CROPS

The wheat market's price behavior over the last week has become cautious. The bears, that snarling, hairy group of negative-biased sellers, have become less willing to extend their positions, even as the bulls, like Fer- dinand, are sitting just quietly, smelling the flowers.

The "large speculator" category of traders included in the Commodity Futures Trading Commission's (CFTC) weekly Commitment of Traders (COT) report are currently holding about 23,682 wheat futures contracts net "short" sold in Chicago . Historically speaking that is a relatively modest posi- tion for this group to hold. There is plenty of capacity to sell more, but the incentive to add to the current position given today's setup is small. There are always buyers in the market, as every one of those 23,682 contracts has both a buyer and a seller holding, but the dominant forces are nearly balanced.

As of May 19, 71% of the U.S. corn crop has been planted. That means that 43% of the corn crop was planted in just one week, as the lights were moving in the fields all night, every night!

While the farmers who put the corn seed in the ground take a little nap, the market seeks a new story to drive prices of all grains. So far there is little on which to build a price rally. Spring wheat planting is lagging, but also showed a very fast week, with overall 67% seeded compared to last week's 43%. North Dakota is running late, at 50% versus the normal 67% done.

Wheat exports are expected to come in just under USDA's projections for the crop year, as the official 2012 crop mar- keting year ends this month. Harvest of wheat planted last fall is underway in Texas, so the next market focus will be quality and yield. It is a normal transition period for prices that eventually is dominated by the increasing flow of avail- able wheat. Wheat purchasing from the Middle East, notably Egypt, one of the largest global buyers of wheat in the past, is in disarray, causing delays and order execution problems, ul- timately a price negative. All of this is market neutral at best.

Overall wheat crop conditions have declined a bit in the last week, with 31% in good-to-excellent condition com- pared to 50% on average for this time, and 41% in poor-to- very-poor condition versus 23% for normal. Even though wheat production from the US is expected to decline this season, the USDA is projecting an increase from all global sources of wheat to a record high this year, as conditions have been favorable in most of the Northern hemisphere.

Overall, the long-term sideways-to-lower price trend is still intact. The impulse to buy should be curbed for now. It would take a move above $7.10 in Chicago July wheat futures, presently at about $6.80 per bushel, to attract buyer attention. Below that level, not much power.

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 com- mitted should be risk capital.