OptionEye...Sept. 19th (6:50)

[ShelladyOptions]

Ok...back in the saddle again.

Spent the last few days in London and Paris visiting Ag market participants. Very interesting to hear their views.

As for the home turf, seems as though not a lot has changed. CCI index is looking weaker, and the CBOT products are all at least 5 to 10 cents lower.

Gold is up $5 and oil is slightly easier. The dollar is continuing its strength and is up .473.

The headlines are the EU ministers meeting about Greece, UBS' issues with the rogue trader all point to a negative day.

Will update in a while

[marketeye]

Scott,

Welcome back. As much as you could share, it would be interesting to hear what others around the world think about the ag sector. Also, could you expand on your thoughts about the CCI Index. And, are you hearing the U.S. Dollar is now back in 'favored son' status. I read that world investors, once ready to throw the dollar 'under the bus', are now pouring money into it. Can you offer up some thoughts on what this might mean for the ag commodities? Is this 'favored son' status longlasting or short-term?

Thanks,

Mike

[ShelladyOptions]

Hi Mike.

I think that the 'world view' if there is one is that the latest and last bubble to pop would be the commodity sector. That is not to say that corn and beans necessarily have to follow but there may be some decent headwinds.

The SNB move recently has now favored the dollar and the dollar index may rally to 80 or 81. Currently its at 77. If that does happen it will make it harder for our products to rally as well. So, it looks like dollar strength is here to stay for at least the short term or as long as the EU struggles.

Scott

[BA Deere]

Hi Scott, it`s funny Iowa farmland went up 33% in the last year, also gold was up 34% ytd, moving together like fraternal twins.  Dollar is best looking nag at the rendering plant, that has to make our corn higher priced overseas.  Gonna be interesting as always.

[rightone]

Should be intereting.

Cannot see any qe type stuff until the usd is much higher ( say mid 80's to 90's ).

Then of course to weaken the usd.

However since the whole of the Western econ mess for some reason cannot visualize equitizing their way out, hmmmm.

There is a possibility Ben and co weaken the usd now ( from the mid 70's ) as a direct move to help the eu float.

US Demopubs likely have to change faces again in 012.

Supposed new faces thus supposed fresh plan to justify the next trillion they'll need to borrow for their various supposed causes.

( Humpty Dumpty keeps falling off the wall. A supposed new set of kings horses and men keep putting ole demopub Humpty back together again )

[ShelladyOptions]

I think that those in charge are comfortable with a weaker dollar however until we sort out the EU, and I think that takes awhile, the dollar will be stronger by default.

The headwinds here and abroad give me small pause for concern. I do believe that corn is very tight but not sure if we can breach $8.00 and beans are still in that $13/$14 range having spiked to $14.50 a few weeks ago.

Wheat is wheat.

I do love having the movement in the market as it does give us short term opportunities. What happens with a 1.5% ten year and QEIII to the dollar? That is the big question pertaining to our short term trend in the future.

Scott

[ShelladyOptions]

Heading into the grain floor close markets are catching a bid with corn now trading positive on the day.  This looks to be positive price action off of technical support more than anything.  As mentioned today the EU situation will need to be sorted out before we start to see some continuity in the markets again. 

Taking a long term approach on these markets or any market for that matter is very difficult to do. 

As far as the commodities being a bubble ready to burst, I don't know.  We did see managed money cut their long positions last week by 10 percent in the corn.  This would explain the sell offs that we saw last week and today, but technical support levels are holding.  Today I think that with previous lows being tested and catching a bit of a rally into the close that the technical picture is one we will continue to look at. 

Scott