COOL BEANS

Two of our trading members went corn-yomping recently. That means they went to inspect the progress of the corn and soybean crops across key states including Ohio, Illinois, Wisconsin and Minnesota. Not being keen believers in everything the government tells them in the USDA grains report, they couldn't resist making that annual pilgrimage to see first hand and to hear what farmers had to show and say.

They set off full of suspicion about recent crop progress reports, which although lauding probable bumper crops, seemed to have stopped knocking prices of soybeans any lower. Since June corn prices for example had lost more than one third of their value, through last week, while soybean prices were down 18% off their peak. That sent up a red flag. Upon further first-hand inspection our guys told readers of Jurojin Weekly in Tuesday morning's issue, "We just didn't see the bean acreage to justify some of the numbers that are coming out of the USDA."

While the corn crop looked solid to our team of two out there in the fields, they noted that other crops were lagging after a cold and wet start to the growing season. That means delays to harvesting just as the cooler weather arrives.

Jurojin readers were treated to a position in November beans at the open on Tuesday thanks to the analysis concluding that, "Already, temperatures are cooling, a hard freeze may not be that far off.  It could be a race against the clock.  Any farmer will tell you that you can't count the money until the crop is in the bin.  Yields may suffer, and some crops may even be lost.  That's why the really sunny numbers out of the USDA may not be accurate."

As if by magic, soybean prices rallied from a weaker start Tuesday to put in a 2.8% gain sending prices skyrocketing by a net 25.25 cents on the day to deliver gains to us speculators of $4,250 on the day. The National Weather Service predicted the chance of damaging cold weather for the northern Great Plains and Midwest starting next week and said it might last several days.

As ever, traders take no chances and are swift to act, driving prices sharply in one direction until all of the bad positions are squeezed out of the market.

In a report earlier this week the USDA said that only 17% of soybean plants were dropping leaves - a sign they are close to mature enough to harvest. Yet the five-year average is 36%, which is perhaps why you can see that the bean markets reacted so violently to predictions of a freeze. The affect may be to reduce the total crop yield by as much as 20% according to a report from one commodity weather forecaster this week.

There's nothing like gaining some first-hand experience in markets we like to trade. Years of trading knowledge and quite literally some field-experience should be enough to help our readers navigate the commodities markets.

According to Zug, Switzerland-based Tiberius Asset Management AG, more investors will pour an estimated $20 billion into commodities markets before the end of 2010. At the end of 2008 the total amount of investment dollars committed to energy and metals markets was $160 billion. At the halfway stage of 2009 the report claims that total had swollen to $200 billion as investors gained confidence in the view that inflationary pressures linger on the horizon. Although half of the increase came from price appreciation the report claims that around $20 billion comes in the form of fresh investor funds.

The Reuters-Jefferies CRB index of commodity prices is up 11% so far in 2009 as copper, sugar and gasoline prices spearhead a rebound for commodities. We don't think it's about to stop either.

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