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Head spinning markets-Ron and Sue Mortensen

06/23/2011 @ 8:17pm

Today was one of those days that turns your hair gray! 

Traders like volatility, but a 45 cent trading range in July corn futures was more than many wanted.  After a dismal opening, the market rather quietly marched back, with a few fireworks at the end—just for excitement.  While July corn and July wheat closed higher, most other contracts could not shake their minus signs and closed lower.   

It was one of those days where the outside markets were the dominant influence on the grains.  Already in a downdraft after a ten day wave of liquidation selling, prices were sharply lower on the open due to a higher dollar and very weak crude oil prices.  It was definitely a surprise that the IEA announced the release of 60 million barrels per day over 30 days.  At one point, crude oil prices were $6 lower. 

There are only four more trading days until the all-important Grain Stocks and Acreage reports from the USDA.  These days could be much lower volume, position squaring trading days.  Traders will seek to reduce their risk in front of the data, especially since it can produce large price swings.  This year, with the tight nature of the supply/demand situation in several markets and the wet conditions during planting, there is a big chance some piece of data will be a surprise.

After the grain markets closed, there was news Greece had reached an agreement with the EU and the IMF regarding a five year austerity program.  This caused the dollar to ease a bit, crude to rally a bit and the stock market to also rally.  Perhaps this could generate a different tone to tonight’s markets. 

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The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading in suitable for you in light of your financial situation. 


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