Markets Start To Show Concern?

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U.S. export sales of corn in the week ended Nov. 22 tumbled 69 percent to 263,140 metric tons from a week earlier, the Department of Agriculture said today. Thus, the corn market is down slightly today, with the DEC12 contract down 7 cents. Soybeans and soybean meal are leading the way down in the grain futures markets. Front month soybean futures are down 17 cents and meal is down 11 cents.  Wheat futures have experienced selling today, down 21 cents.

The biggest losers today in the commodities markets are coffee and silver. Coffee is down 3.87% and silver is down 2 percent. It is starting to be clear that consumer demand based, “risk-on” markets are being sold due to concern that the fiscal cliff might not be resolved. The US bond market has seen fairly quiet trading as we don’t think people know exactly what to expect of the bond market should the cliff situation not be resolved. The US 30yr bond futures are still below their highs of November 2012. We hear talk of a Bond bubble among various investors, but its tough to pick a top, especially with the Fed so heavily involved in US interest rate pricing.

We focus on Corn futures today. We think corn futures have a very legitimate bullish case for another run higher, but there certainly are obstacles. In our view, the main obstacles to another run higher for the corn market are: Fiscal cliff not being resolved and further Euro deterioration. There are major global demand issues that will be negatively affected by either one of the two obstacles turning out negatively. For now, corn has been consolidating between $7.20 and $7.70 since September. It is still above a multi-month uptrend line, and above a key pivot point of $6.80.

Corn Futures

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