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Contributor

OptionEye....Oct 19

Well, well, well.

 

Opening calls are corn 5 to 7 lower, beans 10 to 15 lower and wheat 5 to 7 lower as well. What happened? The Bank of China caught everyone of guard. Even the currency guys. As we went into the last part of the overnight, all were higher than yesterday's afternoon close. We will need some fresh bullish news to stop this consolidation/retrenchment.

 

Interesting to note that the problems in Russia are not over and world demand keeps going up. We have had a historically lower carryout in wheat while we have had a historically larger crop. That doesn't add up. Those emerging countries just keep emerging.

 

With the last big report on the way, we will be dollar oriented with a bias to a lower number in the Jan. report. Hence, consolidation mixed with sideways trade. Until we of course wake up to the demand story but that will be on page 3. Not page !.

 

Happy hunting.

 

Scott

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3 Replies
Contributor

Re: OptionEye....Oct 19

Hi, Scott: Good to have you back on the board. Appreciate your insights. What's likely to be the next demand-related news to move the market, do you think? -- Rob

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Contributor

Re: OptionEye....Oct 19

I think it's going to be wheat that shakes the world. To reference Dennis Gartman, since 2000, world wheat ending stocks have been trending lower while production has been trending higher. To be exact, ending stocks have fallen by roughly 12% while production has risen by 11%. That's not good math. Even though we have been making more, we are using it at a faster pace.

 

Scott

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Senior Contributor

Re: OptionEye....Oct 19

The wheat situation, like you mention here Scott, could get serious. Talked with a friend of mine in western Kansas who's wrapping up planting. I e-mailed him, asking how dry it is and the first words of his e-mail back to me were "Oh man, not good." They will need some good rain between now and winter dormancy if the crop's going to come back to life next spring. Could be a lot of winterkill without it. 

 

Here's more on the condition of the wheat crop.

 

Scott, is the market already watching these types of conditions and factoring them into the trade yet, or is it yet to be seen how much higher it could send the market?

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