What I've Learned
“The harder you work,
the harder it is to surrender.”
Vince Lombardi
Commentary
Today’s grain trade ended that a lot different than how it was anticipated to start Sunday night. Soybeans could of crumbled in the night session Sunday on the improved rain chances for Northern Brazil, yet recovered into the day session, and traded higher on the day when export inspections showed up strong 1.431 MMTs for exports in the prior week before a closing with penny losses. Corn and wheat reversed those overnight losses and closed higher.
Corn closed higher last week for the fourth time in the past five weeks, but we were not able to post a weekly close over the 100-day moving average. Today, the 100-day rests at $4.26 ¼ with December corn closing right at it. The net short of the managed money position was reduced by 63,000 contracts, and it now sits at about 68,000 contracts as of the close last Tuesday.
Farmyard Funnies
Open Spec Trade Positions
Spec trades:
Long Option Wheat Play: Long a December Chicago Wheat 630 call and short the 560 put.
Corn
Corn did a two-day correction from last week's high and was quickly bought overnight, allowing it to recover and close above the 100-day exponential MA (purple line). If corn can climb above 428, one can deduct that wave (4) was a simple pullback that bottomed at 421.6, and we could already be in the next leg up with new highs probably awaiting this Friday’s crop report.
I want you to see the two immediate charts below, one showing how US corn is the cheapest in the world right now based on January pricing. Brazil and Ukrainian corn prices are well above ours, which is why exports from the US are usually our strongest December-March.
Beans
Take a look at that blue line in the November daily bean chart below and just marvel at it. I had said in the Weekend Hedger that if soybeans can hold the blue line with slippage (around 5 cents), we may have a simple wave (4) in play with a recovery again on the way. How does this happen with rain in the Brazilian forecast other than last week's $0.30 decline priced a bunch of this in, and everybody had already anticipated rain for weeks? It also could be that China is buying in a big way and doing it to everybody’s fears. It also could occur as soybean yield losses are becoming real with shatter and light moisture content. Whatever it is, if soybeans cannot get below 1026 (Sunday nights low) within the next few sessions, the bean trade via physics is poised to rechallenge the 100-day MA (purple line), presently at 1062-1063.
The 2-Hour bean chart shows the breaking of support and challenging it today near 1039. If soybeans climb above 1040 and can hold that for a four-hour period, then further technical strength will develop.
If soybeans break under 1026, the trade will target the September support area of 995-1001.
Wheat
On the Chicago and Kansas City wheat trade, the way they quickly tagged the 200-day MA for both (blue line) and abruptly crumbled makes it apparent that wave 1 was the early September high, as the intraday charts allow for five ways up to near 6.00, and that the spike high at the blue lines was, in fact, a B wave sharp bounce, with our present leg allowing for a wave C decline that will culminate in a wave 2, which I have been waiting on.
The seasonal upturn in wheat prices started several weeks early, so consolidation would not be out of line here. What is continually needed now is for Russian wheat values to appreciate again, as our domestic values already carry a premium to that, so as they rally, we rally.
The mid-September lows could be rechallenged, as values risk rechallenging Chicago wheat’s mid-September low of 564.
Long Option Wheat Play: Long a December Chicago Wheat 630 call, short the 560 put.
Twitter Tidbits
Cattle
7 Day Feeder Index: $247.47, +0.75
1 Day Feeder Index: $245.71 on 6,921 head
Choice Beef: AM sales: $305.37, +2.79
Select Beef: AM sales: $290.33, +2.72
USDA Pork Cutout Values: $96.48, +2.17
Since making a new high for the move last Thursday, the front three contract months of live cattle futures have consolidated, trading both sides and unable to push further thanks to a significant overbought technical status. It’s First Notice Day for spot October LC and it is trading just slightly premium to last week’s 5-area average price of $186.88, the highest since mid-August. It’s been early September since futures have experienced any sort of setback. October has gone premium to December LC and today it at its greatest premium since early September.
Gold and Dollar
Today, gold prices did soften as the US dollar continued to hold strong above 102 because of last Friday’s employment data, which has many thinking that any more rate cuts in the Federal Reserve in November could be on hold. This has put the US dollar at its highest level in seven weeks and has become a headwind for gold to want to make new all-time highs again, given current world conflicts.
Currently, there is an 86% probability that the Fed will cut rates by only .25% next month after they see another US employment report, and it’s unlikely the Fed will want to deliver another large interest rate cut during the rest of the year.
Gold has stalled at the 2,700 mark, which we showed in the prior newsletter 2 weeks ago as a measured move theory number from the 2001 low to the 2011 high, which you then add to the 2016 low and you get right near 2,700.
Crude
He is, okay, okay, yeah, because then we can kind of see, okay, what do we need to get out of this thing? For Gary be able to be usable, you know? So he's able to just ask it and get data out of it, or put data into it, you know, like we just did with that chat GPT. And chat GPT asked for the data. If he can stick that in there, it'll create those charts for him.
Hedge Recommendations
Hedge update:
2023:
Corn
20% Dec 2023 at 610.
10% Dec 2023 at 605.
10% Dec 2023 at 557.
10% Dec 2023 at 595.
25% July 468.
25% Sept 4.00
Final sale on 2023 corn was 515.
Bean
10% at 1384 on November 23
10% at 1395 on November 23
5% at 1394.4 on Nov 23.
10% at 1227.
10% at 1345.
25% at 1245
30% 1045 Sept.
Final sale on 2023 beans is 1228.
Wheat
100% HRS wheat sale 7.80
100% HRW wheat sale 7.51
2024:
Corn:
Made a 20% sale of new crop corn at 505 March 2025.
Bean:
Wheat:
Made a 25% HRS sale at 765 September.
Made a 20% HRS sale at 707 July
Made a 20% sale of HRW wheat at 658 July.
Made a 25% HRW sale at 718 July.
This material has been prepared by a sales or trading employee or agent o Heartland Investor Capital and is, or is in the nature of, a solicitation. This material is not a research report prepared by Heartland Investor Capital Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS
COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader
must consider whether this is a suitable investment. Past performance, whether actual or
indicated by simulated historical tests of strategies, is not indicative of future results. Trading
advice is based on information taken from trades and statistical services and other sources that Heartland Investor Capital believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.
Newsletter provided by Heartland Investor Capital Management, Inc. a registered CTA with the NFA, of which Eugene Graner is principal. This entity is a separate legal entity from the Introducing Broker Heartland Investor Services.
Copyright © 2020 Heartland Investor Capital Management All rights reserved