Current Markets

Corn Crop Deterioration

The fundamentals f the corn market continue to point towards higher and higher prices. I understand that many people had a hard time forcing themselves to buy new crop corn $6 a bushel.
Unfortunately, $7 is here and $7.50 is not far off. The corn market is experiencing a “perfet storm.”
The short list of contributing factors are:
1) Tight ending stocks leave us very dependent on this year’s crop.
2) Increasing global (Asian) demand for red meat funnels more corn to feed.
3) Declining Dollar increases global demand for our exports.
4) The late start to this year’s crop will have a material …

Current Markets Macro Viewpoints

Defending the $ and Popping the Bubble

Yesterday, Bernanke stated that a weak Dollar was not in America’s best interest. Typically, this statement would be argued against based on a weak Dollar’s contribution to exports
helping to grow a weakened domestic economy. Bernanke’s point, I think, is that inflation is a bigger worry than recession. Dollar based commodities, primarily grains and energy are having a greater
negative impact on our economy than can be offset through higher exports. Inflation in these primary goods is acting as a tax on the American consumer. Right now, the economy cannot create enough
high quality jobs fast enough to offset the …

Macro Economics Macro Viewpoints

Commodity Index Funds & Investment Banks

This is from John Mauldin at
I think he does a wonderful job of explaining how the Commodity Index Funds stay off of the CFTC’s radar in their weekly Commitment of Traders reports.

Swapping out Commodities

The Commodity Futures Trading Commission announced yesterday that they are
looking very hard at possibly closing a regulatory loophole that allowed some
extremely large commodity index funds to get around positi on limits. For those
not familiar with the concept of limits, it basically works like this. No trader
or fund is allowed to own more than a specific amount of a commodity …