Free Commentary

By: Dan Hueber –

There used to be an old maxim in the commodity trade that stated, “It is raining on LaSalle Street in Chicago so grain markets are going to be lower.”  Of course, this would only apply in the summer months but realistically was not too far from the truth, even if the pressure was temporary.  While technology always introduces both good and bad elements, here is where we can point to something concrete where it has delivered a positive or at least more equitable and realistic influence.  First of all, instead of traders gathered together in the somewhat closed environment of a trading floor, they are now scattered across the globe and everyone has at their fingertips access to weather information and maps that at one time would have been out of reach (financially at least) to most average individuals at least until after the fact.  Of course, this still does not stop individuals such as myself from making bad puns and it would appear that grain/soy markets are finally getting “hot.” Corn values have reached the highest level in a year, beans are flirting with the calendar year highs and wheat appear to be shaking off the little swoon that it experienced last week and is pressing higher.  We all certainly know all-too-well that there are no guarantees in weather forecasts but regardless of the moisture that has fallen on LaSalle Street this morning, the trade appears to be looking at the broader forecast that promises limited or spotty moisture and above normal temperature to the western side of the Midwest and up into the Northern Plains.  I understand that some computer models are suggesting that a high-pressure ridge could setup across the western Corn Belt over the next couple weeks, and while no one that I have read has mentioned the “Dome of Death”, needless to say, warm and dry over the next couple weeks would not make for a favorable recipe for yields.

Last week, I traveled from Northern Illinois, down to St. Louis, across to Kansas City, up to Des Moines and the then finally back home to Illinois, basically 1,000 miles of predominantly corn and bean fields.  Now, I recognize that a windshield tour at 70 mph is by no means a definable crop tour but the biggest thing that I came away with was the inconsistency of crop development.  I saw a number of corn fields that were tasseled but others at the same latitude that were barely waist high and just a lot of variability within many fields.  If there was one thing that was consistent just about everywhere, it was lack of development (height) in beans.  While I recognize that is not supposed to make any difference and what will really count is the August weather, but I cannot help but believe, especially after the past several years where we experienced above average yields, size does matter.

Looking from a technical standpoint, this morning beans gapped higher and while corn did not quite leave a gap, it began the week with a leap into new highs, which for both is indicative of potential breakaway situation.  The more classic chart of the two is beans as this is now the second gap since this move began in late June and with gap theory, this would be considered the measuring gap.  If correct, and assuming this gap is not filled over the next couple days, this would provide us with a target up between 11.28 and 11.43.  If this setup is close to realistic, the key element to watch for would be a third gap, which would be considered the exhaustion gap and a sign that we are nearing the completion of the move.


Recognize that none of this need come to fruition and a shift in the weather pattern could bring it all crashing back to earth so it is no time to become greedy or undisciplined.  If you are in profitable territory, which I believe is safe to say for most that you are, take advantage of the move as weather markets are always short-lived by nature.  As the old saying goes, bulls make money, bears make money but hogs go to slaughter.