Published on: 14:24PM Oct 06, 2008
I have to say the tone of the market today is now as bearish as it was bullish at the top. We all know that a bull has to be fed every day, but a bear can simply wait and if things don’t improve they go lower.
The action now is all about liquidity! As the financial crisis has spread to the international markets everybody is starting to worry about their job and cash flow. When emotions start to rule the best thing I can say is time to move to the sidelines and allow the market to stabilize.
The key now is where is value? What is absolute bed rock support? The number I keep hearing is some place around the $3 cash. With today’s hit in corn and beans and wide basis levels, we feel the market is getting very close to bedrock support.
Will the market go lower this week? More than likely, with global markets in major retreat and harvest just getting started there is no real reason to expect the market to stabilize until the dollar, gold and crude oil stabilize. This implies a stabilizing of the Dow which more than likely is going to take a few months to occur. As for corn and beans, I really don’t see prices starting to stabilize until we start getting close to seeing harvest more than 70% done and the bin doors shut.
PLEASE NOTE: Either the cost of inputs is going to have to come down very fast or we are building a major problem for the 2009 season. Producers are telling me they are simply not going to take the risk when prices of cotton, wheat, beans and corn are all below the cost of production for new crop. What do you think will happen?
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