CROPS

The price of Chicago soft red winter wheat on Tuesday, Nov. 20 was 70 cents below the highest price traded on November (a week ago Friday). The slightly down- ward sloping trading range is unbroken, but is being threat- ened. The current price is a battleground. Buyers that see wheat at the low end of its range about to return to higher lev- els as expectations for increased U.S. exports finally emerge. Sellers see the weak pace of exports to date and importers tak- ing only small amounts from the market at a time along with a potential range-failure in the price charts. Egypt is anticipated to tender for wheat this week after skipping a week.

The Egyptians are very powerful importers of wheat from many sources, a bellwether of the wheat trade. If U.S. traders are able to capture some of the business this week, it will al- low the market to justify a higher price. If the U.S. fails again to be successful in the Egyptian deal, the low end of the range may break, implying something like an 80-cent break to lower prices, maybe even to fill the chart-gap left back in the first week of July on the way up. The trade defines a price gap up (or down) as a price zone skipped over in a rapid move. The traditional wisdom is that all price gaps get filled with a return to that level eventually, although the timing is vague. If that wisdom is fulfilled this year there is some likelihood that Chicago wheat will return to just below $8.03, some 55 cents below current. This would not be a disaster, since a 50-cent move in today's environment has become normal.

On the supportive side, crop conditions for next year's U.S. winter wheat crop are not particularly good overall. In the latest crop condition report from USDA, the rating fell 2 percent down to 34 percent "good to excellent" with the larg- est declines showing in the Pacific Northwest. Washington dropped to 57 percent and Oregon was down to 39 percent. Too much water? It is a long way to next summer and too much water at this stage is not a huge deal. There is no strong statistical correlation between November crop condition and final yield.

The main focus through year-end will be weather in the Southern hemisphere, the U.S. wheat export sales pace, trad- ing fund liquidation and the entertainment of negotiations on the "Fiscal Cliff".

There is a campaign and full-court-press from the finan- cial media and investment banks to reassure remaining stock owners to stay put. It's a holiday week and many traders are going to be absent in the next few days.

Using tax timing for investment decisions is rarely the right thing to do.

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.