TopStep Alert: Beans Corn and Wheat top the charts again.

Soybeans & Corn make another New All-Time-High in the Fund Longs, this last week.  View Complete Document --> http://www.cotlive.com/COT/Main_files/122910grains.pdf

In the last 7 weeks Corn Open Interest has dropped 10.27% from all-time highs but the Fund Longs have made a new all-time-high. 

CORN - CHICAGO BOARD OF TRADE
RECORDS!		OI	FL	FS	CL	CS	Fund_Vol	Comm Vol	Spec Vol
7-YR low		427011	72550	29670	199819	244356	159620	475007	162457
7-wk low		1489862	531645	116899	622779	963137	648544	1585916	388515
7-wk high		1674251	587744	152985	685568	1033156	738332	1702699	451555
Record H		1674251	587744	233720	694925	1033156	738332	1702699	476220
Record H		11/9/2010	12/21/2010	4/13/2010	11/14/2006	11/9/2010	11/9/2010	11/9/2010	11/7/2006
7-YR low		9/16/2003	9/19/2000	9/4/2001	9/10/2001	7/15/2003	7/31/2001	4/30/2002	7/6/2004
HISTORY!		OI	FL	FS	CL	CS	Fund_Vol	Comm Vol	Spec Vol
12/21/2010		1518419	587744	124981	640827	1012811	712725	1653638	388515
12/14/2010		1490016	563746	122119	629368	981618	685865	1610986	389289
12/7/2010		1489862	540244	118656	622779	963137	658900	1585916	408470
11/30/2010		1518147	531645	116899	634980	970712	648544	1605692	412544
11/23/2010		1630025	545278	152985	682910	998800	698263	1681710	417129
11/16/2010		1632201	559943	150890	685568	1015234	710833	1700802	415069
11/9/2010		1674251	586970	151362	669543	1033156	738332	1702699	451555

The Corn Long and Short Index Funds haven't broke any records for many weeks, but the Short Index Funds are still pressing for hard break to unwind their positions.  The Long Index Funds will likely let the Short play their position, it will allow them buy the market cheaper.

 

 

Soybeans made several new records this last week.  Open Interest, Fund Longs and Fund-Volume. 

SOYBEANS - CHICAGO BOARD OF TRADE
RECORDS!		OI	FL	FS	CL	CS	Fund_Vol	Comm Vol	Spec Vol
7-YR low		166698	25014	14208	84534	61300	49413	164652	69597
7-wk low		617469	233608	34902	251305	433590	272562	685720	131730
7-wk high		660863	257558	41529	276392	445154	299087	717900	149205
Record H		660863	257558	111954	287873	455850	299087	739498	191219
Record H		12/21/2010	12/21/2010	9/12/2006	11/20/2007	10/26/2010	12/21/2010	10/26/2010	12/11/2007
7-YR low		5/8/2001	12/28/2001	12/31/2002	7/10/2001	5/8/2001	1/9/2002	5/15/2001	8/12/2003
HISTORY!		OI	FL	FS	CL	CS	Fund_Vol	Comm Vol	Spec Vol
12/21/2010		660863	257558	41529	258352	445154	299087	703506	145475
12/14/2010		643173	249065	37466	251305	434415	286531	685720	148787
12/7/2010		631787	246107	37578	253788	433590	283685	687378	149205
11/30/2010		631522	238157	34902	272769	445131	273059	717900	140293
11/23/2010		622648	237538	38260	273964	440742	275798	714706	131730
11/16/2010		617469	233608	38954	276392	436421	272562	712813	141989
11/9/2010		628476	245713	40801	264133	441976	286514	706109	147463

Soybean Index Funds (CIT) are on different page, then the rest of the commodities, but a battle has begun.  The Long CIT's have pressed new all-time-highs for the second week in a row.  But the Short CIT's have aggressive as well.  New all-time-highs as well for the Shorts, 5th week in a row.  Currently the longs are right and the shorts may need to cover their bad trade.  But, these guys are Index Funds, the money is not an issue, YET!  If the shorts do begin to short cover their positions the lows are in and the market will need to go much higher. 

12/1/2010 KCBT HRW Wheat Futures Volume Third Largest in Exchange History
New November Volume Records Set For Exchange and HRW Futures

Kansas City--December 1, 2010--The Kansas City Board of Trade set a new exchange trading volume record for the month of November as a total of 624,481 contracts were traded, breaking the previous record of 472,244 set in 2005 by 32.2 percent.  Total exchange volume was 38.9 percent higher than last month. The exchange only needs to trade 48,734 contracts to set a new annual volume record. The current record set in 2006 is 5,287,730 contracts. November volume was the third largest for any given month at the exchange, behind only July and August of this year.

The Hard Red Winter wheat futures contract set a new trading volume record for the month of November as well with 602,081 contracts, breaking the previous record of 441,194 set in 2005 by 36.5 percent. Volume posted gains of 38.9 percent compared to last month. A new HRW wheat futures annual volume record was set on November 12, breaking the previous record of 4,763,168 set in 2006. That record has now been exceeded by 7.3 percent. November HRW volume was the third largest for any given month at the exchange, behind only July and August of this year.

Wheat options trading volume was robust in November, posting a 168.4 percent gain compared to November 2009 and 15 percent compared to last month. Open interest in the HRW wheat futures set several new open interest records during the month of November, topping out at 250,506 contracts on November 11. Before this month's run-up, the previous record was 236,543 contracts set on October 28. At month's end, wheat futures open interest was 55.9 percent higher than at the end of November 2009.  Wheat options open interest gained 97.2 percent compared to the end of November 2009. Open interest measures the number of open trading positions in a market. Each KCBT wheat futures contract represents 5,000 bushels of wheat. Year-to-date volume for the HRW wheat futures contract is running 48 percent ahead of last year at this time. Exchange volume is running 47.2 percent ahead of last year at this time.

The Kansas City Board of Trade, founded in 1856, is the world's largest futures market for hard red winter wheat. Daily quotes, market commentary, historical data and charting services are available on our website at www.kcbt.com

The KC Wheat CIT's have unwound 29% of their longs.  Obviouly these guys don't care about the drought that is going. If the longs can make several new higher highs the next couple of weeks, will give me a bullish edge.

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RISK OF LOSS. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

TopStep Alert; topic, General Comments

General Alert:   View Graph The markets aren't showing any new record levels, so let's talk about why a bull market has corrections.  Most traders are in agreement, that the Index funds control the show. Cargill and other agriculture commercials still try to flex their muscles against the Index funds but in the end, all they can do is to stall the market. You would think the farmers, miners, producers, oil drillers etc. are the ones raking in large profits.  Not so.  Granted they are doing better then a 10 year average, but it's so hard to wrap your arms around (example) Beans that normally are $5.50 at harvest and are now $11.00.  Is $11 one of the two evils, Greed or Fear?  Farmers know there costs are going up with the market, rent, taxes repairs, upgrades all increase with the bull market. So it's the fear of the market going lower and missing an opportunity, which controls their marketing actions.  The market savvy producers use different option strategies, puts and calls to offset risk, sadly this is only about less then 5%. Four to six weeks ago many of the active commodities were making records in Open Interest, Fund Longs, Index Funds and short as well as the Commercial short side. Most markets came off their highs and had a correction.  Why? Have you ever asked yourself why the market corrected?  Since this week numbers aren't showing any new records from the Commitment of Traders levels, will use this time to answer the question, Why did the market correct?... Before I begin, it's important to know the differences between the Funds. There are Commodity Funds and there are CIT Index Funds. Commodity Funds tend to fluctuate with the ups and downs of the market and must get out quickly in preserving equity.  An Index Fund does not.  Index Funds are made-up of Stock traded concoctions, some are ETF's others are broad based, meaning they are long a percentage of a basket of commodities.  All they care about is either a percentage of pool of money or how many stock shares they are selling.  The price going up or down has no true barring on how they get paid. So its fare to say the Index Fund stability has direct correlation to the performance of the stock market and its indices. Mutually Shared Destruction.  As an example of this in 2008 soybeans Index Funds Longs went from 210,000 contracts down to 105,000 through the last half of the year, that's half of the contracts.  During this time the futures dropped from $16 to $8, hmmm…  and the stock market was also regurgitating some old grey-haired longs out of the market as well. Currently the stock market is up and soybean Index Fund Longs are at all-time highs this week. Ok, why was there a correction in the market.  If you look at the CIT charts, take look at the Index Fund Shorts in red.  Many analysts just look at the net, to me, that doesn't give you the full picture.  As you notice the CIT shorts where mounting a scale up position, at historical record levels. Granted they are a very small percentage compared to the big brother the longs, but if you're a long buyer, either in a CTA, Small Fund Manager, or Large Long Index Fund, you might as well let the shorts play out scale up trade, it will drive the price down for a better buy and give the market some fuel to have a bounce off the lows as the CIT Shorts buy back to exit their trades.   And that is what exactly happened.  Take a look at Cocoa in 2008 it had the same type of CIT Short scaling anomaly, the net result was an extremely sharp break. It is so important to understand what the professionals insiders are doing, you either fight them and believe YOUR trading ideas are correct and true or your go with them.  If the stock market indices look weak, but the commodity futures don’t it may be time to use an option strategy for some protection until you can determine if the indices are breaking long-term trends or not.   Remember, Mutually Shared Destruction.