By: Dan Hueber –
The first full week of March (or should I say weak) has been a cruel one for grain and soy prices. If we were to close right now, nearby corn would be down nearly 17-cents, nearby beans 32-cents and wheat right at 8-cents. While the USDA report yesterday really had little that would be considered shockingly bearish, these markets were in need of something just a bit more uplifting and that was really nowhere to be found. At this point you could say the month has lived up to at least the first part of the old proverb that states “March comes in like a Lion…” and in this case, it was a lion that was obviously quite hungry for a little bull flesh, but if the second part of the proverb where will go “out like a lamb” is yet to be determined. Right now, I think most bulls feel more like lambs being led to slaughter.
While nothing that has occurred this month changes my long-term outlook on markets and even believe that short-term, we should be approaching at least reaction lows but recognize, the ag sector is not alone and commodity markets as a group appear to be moving into a corrective phase. Crude oil, which is often regarded as the icon of all things commodities has finally tipped lower, pressing down to levels not traded since early December. Number two on the list for many would be gold, which turned sharply lower this week and as you might expect, broad based commodity indexes have done the same. The Goldman Sachs Commodity Index appears poised to post its lowest weekly close since Thanksgiving and is seeing weekly indicators cross lower in the process. The last this that happened the market experienced an eight week downward corrective swing. While there is nothing that “assures” us that we need to see a replay of that, these markets are going to need an infusion of something fresh or out of the ordinary to shake off the negative bias. That could come in any number of fashions from weather issues, a problem with oil production or maybe even better yet, a breakdown in the U.S. Dollar but until it does it would appear that we may be in sideways to lower corrective phase. We are still left wandering in the desert and continue to await the leader that can direct us out and into the promised land.
