CROPS

I rresistible force meets immovable object - the old football cliché may be applied to the cur- rent wheat market; high emotion and heavy money on the move are making sparks and noise, but theses forces of buying and selling are, for the moment, balanced.

For the last week, the price of wheat has been vibrating between $9.15 and $8.60. Granted, it has been a large vibe, with a 55-cent range from high to low, fully explored almost every day. But it is becoming better defined as the days pass.

What this allows, for the chart traders among us, is a planned market entry or exit point when the range is finally broken either way. Watch Chicago September wheat -- if it drops below $8.50 or break out above $9.20. It could be entertaining.

Chicago is not the only wheat futures market, as the Kansas City Board of Trade has the Hard Red Winter wheat contract (grown mostly in the Midwest west of the Mississippi), and there is the Minneapolis Hard Red Spring wheat contract (for spring planted wheat grown mostly in North and South Dakota, Min- nesota and Canada).

There are no corresponding futures contract for the White Wheat grown in the Pacific Northwest, so white wheat traders have to borrow risk management from the other markets, using futures for other variet- ies as proxies. It works out fairly well over time, but the relationship is not perfect, so there is an extra ele- ment of risk for white wheat.

As of Tuesday morning, the price of white wheat delivered to Portland is up about 20 cents from the July 24 closing quote, with an $8.96 high in between, while Chicago is about a dime higher. KC wheat has corresponded with Chicago's pattern, up about $15 cents, while spring wheat is reflecting a healthy crop, declining about 15 cents. It is rare to see any wheat va- riety price diverge much from the pattern of the others.

The damage to the corn crop that has sponsored most of the recent wheat price increase is just about defined. You can only kill a plant one time. Recently the weather pattern has broken enough to cause un- certainty among market observers, and historically uncertainty has been overwhelmingly a negative force for prices.

The primary effect of the big run-up in grain pric- es this summer for the U.S. is to have priced U.S. grain products out of world trade, which is actually what the markets are supposed to do, rationing sup- ply by raising prices. The anticipation of further de- clines in production allows the prices to rise above the point at which things are perfectly balanced, so downward adjustments become necessary. That is the point at which we find ourselves now.

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.