I continue to field calls from "Producers" wondering why corn has broken by more than $1.20, and both soybeans and wheat by more than $1.70 in the past few weeks. My answer remains the same as it did three weeks ago..."Money Flow." I said it when we approached $8 in corn, "money flow is starting to dry up and may soon become our biggest enemy..." Guess what? That time is upon us. This is exactly why I recommended (for several weeks) that you make all of your remaining 2011 cash-flow sales while we were up above $7.25. No, it was not that I had found a crystal ball, but you could feel the "money flow" or "big boys" were starting to question the risk-to-reward ratios, not just in corn and beans, but in all of the commodity markets. The outside fear of a global slowdown was looming, along with threats of a default stemming from the European Debt issues.
Published on: 15:15PM Sep 23, 2011
Right now, the heat in the kitchen finally seems to have gotten too hot for many of the larger traders to stomach, and liquidation has started taking place in almost every major market. Traders are now fearful that the US economy may continue to struggle, with no real solution for improving the unemployment situation, for improving homes sales and valuations, or a solution for the ever mounting debt problem that will not adversely affect economic growth. Similar type issues are also now being discussed in Europe, and there is talk of a deeper slowdown in China. Some are even going as far as saying that we could be in worse shape now than we were back in 2008, because most all of the major countries in the world are much more in debt now than they were back then. Therefore, due to their high debt levels, there is very little they can do from here to help bail us out.
I certainly can not argue that point, but on the flip side I have to believe companies and consumers are operating much more efficiently now than they were back in 08'. I believe companies are much leaner, they are sitting on much more available cash and are now in a position to better weather the storm. American consumers are also operating at much more conservative levels. Many have already lost their homes, jobs, etc... My point is, it might be tough to fall very far, when it seems as if most will be falling out of the basement window. When you are already on the ground floor, the fall is generally not too severe.
If your looking for answers to these questions and many more make sure you are getting my daily e-mail. We have made some terrific cash sales and have some fantastic hedges in place, preparing ourselves for just this type of move. If you are not receiving our daily e-mail make sure you get signed up for the FREE Trial by following the link. There is absolutely no cost or no obligation. Sign Me Up For FREE "The Van Trump - Farm Direction Report"