Grain and Soy "re ownership" A fools play?
Apr 06, 2013
Grain and soy traders have been asking me about "re-ownership" on the recent breaks. Personally I believe this is a fool’s play. In my opinion rallies should be used exclusively as an opportunity to reduce further risk, build a better floor or hedge more of your estimated production. I could go back several months when I first talked about a "MAJOR" storm brewing on the horizon. I told subscribers to make plans, build a floor and prepare for a possible massive price storm. Now all of a sudden with the storm in full-swing and upon our doorstep producers and traders are scrambling. What I find amazing is the fact there are still people out there who do not recognize the high winds and dark clouds moving in overhead??? I could continue, but I think you get the drift...it is raining "negative headlines" outside and the bearish winds are really starting to blow. Throw on top the outside market headwinds...and I am thinking you have to be somewhat oblivious to what is taking place if you are looking to step out of the comfort of your hedges or strategies to re-own in the face of more downward pressure. Understand the US dollar is posting highs not seen in months; North Korea is about to go to war with South Korea; tensions in the Middle East (with Iran in particular) are still extremely concerning; Europe remains on the brink of economic hardship, and money flow continues to pour into US equities.. NOT commodities! Technically speaking, the grain and so markets have been in a downhill sideways channel since late 2012. My point is the "bulls" are not only swimming upstream into bearish fundamental "supply and demand" data, but they are also swimming into bearish technical chart formations, and bearish outside macro market influences. Rallies will certainly take place as traders listen to short-term supply side concerns and weather related glitches. These rallies though need to be closely monitored and used to reduce more risk!
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