CROPS

Wheat Outright Trading Rule #1: Always know the trend. WTR Rule #2: Hold or establish no posi- tion against the trend. WTR Rule #3: If no trend is identified, wait.

The above rules apply to identified trends; that is, trends that a given trader has identified with confidence. Even a ca- sual observation by someone with little experience can yield a fairly powerful impression of trending tendencies.

It's simple; just print out a current price chart of whatever is to be considered (here Chicago July wheat futures), prefer- ably one that includes at least several months of price behav- ior, if not more. Lay it on a table and walk away until you cannot easily read the labels, but are still able to see the lines. Then note your first impression of what the lines suggest; i.e. moving lower, moving higher or not moving much.

With just this simple exercise, in the absence of all the minutiae and noise, crop reports, vessel lineups, stories of economic woe, etc., a strong idea of what is actually happen- ing will emerge. Every bit of news and fundamental informa- tion currently available at each moment in time is expressed in current prices for each point on the chart.

To repeat: All the actual money decisions being made to buy or sell, anticipating all possible outcomes by all market participants at each point are distilled into the price at that moment. This is why chart reading traders are able to com- pete with the most profound of fundamental supply/demand analysts in the wheat business.

Of course, no wheat market observer with anything at stake, be he primarily fundamentalist or chart technician, can afford to ignore either process. It is economically hazardous to ignore a trend, no matter how great the story may be. This is as true for any other money decision as it is for wheat trad- ers.

The wheat market is now reflecting a lack of ability to trend that is about 60 days old. Decision-makers on both sides of the supply and demand equation are caught between lessthan optimum conditions for wheat production in wide parts of the wheat lands in the US and Canada and a world market that has many sources of wheat supplies outside of the US.

The recent grinding price increase from the lows touched on April Fool's Day ($6.64¾) have not broken above the price highs from only the day before those lows went in at $7.40½. That 75-cent range has become the definition of the non-trend that actually was first established in the first week of March.

At this point, there are no looming fundamental production factors in the northern hemisphere that have the power to move wheat much beyond the established range. The new crop of wheat to be harvested starting in Texas and the Southeastern US will hit the market very soon, which tends to make buyers lazy for a while. See Rule# 3 above. Watch for emerging factor changes.

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.