This spread was amazing today. We saw it move as wide as 152 after opening at 133 before closing on either side of 140. This was a violent move with talk of S. American port problems adding to front end momentum verus new crop. This spread if for only the most risk tolerant traders…eliminating myself and many others. Volume is thin allowing for small orders to move the market in unnatural ways. This spread is a perfect example why the CBOT is starting to offer options on flat price spreads starting June 1st.

Crop progress came out this afternoon with no major shock. Corn planting and emergence are behind, beans are behind and spring wheat is behind. We knew this, the question in does the trade react to IL coming in only 1% advanced week on week? I have to think they will but the trade still lacks the next catalyst to pull the market to fresh highs. Demand is waning against the upside flat price move making the rally seem less and less sustainable.

Kansas City wheat should fail to the upside with another week of improvments seen. The crop is currently sitting at 47% G/EX, beating the 5-year average.

Housing data is awesome! But bank stress tests might show weakness so it may have a little seesaw battle in the next few days. There are a ton of variables in the current market. Housing, banking, government intervention, credit, the swine flu, and the bond market. There are treasury auctions this week that we should be watching. This could mean a ton of money may be taken out of the stock market. If the swine flu gets raised to level six the market could be seriously affected.

Less than expected weekend rains have the overnight session starting off on the defensive with corn getting hit the worst as field work was accomplished. The market should have a hard time moving to the upside lacking macro support with equities expected to start the week on the defensive.

Subscribers should have taken off the long CN 420-520 call spread on Friday locking in profits. This crop will get in the ground in plenty of time making this rally a bit premature.

Watch open interest this week for changes in bias with any serious concsistent advance in corn OI pointing to a continued upside move.

Cotton does seem overbought, and possibly sugar too. Sugar did back off from its high both made late on Friday, but cotton did not. I will not sell calls naked in either of these markets. Such a move could prove very painful. Instead, in Sugar, and only for aggressive traders it might make sense to consider buying puts and placing buy stops (one to one) above 15.30, in effect to turn the long put into a synthetic long call if the market returns to to make a new high. Such a move would be a powerful incentive to get long, but a correction may have already started on Friday and we could see July back down to 14.50 or lower as weak longs get trampled.

Cotton seems to be the real deal. If we close above 5700 again in july this market may be headed for 6300. Tempted as I might be to try and buy puts, understand you might just be throwing money away at a solidly bull market. Instead consider any significant dip as a possible opportunity to buy call spreads.

Buying straddles in cotton also might make sense

The idea of buying a put in sugar is only for a short term trade as any correction downward ought to hold 14.60.

Please excuse me as I get used to working in the forum. If you have any questions, please post them. Jurgens

Softs

I misplaced this post on Friday,