"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Monday, September 22, 2014

Corn Conditions Hold Steady; Beans Dip Ever so Slightly

The weekly USDA Crop Conditions and Progress reports were released this afternoon as they always are on Mondays' during the growing season. The results show the percentage of the corn crop rated Good/Excellent unchanged at 74% but even that masks the fact that the percentage rated Excellent jumped by 1% with the 1% drop coming from the Good category. A whopping 23% of the corn crop is rated Excellent. Think about that for a moment - nearly a full quarter of the crop has the highest rating possible!

As far as corn maturity goes, this recent weather has been ideal for the crop to begin catching up to its more usual maturity ratings at this time of the year. Remember, I have been maintaining that the reason for the lag in the crop maturity rate has everything to do with the exceptionally perfect weather and moisture levels for the plants which kept the plant from shutting down as it usually does when the weather tends to turn to its more seasonal dry period at this time of the year. My view is that while it keeps the plant from shutting down it also results in bigger kernels and even better ear fill. As long as that plant can put energy into those kernels, it will. That translates to bigger overall yields which I believe is going to be confirmed as the harvest results start multiplying.

However, to provide the numbers - 90% of the crop is now dented compared to 82% last week and 90% at the same time last year. The 5 year average is 92% so for all practical purposes, the crop is now catching up.

42% of the crop is mature versus 27% last week and 37% last year! Compared to last year, the crop is now ahead slightly in that regard. The 5-year average stands at 54%.

Harvest is at 7% compared to 7% last year ( dead even ) and the 5-year average of 15%. Good weather will help farmers make tremendous progress in areas where the crop is ready to go to the bin.

On the soybean front - there was a slight bit of deterioration this week with the percentage rated Good/Excellent dropping 1% to 71% from 72% last week. In going through the data state by state, it looks as if the minor decline came from Minnesota and Michigan ( northern tier states ) so perhaps some of that is indicative of some very mild frost damaged that occurred very early just ahead of the previous weekend and was reflected a bit later in the week when the surveyors had a chance to get out into the fields and take a look-see.

That being said, the Wisconsin crop actually improved to 49% Good from 48% last week and held steady at 24% Excellent  from the previous week. North Dakota lost 1% in the Excellent category to 16% but it moved to the Good category which is now at 59% compared to last week's reading at 58%.

Still when you consider that Minnesota has 65% of its crop rated Good/Excellent with 27% rated fair, while Michigan has 61% rated at Good/Excellent and 26% Fair, it is quite a stretch to try to talk up prices by referring to frost damage with those kinds of ratings.

More important in my view is the fact that 45% of the crop is dropping leaves compared to 24% last week ( the number nearly doubled!) and 44% the same week last year. That is good news. The 5-year average is 53%.

On the harvest front - 3% of the crop is in the bin compared to 3% last year at this time and the 5-year average of 8%. One can definitely see the progress in the Delta which is running ahead of not only last year at this time but also ahead of the 5-year average. The harvesters are coming north!

Based on what I can see of the forecasts at this stage, they look very good on out into the first week of October. We should see some very good harvest progress in some areas. The warmth should also speed along those crops in the northern tier states.

We'll see how the Board reacts to this tomorrow but I find any bullishness in it missing.

Incidentally, changing gears a bit here to look at the mining shares as evidenced by the HUI, the index has fallen to support at the late May/early June lows of this year and looks very precarious. Also, that happens to nicely coincide with the top of the gap made on the chart to start the year when the shares jumped sharply to start of the new year.

The index is very close to surrendering the entirety of this year's gains. The way things stand at the moment, the gold shares are not exactly sending out a ringing endorsement of higher gold prices. The longer gold remains below $1220, the more the odds grow that it will revisit psychological round number support at $1200. If it changes handles, a test of the major low near $1180 will be coming shortly thereafter.

Note that the HUI/Gold ratio continues to plummet:

On the US Dollar front, traders seem a bit unwilling the take the greenback up through the 85 level basis USDX. If they do, gold will  more than likely not hold $1200.


  1. harvest is moving slow so hurts the long side., seeing commentary 'corn to 3.00 and beans to 2.5 corn' as the big crops are getting bigger.

    an item to think about is index fund longs:
    Latest Index fund long in 5 major Ag commodities of 613K contracts
    (nearly half corn) is up 29K contracts from 1 year ago but off from Feb ’08 high of 878K contracts which marked peak in pre-recession accumulation of
    commodity basket longs. Interestingly, current Index Ag Commodity long of 613K contracts is nearly 20% higher than early January 2014 level of 511K Index long.

    the index fund longs is bearish across the board in commodity land, as money is going to be pulled out.

    interestingly, stock market tops have had 'ipo mania' at the top: in 2000 it was an incredible ipo year about $98bil, then 2007 made 2nd highest at $49bil... with BABA this year will be off the charts!

    the euro has a bullish % of traders down to 3%, so perhaps the big boyz think a pause in the DX push is needed. the trend in us dollar looks very good to continue, with goldman sachs et al saying euro to 100 by 2017... usa is the currency that has a country raising rates and if you had bought our treasuries from abroad you are still doing well as your currency drops.


  2. 77:
    Are you saying that because the ag market is getting hammered, that those investors who are still holding shares in long ag index funds will eventually sell their shares and therefore cause even more downward pressure on grain prices?

    It will be interesting to see how the hedge funds manage the corn/wheat spread trade. The price action today went against them. Seems that wheat will need to continue its move down for this trade to continue to work. With the big crop in corn, it isn't looking so good right now for wheat to underperform corn.

  3. Wow. I remember gold pundits pounding their chests a few months back screaming mining shares as the best performing asset class for the year. Now they are back to their theories. These guys have become too predictable.

  4. Beautiful weather up here on the prairies.....combines going as long as possible before the dew makes the straw tough....but still its going to be a difficult year for many farmers as the spring was wet and cool and many crops didn't get a good start.

  5. Hi Trader Dan,

    you should possibly add "donate" to the mobile view since I had change devices to find it. I'm referring another market view blogger to see your site for how to do it right, plus the voluntary "donate". I sent you some coin tonight.

    Thanks for your hard work and you saved me a ton of money by enforcing a more patient trading style


  6. Flurple....I use a mobile device and I have no problem seeing it up above and to the right just above Dan's pic.

    Thanks for providing the segue so that I could point out the "Donate" feature so that others might consider doing so if they weren't aware it was there.

    Dan will never mention it and we had to practically beg him to put one on the blog. Those of you who are thinking..."Yeah, maybe I should."....maybe you should? ;-)

    Please consider doing so if you've appreciated (or even profited) from Dan's unbiased and professional market outlook over the years.

    1. Made my prior donation from the laptop as it does not show on my iPhine 5.

    2. correct, I'm using iphone 5 as well. not switching to #6 either. Have 3 apples in the family and every one has broken buttons and this long standing Apple developer is moving on

  7. Now John? Now?

    John Kaiser Proposes Alternative Gold-Bug Narrative

    "I think the conventional gold bug narrative is absolute garbage, and I think it will in the next couple years be replaced by my alternative narrative which sees gold at $2,000 in real terms by 2020, provided we avoid descending into the global depression the Austerians so desperately crave in their delusion that it will be others licking their boots rather than they licking the boots of those who understand how unfettered “free markets” really work."


  8. Silver continues to take a beating Dan. It's now broken below chart support and I wonder if it foreshadowing a further drop in gold prices moving forward. Time will tell of course.The $1200 and $1180 levels for gold will most definitely be eyed by traders in the coming days/weeks.

    My question is how long can this race for yield continue? It seems that a select few market names have swallowed up investment capital with ever rising market valuations. TSLA is a ten bagger since 2013, MSFT is encroaching upon half a trillion dollar market cap, AAPL reclaimed its previous highs from 2012 and is persistently holding there, etc. The list goes on and on. Its truly a memorable period as an equity trader.

    Thanks for your insightful posts as always - for those of us that may not be specialized in commodities but still like to keep an eye on the metals from time to time, your blog is a source of straight forward discussion that lets the markets, as reflected by the charts and price action, do the talking.

  9. Gold bottomed just under $1210 yesterday. Trading at $1220 now!

  10. I am sorry Gentlemen, but that is it ftom Lan and I, as we have decided that we are unable to sustain dialogue with citizens of an aggressor state which has once again violated the sovereign territory of another nation in a blatant disregard for international law

    No attempt has been made to run thus via the UN and Lan and I are sick of the hypocrisy of selectively choosing which civilians to "R2P" protect, and which to alllow to be massacred as in Fallujah, Ukraine and Syria

    Although you gentlemen are in no way directly associated with the actions of the Pentagon and the White House, we hold you collectively culpable with your elected leaders for illegal actions carried out in the name if the American people, insofar as none amongst you appears willing to take a stand against these actions.

    America is indeed "exceptional", insofar as no other nation on earth shows such a cynical disregard for human suffering in the pursuit of corporate and geopolitical advantage, and no other nation in recent history bears anything even remotely close to the shame of Guantanamo Bay, Abu Ghraib and the myriad of "dark" rendition centres

    We wish you individually swell, and pray that you will one day face Justice and be held accountable for the heinous obscenities perpetrated on your behalf.


    1. Goodbye, good luck and thanks for both of your previous contributions here. :-)

    2. postcolonial;

      This is not a blog for you to vent about your disdain for my nation nor is it a place where you may self-righteously and with a great deal of condescension I might add, hurl your accusations against those who post here with some sort of blind shotgun approach.

      The cane-whipping nation where you reside is not my idea of a place where I would care to reside but that does not mean I will take it upon myself to insult you and your keen-witted wife.

      As for what we do to those subhuman monsters whose idea of "civilization" is beheading defensive journalists and killing Christians who will not convert to their "religion", the vast majority of Americans could care less how we got about killing them.

      It is not people in Singapore who are being beheaded nor was it Singapore which was attacked on 9-11.

      You may lecture us on what we do if your country is ever attacked (which I hope never happens).

      I suspect Lan will be back in the future to post here and I hope she does.

      As for you, I could care less.

    3. PCB and Zhang Lan
      I admire your principled decision as I regret your loss.

      I have no wish to engage in a political debate here or elsewhere. The marginalization of desenters leads me to keep my head down. For reference material just look at how the Tea Party and more radical elements are treated here.

      As you level the accusation of aggression I would urge you to consider the motivation Dan references above. Further, please consider the fingers pointing back at the accuser. China, and Great Brittan are hardly blameless when it comes to aggression. They may handle it better than USA does though.

      Obama is using a big stick rather than a scalpel. The "local allies" fig leaf is hardly even that but something does need to be done about these terrorist in ISIS etal. Their inhumanity to man is surely as bad as the USA air strikes and I would argue worse.

      All the best.

    4. Good riddance PCB. Thanks Dan for speaking the truth on this matter. The UN (is a joke) and has no sovereignty over any country who is in danger or being threatened of being attacked (they should be on the forefront of defeating this evil). The unfortunate truth (for all the peace loving nations of this world) is there are cockroaches running rampant that need to be exterminated... some do not (or refuse to) recognize it.

    5. How childish, PCB, from the way you write I thought you were a big boy. How can you hold everyone collectively responsible on this website for infringing your prejudices, unless you are a twerp of the first magnitude?

  11. http://www.globalresearch.ca/violation-of-international-law-where-is-obamas-authorization-to-use-force-in-iraq/5403463

  12. Gold above $1220 now. DX headed lower. Gold headed to $1260 imminently!

    1. After 14 days out of 15 with consecutive lower lows, gold was prone to a short covering reaction. It is headed towards its ema15 / ma20, which are already below 1250, with a first serious resistance right in the 1240 area.
      "imminent" 1260 still have to be proven.

    2. This comment has been removed by the author.

    3. 1230 broken? Oh my! I'm so impressed by the strength of this bullish trend!
      One question : you didn't post anything during the 15 days hold was heading down. Now gold makes a 20 $ "rally" off its lows and you write "gold headed to 1260$ imminently" and "we have bottomed"!. Nice battlecry, so may you be kind enough to provide us with your position, at what price did you buy, do you have a target, do you have a stop loss? :)
      To be long on the short term based on the oversold market (14 lower lows in 15 days!) makes sense, but on the longer term and calling a bottom now...seems to me a pretty tough call. Copper is flirting with 303 now. One more week like that and its inf bollinger band weekly time unit will diverge, opening space for a 290 target, not really bullish for silver. Euro Dollar stopped making new lows and may also at last be en route towards the top of its channel, which is good for gold in the short term, but what next? Careful.
      For me the first key resistance level on gold is 1240.
      And if gold is unable to get through it, it will only confirm its weakness and call for more selling pressure from the bears.

  13. GLD holdings at lowest levels in nearly six years is a tell tale sign that we have bottomed. Short squeeze happening now.

    1. "GLD holdings at lowest levels in nearly six years is a tell tale sign that we have bottomed."
      I disagree. GLD holdings may very well head down further towards 700t. You don't know about that.
      The short squeeze was expected, and the real question is how long will it last and what are the bears going to to if / when gold reaches 1240 / 1250 area.

    2. u r right ... this could be a good opportunity to load up with puts ... I just like to see it higher . The area between 1260 and 1280 could show good bargains again ... we shall see .

  14. Russell once again reminds us of what gold has done since '29, but pray tell, does not mention anything about American real estate prices in general, or different stock indices since then, because of course if he did, the true and dismal returns of the yellow metal would be exposed. Thank you and that is all. Go Shanghai baby, go. That is all.

  15. Total returns on stocks and real estate have crushed gold over any long term horizon one might want to look at. It's not even close.
    Want to hedge against disaster? Then make as much money as you can, however you can. Gold is a poor choice for it, always has been, and always will be.

    1. But gold can make you the most money in shortest period of time especially the junior miners which can be 10 baggers. But its all about timing

    2. So can lottery tickets, but that hardly makes them a prudent investment.

    3. "Want to hedge against disaster? Gold is a poor choice for it, always has been, and always will be."
      I'm not a gold bug but I disagree.
      Gold has been and could still be a nice hedge against the worst.
      Even though we have now metal detectors in the airports, as Armstrong mentioned, which complicates things.
      Think not only from an american point of view, but about the rest of the world, too : war, civil wars, etc...

      Here is a nice movie to watch as it will soon be the 100th century of the armenian genocide. You will be reminded how a few gold coins can change a life.

  16. I have a daughter just starting college and I plan to be a constant seller of physical metal for the next few years to pay for it. By the time she graduates, I'll have nothing but a few favorite Sovereigns, Double Eagles, and Sterling spoons left. A little reminder of my temporary insanity as a goldbug. In hindsight, I'd have been much better off to stick all that money in a stock index fund for the last 20 years and just let it ride.

  17. Hi Dan -
    "Bean Dip" that was a good one. Always good to read your cold eyed posts.


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