Current Marketing Thoughts
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Hurricane Sandy Shutting Down Financial Markets
Oct 29, 2012
Hurricane "Sandy" is obviously going to be the topic of the day, as an estimated 60 million people could be affected in the mid-Atlantic region. Let me emphasize: Storm surge forecasters for NYC are now calling for 6-11 foot waves. Irene had 4-foot waves. This could be the biggest coastal flooding event in NYC history! If hurricane "Sandy" itself isn't bad enough forecasters are predicting it will combine with two other storms in the coming days, creating what the weather guru's are calling the "perfect storm" or in honor of Halloween..."Frankenstorm." From what I am hearing the monster creation could bring close to a foot of rain, punishing winds extending hundreds of miles outward from the storm’s center. New York, New Jersey, Connecticut, Pennsylvania, Maryland, Virginia, Vermont, Massachusetts, Rhode Island, and DC have all declared states of emergency. It could also dump up to 2 feet of snow in Kentucky, North Carolina and West Virginia. It is believed 1 in 5 Americans live within the storms path. The U.S. stock and options markets will be closed on Monday, and possibly Tuesday The CME Group say they will trade equity futures electronically Monday until 8:15am CST. I heard the Bond markets will remain open, but will close at noon. The Chicago Board Options Exchange (CBOE) has also announced it will close. All other electronic FUTURES and option markets will remain open, including energy, metals, and agriculture, with the usual scheduled break between 5:15 p.m. and 6 p.m. Several large financial firms have told traders to stay home. Bottom-line, volume could be extremely low in the futures markets to start the week and price swings could be dramatic on little to any market related news. On a brighter, note, data released late last week showed the US economy growing at a little faster rate than expected in the third quarter as stronger spending by consumers and the government offset falling exports and flat business investment. Basically, the 2% annualized pace of growth was stronger than the second quarter’s 1.3% rate. The problem is many analysts believe it is simply still too slow to speed up job creation. There is also some fear moving forward that the US economy doesn't have enough momentum or head of steam built up to push through the waves of minutia that are certain to be associated with the upcoming "Fiscal Cliff." Just remember, if "money-flow" gets spooked the outside market winds will continue to blow in our face. As we advance through the week macro-market traders will be watching the Japanese rate announcement, the Chinese, US and European manufacturing numbers, as well as the monthly US employment data scheduled for release later this week.
USDA weekly crop progress and conditions scheduled to be released today will NOT. Don't forget when they are finally released we should get our first look at US winter wheat conditions, where most in the trade are thinking wheat rated "Good-to-Excellent" will range between 45%-50%. As we progress through the week the trade will quickly start to focus on the November USDA report due out on Nov 9th. I personally doubt we see a ton of changes to the data, as I suspect the USDA will patiently wait on more accurate acreage abandonment and silage numbers before making their final acreage cuts. Keep in mind there will be a ton of private estimates and guesses being released the next several trading sessions so any extremes in one direction or the other could (for the short-term) directly influence price.
As for today...stay out of the waters!!! The markets that remain open could be extremely dangerous and highly unpredictable with abnormally low volume.
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