Here's some grain comments from barchart. I don't pay much attention to wheat, but I have stored soybeans and corn, so watch them closely:
Mixed markets again today as old crop soybeans (March - May) continue to try to rally while new crop beans (Nov and beyond), corn and wheat are under a good amount of pressure. A surprise rain in Argentina covering most of the growing area and producing half an inch to an inch put a damper on a collective rally in the grains. Now old crop soybeans are trying very hard to rally on their own while price action and chart action turn decidedly bearish for all other grains.
Grains as a whole seem very week at this point with the exception of old crop soybeans. The weakness is coming from a lack of demand, prospects of a huge upcoming US crop, and a massive South American crop about to come on line. It seems likely that corn, wheat and new crop soybeans could see lower prices between here and planting. But why are the old crop soybeans so strong, and how long will it last?
South America has a huge soybean crop and is expected to bail the US and the world out of a tight situation, but they are sure taking their time with it. Every year we have concerns about the sub par logistics in Brazil and Argentina. Year after year we hear about trucker strikes, port worker strikes and multi mile long lines of trucks waiting to unload. And, every year soybean prices rally and then miraculously soybeans start flowing out of South America. I always find it interesting that South America has all these issues but a 60-80 cent rally sure has a way of fixing things. Sometimes I wonder how much of these issues are exaggerated to coax better prices, or has it become a custom to rally the soybean market to reward / entice South America to sell their cash crop. Either way there sure is a lot of incentive to get soybeans sold in a hurry. Prices are very good right now and the outlook is nowhere near as bright. So I would imagine that South America will figure out their issues faster then usual this year.
The strength in old crop soybeans will end as soon as Brazil gets more aggressive in shipping soybeans. I have a feeling that well be very soon. And when that happens there could be a sharp sell off in old crop soybeans as our exports will no longer be relevant. But, the sell off might not just be limited to soybeans. Whatever spill over strength that has been holding corn and wheat together will be gone and a flush out is possible. Even today wheat closed at new lows for the move and produced a sell signal. Corn also produced a fresh sell signal on a daily chart. So I really believe that this recent rally in soybeans is a great opportunity to sell cash beans and get some hedge positions established for new crop. It certainly is a good possibility that we have a weather rally to sell at some point during the growing season, but that sure seems like a long way off. And even if there is a weather scare this summer where will we be rallying from ? $1 - $1.50 lower? It is going to take a very real and damaging weather issue to rally that much and it would be a major surprise to see that two years in a row.
However, with the potential for a summer weather rally in mind I am currently establishing hedge positions that put a floor in near current prices while still allowing for some upside potential and I am able to do it for what I would consider a very fair cost. Give me a call or shoot me an email if you would like to hear more about it. Either way, I think all grain producers need to be thinking about managing their risk rather then wishing for higher prices.
The financial markets will consistently reward the fewest investors. In order to achieve this goal with the increasing consensus of major players (hedge funds, institutions, etc) who rely on nearly identical algorithms and ideas, and who also eat together, sleep together, and discuss their ideas together, any major move in one direction will be both preceded by and followed by an incredible move in the opposite direction.
Gold stocks and wheat are suffering such extreme opposite moves now to shake out as many players as possible before the move reverses. So its time to build a position and watch things reverse again.
We've been living in an atmosphere of extremes since 2000 and because of the consensus of major market particpant views, extremes like we have seen in the miners and to a lesser degree in wheat will become larger over the next few years to guarantee that the consensus will be punished , shaken out of their positions and then shown to be finally correct :).