By: Dan Hueber –
For the second week in a row, unless you are a gold enthusiast, markets have been just a bit tough on investors. Continuing to feel the aftershock of the August report earthquake, December corn is currently just over a 10-cents lower for the week, November beans down 14-cents and December wheat surrendering nearly 24-cents. December cotton is down nearly 1 ½-cents, October hogs $2 cwt and October cattle $2 lower as well. The bloodletting did not stop with the ag sector either as Brent Crude is lower by $1, the S&P 500 is down 20-points and even the dollar has broken sharply from its early week highs and could slip into lower territory as well. The beneficiary of all this? Gold, which is currently up around $12 for the week and may post the highest weekly close since October last year. Yes, each commodity or market has its own individual circumstances to deal with but from the tumult in Washington, to terrorist attacks in Spain it would appear that we very much are dealing with a “risk-off” mentality in markets and many have chosen to move the relative safety of the sidelines or into to that old stalwart of a safe-haven, Gold. I would be remiss not to mention the continued feeding frenzy that has continued to occur in crypto-currencies. While part of this would appear to be just a classic speculative bubble unfolding in front of our eyes, I have to believe that certainly some portion of the gains are attributable to a lack of faith in the global political/economic climate, fiat currencies and traditional safe-havens such as metals.
Yes, gold is up this week and has advanced nearly $100 an ounce this month but that dramatically pales in comparison to the Bitcoin market, which pushed to nearly $4500 at one point this month, compared with the end of July at $3260, June at $2420 and the end of last year just below $1000. Now that is a REAL panic advance, but more on this in the weekend commentary.
I continue to believe that we have already witnessed the majority of the downside damage in the grain/soy complex for now and to press and sustain prices lower from here would require some fresh bearish news. As we know the Pro Farmer tour kicks off next week but with expectations of hearing reports of lower yield estimates than the USDA, we have already potentially set ourselves up for disappointment. While I do not think that will be the case, advance expectations need to be lived up to. Baring something shocking, I would expect to see grain/soy price now drag sideways through the end of the month.