CROPS

The single, largest potential market mover for wheat (and many other commodities) today is China. This is a very old story, told over and over again through the years. Most market observers have become indifferent to melodramatic analyses of Chinese buying power for grains, as the reality never quite seems to reach the level of enthusiasm forecast. Recent developments have started up the talk again.

Late last week there was a large sale of corn to "unknown destinations" announced by USDA's reporting system which the trade has assumed it to be for Chinese consumption. It is not really the actual sale that is important, but the idea that Chinese managers may have made a policy shift toward importing grains. Tyrannosaurus Rex may pass by without incident, but it's the kind of stuff of which significant market moves may be made. Potential buying is represented by the large short-sold positions in wheat currently reported to be held by large trading funds; some 53,771 contracts...another ground-shaker, but more like a herd of buffalo. As long as the herd is not spooked, things will be pretty peaceful, but it is defi- nitely not healthy to be caught on the wrong side if they catch scent of the T. Rex on the move.

Balancing the China and short-fund rumbles, the current crop conditions in the northern hemisphere and the U.S. in particular are very healthy. Winter wheat is reported at 64 percent good-to-excellent versus a 10-year average of 49 percent. Spring wheat planting progress is at 74 percent compared to 38 percent normally. Emergence is way ahead; 79 percent up and growing in North Dakota versus 16 percent historically by now. Corn also is ahead of schedule at 53 percent planted versus 35 percent normally. All of this allows plant development ahead of heat-stress time, especially for corn. So far the weather volatility season has not delivered much excitement, with no significant problems for crops in the northern hemisphere, ultimately a price negative.

Information and opinions contained herein come 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.