r e l a t i v e // strength

usda crop progress report

corn

The corn market moved lower (at time much lower) on Monday. But the last 15-20 minutes of trading were again intense. The market dipped into the low 230s for the Dec contract only to rebound and close at 238.50. Though there was a jab below support in the 237 area, the close was in fact above support. This could prove important in coming days. Though, tonight (aug-14) corn will likely feel more pressure because the USDA's weekly crop progress report came out and showed that good/excellent ratings for the crop were unchanged from last week. However, and perhaps more importantly, the "good" category for Iowa increased from 41% to 45%. This may prove significant in tonight's market action. Be wary of this area... fresh contract lows during the day session leave the possibility open for a hard and fast fall should the funds roll over and liquidate. The massive longs the funds are holding could make this vacuous.


cattle

The cattle market was initially higher then closed lower for the day. October live cattle closed below 92.00 at 91.80, which may be significant in coming days. There has been a strong and fast run-up in the cattle complex and anything that moves with that kind of intensity often has a reckoning day.


sugar

Sugar was again down hard Monday. The October contract closed at 12.50. This has been one of those rare instances were I actually caught a large portion of the downward move.

Observations about this:

• I was initially long and stopped out a couple of weeks back.
• Re-evaluating the chart and the shelf of support in the 14c area, I decided to reverse the position and ride the fresh momentum to the downside.
  
• The chart broke through 14c then 13c, and now we're in the mid 12c area.
  
• Looking at the daily chart shows that this may be another vacuous zone where there is not a definitive support area. Take a somewhat defenisive posture to retain most of the profits achieved at this point, but be aware of the "nowhere-land" that exists on the way down to 10.92. Bears are no-doubt targetting this region.
  

Looking at the longer-term chart, the 11/10/2006 price of 10.92 at the bottom of the long rally eventually got us to 18.35, which is a differential of 7.43. We're currently at 12.50, which is a differential from the high of 5.85. The differential 5.85 (=18.35-12.50) represents a 79% retracement of the bull run. Granted it hasn't happened all at once, but the supply/demand factors for the upcoming surplus year perpetuated the placement of the straw that broke the camel's back.

posted by jared @ 4:00 PM