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RSS By: Kevin Van Trump, AgWeb.com

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

Macro Events That Could Impact Grain Prices

Oct 24, 2012


Outside macro markets have been applying a little pressure as of late. There are many ways traders are playing this out, so I thought I would list a few of the more popular cards associated with the sell-off. Below are few of the favorites being thrown around. Pick anyone to play out your hand. Just remember "money-flow" is vitally important for ALL investments. Any one or combination of these could have wide sweeping implications on the funds and their positioning or should I say re-positioning moving forward.
  • As the US election draws near and the polls are showing an increasingly close race, many Macro traders may becoming increasingly more nervous about the "uncertainty" of the outcome...therefor taking risk off the table. Remember, "uncertainty" causes "fear" and fear cause traders and money-managers to move to the sideline. They may have been thinking Obama was a sure winner or Romney was a sure winner...now all of a sudden no one is sure about how any of it is going to play out. 
  • There also seems to be some concern regarding reports that Bernanke recently said he would NOT go for a 3rd-term if President Obama is re-elected. Keep in mind, Romney has already said he would NOT re-nominate Bernanke if elected. Along with Bernanke saying he will step down as the Fed Chairman, Treasure Secretary Timothy Geithner is now saying he will step down in early 2013. Not that these are "bad" things, but they could cause the market to be worried and concerned about the "unknown" and the fact we could see higher rates and possibly less easing by the Bernanke / Geithner replacements. 
  • Despite what the polls have indicated there is talk that the market had been thinking and or hoping since early summer that Republicans were going to win the White House. Now with election less than two-weeks away and more uncertainty than ever, the trade is backpedaling a bit, especially after two improving performances by Obama in the latest debates. 
  • Some will argue the funds are liquidating a portion of their commodity risks on thoughts that Romney is going to win and in return the US dollar is going to start surging higher. I am not so sure I am on the same page with this one, because a Romney win would push the stock market higher, not lower like we have seen the past couple of days. Remember, the market believes Romney is the more "Pro" business candidate and win should benefit the US stock market. 
  • A few additional "wild cards" are the fact that both presidential candidates are talking about getting tough on China. The macro market traders absolutely hate the idea or thoughts of any type of trade-war breaking out between the world's top two economies. There is also some fear that if Obama wins, the increases in the "capital gains tax" and or "dividends tax" could cause a massive selloff as investors see less opportunity in investments. Lets conclude by saying there have also been some recent whispers by the likes of "SocGen" that Greece and possibly Spain are back on the edge of becoming "MAJOR" destabilizing European factors once again. Once the US earnings season is behind us the talking heads in the media may once again turn their cameras back to the problems in Europe...this could obviously weigh on the macro markets.   


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