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Talk is Cheap and So Is the Dollar! Plus…The 2008 Corn Crop 101
Has the Helicopter been grounded, or are they going to start using a plane instead?
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Talk is Cheap and So Is the Dollar
So Mr. Bernanke has finally decided to step up and defend the dollar…Yawn.
Long live the King, King Dollar!
SO after such strong words from the Fed Chairman I expected some kind of action. After all it’s the Treasuries turf to defend the dollar, isn’t it? It’s one thing to say you want a strong dollar,it’s a much different thing to actually do something about it. If Bernanke was serious he would simply have raised rates and be done with it.
No, it seems more likely that he is trying to “prime the pump” and get investors and currency traders nervous and then have them do the heavy lifting.
Mr. Bernanke carries a big stick, that’s for sure, but will he use it? Can he use it?
I think Wall Street has a much bigger stick, (threats of insolvency, recession, etc.) Does Bernanke really want to risk a massive deep recession in an election year by raising rates on the greenback,not likely.
The risk here is that the global currency markets may just call his bluff and the Fed will fold like a cheap tent. The talk of a stronger dollar is just that, until you see higher rates, much higher.
The only way to win in the end is not only to have a strong defense it is also to have a strong offense.
Strong words are not enough, tough choices (boy are they tough) are the only way.
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Corn Crop 101
It’s still wet and ugly all over the Midwest, (see e-mail below). It’s my farmer friend and Reserve member Geb, in Waseca….Sounds like they are ok since they got the crop in the ground they are lucky, but now not being able to spray what chemicals they need to on the crop could mean it was all for nothing…
It’s June 4th…..Bad news if this rain keeps up and then the searing July heat sets in…..You will be able to put a fork in this crop if the corn isn’t tasseling and silking before then.
So how far along is the corn, not very far at all. A very rough estimate can be made by counting the leaves developed or by measuring plant height, which I did last year . However, the first solid indicator of crop progress is the average silking date.
Begin looking for silks soon after the tassels appear. Under normal conditions, 20 to 25 % of the plants in a field will silk each day. When approximately 75 % of the plants show silks, we record that date as the silking date. In a typical year, the average silking date for Iowa for example, falls between July 20 - 25…Not this year, not a chance.
Once silking dates are known, we will have a better feel for the maturity prospects for the 2008 crop. It’s a fairly simple equation, mainly because the number of days from silking to physiological maturity is more or less constant, you can estimate maturity by adding 60 (±5) days to the silking date. The obvious value of a silking date plus 60-day estimate is to compare the expected maturity date with the average frost date. This is one of the best ways to estimate “real” crop progress. Frost is a factor because harvest will be later this year and an early hard freeze can be the final nail in an already fairly well sealed coffin for corn yield.
In case I lost you at tasseling, it’s when you start seeing the stringy stuff coming out of the corn husk. 
Late silking is associated with lower yields and wet grain. Trading a couple of weeks of grain fill during late July and early August for a couple of weeks in late September or early October is not a fair trade off as far as the corn plant is concerned. On top of that since farmers planted (and are still planting) late, the problems are magnified when a killing frost comes early.
I think the story is growing even worse for soybeans, at least in my opinion. More on that tomorrow.
Hey if you tune into the CBS Evening News tonight you may see me along with several other traders discussing oil prices and what the heck is going on,that’s tonight on the CBS evening News with Katie Couric.
