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August 1, 2006
First up, the Vegetation Condition maps. There is still a major difference between this year and last...Dark green means greater crop development...Dark brown to yellow means the opposite...
  Last Year July 13- July 26, 2005             This year July 12 - July 25, 2006
Cotton made new lows in July, went nowhere, then closed up for the month. It is now more than a nickel off those lows and very much looks like it could be on the move...Besides the drought in Texas (our biggest producing state), the weather has taken a turn for the worse in other major areas of the Southeast...
For the past year, every time I have thought "this is it", it hasn't been...but I strongly believe the odds for the beginning of a MAJOR rally go up every time it does get this look.
I have said it over and over (and over)...What you have seen in cotton for the past two years is a market "doing nothing" and remind you 15 to 20 cent moves are no big deal in this market.
I'm still buying Cotton.
Corn, Soybeans & Wheat
Following the weather reports in the Midwest has been like riding a yo-yo during the past month with corn, soybeans and wheat all rocking hard back and forth. The fact remains, however, that this year's weather has been far from ideal and I fully expect these markets to make strong recoveries...With world stocks in corn and wheat still projected to be the tightest in decades, what you are supposed to be doing is buying the recent weakness in all of three of these markets...
Interest Rates
Virtually no one has any interest in this trade but I continue to see Treasury Bonds call options as incredibly cheap...Everything the Fed has been doing the past few years has laid the foundation for long term rates to fall and bond prices to rise...During the past 15 years, December Treasury Bonds have had AT LEAST a 10 point rally during 13 of those years between January and expiration. So far this year, the biggest rally has been a mere 3 points.
Give me a call if you want to know more about any of these ideas...or have any of your own you want to talk about.
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