CROPS

There are corn shipments from Brazil unloading on the East coast for feeders in the mid-coastal region. The price of corn has arrived at a tipping point that is the market must seek a price for United States corn that does not destroy demand any further than it has already. On the other hand too much relaxation of prices could kick demand up enough to over-run available supplies being harvested now. The price range for corn is thus de- fined loosely between about $8.50 and $7.50 for a while. The recent range for December corn is between $8.49 on Aug. 10 (all-time high) and $7.86 (two days after that high).

Wheat never has had a personal reason to trade higher this summer, so it has been a "sympathy rally" being led up by corn and soybean prices. The market already knows this, so we have clearly lost the momentum to the upside for wheat. The fundamentals of USDA projected year-end stocks of all wheat at 724 million bushels with export sales running below last year's pace do not support the idea of higher prices later this year.

With that gloomy longer-term idea in mind, we then turn to short-term ideas. Does wheat need to decline to be priced "correctly?"

Probably yes if export sales are desired, although Rus- sia will be running out of wheat for sale in late October or November. The low end of technical (chart-based) projections for Chicago wheat is around $8, a somewhat rare "chart-gap" left untraded back in the first week of July. The December Chicago wheat futures contract has recently been trading around $8.85, implying roughly a dollar potential downward potential. The upper side of the recent downward channel would be broken above about $9.25, with a warning shot being fired if the con- tract breaks above last Thursday's high of $9.14. As long as wheat prices trade within these fairly loose boundaries, there is no reason to stress either way.

The Russians had suggested that they might shut off export sales early in the season, as their crop was cut by drought, but the shutdown order never came. It seems that they were taken to the woodshed by the importing commu- nity last time they cut off export sales and have had to work hard for sales this year, cutting prices below world market levels to regain the confidence of buyers. It is clear they in- tend to continue to sell aggressively, although the statistics show they cannot continue to be the world wheat market low-price leader indefinitely. This allows some wheat busi- ness to return to U.S. origins later this year.

With Ag markets nearer the high end of the recent range of prices and quiet outside markets, i.e. range- bound U.S. dollar in a mild uptrend, a non-threatening U.S. stock market and energy in the middle of its recent price range, the stress is off of traders and the theme of the next chapter has not yet been revealed.

Information and opinions contained herein come from sources believed to be reliable, but are not guar- anteed as to accuracy or completeness. The risk of loss in trading futures and/ or options is substantial. Each investor must consid- er 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.