Outside Markets' Influence on the Grains
Oct 04, 2012
Last nights US Presidential debate being proclaimed by many political analyst as the best since the debates began some 30-years ago. The press and most in the media proclaiming Romney the clear cut winner, but still questioning if it will be enough to overcome his current deficit in the polls. The sad part is an estimated 111.3 million people watched the Giants beat the Patriots 21 to 17, but less than half that many watched the debate....
The Bank of England and the ECB have both decided to leave key interest rates "UNCHANGED." Europe is somewhat stable this morning as Spanish bond yields ease, there are some rumors brewing however that the next round of Greek bailout money may be held back until November. This ultimately could bring the European debt concerns back into the "headlines." Lets not forget last months FOMC minutes will be released this afternoon at around 1:00pm CST. Many traders will be looking for hints as to what will happen January 1st when "Operation Twist" officially comes to an end, and what specifically will cause QE3 to be adjusted. If the employment picture continues to become more clouded, what will be the Fed's next move? If the US housing market start to give back it's recent gains, what will be the Fed's next move? What if the US stock market starts to be pulled lower by problems in Europe, and a slow down in Asia, what will be the Fed's next move? We also need to keep our eye on "money-flow." We have seen a large amount of money moving into the gold sector, but in return money has been flowing out of the Ag's and Energy sectors.
Crude oil prices continue to setback and are starting to become a more serious concern for the fund managers and those caught on the long side. With US crude stockpiles now climbing for a fourth straight week and the Chinese economy looking as if it is suffering further declines there could soon be a glut of global oil supplies. The trade is also thinking there could soon be some type of Iranian sanctions and the fact US crude oil production has reached levels not seen in the past 15-years. Be patient still, but if your looking to lock in some of your on-farm diesel fuel, crude oil prices below $80 per barrel may provide just the opportunity. As for tomorrow morning, all eyes will be glued to the monthly US employment numbers. Yesterday's ADP employment numbers showed payrolls increasing by 162,000 in September. This was better than most analyst were expecting and may indicate a better jobs number on Friday. As of right now most are still thinking the monthly US government number will be around 115,000 but I could see that number pushing higher in light of the recent ADP data. A good monthly employment number and confirmation that the Fed is prepared to do more easing if problems occur could certainly prompt a "risk-on" type trade environment. Bottom-line, it would not surprise me to see the funds add some risk heading into the weekend.
USDA export sales data released this morning showed sales well above expectations in soybeans, in-line with expectation in corn and below expectations in wheat. Below are the details:
- Corn exports reported at 326,900. The trade was looking for a number between 200,000 and 400,000. Last week we had 400 reported.
- Soybean exports reported at 1.306 million. The trade was looking for a number between 700,000 and 900,000. Last week we had 799,500 reported.
- Wheat exports reported at 307,000. The trade was looking for a number between 400,000 and 600,000. Last week we had 426,000 reported.
Grain and soy traders seem more confused than ever. Are we trading "supply," trading "demand," trading the "macro markets" or perhaps the "technicals"??? However, you want to play the game and solve the "Price" mystery we have a variety of clues to consider right now. Below are a few of the highlights:
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