I'm your typical bear. It's more than likely because I've seen things fall apart too many times in the past. However, I'm at a point where I have removed a small portion of my CZ2 hedges and am looking at possibly removing them all. Here's what we know. Corn stocks are sitting right on pipeline supplies. Domestic usage will not back off because margins from nearly all end users are at or near ten year highs. USDA has already backed off the exports considerably. It appears that if we see a yield reduction in the January report we will need to see domestic rationing. These prices today will not ration unless meat prices and oil prices fall considerably. This could very well happen if Europe implodes. However, what out there that has been done makes anyone believe that central banks will not pump and dump liquidity into the system until the entire World economy goes down? The World doesn't have the stomach for a European default. There will be skirmishes along the way, but in the end the World will come to the aid of the EU.
The weather in SA is not cooperating for big crops this year. Argentina is dry as well as Southern Brazil. The next ten days appear to be dry as well. The funds are net short the soybean market. If things continue to get worse in SA, the funds will be quick to react going from net short to net long. Being bearish these markets has been very rewarding over the long haul for me, but I'm having a hard time being negative right now. I think most of the funds right now are sitting on their hands waiting to see if the blenders credits make much difference in corn usage for ethanol after the first of the year.
