From today’s Global Commodities Alert Mailbag. Full GCA mailbag is available to anyone at www.kerralert.comm for a limited time only at no charge, just register on the front page!
The below opinions on my positions at my former publications are strictly my opinion and provided solely as a courtesy not as investment advice in any way. I always suggest speaking to your broker or registered professional before making any trading decisions for yourself.
Kevin’s notes regarding RTA & GRT positions:
As I mentioned, for a while, at least until my former trading services hopefully have new editors in place and finally let people know I have left, I will give you my brief thoughts on positions I initiated in my former trading services. I consider it my responsibility and hope it helps. I will send you thoughts on RTA first and then post it to my blog later the same day
Remember these are only suggestions and I highly suggest though that you consult with your broker before taking any action on those positions. These are simply my thoughts and are not endorsed nor approved by Agora Financial or MarketWatch.
Sugar: is finding some resistance at the current levels after a significant run to the upside. Patience is the key word here, and as we head into 2009 I would expect more choppy trade indeed. The weather in Florida certainly didn’t do much good for many of the crops in flooded areas, and sugar was one of them, although impact from that may be small. I would simply hold onto this position and watch and wait. Remember this trade has a lot of time to be right. HOLD
Soybean Oil: Soybean oil and soybeans in general are skyrocketing on a couple of major factors. First, dry weather in the Midwest is now concerning farmers a great deal because this is a key time for soybeans and corn. Second, fears of an early frost are now also playing a role in the rally. Look for more jittery talk to keep the grains well supported as we head into September. Now last week I suggested to buy back the short leg of that spread and that was the right call in my opinion. I believe officially they are not doing that in RTA so it’s really up to you. No matter what you should always discuss the ramifications of any trade change with your broker or financial professional. HOLD
Orange Juice, is seeing a modest bounce on Fay, the storm that seemed to never end. I am more focused on the Steiger Report which is an industry report which indicates a much smaller yield in oranges is expected this year. This market seems way oversold to me. I am glad that I put on January calls rather than November. This position may need the extra time value to take advantage of more weather factors and a rebound. My suggestion is to HOLD.
Gold. No market remains more choppy, besides maybe oil, than gold. Now we are long silver in GCA long term, and I still believe the second half of the gold spread in RTA will come back before December. However I have to tell you that there is a reason I grabbed profits on that first half of the spread while I was at RTA’s helm, and the pullback is it. You have to look at this trade as already a winner since we took nice profits on the first half. Even if the second half doesn’t come back we have already protected ourselves. Of course the new editor at RTA may take a different course. I cannot officially suggest buying backt he short leg on this gold spread, only because the premium increase is significant. However if this interests you then you should speak to your broker and make sure they explain it to you fully, and what additional cost there will be. HOLD
Ok now let’s get back to what I am looking at now. Good luck to all you RTA and GRT subscribers, I will have further opinions here each Monday night. If you would like to find out more about what we are doing at GCA I am offering for a limited time a significant discount for my former subscribers, just look for the coupon at www.kerralert.com
Ok now to back up my observation about the grains just look at these findings form Ag Web…I am actually going out next week to Illinois and Indiana to check out some crop conditions for myself too.
2008 Pro Farmer Midwest Crop Tour, form Agweb.com
“Minnesota is looking at better corn yield prospects than a year ago; Iowa will see a slight downturn, based on data gathered by experienced crop scouts on this week’s Pro Farmer Midwest Crop Tour.
In Iowa, over the past two days, Tour participants measured corn yields at an average of 168.33 bushels per acre based on 325 samples. This compares to a 167.67 bu. per acre yield measured by the Tour in 2007, and an official statewide average of 171 bu. per acre last year.
Western tour director and Pro Farmer editor, Chip Flory, says, “Iowa is a good example of how the crop has been living on the edge all season. It continues to live day-to-day. Without rain soon, we are going to see ear weights continue to trend lower, robbing additional yield. The Iowa story is not over.”
On soybeans, Iowa Tour participants found an average of 1,091.25 pods per 3′ x 3′ square, compared to 1,218.40 measured by the 2007 Tour. The average pod count came from 311 samples collected by participants.
That 10% drop in pod count for this year tells only part of the story. Crop scouts figure the Iowa soybean crop has reached a tipping point. Rains either make it better, or it goes in the tank. August rainfall totals in Iowa have only been half of normal. That is punishing the crop now, and it can’t make up for all of that lost time, especially with the trend of below-average daytime temperatures and cool evenings. Not what soybeans need right now.
In Minnesota, Tour participants measured an average corn yield of 178.35 bu. per acre, compared to 169.07 bu. per acre tabulated during the 2007 Tour. The current-year data is based on 133 samples gathered on Thursday.
For Minnesota soybeans, the Tour measured an average of 1,006.58 pods per 3′ x 3′ square. That compares to 1,030.10 in a 3′ x 3′ foot square in 2007.
“We were stunned by how dry it is in Minnesota,” according to Chip Flory. “We’ve watched dryness in the eastern Corn Belt. Minnesota shocked us! We were pulling ear samples in Minnesota, and noticed remnant pollen was still on the leaves. It hadn’t rained enough since pollination to wash pollen off the leaves! We saw heavy plant populations, but ear length is going to be very short. Hopefully they’ll have enough short ears to add up. But we have our doubts. Too late for rains to mean much to corn; could still give soybeans a much-needed” boost.”
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