Market whispers for the bull case for corn
Market whispers might once again be occurring, not just for grains but for perhaps the entire world's marketplace! Are you listening?
There has been much fretting over the financial markets recently in the US and World, with the financials getting much of the attention due to the fluttering of the market at the least little bit of news. Last Friday worries were that the market would crash as it had in 1929, with some citing the anniversary of that disaster as the potential start of the "Depression" of the 2000's.
But there was basically much ado about nothing! The Dow didn't decline, and in fact gained 1000 points yesterday (a record!) and has had lots of trouble declining below the 8400 area. If anything, US stocks rallied and held up world stock values, which recently seem to be coming under more pressure than US stocks as overnight trade has been weaker than US day trade! Could it be we are in the process of bottoming the stock market at 8400, it just will take a while (6 months) to complete that bottom???. The market is well aware that the world is entering a recession, but perhaps that is already built into the market?
The world also knows banks are in a heap of trouble, and already have been discounted well below their 'full value'. But maybe bank stock prices have bottomed, too, as in fact, banks are using the money the government has infused into their system to acquire other banks - not lend money - much to the chagrin of the Bush administration who so passionately pleaded with Congress for our bailout program for banks. It might also be true that housing values are at or very near a bottom as well, as housing data continues to improve in each report.
With the FED and US government policy so astutely concerned about housing, banks, and US stability, is the market whispering: 1) The US stock market is bottoming, and will lead the world stock market higher, and 2) US housing and bank stocks are the best buys on the planet today?
If the stock market has bottomed along with housing and bank stock values, perhaps grain markets aren't far behind? The USDA yesterday revised corn planted/harvested acreage down 1 million acres yesterday. While corn yields so far during harvest are outstanding, and could more than offset the 1.4% production cut in yesterday's highly unusual report 'correction', we still have a huge amount of corn left to harvest. We only have 39% of corn harvested vs. 66% normal and 70% last year at this time, and the corn is very wet to date and is not drying as quickly as we'd like. Many western corn belt states are extremely wet, with some not able to support combines in the field. This scenario could become a nightmare if western areas receive heavy snow in the near future, and yesterday's 6-14 day forecast shows wetter than normal conditions and cold weather coming in behind the current warm temps. Could it be that in mid-November, we might sock in 30% of the corn crop in western corn belt fields?