EARLY CALLS:  BEANS Up 1-2;  CORN down 1-2;  WHEAT up 7-9

 

September Dollar Index:  78-14 down 2      September Euro:  144-69 down 12

 

 

WEATHER CONDITIONS:

 

US MIDWEST:  Remnants of Hurricane Gustav slowly moved northward towards the Midwest Wednesday, bringing rain from eastern Kansas through western Illinois.  Some minor flooding occurred in parts of Missouri and western Illinois.  Rainfall amounts were 0.62 to 1.50 inches in most of central and northeastern Missouri with 0.24 to 0.85 inch reported in eastern Kansas, western Missouri and parts of northern Missouri.  A small area of rain fell in eastern Michigan with rainfall totals of 0.20 to 1.66 inches.  East-central Illinois received 0.27 to 0.70 inch while central and north-central Kentucky received 0.33 to 0.49 inch.  Rain expanded across central and eastern Iowa, Illinois, southern Wisconsin, western Michigan, and northern Indiana since the 0100 CDT.  Rainfall amounts were estimated to be up to 0.40 inch with locally more. 

 

Wednesday was cool across the western Corn Belt with highs in the 60s in most areas.  Some upper 50s were reported in Kansas and Missouri.  Highs warmed into the lower and middle 90s from Kentucky to southeastern Michigan.  Lows this morning were in the 40s and 50s in the north and were in the 50s and 60s with some lower 70s in the south. 

 

Heavy rain will continue into Friday from portions of Missouri into central and northern Illinois and Michigan.  Some flooding will occur, but the flooding should not have a serious impact on crops.  Rainfall will be lighter from southern Illinois and western Kentucky into central and southern Indiana, but the rain will benefit crops in the region that have been stressed by a recent lack of rainfall.  Another round of significant rain will bring additional improvements to the driest areas of the Midwest Sep. 10-13.  Overall, if today's forecast verifies late season crop development would occur in a highly favorable environment throughout the Midwest with no region suffering from excessive dryness.

High temperatures for the next week in the north will be in the 60s and 70s with some 50s.  Highs in the south will be in the 70s and 80s with some 60s today in parts of Missouri and Illinois and some lower 90s today in eastern Kentucky and southern Ohio.

 

Lows in the north will be mostly in the 40s and 50s with some 60s tonight in Michigan and some middle and upper 30s in parts of North Dakota and northern Minnesota. A few freezes may occur near the Canadian border and some soft frost will be possible in the far northwestern Corn Belt Tuesday, but no crop damaging cold is expected.  A couple of waves of cooling are expected during the second week of the two-week outlook with the days following September 15 coolest.  Crop threatening cold is not expected for at least the next ten days.

 

It appears the economics in Europe, led by Germany, Spain, Ireland, and the UK are weakening RAPIDLY – our bias remains to buy the Dollar on dips and selling (short) the Euro on rallies, call us if interested @ 1-800-533-8045.

 

After two hard down days this week, the overnight commodities market seemed to “settle” and I suspect the market to consolidate for the balance of the week, as the bears seemed to need some time to catch their breath.

 

T. Boone Pickens continues to promote his own energy program as he makes continual promotional messages that the U.S. must wean itself off of foreign Oil.  (The U.S. uses 25% of the world’s Oil but has only 3% of the world’s Oil reserve).    

 

He (T. Boone) promotes Solar, Wind, Geothermal, and especially “Natural Gas” as alternative fuel sources.

 

T. Boone particularly promotes “Natural Gas” as a “Transportation” fuel as we have an abundant supply and it is a much “cleaner” fuel which heavily populated countries like “China” desperately need.  (Pickens Plan.com)

 

A client or ours just returned from the “Ukraine” and reported that major agricultural reform was underway, (See Tuesday’s Letter) and he also noted that a large percentage (perhaps 30 – 40%) of their taxis used Natural Gas as their primary fuel.

 

Natural Gas has had a large correction and most likely needs to base it self out before turning back upwards, but this is a commodity we are watching for a long term positional trade.  (Stay Posted to our Daily Letters and our Special Alerts).

 

terday and overnight Missouri, Illinois, and parts of Indiana received beneficial rains (market already has these rains built in) but as I mentioned in yesterdays letter I still think the national average Soybean yield will come in near 39.5 – 40 bpa per acre as opposed to computer rating model numbers between 42.5 – 43 bpa.  (Numbers off combines will be extremely important).

 

We are currently using a September ’09 U.S. Soybean stocks forecast of 104 million bushel (if we use 40 bpa) and is 43 million bushel less than our August 12^th, 2008 forecast.

 

“Accurate” Bean yields are hard to determine by visual or pre-harvest plant-pod-bean count, so “early” yields directly off the combines will play a huge role in price discovery over the next 3 – 6 weeks.

 

Rain totals from Hurricane GUSTAV have ranged from 10 to 20 inches over much of central and northeastern Louisiana and west-central and Southwest Mississippi while 6 to more than 11 inches have occurred in central Arkansas.  (Some Rice, Soybeans, Cotton, and Corn fields have sustained damage).

 

The eastern Midwest dry bias will not be seriously changed by any showers through the weekend, but greater rains may occur late next week.

 

There appears (based on this morning’s update) there is very little risk of crop damaging cold in the Midwest or the Northern Plains for the next 10 days.  (STAY POSTED).

 

Rain began in Queensland and Australia yesterday and will continue today with 1 – 2 inches and local amounts reaching over 3 inches.  September 11 – 17^th weather will bring another good chance for rain across most of Australia.

 

It appears to me the commodities markets made the “mistake” of trying to “accelerate” higher into what appears to be an ongoing “significant” global showdown.

 

Early September penetration of mid August support on the CRB (CCI Index) suggests technical downside erosion to 475.

 

Intermediate “technical” objectives on Gold and Crude Oil are $700.00 and $85.00 respectively.

 

Also one must keep in mind the weakness in the overall commodity sector is being driven more by ongoing “fund” liquidation than confirmed global “demand destruction”.

 

At the present time we are still the most negative to Wheat given our recent updates on Northern Hemisphere yields, acreage expansion in the Ukraine, and beneficial rains into key Australian areas of production.

 

We want to sell (short) “08 and ’09 contracts of Wheat on rallies into overhead technical resistance given the 60 mmt increases in 2008 – 2009 world Wheat

production.

 

TRADE UPDATES

 

CASH CORN PRODUCERS:  We sold cash Corn at $7.62 basis the September futures price on June 18^th but replaced the equivalent amount of cash bushels sold with September ’08 $10.00 strike Corn calls at 14 ¼ cents (Sell and Defend).

 

CASH CORN PRODUCERS:  We sold cash corn at $7.26 basis the September futures price on June 23^rd, but replaced the equivalent amount of cash bushels sold with September ’08 $10.00 strike Corn Calls @ 8¼ cents.  (SELL AND DEFEND).    

 

CASH CORN PRODUCERS:  We sold “Cash” Corn at $6.00 or higher (ceiling price) and kept the 420 December ’08 Corn Put at 23 cents from our Bear Put Spread.  (We are now finished with Cash Corn Sales for 2008).

 

CASH SOYBEAN PRODUCERS: We sold cash Soybeans at $16.80 basis the November futures price on July 3^rd, but replaced the equivalent amount of cash bushels sold with a November $18.60 bean call at 70 cents.  SELL AND DEFEND.

 

CASH SOYBEAN PRODUCERS:  We sold cash Soybeans at $15.64 basis the November ’08 futures price on June 27^th, but replaced the equivalent amount of cash bushels sold with a November ’08 18- 40 strike calls at 75 cents.  SELL AND DEFEND.

 

CASH SOYBEAN PRODUCERS and SPECULATORS:  We are now long 6 units of November ’08 $18.00 strike Bean Calls at an average price of 44 cents.  Please note that we had previously sold “CASH SOYBEANS” aggressively in June and early July.

 

CASH WHEAT PRODUCERS and SPECULATORS:  We are short July 2009 KC Wheat @ 830.   All Wheat Producers Check (Call) In.

 

CASH WHEAT PRODUCERS:  Sell (short) 2 units of December ’08 Chicago Wheat (SRW) at 870 O.B. on a G.T.C. Order.

 

We are now long 4 units of November ’08 Beans at 13.37 ½.

 

We are now long 10 units of December ’08 Corn versus (short) 10 units of December ’09 Corn at 34 cents premium December ’09.  (Remaining in the Bull Spread). 

 

We are long 30 units of December ’08 Corn versus short 30 Units of July ’09 Corn @ - 40 cent differential on the Bull Spread.

 

We are now long 4 units of December Dollars @ 77-65.  (Stay Long).

 

We are short 4 units of December ’08 Euros at 146-11.

 

 

TRADING POINT:   Wheat can easily give up 5 million acres in 2009 and still enjoy a more than comfortable June 2010 U.S. Wheat carry over.

Jim 

 

 

ANY QUESTIONS, CALL:  800/533-8045

 

 

International:  (USA) 765/423-4484

International Fax:  (USA) 765/742-5770

 

 

Email:  jim@bowertrading.com

Web site:  www.bowertrading.com

 

 

 

Copyright by BOWER TRADING, INC. (2008), 324 Main Street, Lafayette, IN  47901.  The information contained in this report has been taken from trade and statistical services and other sources, which we believe are reliable.  BOWER TRADING, INC. does not guarantee that such information is accurate or complete and it should not be relied upon as such.  Any opinions expressed reflect judgments at this date and are subject to change without notice.  The principals of BOWER TRADING, INC. and others associated or affiliated with it may recommend or have positions which may not be consistent with the recommendations made.  Each of these persons exercises judgment in trading and readers are urged to exercise their own judgment in trading.  PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

 

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FUTURES AND COMMODITIES TRADING INVOLVES SIGNIFICANT RISK AND IS NOT SUITABLE FOR EVERY INVESTOR.  INFORMATION CONTAINED HEREIN IS STRICTLY THE OPINION OF ITS AUTHOR AND IS INTENDED FOR INFORMATIONAL PURPOSES.  INFORMATION IS OBTAINED FROM SOURCES BELIEVED RELIABLE, BUT IS IN NO WAY GUARANTEED.  OPINIONS, MARKET DATA, AND RECOMMENDATIONS ARE SUBJECT TO CHANGE AT ANY TIME.  PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS.