Market Monitor

By Marlin Clark

The fat grain buyer is quiet

Bill Barnett says I was wrong about my thinking last week. I said, "It's not over until the fat farmer combines!" Meaning, the market top is not in yet. Bill says it's not over until the fat grain buyer sings, and I'm pretty sure he was talking about me.

Now, Bill was at my karaoke birthday party last summer. He knows what everybody who has seen me in the last thirty years knows, and he has also seen me sing. And, he is right—I haven't been singing. Oh, I keep chirping about the high being in every time we get a peak in prices. Then, we trade off a few days and come back to make new highs in corn. No singing in there anywhere.

Once again this week we made new corn highs. Once again as we go into Tuesday morning the overnight is sharply lower, and I start thinking the top is in. I'm not singing about it, however. Is this a mood change, or just a knee-jerk reaction to the highs we put in on Friday, when we were worried about the long weekend?

Friday corn made a new high at 4.67 December futures. We saw a 21-1/2 cent range and closed 17 cents higher. This leaves me scratching my head, as the end of the rally is frequently the biggest day. So, was this trade a reflection of the long weekend, a blow-off top, or just one more big day up?

It is no surprise that Tuesday morning, as this is written, the December corn futures are down 5/1/4 cents. Interesting to note, however, is that we actually made a new high on the overnight, at 4.69. Just to prove my humility, or to make an attempt at it, I should point out that when we made the spike high on wheat overnight on the 5^th I said that the sympathetic corn high was phony and would remain the high, at 4.38-3/4. So far I am wr, wr, wrong, by30 cents.

Chatter from Chicago this morning is about the near-record long position of traders in Chicago. This is the biggest number of long contracts and options in two years. That is an indication that the bull really needs to be fed, and that we are running out of the ability to trade longer forever. We could trade this as a long-term high, or it could be another stepping stone. Advice from the floor this morning is to use puts to protect against prices falling.

While corn has made new highs, the soybeans have not. Beans have traded in sync with corn, but without as much volatility. Thus, soybeans were up 26 cents overnight going into Tuesday, but the high was 10.41-1/4, still off the 10.49 spike high of the 5^th. The overnight session close for the November futures was 10.35.

Wheat futures continue to look for direction after the precipitous breakdown in prices the 6^th of August. Remember that we turned around $1.20 at one point that day. December wheat futures are off 12-1/4 overnight. We are 7.29, $1.39 off the high. The good news is that we have bounced 52 cents off the bottom.

Traders continue to be focused on crop news as they try to determine what our corn, especially, is going to turn out. A remark heard this morning was that USDA might raise the corn yield number, but the trade would not believe it. The bias in Chicago still seems to be that the corn crop is suspect, and demand is going to be more than allowed so far in the USDA Supply and Demand Report. Consequently, the market is still bullish.

And, I am holding off on the singing. Of course, when I do sing, it will be the traditional call of the grain trader. That is Ray Orbison's "It's Over!"

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.