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Holiday markets

Agriculture.com Staff 12/19/2008 @ 1:00pm

The last two weeks of December there is normally not a lot of excitement in grain markets.

On my seasonal chart analysis I call this period "Holiday Doldrums". The most prominent characteristic of this time is thin trading as traders stay away from trading because of the holidays. The grain markets look different this year. Since December 8 the cash soybean bid at my local elevator has increased 89 cents. In roughly the same time corn futures have gone up around 80 cents. Those are significant price moves in markets that have had such a big wash out in the last half year. Part of the move could be recovery from a badly over sold condition. A big part of it relates to currency exchange rates.

Corn and soybean prices have been a mirror image of the U.S. dollar index. As the dollar has gone up in value since summer, grain prices have gone down. The dollar has gone almost straight down in recent days. As the dollar dropped, grain prices rose.

The big question is whether these trends will continue. Unless some other fundamental factor comes into the market, the dollar and grain prices will probably still continue to have an inverse relationship.

Whether the dollar will go up or down is the big question. As I write this, the president is telling of his plans to bail out the auto industry. How the world interprets his action is probably more important to grain prices than conventional supply and demand factors.

With trading thin in the coming days and all that is happening in economies around the world, this holiday season could see a lot more excitement than usual in the grain markets.

I do not normally even think of selling corn or soybeans at this time. However, with the big rally of the past week, if anyone has grain that needs to be sold this winter, this is an opportunity. The rally is an extension of the 'dead cat bounce' in the soybean market. Corn prices may stay high to avoid concern about a reduced acreage of corn being planted. That should keep a floor under prices until there is a better grasp of spring planting.

The last two weeks of December there is normally not a lot of excitement in grain markets.

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