Corn Limit Down

Chicago Board of Trade March corn futures plunged 40 cents Thursday morning to a little over $6.11/bushel as traders reacted to an earlier crops report forecasting a smaller-than-expected drop in inventories.

US corn stocks are to fall 2 million bushels in January as increased export demand is expected to offset a rise in production, according to the World Agricultural Supply and Demand Estimate report released by the US Department of Agriculture.

"Basically, the report did not live up to expectations," said a market source, adding that the "market had already priced in the expectation, so now it's reacting."

As a jump in demand slightly outpaces a rise in supply, the projected total ending stocks for US corn in January edged down 2 million bushels from the December projection to 846 million bushels, according to USDA.

Cotton Limit Up Following Long Slide

It didn't help that the Dollar was trashed today!

Livestock Futures (Near) Limit Down

Feeder cattle was limit down, and live cattle was nearly limit down. Lean hog was near limit down. I don't think I've ever seen this occur before!

Feeder cattle

Live cattle

Lean Hog

Daily chart for live cattle

Sugar, Cotton Reverse, Move Higher

Sugar - moves powerfully higher - intraday

Sugar - daily

Cotton - limit up intraday

Cotton - limit up daily

Corn Limit Up

Grains Spike, Corn Nearly Limit UP

Threat of frost has finally hit the grain markets. Yesterday, Arlan Suderman said that only 8% of the corn crop was developed beyond threat of damage. Normal for this time of year is 36%.

Grains Get Clobbered in Evening Trading

Grains have been clobbered in overnight trading. Soybeans are down nearly half the limit!

Rice Futures Limit Down

Isn't this the same commodity that, a year ago, its scarcity was causing riots all over the world? Today it was limit down (see intraday chart, above). The daily chart is shown below. The price of rice has been plunging for months without much fanfare!

Grain Prices Collapse To Near Limit Down

Grain prices today collapsed to near limit down almost across the board. This chart for wheat shows the daily chart on the left and the 15 minute intra-day chart on the right. Note the huge downward spike on the daily chart that occurred right at market open today. The dotted line at the bottom of the upper panel of the 15 minute chart represents the exchange's maximum permitted downward move for today.

The large ETF DBA began an immediate sell-off when the stock market opened this morning, confirming the bearish market sentiment for grains one hour before the grain futures trading began trading at 9:30 am CST. I often look at this and other ETFs during off-market hours to gauge virtual market sentiment. This also works after the stock market closes because if ETF traders continue to sell the ETF after the grain market closes at 1:15 pm CST, it is likely that the futures will continue to sell off when trading resumes at 6:00 pm CST.

This chart is typical of grain prices throughout the entire spectrum. Corn and soybean prices also have either touched or are very close to limit down today. This is one reason why I always abide by Phantom's Rule #1 and keep extremely tight stop loss orders. If a trade isn't making money, I exit very quickly. I exited my soybean trade late last night that I initiated during the day session yesterday. When soybean prices collapsed about 1:30 am EST last night, my stop loss order was activated and I exited the trade with a modest profit. Corn and wheat prices were both soft during evening trading, which was a red light to me. Since then, grain prices have gone straight down! Crude oil prices also showed even greater weakness, putting additional pressure on the bio-fuel grains, corn and soybeans.

The USDA released a crop report this morning that was bearish for grains, with the USDA announcing greater than expected acreage plantings for spring 2009 for both corn and soybeans. Wheat was slightly bullish because the USDA estimated fewer acres planted in wheat (although they also increased the estimated end stocks due to lower feed demand) , but the price chart indicates the fervor of the sell-off today, with wheat plunging in sympathy to the other grains. Now, we will begin building a new base and I will look to find a bottom and reenter the market. If prices continue to drop this week, I will consider a short trade. I will trade weather conditions for the rest of the winter, as well as acreage updates for the next 3-4 months.

Corn Opens Limit Down

Grains Slide Lower Across the Board

Corn is approaching limit down today, after sliding gradually lower across the board. The limit down price is shown on the left chart as a burgundy-colored dotted line. Soybean and wheat prices have followed suit. Typically, especially in this case in which prices have slowly and gradually declined throughout the session, prices will bounce off the limit price in the opposite direction. I wouldn't be surprised if that occurred today. How much that bounce will be is anyone's guess.

Soybeans Toy With Lock Limit

The lock limit price is the light blue dotted line.

Soybeans -- Almost Lock Limit

Traders love soybeans. I certainly do today. I even like to eat them. They're delicious!

We almost reached lock limit today. I'm glad we haven't, however, because when we reach lock limit, the CME automatically increases the lock limit for the next day, and this usually results in another increase of margin requirements. I expect a sell-off into the close, as day traders liquidate their positions before the close of the market. Still, "anything can happen," as Mark Douglas lists in his book as one of the 5 Fundamental truths.

Soybeans: Lock Limit UP!

If this is due to speculative excess, then regulatory oversight is almost a certainty. Speculators, and especially hedge funds, must take the blame for the hammer of regulation that will fall upon them. This will probably arrive in the form of huge margin increases or being completely banned from participation in the markets. It may even result in speculators being required to pay all cash to establish a position in the commodity futures markets. This will, in turn, hurt farmers who market their products in the futures markets by hedging.

Soybean, Wheat Lock Limits Expanded (Again)!

The lock limits for wheat and soybean contracts have expanded again for trading this evening. The soybean lock limit will be $1.05 and the lock limit for wheat will be $.90.

Soybeans Flirting With New Lock Limit

On the first day of the new 70 cent lock limit, soybean prices are flirting with lock limit down. On relatively weak volume and somewhat subdued trading, many traders are squaring up their positions in anticipation of the US Crop report due out on Monday. Like many others, I will not hold a position open over the weekend.

Lock Limit for Soybean Futures

The bid pool isn't building as quickly as in the past, however, so this one is not as likely to stick! I expect further trading, as sellers step in to add liquidity and meet the demand. Volume today has been very strong, so there must be fairly good balance between buyers and sellers.

Grains Gone Parabolic!

Corn and soybeans were lock limit up almost from the moment trading began this morning, and wheat has gone parabolic (see the chart, up nearly $1.00). Wheat has a lock limit of $1.35, so it has not yet reached limit up.

Grain, Soybean Explosion

In overnight trading, soybean futures are already closing in on lock limit up. Prices are just seven cents from the daily limit, and the primary day-time trading session hasn't even begun yet. Yesterday's settlement price is so far below the prices on the above chart, the line depicting it (yesterday's settlement price of $1257) doesn't even appear. Soybean prices are nearly $1.00 higher than where we started the week, and the Tuesday session open hasn't even started yet.

Commodities Come Roaring Back?

Gold is significantly higher, also, $30 off its lows. Only energy prices look weak, but don't expect them to stay down for long. Crude oil has remained resiliently above $100/barrel, and if it holds, prices will surge higher again also. So much for the commodities rout! So much for inflation being under control!

There are some excellent articles this morning on Marketwatch.com. Read the one by Paul Farrell about the necessity of taxes going up, regardless of who wins the White House this fall. Read also the one by Irwin Kellner about inflation and the M3 money supply. Greg Robb also wrote a good one called, "Painting Lipstick on a Pig".

Ultimately, there are only three ways to pay for the monstrous US Government deficits:

1. Higher taxes. There is little political will for this one.
2. Borrow from nations that save (China, Japan) or have oil wealth. Eventually, these people will no longer be willing to lend when they realize we can't pay them back.
3. Monetize the debt. This means that the Fed just keeps creating more and more fiat money, paying for the deficits with devalued currency. It also means inflation, as the US Dollar buying power depreciates. It could mean hyperinflation!
   

Look out below!

Soybeans Limit Up

It's been several days, but soybean prices have once again reversed to the up side. This is the first day in March that soybean prices have reached limit up. This is particularly remarkable, since soybeans have reached limit down seven times! Bid orders are also building rapidly, so its possible that prices may continue even higher in the future.