Hi tjc,

I've been tied up all day at a marathon meeting. Sorry for the delayed response.

Easy to answer after the market closed. 

Yes, the market displayed a potential selling exhaustion with the spike low that could very well have been the result of the market going from all rains being wonderful in a drought to ..............oh, oh, wait a minute, if 10 inches of rain fall in a some areas, it will hurt the crop more than help it.

This was anticipated with yesterdays post providing the links and meteorology related to it.

                Excessive rains coming up            

                            8 responses |     

                Started by metmike - June 23, 2021, 12:21 p.m.            

https://www.marketforum.com/forum/topic/71449/

However, like I tell everybody here, I give you the information weather and trading factors but will rarely tell you what trade to put on. Sometimes I might though. 

Since its your account with your money you have to make the decisions and I always want to feel good about my contributions. If/when I steer you wrong, I  WILL always feel bad and want to minimize that.

 But I'm always thrilled to discuss where the markets might be going.............after all........this is a trading forum !!

What are you thoughts tjc?

I'm also trying to get back tuned to the market again after being tied up much of the day and monitoring but not closely.

  IMHO, grains are over due for at least a bounce to Friday July 2 (RSI in 30s, %R buy signals, over sold, etc).  I have gotten burned on 3 day weekends, so I will close my long meal, rice and corn trade going into the July 4 long weekend.  Meal has A LOT of ground to make up relative to bean oil, but bean oil is the spec dream right now---buy every DIP!   Oats had a huge revesal today.  Corn "wanted" to close plus and was up at time times late morning early afternoon.  Look for short covering tonight/tomorrow.  IF I were short, I would cover.

  Cofffee may be the best trade of all.

  2 cents

Thanks for your valued thoughts tjc!

And great call early this morning BEFORE the market reversed.

I am going to purely speculate using a hypothetical situation that is NOT my forecast but intended only to demonstrate how tricky an extreme rain event is to trade.

Spikes up from extreme rains  in a big enough area to get the market bulled up, well after the crop has been planted happen every few years but they NEVER last(other than Summer 1993 type flooding) and are almost impossible to time.

However, most of the time, the real spike up happens during the course of the extreme event and that hasn't happened yet......only the forecast for the potential for it happening in a very oversold market providing the ideal set up for the spike up.

Its impossible to know how extreme the rains will get. For sure some places will get too much rain......a large area in fact in a key producing location.

 If a significant event were to happen, it would proceed sort of like this............

A large area of organized tstorms that is something like 200 miles long and 25 miles wide might take place within a very powerful, self sustaining and stalled out atmospheric dynamical field that results in training/repeating storms that keep that area under the gun for 8-12 hours straight, with rainfall rates in excess of 2 inches/hour in some locations.

At the end of the event, over a foot of rain has fallen in maybe half a dozen counties. Let's say that was in Central IL this time.

No way the market would not have a vicious spike up during the event....if it was open.

But its impossible to predict this ahead of time with accuracy. You only know that its going to happen, to that extreme, when its already underway/several inches of rain have already fallen and the conditions are clearly going to remain exactly the same for at least several more hours.

That's when the price takes off like a rocket when we have such bullish fundamentals right now. Beans could spike up 50c, down 20c, then up $1 before the knee jerk spike peaks..... if the rains were at extreme as the hypothetical above.

This is absolutely NOT the forecast. This is only the outside potential that is POSSIBLE with a weather situation we have right now.

After a rare, 1 day extreme  rain event of that magnitude  ends, then the market will spike up and down based on tremendous uncertainty about the actual damage.

Reports will be all over the place.

Local streams coming way out of their banks could wipe out crops and be a story that causes a spike.

In the end, most of these situations don't cause huge production losses but these would be taking place in a key area that is in good shape and we are counting on because of the damage and lower yields we know will happen in the northwest belt.

This is only an exercise in pure speculation not to be confused with my actual forecast.