Today, after this mornings higher opening in SX at 901, the market traded higher, did a small head fake lower, rallied to 920 and then bounced between 910 and 915 for most of the afternoon..At one point CZ was almost limit up, but moved lower into the close… Weather forecasts continue to call for wet and cold, with a hard freeze this Sunday..
Such a hard freeze would lower yields, but the fact remains, its a 13Billion plus crop.. Unless we have a scenario like the 2004 Science Fiction Movie, The Day After Tomorrow, Where north America is flash frozen in a matter of 72 hours, I can’t imagine how much damage can actually be done to the corn crop at this point in its development…Certainly there will be decreased yields, but we’d need to wipe out a huge chunk of corn to really have lasting impact… But, that’s just my opinion…
Longer term a declining dollar should promote the same type of action we saw in the 1970’s…Demand for our commodities will increase, due to the relative weakness of our Dollar. The rest of the world will be coming for our grain for quite some time. Its the one thing Corporate America hasn’t figured out how to outsource, other wise that would be gone too.
As far as the US Dollar’s long term viability, its interesting to notice one thing…All the countries in the alleged talks have denied the talks.. That pretty much assures me that the talks are real.. Secondly, I think this is some posturing, because their master plan called for a ten year roll out away from the US Dollar… That’s hardly Dr. Evil at work….no need to call Austin Powers or James Bond, I don’t think yet..
Thirdly, on a certain level, everything is a commodity… and long term trends are like naval battle convoys… There are 200 ships that have to make that 90 degree turn.. They aren’t spinning around out there like ski boats turning on dimes… It will take fits and starts, but over time, the US dollar was going to be de-valued anyhow.. Our economy is sick, and we are printing money like wall paper to get out of this financial gutter the US drove off into…So, are people really surprised that Russian and China wouldn’t be looking to take advantage of our ills, rubbing salt in the the wounds so to speak, and more importantly, positioning themselves favorable with OPEC, because they too are dependent on that oil…
If the shoe was on the other foot, and in some parallel universe the currency of choice was the Ruble, our leaders would be nuzzling up to the oil producers in exactly the same way..
Bottom line, 6 countries talking about doing something ten years from now is, as far as I am concerned, three steps removed from a bunch of guys sitting in a basement doing a fantasy football draft…
But, that’s just my opinion..
Long term, I think the metals will go up and explore the space around the old contract highs reached in 08… We need to revisit those levels, trade around them, and then the charts will tell us where gold is heading, where the dollar is heading… not 25 guys sitting in a luxury hotel in Dubai, or London, or where ever these boys get together to map out their plan to bail on the Dollar…