Let the Bulls Run!!
Aug 11, 2011
Let the Bulls Run!!! The USDA blows away the trade by estimating a 153 corn yield, and a 41.4 soybean yield. Total corn production is now estimated below 13 billion, and new crop soybean ending stocks fall to an extremely tight 155.
I have found at times it is often very tough to communicate thoughts or direct feelings into words on paper. Sometimes I may come across as being "bearish" when I am actually "bullish" longer-term. What I have been trying to communicate as of late might be better explained by painting a more vivid picture.
I want you to envision a group of fund traders all trying desperately to push a large rail-car up a steep mountain. The mountain represents "price." The higher prices climb the steeper the mountain becomes and the more difficult the rail-car is to move. At our current price level, I have to believe we are at least 3/4 of the way up the mountain, if not more. We have over 325,000 active participants (the funds) trying to push the rail-car as hard as they can up the mountain side. The grade of the mountain is getting steeper, and the rail-car seems to be getting heavier with each push. As we move the car higher up the mountain, "demand" seems to be providing less and less help.
We are however getting a nice boost from "yield," who as of late has actually helped us gain some additional ground. However, all around the mountain traders are watching other rail-cars fall off the tracks and flatten those that were pushing that particular rail-car (i.e. crude oil, stock market). What I am trying to say is that we need all the man-power we can muster just to push the rail-car up this last increasingly steep part of the mountain. If for some reason a few of our 325,000 plus "pushers" decided they have had enough (get scared) and walk away, we might actually loose some footing and at least temporarily, give back some ground. I have to believe once the rail-car is secured and comes to stop on solid footing, it will assure "pushers" that the rail-car is not going to tumble completely down the mountain. Once that plays out it wouldn't surprise me to see us end up with 400,000 or maybe even 500,000 plus "pushers" (fund traders) that take us right back towards the top of the price mountain. The magic question seems to be, "How far will we make it before the terrain simply becomes too steep?" I personally believe we have reached a level where footing could become an issue at any given moment. We desperately need all hands on deck, but with the "outside" markets in shambles, I am just not sure we will receive the extra man-power.
Remember, the re-survey was only for the Dakotas, Minnesota and Montana. We will not see what type of total damage was caused by the Missouri and Mississippi river flooding until early fall, nor will we know what type of total crop abandonment and acreage loss due to extreme drought like conditions has occurred either. These are certainly more "bullish" cards that have been loaded into the deck, along with the potential for extreme wind and hail damage, and thoughts of any type of early freeze. I have to believe the fear of these being dealt on to the table are still several weeks away, so we will need to sit patiently by and wait for some type of extended profit taking or setback to position ourselves for the next round of "bullish" cards.
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