World Oil Stocks are currently close to what they were 11 years ago when we had ten dollar a barrel oil.. Remember those day’s? So if the stocks are the same, then the current prices have been reached via 1) currency devaluation of the US Dollar, and 2) Inflows of speculative funds from all types of “investment vehicles”…With the huge run up in Oil prices over the past 3 months, the huge 3700 point rally in the Dow since last March’s scariness down at 6500 up to today’s high at 10,260, we have a situation now where we are seeing funds flow into Corn on speculative buying.
Two days in a row we have had sudden afternoon rallies of 15 cents of more leading the way with CZ. With only 37 percent of the crop in, with weather issues, yield questions, quality questions all looming over this corn crop, it seems as though these funds are taking a long speculative position in corn.
Because of that, we will continue to have extreme volatility over the next months.
Unfortunately, it could be another case of financial musical chairs, with the whole party running for the exit at once, if and when this long speculative position goes the wrong way.
I have noticed that the buying is coming during the 1145 to 1230 period every day. Take a look at the 5 minute chart and you will see what I am talking about.
Right now these funds have their buying boots on…
How much longer that continues will be a function of weather or not higher prices will truly beget higher prices…
Good Trading