Feliz Ano Nuevo (as they say in Miami and everywhere else they speak Spanish) guys and girls that’s Happy New Year translated. I hope everyone had a safe and joyous holiday season the past several weeks! To be completely honest though, I am so glad the holidays are over because it was a heck of a party season this year. Seems all my family, friends, and neighbors were in the partying mood (including myself) and even after having several days off for CHRISTmas and New Year’s, I sure could use an extra week of vacation just to rest from the holiday festivities! But all things aside, it was a great time for everyone to celebrate, share, and be together during the last few weeks of 2012 and what supposed to be the end of the world (according to some believers). But now its time to get back to reality and a new trading year, so let’s get to it!
Markets have been mixed the last 2 weeks as traders have been preoccupied with CHRISTmas parties, hangovers, limited trading sessions, New Years parties, more hangovers, and more limited trading sessions which included trading with and without hangovers, and the US fiscal cliff which will give everyone one way or another a very big hangover! Now that a temporary band-aid has been used on our fiscal cliff and we enter the second week of January, which is the first real full trading week for traders worldwide (which should be comprised without hangovers), the market should provide big price action in various asset classes. Some commodities have already begun to move, primarily metals and agriculture. Please click on this link to see where prices ended the week: CBOT Commodity Prices.
On January 11 the USDA will release the several data reports including crop production and World Agricultural Demand and Supply Estimates which forecast US and Global supply and demand of major crops and livestock. These are market moving reports both before and after they are released, so be mindful, plan, and anticipate any moves when trading as we approach the reports. As of 7am this Monday morning, Corn for March delivery is trying to rise above from a six month low trading at $6.84, Wheat advanced to $7.51 a bushel, and Soybeans is sitting at $13.75 a bushel, down roughly 22 percent from the September high.
Gold is still trying to stay above $1650ish and Silver is sitting tight at $30, a strong US dollar move which began late last week seems to be gathering further pace as traders took queue from the USD minutes of FOMC meeting last week that they could end their latest round of QE in 2013, and that’s all traders needed to hear to sell treasuries, metals, and currencies. Speaking of currencies, the Yen is getting sold like hamburgers and french fries at McDonalds, currently Yen is trading around the 88 handle and is at a 2 year low vs the US dollar. If you are patient and willing to go in for the medium to long term, buying US dollars vs Japanese Yen is probably a very good idea considering fundamental and technical indicators are not in the Yen’s favor.
Getting back to dry beans now, there hasn’t been much movement as of the last 4 weeks; mainly because most originators and processors have been waiting on other Ag-commodities for some direction. Growers and dealers have been content with satisfying old contracts and playing the waiting game to see what was going to happen with the US fiscal cliff, holiday season, and markets in general. But now that we have made it into the new year, markets will begin to move further and we should see plenty of new offers coming from grower and dealers alike. Being patient is always a good idea from a buyers perspective as long as the growers and dealers are not making any new offers. The time to worry is when the originators and processors become eager all at once to make new offers to the market, that is typically an indication that a turn is happening in price action, either to the upside or downside. Once market participants see new offers coming in from all directions then it’s time to really focus and get your cat-like senses ready so you can pounce on any potential opportunities which present themselves. Lets see what shakes out here in January, I’m betting it’ll be a whole bunch of beans!
The Bottom Line: Plan your trade and trade your plan, and ROLL TIDE ROLL!