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| Daily Jurojin - Wednesday, June 10, 2009 |
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Wednesday, June 10, 2009 Agriculturals get bullish ahead of crop reportThe dollar put its pistols away on Tuesday. Investors collectively decided that, despite the so-called efficiency of the market that the Fed isn't on the verge of a monetary tightening. As such, the greenback lost last week's luster opening up a fresh commodity binge! Copper, wheat and cocoa prices led the Reuters/Jefferies CRB index of 19 commodities to a 1.3% gain, while crude oil jumped 2.5% for its first close north of $70 for the year.As the dollar declines in value it investors are reminded of the recent Chinese rationale of buying hard assets as a hedge against the value of the dollar. Investors worry that too much government spending is destined to create an unsound platform for prices in the coming years. Since the Chinese are one of the largest holders of U.S. government debt and they have a knack of converting raw materials into semi and fully manufactured products, they've taken it upon themselves to become commodity gods in defense of what they perceive to be shaky fiscal policies in Washington D.C. Wheat futures surged higher by 2.6% on the day after falling ten-times that amount over the course of the previous year. The most-active contract had dropped 6.2% so far in June before Tuesday because speculators fear that better weather might boost prospects for the winter wheat crop that farmers began harvesting within the last week. Numbers emanating from the world's fifth-largest wheat producer, the Ukraine suggest a 23% decline in 2010 production to 20 million tons. The local agriculture minister blames poor weather for the deficit. Worse still is that Ukrainian exports might fall 50% short at 6 million tons this year leveraging the crop shortfall. The weaker dollar encouraged speculators to bank on investors increasing their appetite for food and animal feed, which bolstered demand for corn and soybeans. Both contracts rose to nine month highs and reversed recent price declines. Soybean futures have seen revived demand lately on account of fears over Argentinean drought sapping supply. Bean prices have risen for six straight weeks now. Meanwhile a seven-month high for corn prices reached last week was built upon by speculation that inclement weather would deter planting and acreage devoted to the corn crop thus lowering possible crop yield. All eyes are now on Wednesday's key crop forecasts from the USDA. Expectations are for a reduction in the amount of corn reserves likely to be in storage as of August 31 2010 by around 8%. The bad news on supply has led many people to join the bullish speculative line up for crops - Jurojin Weekly readers included. We too sent our readers headlong into the foray in the issue we sent out on Monday evening. So it's fingers crossed for what the reports show Wednesday, but at least we're in buying the dip ahead of time! The Supreme Council of the Secret Order of Jurojin |
