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Weekly Market Comments: 3/17/10 |
Regional Supply Focus Induces Isolated View?
For the past 2 months (since the USDA's Final Corn Crop release in January) we have used "more than adequate supply" as the fodder for our grain comments. In two weeks (March 31st) we will spotlight the USDA's Planting Intentions release. Anticipation of April field condition will, most likely, command priority if "guessed" government corn acres don't roam too far from 89 million acres planted.
Global Demand Focus Induces Insightful View?
On Monday, Creighton University economist Ernie Goss gave this analysis, "Investors, fearing Greek bond defaults, bailed out of the Hellenic nation's sovereign debt funds selling Greek bonds and buying "safe haven" U.S. Treasuries. In order to buy U.S. Treasury bonds, investors converted their Euros to dollars driving up the value of the dollar relative to the Euro from $1.51 to $1.35 within two short months.
This means that the price of an Omaha hotel room for Europeans rose from 66€ to 74€ per night. During this same time period, the price of a bushel of South Dakota corn, measured in dollars, plunged by 14 percent. That is, U.S. produced goods, such as corn, became less price competitive while European produced goods declined in terms of U.S. prices."
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Google Electric Company in Your Car's "Gas" Tank
It doesn't seem that many years ago that we skimmed over a Milling and Baking article that projected Wal-Mart would be entering the grocery business and become a significant consumer pricing factor. It might be hyperbole, but personal reflections on how insignificant Wal-Mart was going to be in food were resurrected after reading the attached article.
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DDG Futures Do Not have to go the Way of Grain Sorghum Futures
Do you recall the futures history of apples, shrimp and diamonds? They all lasted briefly.
Grain sorghum was put on life support a second time and didn't develop the industry support because the trade became accustom to cross-hedging in corn. In the case of diamonds it was the loose quality specification that allowed merchants to 'beat the system" causing only limit down markets until the California exchange closed.
If the ethanol and livestock market wants this DDG contract as a risk management tool, support is going to be needed similar to/beyond that which has been supplied to the milk futures contract.
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We believe positions are unique to each person's risk bearing ability, marketing strategy and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore carefully consider whether such trading is suitable for you in light of your financial condition.
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