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Lack of Buying Interest in Corn and Soybeans


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Spain remains at center stage of the European debt-crisis as protesters desperately try to prevent Spanish leaders from formally asking for additional aid. Keep in mind, Spain is facing a big week with a new economic reform plan, major bank stress test, and the NEW 2013 budget scheduled for publication. The problem is many in the trade are becoming increasingly concerned that nothing is going to happen in Europe unless something is resolved in Greece. Bottom-line, Spain appears to be setting itself up to eventually make a "formal" request for more bailout funding, but the ECB won’t be buying a bond until Rajoy signs off, and they are able to formulate some type of more permanent solution for Greece. Here at home, US traders will be digesting a ton of economic data this morning including: the latest GDP numbers, Personal Consumption, Durable Goods Orders, Capital Goods Orders, Initial Jobless Claims, Continuing Claims and Pending Home Sales. There is also a bevy of European and Japanese data to digest this morning as well. Net-net, a somewhat calm and peaceful summer could be turning into a more volatile fall as protests and riots in Europe ramp back up and work there way back into the "headlines." Throw on top the fact Pimco now estimates the Chinese economy will only grow at a rate of 6.5% to 7.0% over the next year and there is even more concern about a global slowdown. Let's just hope the US economy can keep its head above water and continue to provide a shimmer of hope for what appears to be weakening global outlook.  

*US GDP this morning revised lower. Second quarter GDP now at 1.3% vs the previous estimate of 1.7%. US Durable Goods orders sink by 13% in August, the biggest monthly decline in over three-years. We continue to slow....

Corn and Soy traders need to take notice of "open interest" and the most recent "commitment-of-traders" data. Despite what prices may lead you to believe, I do NOT see massive "liquidation." Rather simply a lack of new buying interest. Remember, money-flow is critical, and when "NEW" buy paper dries up as prices peak we are often left backpedaling down the hill. There seems to be very little fund liquidation. In simple terms, it feels as if many of the bigger players who banked big profits on the run up, jumped back in on the first $1.00 break and may have actually doubled up again on the additional break. As they like to say in the trading world, "Many times you buy the first break, you double up into the second break, and you ARE the third break..." From my perspective, the dreaded "third-break" has not yet occurred. The funds and large traders have NOT yet puked out of their long positions. I am thinking they could be getting dangerously close because more than likely they are no longer playing with the markets money but rather starting to get into their own pockets. Be extremely careful right in here because a little more loud noise to the downside and we could see a short-term avalanche if the funds are forced to actually "liquidate." My best advice is to be extremely cautious, you have to hunt with a rifle rather than a shotgun in this environment!!! Make sure you have a steady hand and have done your homework very carefully, you may only get one shot at this thing...then poof, it's gone!
 

For the rest of this story and more insight into what the Hedge Funds and money managers are looking at, sign-up here to receive a RISK-FREE 30-DAY trial of my Ag Markets commentary.  In this daily report you will get my thoughts on where prices are headed and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets.  Just click here -  Van Trump Report  

 



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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 farmdirectionreport1@gmail.com

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