your losses to intended amounts or guarantee an execution at a specific price, since market conditions may make it impossible to execute such orders.   Next week I recommend buying the November Soybean 12.80 call for 20 cents or less, plus commissions and fees, risk to 12 cents, and target 40 cents or higher for profit taking.

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      On Monday, September  19, 2011, December Corn closed fractionally higher at 6.92 ¼, up ¾ cent, as an early sell off gave way to short covering and bargain hunting as prices have fallen over $1.00 since posting a contract high of 7.79 on August 29, 2011.  During the session, the USDA reported Corn export inspections totaled 22.39 million bushels last week vs. 16.5 million bushels the week prior.   The report was below analyst's expectations and added to the negative sentiment in the market. A widespread sell off in most commodities swept Corn sharply lower in early trade, however prices rebounded to close slightly higher as rumors of new China buying of Corn sparked short covering and bargain hunting.  The ability of Dec. Corn to hold the 50 percent retrenchment level around 6.77 also encouraged technical buying which pushed the Dec. contract back over the 50 day moving average at the close.  After the close, the USDA released their weekly crop progress report and they indicated 46 percent of the Corn crop was mature vs. 29 percent the week prior and 48 percent the 5 year average.  They also reported 10 percent of the crop has been harvested vs. 11 percent the 5 year average.  The USDA also reported 51 percent of the Corn crop was in the good/excellent category vs. 53 percent the week prior.  The 2 percent drop in the good/excellent category was a little above most analyst's expectations of a 1 percent decline, and should be bullish for the opening in the over-night session. 

     Dec. Corn closed 2 cents lower at 6.90 ¼, as an early rally supported by lower than expected crop ratings gave way to technical selling as the market lacked follow-through after prices opened over 7.00  Minor resistance at 7.03 ½  capped the early rally attempt, which picked up momentum as prices pushed through 7.00, than support at 6.95.  Funds were on the sidelines, so there was little resistance as sellers pushed prices below even at the close.  Reports of better than expected yields from early harvested Corn also added to the negative psychology, although a weaker U.S. dollar and strong equities and Crude Oil supported prices near unchanged on the day.

      On Wednesday, Dec. Corn closed at 6.85 ¾, down 4 ½ cents, as an early rally attempt fizzled as spillover pressure from Soybeans pushed Corn lower at the close.  The inability of Dec. Corn to penetrate 7.00 resistance encouraged technical selling which pushed prices into negative territory at session end.  Reports of better than expected yields from early harvested Corn also added to the negative psychology, although some analysts expect further yield deterioration after the freeze from last week appeared to have damaged a larger portion of the Corn crop than had been expected.  Funds sold an estimated 5,000 contracts during the session.

     Dec. Corn closed sharply lower at 6.50, down 35 ¾ cents on Thursday, as a broad based sell off in World equity markets spilled over to commodities, as traders liquidated positions to reduce risk.  Prior to the open, the USDA reported Corn export sales totaled 595,100 metric tons last week vs. 1,168,400 metric tons the week prior.  Analysts had been looking for an average of 650,000 metric tons, so the report was slightly below their expectations, however the major sell off in World equity markets appeared to trump the neutral export report.  Technical selling pushed prices below solid support at 6.70, as heavy fund liquidation pushed prices to the lows of the session.  Funds sold an estimated 25,000 contracts during the session.

      On Friday Dec. Corn closed at 6.38 ½, down 11 ½ cents, as traders continued to liquidate long positions to reduce risk as volatility in equity markets spilled over to commodity markets.  Sharp sell offs in Crude Oil, Gold and Silver also contributed to the negative sentiment that has pushed a basket of commodities lower as traders moved to the sidelines.  Expectations for good harvest progress next week also encouraged hedge pressure, although yields have remained lower than last year for the most part.

      In last week's report, I recommended buying the December Corn 7.25 call for 20 cents or less, plus commissions and fees, which should have been filled at 16 ½ cents on Thursday, plus commissions and fees.  However the option traded at my recommended risk stop at 12 cents on Friday, resulting in a loss of 4 ½ cents ($225.) plus commissions and fees.  Use of a stop-loss or stop-limit order will not necessarily limit your losses to intended amounts or guarantee an execution at a specific price, since market conditions may make it impossible to execute such orders.  Next week I recommend buying the December Corn 7.00 call for 15 cents or less, plus commissions and fees, risk to 10 cents, and target 30 cents or higher for profit taking.

For additional research, charts, option prices and research on CORN click here: http://markethead.com/2.0/free_trial.asp?rid=McKinney

                                                                            WEAT 

On Monday, September 12, 2011. December CBOT Wheat closed at 7.27 ¼, off 2 ½ cents, as a slightly bearish USDA monthly supply/demand report was mostly offset by spillover strength from Corn.  KCBT December Wheat closed at 8.26, down 6 ½ cents, while MGE December Wheat closed 5 ¾ cents lower at 9.01 ½.  Prior to the open, the USDA released their monthly supply/demand report in which they raised 2011-12 Wheat carryover to 761 million bushels from their August estimate of 671 million bushels, mostly due to a 75 million decrease in Wheat exports.  They also increased their estimate for World Wheat stocks to 194.6 million metric tons, vs. their August estimate of 188.8 million metric tons.   Analysts had expected an average of 667 million bushels for ending 2011-12 stocks, 94 million bushels under the USDA estimate.  The big increase in World stocks was also unexpected, as many traders reasoned high Corn prices would allow for Wheat substitution in livestock feed use.  During the session, the USDA reported Wheat export inspections totaled 15.7 million bushels last week, vs. 21.156 million bushels the week prior.   The export inspections report was well under analyst's estimates, although the higher trade in Corn appeared to prevent a large Wheat decline.  After the close, the USDA released their weekly crop progress report in which they reported 83 percent of the Spring Wheat crop has been harvested vs. 68 percent the week prior and 81 percent last year.   

      December CBOT Wheat closed sharply lower at 7.02, down 25 ¼ cents on Tuesday, as spillover weakness from Corn along with larger than expected World Wheat stocks as reported by the USDA on Monday, combined to push CBOT Wheat lower for the 6^th straight session.  KCBT Dec. Wheat closed at 8.02 ½, down 23 ½ cents, while MGE Dec. Wheat slumped 24 ¾ cents to close at 8.76 ¾.  Spillover weakness from a sharply lower Corn market pushed prices lower from the open, with ample World supplies of Wheat adding to the bearish psychology in the market.  Weather forecasts calling for ½ to 1 inch of rain in portions of Kansas, Oklahoma, Texas and Oklahoma later this week, also added to the bearish news as farmers will be sowing Winter Wheat in that area soon, and the land needs moisture to germinate the freshly planted Wheat seedlings.  Most of the Southern Winter Wheat Belt has suffered drought like conditions over the past year, so any relief will be welcome as planting progresses over the next month.

      On Wednesday, Dec. CBOT Wheat closed at 7.04 ½, up 2 ½ cents, as short covering after 6 straight sessions of lower prices pushed prices higher, although the gains were pared at the close.  KCBT Dec. Wheat closed at 7.92, down 10 ½ cents, while MGE. Dec. Wheat closed 12 cents lower at 8.64 ¾.  Weather forecasts calling for 1-2 inches of rain next week for portions of the Southwestern Wheat Belt should improve the dry soil conditions in that area, which is needed before the Winter Wheat crop is sown over the next few weeks.  Winter Wheat is traded on the KCBT Exchange, so the increase precipitation forecasts cause that market to sell off to a greater degree than CBOT Wheat.  Traders will be monitoring the weekly USDA export report on Thursday to see if the recent sell off has increased demand, or if higher Corn prices have caused any substitution affect to increase Wheat demand.

      Dec. CBOT Wheat closed at 6.96, down 8 ½ cents on Thursday, as spillover weakness from sharply lower prices in Corn and Beans pushed price lower, although KCBT and MGE Wheat closed higher.  KCBT Dec. Wheat closed 3 ¼ cents higher at 7.95 ¼, while MGE Dec. Wheat added 6 ¼ cents to close at 8.71.  Weather forecasts calling for a return of hot and dry weather for much of the Southwest Wheat Belt supported prices for KCBT Wheat since farmers are now sowing the Winter Wheat crop and moisture will be needed to germinate the seedlings.  Prior to the open, the USDA reported Wheat export sales totaled 413,500 metric tons last week vs. 512,200 metric tons the week prior.  The total was 7 percent below the 4 week average.  The weak export report continued the weak export trend that has persisted since Russia re-entered the Wheat export market in July of this year.  Russia had previously banned export sales because of low production caused from a severe drought the year prior.  Sine re-entering the export market, Russia has undercut World Wheat prices and have garnered a high percentage of the total export market since July of this year. 

      On Friday, Dec. CBOT Wheat closed at 6.88 ¼, down 7 ¾ cents, as spillover weakness from Corn pulled Wheat lower, as both grains compete for livestock feed.  KCBT Dec. Wheat lost 11 ¼ cents to close at 7.84, while MGE Dec. Wheat closed 14 ¾ cents lower at 8.56 ¼.  Since their was no fresh bullish news to move the market on Friday, traders sold Wheat to reach a level that will allow U.S. Wheat to be competitive with World Wheat prices.  Egypt once again purchased Russian Wheat in a recent tender, with none going to the U.S.  Weather forecasts calling for mostly dry weather over the Spring Wheat Belt next week should allow for good harvest progress, which may produce hedge pressure pushing prices lower. 

     In last week's report, I recommended selling the December CBOT Wheat 8.50 call for 40 cents or more to take profits (purchased the week prior for 20 cents, plus commissions and fees), however the option traded below my recommended risk stop of 12 cents on Tuesday at 10 cents, resulting in a loss of 10 cents ($500) plus commissions and fees.  Use of a stop-loss or stop-limit order will not necessarily limit your losses to intended amounts or guarantee an execution at a specific price, since market conditions may make it impossible to execute such orders.   Next week I recommend buying the December CBOT Wheat 7.25 call for 20 cents or less, plus commissions and fees, risk to 12 cents, and target 40 cents or higher for profit taking.

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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions are subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options.  The information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness.  All known news and event have already been factored into the price of the underlying commodities discussed.