July futures are down nearly 8% as I write, as the USDA just reported that corn stocks are up 6% from a month earlier. Obviously the market does not like this supply news, and corn is being heavily discounted as a result.
The USDA also reported soybean stocks down 12%, while wheat stocks are up 118% from a month earlier. Wheat and soybeans are also down on the report…beans down only half a percent though, so a decent performance in the wake of the carnage.
This looks like another “all or nothing” day in the markets – with the dollar and T-bonds up, and everything else down. We’ve been keeping an eye on this lack of decoupling…and I think we can assume it hasn’t happened yet.
Notable performances in the commodity sector today by rough rice and orange juice…the only green ticks amidst a sea of red. Keep an eye on these two, as strong performances on down days can imply good things to come.
I wouldn’t interpret this as a nail in the coffin of the bull market in agriculture – more likely just a respite for this year. The old saying is that if corn doesn’t rally by July 4th, it’s not going to happen.
We still appear, though, to be playing a game of Russian Roulette with the food supply – we basically need a bumper crop every year to keep this cheap food party going. Grain supplies remain near record lows, so the 2010 grain contracts may be an interesting speculation in the near future…or perhaps right now.
Puking up corn chunks…right past the line of support.
Interested in investing in agriculture…a la Jim Rogers? Check out our weekly series This Week in Commodities.
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