Markets swinging to the Bernanke two-step

Grains and Oilseeds: September corn closed at $5.45 ½, down 15 1/4c, its biggest monthly drop since March on adequate global supplies and farmers are reported a record crop in 2013. Stockpiles in the U.S. should more than double by the beginning of the 2014 harvest according to the USDA. We prefer the sidelines. September wheat closed at $6.81 per bushel, down 1 14c also tied to the USDA report. November soybeans closed at $12.57 ¼ per bushel, down 33 3/4c also tied to the USDA report indicating a strong recovery in production and lower prices. We prefer the sidelines after having been bullish for beans.Previous concerns over possible weather damage did not materialize. The monthly USDA report on Thursday forecast large fall crops for beans and corn. Stay out for now.

Meats: August cattle closed at $1.2170 per pound, down 0.22c while August hogs lost 0.57c to 94.70 cents per pound. The decline in U.S. exports the main factor in the weakness. Recent price gains in cattle after the June lows could continue but we prefer the sidelines. Hogs remain centered in the recent range from May to June and could go either way. Stay out for now.

Coffee, Cocoa and Sugar: September coffee closed at $1.194 per pound, down 4c on indications that the Brazilian harvest will avoid any frost damage and will produce the third largest harvest ever. We continue to prefer the sidelines. September cocoa closed at $2,232 per tonne, down 0.3% but only after trading at $2.260, the highest level for the front month since mid June. Traders are awaiting the U.S. and European cocoa grinds which would give an indication of demand. We prefer the sidelines. October sugar closed at 16.06c per pound down 0.2% tied to ongoing weakness in the Brazilian real. The weak currency prompts growers to sell in order to maintain the level of reals for their product. Stay out for now.

Cotton: December cotton closed at 85.08c per pound, up 34 points tied to lower USDA reported cotton stocks. Increased estimates for ending stocks could continue to pressure prices going forward. We prefer the sidelines.

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About the Author
John Caiazzo

John has over 40 years experience at major U.S. Brokerage firms as Manager and Director of various International Divisions and is the founder of his own trading and brokerage firms. Over the years John has gained a wealth of knowledge and experience in all aspects of investments and trading. He was also a floor trader at the Commodity Exchange in New York. He formed Acuvest in 1999 and can be reached at futures@acuvest.com.

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