CROPS

The sun comes up and the sun goes down, the hands on the clock go round and round...Life gets teejus, don't it! (Thanks, Hank.)

But here's the thing; There is always opportunity, no matter what the world says on the Internet, or talk radio, or CNBC. Never mind how dark the political rhetoric gets. "The market" goes on. In our world there is an extreme need for honest price discovery that is fair and available to anyone for stuff we all need every day. Ultimately, it cannot be dependent on government permission, subsidies or requirements. But it is absolutely dependant on one thing: trust. We must be able to trust each other to follow through on commitments.

Every day, when someone buys a unit train of wheat for delivery many hundreds of miles from its origin, the trade usually takes place on the telephone, just a buyer talking to a seller ... $2.4 million on a phone call. The link to reality that keeps a market like wheat or any other real commodity honest is the trust between buyer and seller that each will honor the agreement made through a nod from one pit broker to another or on an electronic confirmation screen at the tap of a send key. In the end, anyone in the world with the financial capacity to open an account can make or take physical delivery on a contract at expiration, and do so expecting a given quality, location and price. All of this and more depends on trust. At the end of the day, the market must function without relying entirely on regulators and government watchdogs to prevent corruption. It must function on trust.

Wheat prices spent the last week going sideways in the now-familiar 24-cent range, but on Tuesday, Chicago May contracts managed to close at the highest point of the last 11 trading sessions, around $6.54.

When a pattern like this is changed by a break-out of the top of the range, especially when confirmed with another close over that level, it suggests that a shift has occurred in the underlying fundamentals, or at least in the conditions that gave rise to the previous behavior. Wheat has been trading slowly awaiting new data, mostly weather developments in the northern hemisphere, but corn is currently the more dominant factor that has been slightly more positive for the last week.

The suggestion of higher prices ahead is still tentative, but corn will likely give the signal first. The movement is technically inspired at this point, with a supportive background of a weaker U.S. dollar and above-expectation weekly corn export totals. The wheat price trend remains sideways to slightly higher from last week's low, but there is no compelling story yet visible for much higher prices.

Information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.