Grain Market Wrap Up 3/25/09

The nervous, spastic market continues to keep us on our toes. The wheat market gave up today as the rains and the forecast for much needed water was delivered to the hard wheat country. The wheat market is very thin and this is what happens in a long leaning wheat market that has no fundamental story except for weather. It really makes it impossible to trade in the futures pit, and it is equally as difficult in the cash markets in PA where there is demand. The w/c/b markets were all getting a little tired after 3 weeks of an uptrend. This does not turn me into a corn and bean bear, just settling in and letting the market consolidate its gains. The Linn Group wire today brought my attention to the below chart of unleaded gas.

Unleaded gas made a good trade breaking north of 4 months of trade. Taking this market half way back puts 50-60 cents on the price of gas. Fifty cents up on the price of gas is certainly not bearish corn. 3 gallons of ethanol from 1 bushel of corn adds money back into the ethanol trade, bolstering margins. Check out the gas crack on the next chart, this is a very seasonal trade that is looking ready run.

The next chart shows the May Nov bean spread. This spread is historically very wide as we remain competitive to China while Argentina works out her troubles. We get the sense that ending stocks for beans may be smaller than the USDA reported earlier. When and if SA gets her act together, this spread will come back in, putting pressure on the nearby, possibly on the back of smaller acres here in the US?? Hmmmm

The above 5 day accumulation map tells the story of wheat down 30. This should keep the drought bulls penned up for awhile. Look for wheat to turn into the weak leg of corn and bean trades, use any rally back in wheat as a selling opportunity for producers. As of the close of trade today, I still think there is more downside to beans tomorrow and Friday while corn will probably be supported around 3.80 and wheat will try to gain footing, maybe a little back and fill. Corn users should use this weakness to extend flat coverage.

Call for individual rec's as everyone has a different position and obviously without knowledge of your position, I cannot make specific comments about same. Use this info to formulate your own opinion. I tend to think that corn has room to the topside, maybe a retracement back to 4.20-4.40 ish. Maybe Tuesday's report will be the spark needed to get this market going. Beans are a little more challenging, more of a wait and see attitude. After we get thru August, our US and world supplies turn very adequate so it is a timing and a weather trade. These fundamentals make day to day rec's very difficult as the market can become supercharged in a minute and my computer is not a fast as someone sitting in Chicago or NY.

Good luck,

Jon Hart

Keystone Commodities Co.

I apologize for the formatting above. I created this post in another software program and during the import I lost all of the images . I am now searching for a better format as I have had my fill of this hokey ridiculous posting app. Better luck tomorrow they say.