margin calls

[hardnox]

Along with the already serious situation that was developing in grains in regard to a lot of big spec length going under water- there's a broader problem.

No doubt a lot of margin pressure hitting some of those entities from other markets.

Barring a weather map save, probably going to take a few days to run its course.

Probably worth a speculative shot at the long side but I'd prefer to miss the bottom as opposed to catching the falling piano.

[Jim Meade / Iowa City]

Do I understand you to be toying with the idea of going long the grains?

[hardnox]

Only in the hypothetical case that the longs get washed out before the crop is made.

Depending on how it is shaping up I might put in some wild call orders in before the acres report, just in case.

Forecasts are still going to drive the grains and there's a bit of heat coming back into one of the 16-30s that might get some interest. I regard that as a fools errand but can't fight it.

That aside, my thinking is that financial pressure will continue early next week and should there be any bearish data there may be some specs who run out of money before they get to find out what really happens.

[hardnox]

Floor estimates are never real reliable and looks like Mon/tues washed out 27K corn contracts from the long spec accounts- not inconceivable that the rest of the week peeled 100K total from the 250K peak. That's a little encouraging although not enough to want to buy based on that alone.

Beans are still pretty high with less liquidation so far. As noted- a lot of that position is still profitable and the crop is even more uncertain than corn at this point. Most forecasters still see warm/dry for Aug but I wouldn't bet the farm on that.

My guess is that they'll try to defend bean longs through the report and a little better look at the weather window. That would be unless everything goes wrong early in the week- intensifying financial stress, no help from forecasts etc. I'm not predicitng that specifically, just saying.

BTW, today's 6-10 and 8-14 are not constructive to the bull case but we'll see what the computers say tomorrow or if someone still sees something in the longer term forecasts that excites them.

http://www.cpc.ncep.noaa.gov/products/predictions/610day/index.php

http://www.cpc.ncep.noaa.gov/products/predictions/814day/

[hardnox]

As per the options discussion-

The combined futures/options COT calculates the net futures plus net delta options.

A lot of calls that were "longs" as of EOD on Tues are now dead and buried.

That probably balances the market a bit further, but still not enough to get me excited on its own account.