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Issue Date: October 23, 2009

More to The Grain Markets Than A Weak US Dollar

Weak dollar, weak dollar, weak dollar. There I said it. Everyone knows that story and its effect on commodity prices in general. So let’s focus on the grain market itself.  The month of October started out with a bang, or I guess I should say the big chill. The onset of fall weather, which was earlier than expected, coupled with the late maturity of the crop, ignited a strong rally. Corn prices jumped almost 20%, beans 14% and wheat gained 23%. The loss of yield is a big question hanging over the market now. There are reports of delta area farmers reporting yield losses of 5-10% due to wet weather. Farmers in Iowa are experiencing hard beans with only 9% moisture content. The corn harvest that has been delayed, due to wet fields, may continue to be delayed into next week. Near term, this should underpin that market. How widespread these types of yield reducing conditions are remains to be seen. Looking to the southern hemisphere, there are reports that Argentina soybeans are over 50% planted under good conditions. Some observers were worried the drought conditions that occurred last season would persist and hamper planting. The mild El Niño that is occurring should be beneficial to South American moisture levels. There is talk that some Brazilian farmers are planting fast mature beans, in order to take advantage of perceived strong prices in the beginning of 2010.

By Thomas J. Feeney

$80 Magic!

Is $80 the magic number that breaks the back of the fermenting economic recovery? Is eighty dollars a price or just a destination? Well yesterday it looked more like a destination as the front month oil contract hit $80 a barrel on the last trading day of the November contract before it retreated on a  US dollar bounce and a plunging Canadian dollar.  Oil fell back from $80  after the Producer Price Index came in showing benign inflation and numbers that showed the home-building market remained weak.  Still the $80 a barrel area is raising concerns with oil bulls and OPEC that $80 a barrel plus oil could “hamper economic growth”.  Comments by OPEC President Secretary-General Abdalla El-Badri seemed to put a scare into oil bulls that were looking for a reason to take profits anyway when he told Bloomberg News that “Anything above $80 will really hamper economic growth.”

By Phil Flynn

US Economy Improving as Dow Jones Reaches 10,000

U.S. stocks have reached a 50% retracement since their March 2009 lows. In addition, many foreign equity markets have recovered by more than 50%. Regardless of unemployment at almost at 10% and other bearish factors the market continues to advance.

September has historically been a month the stock market declines. Last month the S&P 500 had a low of 987 and at one point made a high of 1075.75 before finishing the month at 1053. October was the anniversary of the crash of 2008.  The S&P 500 went from 1300 last September to 750 by the end of the year. You can see from the chart below how volatile the stock market was last year. We were told the U.S. financial system was on the verge of collapsing. Thanks to the stimulus plan from the U.S.  Government they have saved the market from a historical free fall. We are on our way out of the recession and the market seems to be on a strong path to recovery.

By David Pappas
 


Published by InsideFutures.com, Inc.