Market down Friday on long liquidation!
Sep 05, 2008
The market closed out on sharp long liquidation today. November 2008 beans broke below the important $12-level and December 2008 corn broke below $5.50 which have been impressive support levels. The noted reason today was significant liquidation of fund money in commodities across the board. It seems concern is growing the world economy is slowing down in Europe and Japan. If China and India slow down, it could really lower the markets concern about inflation. It was also noted for the corn and bean complex that recent rains have helped save a lot of the late planted beans. Add this to the recent warm temps and it all makes the prospects of an early frost look lower.
What’s it all mean? We are closing this shortened holiday week on major price pressure. I would not be surprised to see margins force a little more liquidation early next week then some consolidation before the Sept 12th report. At this time, I believe the best the bulls can hope for is for the market to simply develop a consolidation base.
Feed buyers or any client wanting long term speculative reownership should be scale down buying the market for a long term sit-and-hold position between late-September to early-November time period. My bias is to focus more on the corn market.
Side note: While I don’t talk about it a lot, I’m watching with a lot of interest in buying a longterm sit-and-hold position for cotton and hogs. Nearby December cotton is now well below marketing loans at 72 cents and is actually testing last fall lows. One more solid hit down into the 60 cent to 62 cent range should be viewed as a long term buying opportunity. As for hogs, we are now nearing a level of below breakeven level for most producers. As we see a final flush of hog inventory from the U.S. and Canada producers over the next couple of months, I would be viewing it a along term sit and hold position. Since carry does exist in both the cotton and hog markets, one should keep longs in the nearby rather than deferred contracts. As always when you venture into a speculative investment you should have a predetermined amount of capital you want to risk!
The recommendations and opinions contained herein are based upon information from sources believed to be reliable. However, that information may be incomplete and unverified. There are numerous factors that can affect the markets, which cannot be fully accounted for in the preparation of these recommendations. Those following these recommendations do so at their own risk. The firm and/or customers of the firm may take a position that may not be consistent with the recommendations herein. Any recommendation does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any commodity interest. Commodity trading involves risks, and you should fully understand those risks before trading.