Corn

Although corn was very late to the party, it has finally reached and breached new highs. It's about time, as cotton, wheat, soybeans, alfalfa and just about every other ag commodity you can think of have been on a tear for the last six months. The popular July contract has been stronger than December and probably reflects traders' expectations that farmers will increase production in order to meet demand over the summer. Certainly, corn's strong showing of late would justify more acres for farmers, but the same can be said for cotton, wheat, soybeans, etc. I would not count on any of the major ag commodities being over produced in significant fashion this year. There is just too much competition for the acreage. This year marks a unique opportunity for farmers across the US. Everything you can produce is valuable and enjoys a competitive advantage versus the world with an inexpensive US dollar. Its time to 'make hay' and get while the getting is good....

Live Cattle

Live Cattle futures have run up to extraordinary levels with the December 2011 contract reaching $1.26. Technical Analysis shows divergence between the price levels making new highs and the weaker Oscillator. I expect the recent highs to be tested and I will increase my hedges from currently 70% to 100% if this market fails to make a new high. Although I don't often trade options, I will try to sell out of the money calls and buy out of the money puts this coming week.

Corn

It was really nice to see how the corn market showed a lot of strength in the face of adversity last week when the stock market was having a seizure. This is the kind of steadiness that we have come to expect from grain markets over the years, but was noticeably absent a year ago. We are long corn as a hedge against our feed costs for the cattle we own on the hoof. If the agricultural commodities as a group can show this kind of uniform behavior when other markets are bursting apart at the seams, these ag markets should generate a great deal of interest from the big money managers.