Best example yuo'll ever see.

[hardnox604008]

Pretty much case closed.

Corn was languishing until the Fed minutes came out and indicated that some Fed governors favor QE3. crude also went nuts.

Stock market went with it but then faded.

An excellent example of what really moves grain markets- risk liquidity or event he hint of it- and why QE3 is destined to fail- because flow into commodites will choke off whatever stimulative effect it had.

[Palouser]

Glad you're convinced. I will post 'solution found'.

Are we done with this then??

[Palouser]

WTH. Can't find 'solution found' button!!!!

[timetippingpt]

Well....what exactly are you saying Palouser? He just reported the fact of what happened. What is your point?

[Palouser]

I'm infamous for pointing out floor trader's versions of why the market did what it did on any given day. The only question might be whether they believe their own explanations at times. But, no denying that what they say are explanations, whether I believe them or not. Usually they hint at some chain of causality. Always after the fact.

Boom! Case closed on this one. One thing was reported to have happened and there was also a fairly decent event in the market, though there are many of those lately. Hmmmmm. In terms of causality call me a Doubting Thomas. Or anything else. On the other hand the conclusion of direct causality came from one who needed no convincing. Case was closed a long time ago. Not just on trends over time, but now for any given day.

Now, as to other moves in the market recently that were fairly dramatic the narrative was quite different, if not downright conclusive. I might have thrown out 'over sold' at some point just for technical reasons. But, who am I to offer an explanation on a daily basis? Well, I don't, and for good reason.

[hardnox604008]

It was across the everything market.

That is part of the point.

[Palouser]

So, where to from here then?

[hardnox604008]

I haven't a clue.

I'd expect extreme volatility with a downward bias in the everything market but punctuated by fierce short covering rallies.

 Those can be triggered by any sort of news whatsoever- could be that the Bernanke had pancakes and  was said to look looked happy at breakfast, or that the eurocrats are really, really going to fix it this time.

And I suppose they might if the north is willing to cough up a historic ransom to maintain the status quo. I seems unlikely but can't be ruled out.

Grains might outperform as they may have a fundamental story unfolding but if the risk market is off they'll underperform what you think they should do compared to fundamentals of recent markets that were in the midst of spec storms.

A real, real ugly deal seems to have at least as much probability as the goldilocks scenario. In that case expect grains to greatly underperform fundamantal expectations built on recent experience. That certainly might accour if things actually lined up like they did for a little bit early this morning- Europe and the US falling apart and China on increasingly shaky ground. Obviously heaven and earth will be moved to try to avoid that. Probably more a matter of when- later- than if.

Final scenario is that we have QE3 or some masked equivalent and everything will fly but it will only last long enough for $150 crude to damp it off.

[Palouser]

Interesting. So, in short, you don't know. But a meeting where the Reserve was deciding how to shut down QE2 in an orderly way,  a discussion that the board of governors was undecided on the possibility conditions in the future might indicate a need for a new plan at some point (I assume a double dip), which could not be started before the beginning of next year at the very earliest, you think was the culprit behind market action today. And not just the culprit, but an open and shut case.

It's a real stretch.

Almost all grain analysts explanations of the market focused solely on physical fundamentals. Maybe they didn't want to confuse us, and maybe they just don't want to get into it. Or maybe they are ignorant.

I believe the montary policies can have general long term consequences, depending on how they are implemented and the situations that arise along the way. But I have no confidence in the idea that today's grain action proved anything regarding rather a vague discussion of monetary policy.

[timetippingpt]

Thanks for the definition Palouser. So, I happen to think that I agree with both of you. No way the Fed governors notebook moves corn much UNLESS there is a hot-dry forecast that is renewed and strengthened at almost the same time. Clearly corn and wheat got ALGO'd Monday night, again not knowable or predictable as to what causes such things.  Nox is right in that the food commodities probably underperform many peoples estimates because frankly the many are already invested.

So, I think you ar both right, not that my opinion matters.

I'll just stick with my big picture analysis that we emailed to folks in our group of peers Monday. 2011 will be a multi-year high in all the foodstuffs. Prices 2 years from now will be 50% of the 2011 high at best. This is and will STAY a pure verticle weather bull UNTIL prices close below 6.25 CZ. Been saying 2011 would be a significant multi-year high since April 2010 so no need to change the tune now. How producers manage this windfall is what everyone SHOULD be talking about on this forum. But of course posts in that vein don't even garner 1 response normally. Nature of humans.