USDA in a word. Bearish> Looks like we are headed back to our December lows. Remember those? 11.00 bean, 5.80 corn, 5.77 wheat?
We may be headed longer term towards grain returning to being prices LESS than the price of production… Just wait, Its possible.
I hope I am right, but… if we plant 97 million acres of corn this year and 1) we get average rain fall (instead of the 2 years of near drought we’ve had in 2010 and 2011) and if the hybrids kick in, we could have a huge (2Billion bushel) carry out in 2012.
This was broken down for me by a very respected and successful fundamental trader. He shared this idea with me over the holiday break. I am adopting it, because he’s smarter than me about this stuff. Never the less, I know a good idea when I hear it, so I am passing it on to you.
Will we go straight down? Nope, but in fits an starts we should trend lower. We may rally on south American weather, but i think that was a buy the rumor sell the fact. That 3 week, 1.50 bounce in beans was a gift which might not play out again. my best trade was taking profits on all my bean calls yesterday. I wish I had had the foresight to get short, but alas, I have yet to find the crystal ball for trading.
On to the stock indexes: 12,200 will be our new floor, it seems. At 12 days ago, all of the news I read or heard about stocks continued to be negative. A couple articles in the WSJ and NYT interviewed hedge fund super traders. They were all negative, it seemed to me. Of course, far be it from hedge fund mangers to publish opposite opinions to the actual positions/bets they have on in their fund.
My over all opinion remains the same for stock indexes. 1) a wide trading range 2) volatile trade fueled and fanned by electronic boxes trading faster than any human ever could or would and 3) overhanging negative potential from the Euro Zone Debt Issue. 4) entering an 11 month long, hamster wheel of negativity as we try to flesh out who will be our next president. The negative heat will be turned up. Like a family re-union, or in this case more like a mafia war from the 1930’s or 1950’s.. The Dems and Republicans are heading to the mattresses. There’s a lot of bad blood and a lot of “getting even” going on the next 11 months.
That creates a situation where markets chop sideways in a wide trading range. Similar to what we have suffered through for the past 10 months.
Be careful.
Use your stops.
CER