Loading ...A quick note – The US Dollar is back up there knocking on that overhead resistance door near 81.66 basis the USDX. Safe haven buying is supporting the Dollar as well as bringing buying into gold and the US bond market. If the Dollar does managed to stage an upside breakout, I suspect gold is going to struggle once geopolitical issues fade.
As said many times here of late, gold bulls are basking in the geopolitical fears around Ukraine. As long as that is on traders’ radar screen, the metal will hold as it will find dip buyers. If that event were to lose its significance in the minds of traders ( and unless one has an infallible crystal ball and unerringly knows the future when that might occur ) look for selling pressure to hit the metal. Until IF/WHEN that happens, support is intact under the market. All I can say is that traders who believe the Ukranian fears are overrated are going to be selling this rally. Those who look for the situation to worsen, will be buying the dips. One side or the other will eventually be correct. So unless you infallibly know the future, be careful but above all, ignore EVERYONE who is making price predictions about the metal. They know nothing further than any of the rest of us how all this will play itself out.
Beneficial rains are bringing pressure on the grain markets this morning after they experienced a “Ukranian bounce” in yesterday’s session. Weather across the Midwest looks ideal for corn and beans to finish up. Corn is essentially made at this point. With beans ahead of last year’s pace, the August weather thus far has been almost perfect. Tight old crop supplies in the hands of domestic crushers is supporting the bean market for the time being. Crushers are not turning loose of those beans and that has so far resulted in no deliveries against those August contracts that are in their delivery period. This is going to be interesting to see as the basis weakens.
My own personal view is that the crushers who are holding those beans back are propping up the entire bean market, both old crop and new crop. That is keeping farmers from selling but it is also going to be an important factor as S. American farmers get ready to plant down there. With beans being out of whack price wise against corn, odds would favor more acreage going to beans at the expense of corn. I am concerned that a huge crop here in combination with the potential for huge acreage going to beans down in the Southern Hemisphere, could leave a large number of US farmers stuck with very little in the way of downside price protection at the same time available storage is in going to be strained.
I cannot tell US crushers how to run their business but I believe that they are going to end up hurting many US farmers as they play this game of chicken with the market.
Posted by Trader Dan at 9:45 AM 9 comments