Fundamentals:

Corn futures settled lower today as the market was in a defensive mode for the entire session as there was no fresh news in the marketplace. The market traded in a confined range again today, as traders are not willing to take on additional risk heading into the holidays. Bullish traders are still holding longs as they are hoping the funds will cover some of their record short positions by years end. Bears are still holding shorts as the weight of a record U.S. crop (and further anticipation of a larger crop figure next month) keeps many looking for lower prices. We anticipate the market will remain very sluggish and two sided into the New Year. We estimate funds bought 400 contracts today. March settled at 2.05 3/4 down 3/4 and May was also down 3/4 to 2.13.

Technicals:

Corn futures eased lower today but for the most part were in a tight two sided trading range.  We opted out of our positions today as the volatility index on the call options increased and we remained concerned that a concerted effort of liquidation by the funds could move this market 5 - 10 cents higher.  We remain bearish overall from a fundamental perspective but much like the soybeans, the corn market could easily see a moderate bounce before returning lower.  Therefore we moved out of our positions today and will look to enter a short position on a bounce.  Key resistance is likely to provide us with our next sell signal (at $2.10) but for now we will not make any new recommendations.
Positions:

12-16-04: Sell 1 March Corn at $2.03 3/4 - liquidated at $2.06 1/4 (Loss = $125.00 plus commission).

Recommendations:

SOYBEANS:

Fundamentals:

Soybean futures settled lower today after a dull trading session. Volume was light once again as the market traded on both sides of unchanged. Fund position squaring was the primary theme today as they were in a liquidation mode as we headed into year's end. The trade was quiet for the majority of the day as the March bean contract only had a 5 cent range. The market was supported on light fund short covering. Coming into today's session, the funds were reportedly short about 34,000 contracts. We estimate funds bought 500 beans contracts, were even in meal contracts and bought 200 oil contracts on the day. January beans were down 1 to 5.49, March meal unchanged at 159.70 and January oil down .01 to 20.86.

Technicals:

Soybean futures did little to impress us today and are susceptible for a decline to the 50-day moving average tomorrow (a ten cent decline) if we move below the $5.46 level basis March.  We see no reason to believe that any significant move will hold tomorrow or the remainder of the week and look for the complex to remain mostly steady.  We will need a close below the 50-day moving average to bring fresh selling back into the market, but a move beyond $5.60 could create a massive flurry of buying.  If it sounds like we are at a cross-road, we are.  The market, which is usually thin this time of year can sometimes get very volatile and make sporadic moves over several days (much like we saw Friday and Monday).  Therefore we believe we will simply stay with our put option as the major trend remains lower and we will maintain this bias.
Positions:

12-10-04:  Bought 1 March Soybean $5.20 Put @ $.16

Recommendations:

NONE

WHEAT:

Fundamentals:

Wheat futures settled lower today in another light volume trading session. The market was choppy as there was no fresh news out. The Kansas City market led the weaker tone today as a few sell stops were triggered. Chicago gained a little back today against Kansas City as the March spread settled at 31 3/4 cents, versus the spread seven days ago of 38 3/4. The Chicago market remained supported on expectations for a decline in soft red winter wheat plantings. We estimate funds sold 300 contracts on the day. March settled at 3.05 1/2 down 1/2, March KC down 2 3/4 at 3.37 1/4 and March Minneapolis down 1 1/2 to 3.46 3/4.

Technicals:

Wheat futures are going nowhere fast as the market is in its typical sideways action.  Much like the rest of the grain complex, wheat futures are searching for direction.  The complex has established a one and a half sideways bottom formation, but we see nothing either technically or fundamentally that appears ready to push us beyond the recent ranges.  If the market pulls back to contract lows once again we will likely re-enter a long call option but besides that, we feel the best place for our money is on the sidelines.  Even a move beyond the past two days' highs will likely fizzle out at the 50-day moving average which was a mere 8 1/2 cents above todays close (basis March Chicago).

WHEAT:

Fundamentals:

Wheat futures settled lower today in another light volume trading session. The market was choppy as there was no fresh news out. The Kansas City market led the weaker tone today as a few sell stops were triggered. Chicago gained a little back today against Kansas City as the March spread settled at 31 3/4 cents, versus the spread seven days ago of 38 3/4. The Chicago market remained supported on expectations for a decline in soft red winter wheat plantings. We estimate funds sold 300 contracts on the day. March settled at 3.05 1/2 down 1/2, March KC down 2 3/4 at 3.37 1/4 and March Minneapolis down 1 1/2 to 3.46 3/4.

Technicals:

Wheat futures are going nowhere fast as the market is in its typical sideways action.  Much like the rest of the grain complex, wheat futures are searching for direction.  The complex has established a one and a half sideways bottom formation, but we see nothing either technically or fundamentally that appears ready to push us beyond the recent ranges.  If the market pulls back to contract lows once again we will likely re-enter a long call option but besides that, we feel the best place for our money is on the sidelines.  Even a move beyond the past two days' highs will likely fizzle out at the 50-day moving average which was a mere 8 1/2 cents above todays close (basis March Chicago).
Positions:

NONE

Recommendations: