S-P is out of their minds. They have been bearish since before the fall - talking 1.90-2.20 corn (now they say they were "a year early" - just missed by a little) - and 5.00-6.00 beans and 3.00 wheat - hell wheat is approaching 6.00!! It is absolutely nuts. They have been almost 100% wrong. People who are paying for their services must be going out of their minds with disgust. I follow many companies and they have been the only one to be consistently bearish and consistently wrong.

Just checked for posterity. S-P is calling "double tops" in both wheat and corn after today and look for lower price action now. At least they are consistent, even a broken clock is right twice a day! They are due!

It is actually embarrassing that S-P claims that they are wrong by a year let alone say that a close above 4.50 in the front month is needed to change this dire prediction. How can they expect to have any credibility if corn remains above 2.80 and lower than 4.40 for the next 16 months. I'm glad I don't waste my money on that crap.

The problem with traditional fundamental analysis is that it doesn't have a formula for accounting for the flow of money. With the former investment firms (now banks) able to borrow at 0% interest from the Fed, what does that do to their cash uses? Unfortunately, as today's export report shows, these high prices aren't doing us any long term favors on getting this crop sold. While corn harvest is late, based on yield reports that I am reading, yields are phenominal. Even soybeans are doing better than expected. So, if this is a profitable price, why wouldn't you sell something?

Althought I don't agree with S-P that we will hit the down trend objective that they have.......from a risk management perspective it is proably smart to realize that their are some that technically and fundamentally have a longer term bearish view.......and it is smart to realize that these markets are controlled by the funds and their money and the downside could be tremendous if they stop buying or simply just liquidate some of thier length........same token upside could be temendous if they keep buying so having a solid plan that leaves one very flexible is probably very important right now

Very interesting discussion -- thanks to all of you!

My opinion is the CME will do what is necessary to protect the integrity of the contract and the delivery function. Logic and prudence suggests if vomitoxin is deemed to be a commercial risk, then they will put something in place by December 1. It would make no sense to wait when the warehouse receipts tendered in December will remain in circulation for an indeterminable time period. If inbound trucks are being tested and train shippers are being required to provide vomitoxin certs to buyers, those would be two good indications of the perceived risk and what the CME may or may not do.

I'm a bit dubious of the suggestion vomitoxin "played a large role" in the lack of convergence in the SRW delivery markets. Deliveries of SRW have remained quite large despite the addition of vomitoxin spex, proof the delivering parties vs. futures had no problem making the vomitoxin spex. Those who control the cash bids for SRW in the delivery markets may have one believe the risk of vomitoxiin justifies a wide discount of cash wheat relative to delivery values but I'm not a buyer of that theory. Anyway, with cash bids for corn in Chicago at 5 over vs. wheat at 90 under, we have a long way to go before we can say the addition of vomitoxin spex to corn delivery spex is a reason to be concerned about lack of convergence.

Thanks for your comments Ken. However, one can pinpoint when the changes to specs were made on the long-term national average basis chart for SRW as it collapsed through the previous range, nearly doubling in a few week's time. The logic is there: sharper discounts on delivered wheat led to weaker basis and the inability of the delivery location prices to converge at normal levels with futures markets. Add in the 2005 increase in position limits that prompted a dramatic increase in open interest, largely noncommercial as documented in the Irwin, Garcia, and Good study from May 2007, and the cash market's ability or willingness to converge was even more limited. Yes, deliveries of SRW have remained large but that isn't the question at hand. The issue is why haven't cash and futures come together during delivery, and increased discounts combined with an overvalued market play a large role.

Darin, I'm sure we can agree on one thing... the value vs. delivery is a constant : option price instore Chicago. I don't doubt there may have been a tendency to widen the basis at all levels of the marketing chain based on tthe addition of vomitoxin spex but the value instore Chicago before and since the addition of Vomitoxin spex remained the same. Why haven't SRW cash and futures come together ??? The cash value in the delivery markets are set by those who control the delivery space... Its ironic that in every debate about convergence, that fact seems to be the one that is avoided like the plague. Instead, the CFTC awards them additional storage income without any regard to the basis levels they've accumulated the cash.

Ken, it would be my guess we agree about many of the nonconvergence issues. You ask the key question, why haven't cash and futures come together, and the answer -- at least to me -- is that the futures market no longer represents the true value of SRW in either the spot or deferred market. Those that set the cash value in the delivery makrets do not have to pay what it believes to be the inflated futures price because they can't sell it those supplies at equivalent levels. Last I heard, U.S. SRW was still $7/tonne overpriced on the world market, and that was before the latest rally. Like you, I do not agree with the variable storage rate solution. Whatever side readers come down on in this issue the fact that corn could be subject to increased discounts due to a change in delivery specs certainly sets the stage for a similar move in convergence/basis, particularly if noncommrcial buying tied to the weaker U.S. dollar continues unabated. As I've stated many times, this is the cash market's best defense against runaway futures markets that show little to no interest in underlying fundamentals.

Darin, Any commercial operating in the delivery markets is assured of a ready market at a defined value vs. Futures. Regardless of cash market basis levels outside the deliverable area, delivering vs. Futures is always a backstop for commercials operating in delivery markets. There's nothing arbitrary about it and it's one reason why physical delivery maintains order. I agree there is nothing that compels anybody to establish a certain cash value relative to futures but for those who do choose to be in the market, I'd be interested to understand how they can defend 90-100 under as a Fair value when it's delvierable at even money. If they believe something is mis-priced, they should sell futures and deliver on them until the longs cry uncle.

From a South Dakota producer: There is only a handful of elevators taking corn. Most of them are still trying to get their wet beans dried and still some guys trying to finish beans. We have 2 corn only terminals and one next to the ethanol plant that are taking and drying corn. The terminal to the west of my farm had 200 semis in line when it opened last week. Most of them had pups........so that's a lot of wet corn at once. I never got my silage cut because it was too wet.......but am going to try this week. When I get that done I am going to try and combine corn. Wide range of moisture.....neighbors field to the north of my farm was 16.5 last week .......but most are 22 to 30 percent. I do not think there has been enough corn dried to create a propane shortage here..........but a lot as been burned up doing beans and that has to have an effect on supply.

Probably not a more important fundamental number to follow.