Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.
US Dollar vs Corn
Mar 24, 2010
A study Allendale Inc performed suggest there is no correlation between the US dollar and corn or wheat. In the month of January when the US dollar moved, corn moved in the same direction 45% of the time, with wheat 35%. And here all this time the perception has been when corn is down the dollar must be up or visa versa!
In the month of February the dollar moved in the same direction as corn 35% of the time with wheat 45% of the time. For the first 23 trade days in March corn futures moved in the same direction as the US dollar 41% of the time, 18% for the wheat and dollar.
How about the dollar vs crude oil as the perception has been when the dollar is lower, crude oil must be higher or visa versa. Better but still not a good correlation as the dollar moved in the same direction as crude oil did 25% of the time for the month of January and 30% of the time in the month of February and thus far in the month of March 9% of the trade days.
How about crude oil vs the US dollar as the perception has been when the crude oil is higher, the US dollar must be lower or visa versa. The correlation has been good as they move in the same direction only 9% of the time in the month of March.
Once again there is measurable difference between perception and reality between the dollar and crude oil, corn and wheat. You can not automatically assume just because the dollar is moving higher or lower it has a tight correlation to the corn or wheat.
You might turn your long range outlook to the seasonals as we all are aware of the driving forces during various times during a given year. It is very unlikely you will pick a top or bottom but at least you will know the laws of averages suggest an opportunity for producer and end user. Allendale, Inc does follow its custom seasonals for all the grain and livestock. We have attached the seasonal corn price chart
for your viewing.
Please keep in mind the price chart is just one of many items we watch on a daily basis but does help point us in the right direction for our producer and end user clients.
The question you must ask yourself is do you enjoy total control of your grain and are you satisfied with your marketing plan in 2010?
We welcome your questions and comments.........Joe Victor
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The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2010