Crude market discounts talk of Iranian concessions

Commodities rise across the board

Commodity Crazy!

The commodity markets are bullish again and let me count the ways. Many of the old time commodity markets are breaking out and for a host of different reasons. Platinum continues to soar in the aftermath of mine violence in South Africa. Now add to that concerns about production cut backs at other mines that is creating a breakout in the metals. BHP Billiton after seeing profits cut by over 35% is putting off or canceling $50 billion worth of expansion projects. Other big producers may follow.

The manure tour, otherwise known as the Pro Farmer crop tour, is sending signals that most of the U.S. corn crop is a disaster and will be worse than government forecasts. Still there is some hope as reported by Reuters that the tour found slightly better-than-expected corn yield counts in central and north-central Indiana and in south and eastern Nebraska, contrasting with poor yields in Ohio and South Dakota. In Nebraska, where fields are extensively irrigated, scouts pegged the corn yield at 178.8 bushels per acre after inspecting eight fields, up from last year’s 153.7 bushels. Soybean pods averaged 869.6 per three-foot square, below the 1,286.5 pods of last year. Corn yields after the first four tour stops on one Indiana route across Huntington, Wabash and Whitley counties were estimated at 137.07 bushels per acre, above the 134.02 bushels a year ago. The soybean pod count was 1,628.48, better than last year's 1,140.30. The tour will announce its national yield and production estimates on Friday.

Not to mention that fact that barge traffic in the Mississippi has ground to a halt due historically low water levels and thus created tightness in the cash markets.

Cotton has soared as well and it appears that it has finally found a bottom. It seems the market has priced in slowing Chinese demand and now is joining the other agricultural markets in this commodity rally.

Orange juice is soaring on fears that Tropical Storm Isaac may damage the orange crop. What is worrisome about this storm, soon to be a hurricane, is that there is another weather disturbance right behind it.

And now we're back to crude oil. Is it not amazing that with all the talk about the commodity markets and the fundamentals behind the rallies, I did not even once bring up Europe? Well I would not be giving you a complete picture of the market if I did not. The sharp rise in the Euro hitting the highest levels since the European doom and gloom of last July, is adding a bullish dynamic behind the other bullish fundamentals that are creeping up all over the place. For the energy complex, the fundamentals are getting stronger, not only because of a potential European bailout, but also because of the tropical storm threats and geopolitical threats. There is some buzz that Iran is talking again to try and avoid a conflict but it does not appear the traders are giving these talks much hope especially after Iran was showing off new missiles. Still it seems that the International Atomic Energy Agency (IAEA) will meet with Iran on Friday in Vienna to discuss remaining "outstanding issues". It seems that Iran has “issues” especially when it comes to the truth surrounding its nuclear program.

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