Just before going off the board, the September natural gas fell to $2.69, which is the lowest level since August 2002. The low price is good for end users, but the news isn’t all good. The July 2010 contract is currently at $5.58, so there is a great deal of carry in the market and because of that, we can’t take advantage of the very low prices we have in the front months. However, the way the market has been trading, the deferred prices may eventually come down to the spot price, so there isn’t any hurry to lock in next year price.

Trend: Short Term Up – Long Term Down
Sentiment: Looking for fresh news

The December corn was up 2 ¾ cents in what was a very choppy, sideways week. We had both an outside day down, and an outside day up on the charts, which is unusual, but neither resulted in much follow through trade.

I would say, that for the most part, traders are still looking for a larger production estimate out of USDA in the September report. There is still, however, some fear regarding the late development of the crop. An early freeze wouldn’t result in a disaster at all, but it could reduce production enough to make the supply and demand balance sheets a little more interesting. Those two things are keeping the market stuck in a sideways pattern.

Export sales were ok this week with 265,600 MT of old crop sales and 707,600 MT of new crop sales. If we do have a record yield we are going to have to see these sales numbers improve because we are going to have a lot of extra corn. I imagine that sales will improve in the fall once buyers are sure that the harvest low is in. The Dollar isn’t getting stronger, and corn price isn’t rising, so there is no hurry to buy.

Action: It still looks like any strength we see is a selling opportunity. Sell December corn above $3.30 and look for a move down to at least $3.12.

Trend: Short Term Up – Long Term Down
Sentiment: Better Exports

The wheat market showed some signs of life this week, but posted an outside day down on Friday. At one point on Tuesday the December KW was up nearly 30 cent for the week, but the gains didn’t hold and the December KW ended up only being 7 cents higher.

Export sales were a marketing year high at 652,700 MT. Egypt is turning into a regular buyer, which means our wheat is cheap in the world market. The problem is that we still need to see better numbers that this. This week’s marketing year high really just made up for last week. 6 or 8 weeks in a row of numbers like this, then we will have something to talk about.

The market outlook is still pretty poor. The wheat market still needs to see either consistent strength in the corn or much better export sales in order to have a sustained rally. This week showed that the wheat can move under the right circumstances. Short covering and a sale to Egypt sent the market shooting higher, but as soon as that little bit of buying dried up, there was nothing left and the market dropped. At the moment I would look for at least a test of the August low and probably another leg down.

Action: Rallies are for selling or for selling calls.

Trend: Short Term Up – Long Term Up
Sentiment: Still in their own world.

The September soybeans were up $1.12 ¾ this week and that was 29 cents off of Friday’s high. The November soybeans were up 38 cents.

Demand and lack of supply are the reasons for the strength in the September contract, and the rest of the contracts are being drug along for the ride. Next week there will be no limits in the September contract, since we are in the delivery period, so it could be very interesting. There is no way of telling where the September contract may go, but it looks like the November contract has the potential to reach the $10.60 area. Strength is a selling opportunity in the November contract. Once we get through harvest though, buying the July contract could pay great dividends.

Export sales were tremendous again at 87,900 MT of old crop sales and 1.97 MMT of new crop. Sales won’t be as high in next week’s report, but they don’t need to be.

Crop development is still a concern, but the fact that harvest is approaching means that the concern shrinks every day. If there is an early frost it could have a huge impact on the market, but for now the forecasts look nonthreatening.

Action: I still like the November $10.00 puts. They will give you great coverage through harvest.

Trend: Short Term Down – Long Term Down
Sentiment: Higher cash trade again.

The good news is that cash cattle traded at $85, which was up again. The bad news is that October LC futures lost $1.90. I guess that is good from a hedge perspective, but it just doesn’t give you much confidence if you are wanting to be bullish. Choice beef was higher, but only by $1.15, which isn’t that bullish either. My fear is that the futures market is telling us that cash price will be lower next week.

Action: The charts look pretty poor after this week’s break. Look for the November FC to head to $96.50.