FOR TUESDAY: (7/3) Grains are doing a dead-cat bounce on Monday night on minor adjustments in crop conditions. The slam dunk on Monday caught us by surprise, as we hadn’t expected such a huge downward movement. We had cancelled long wheat and exited long corn from the Sunday night session market on Monday but failed to hedge. Lack of a perceived weather threat to U.S. crops along with generally bearish data on acreage and grain inventories last week gave traders little incentive to stick their necks out with new long positions headed in to the July 4th holiday. Have to get some Dec. corn hedges on, as we could quickly be at 340.
TODAY’S COMMENTS: (7/3) We had suggested exiting corn at the open in our morning report because we didn’t like the new weather forecasts and the market was projecting 366—and, in fact, went much lower. Five waves down projects 339 with short-term support at 355 and max. bounce if we’re lucky to 363.50 if you want to be short into the July 4th holiday. Hopes for hedging at 381 or 389 will take a major weather shift—which happens—but not looking good.
OVERALL: I suspect that we have to use strength to hedge Dec. corn at the 381 and 389 region and we may get higher to 399 to 400 if we get hot weather the first few weeks of July with reduced rain. This is a wet year so it may be asking too much. I will look at July weather more closely.
CYCLES OVERVIEW: Lower into July 3; higher into July 5 and 10.