DRY HEAT
Timothy Hughes | 602-859-4100 | thughes@pricegroup.com
10/21/11 General Comments: European summit this weekend and it reminds me of Shakespeare’s line from Macbeth. “Double, double toil and trouble; Fire burn, and caldron bubble.” The characters in this weekend scene will almost certainly be ineffectual but the markets roil with every utterance of a supposed solution. Dennis Gartman quoted Mark Grant (Southwest Securities) in The Gartman Letter, as someone with the “singularly best insight” on what is going on. In a nutshell, Grant said that “Europe has now run out of road. There is no compromise that is politically acceptable. Whatever gets done is going to be nowhere near what some in the marketplace have hoped for or bet on. Europe has reached the wall.” The dollar, and therefore the commodity markets in general, will continue to swing on the outcome in Europe.
Corn : When I weigh fundamental factors such as global stocks and exports I am encouraged. Corn useage totals look to exceed the size of the crop this year. I do expect the Dec corn to test $7.00 and most likely $7.50. One caveat is the dollar. Today a weaker dollar fostered a rally early in the day that fizzled late.
Soybeans: Bean weekly sales are sluggish. The market looks like it will test the $12 mark. A failure to hold $12 will signal a test of $11.60. I will watch and wait.
Cattle: The cattle on feed report today should break the market on Monday. Total on feed was up 5% from 2010 above the estimates of a 3.9% increase. September placements were about the same as last year but the estimate was for a 3.2% drop. Marketing was 1% higher than a year ago. Lightweight placements were up 34.3% driven by the drought in the Southern Plains. Heavyweight placements dropped 3.4% .
Treasuries & US $: The best comments on these markets are in the above quote by Mark Grant in The Gartman Letter. My last advice was a risk just under 76.50 in the dollar. My stop wasn’t hit and I will risk to 75.90 at this point. Someone must believe the horsefeathers that France is trying foist on Germany and that Angela Merkel would try to force on Germans. I don’t believe it will happen. Just more lip service.
Have a great weekend.
Questions Ask Tim Hughes today at 602-859-4100
