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While the soy complex continues to struggle a bit this morning, it is nice to see a few plus signs showing up in the grains. Not unlike the shoppers that are out scouring for leftovers at the mall right after Christmas, I suspect we are encountering a few bargain hunters grabbing these fire-sale prices, but volume by no means appears overwhelming. The biggest enemy of those looking to lock in these values in corn and wheat is the carry, and with December futures set to expire in just a couple days, we have a void that is at risk of being filled.
Gauging from the recent performance in the grain/soy markets, it would appear that commodities are on no one’s Christmas list this year, but in reality, that is not correct. Yes, the CRB index has broken lower in the past week, but the interest in commodities as a whole has been brisk this year. Led by crude oil, which happens to be pressing back toward the highs of the years currently, but also solid interest in industrial metals such as copper, nickel, and cobalt (think batteries) has led to the most assets under management invested in commodities in the past four years. While by no means is this at the heated pace that was witnessed early in this century but I have to believe does suggest that value investors continue to view commodities as a bargain, particularly when gauged against equities. While the tide is rising slowly and there are more than a few ag markets still stuck in the mud, it will eventually begin to lift all boats.