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Grain Markets Doing the "Twist"

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The only person excited about the "Twist" being announced yesterday seemed to be Chubby Checker. Chubby is banking on royalty money from the surge in iTunes sales from his song "The Twist," which was actually named the biggest chart hit of all time by Billboard magazine back in 2008. From the way it looks though, the Fed is NOT going to have the same type of luck or long-term success with their latest release and remake of the "Twist." To say the least, the "outside" markets are screaming against us this morning.  Global traders interpreted the Fed's comments as extremely pessimistic and were forced to digest more "bearish" news last night when economic data showed that manufacturing growth in China has slowed for the third straight month and European factory output has now also slowed. The bottom-line is that every market on our board is in the "red" except for the US Dollar and the Treasuries! The theme of the day is "FEAR ON" and "RISK OFF!"

In other more fundamental grain news, It was nice to see CWG lower their corn yields from 148.7 to 147.3 yesterday, unfortunately, it was not enough to keep us on the positive side of the fence.  I am fearful when "bullish" news like this does very little to influence price direction, it makes me believe the market is now discounting "bullish" news, and opting to search out and digest more "bearish" news.  Also on today's report I get into the rumors going around the trade that say China will likely be out into February or March before they actually look at importiong any significant amount of corn of US corn.  Also, China's rationing of corn is becoming more severed than most have thought, especially whith wheat feeding gaining more and more popularity.  Sign-up for my report to get the full story on these and other issues affecting demand for US corn.  

 As far as the "outsides" are concerned the Fed came through with "Operation Twist" in an effort to keep longer-term interest rates subdued. You have to believe they were doing their best to try and help out the mortgage industry and support the US Stock Market.  Realistically though, with rates at close to 4% how much more will it entice buyers to make purchases if we fall to 3.5%. The global markets interpreted their action and comments as a move that positions the US to weather more economic bad times. Traders around the world have been fearful about "Global Growth," and now the Fed confirms their thoughts by throwing out comments that the economies are going to continue struggling for some time and that they are going to do their best to hold longer-term interest rates low. Just take a look at "copper," which is now trading at 12-month lows.  Remember, many large fund traders use copper as a gauge to longer-term growth.  Most all new building and construction starts with copper.

I continue to sit on the sideline and remain patient.  Our hedges are in place and we have made some great cash sales.  Like I have been saying for the past several weeks, we more than likely will be waiting until 2012 before we make another cash sale...Hunker down and weather the storm!  Remember, we still haven't gotten past this European Debt issue either, Greece will be back in the spotlight next week, so we should know more at that time.  A "Default" can not be ruled out of the equation, and the counter-party risk could be extreme.  From my perspective the waters are just too deep and moving too fast...stay on the shores!

 Thanks for reading!  If your not getting my full report each morning before the markets open make sure you call the office and get signed up for the FREE 30-Day Trial 816-322-5300 or you can simply click HERE to Sign-Up!

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About the author

Helping Producers With Cash Marketing & Hedging Strategies.

Kevin Van Trump, CEO Farm Direction

As a professional traders for more than 20 years at the CBOT and the KCBOT, I know just how important it is to have the right information and strategy in place when trying to capture returns in these markets.

In an effort to better help producers with their cash marketing strategies and hedging techniques I recently left the exchange and launched Farm Direction.  I recently partnered with Ag Hedge as their proprietary market analyst, and now produce a daily e-mail that is jam packed with insightful commentary, helpful tips and detailed strategies you can use to generate better cash sales and hedging positions.


You may reach Kevin at

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