Issue Date: October 30, 2009
Harvest Delays Add to Farmers' Frustrations
Adverse harvest conditions have been the catalyst for higher grain prices this fall. There are other factors at work, but the headline story has been the weather. Farmers have had to deal with soggy soils throughout the Midwest. An example of how wet this fall has been is in Illinois, according to Mike Tannura, a T-storm Weather Meteorologist, with rains this week, the state will have its second wettest October on record dating back to 1895. The upcoming rains expected this week will allow Illinois to pass the 1919 October record of 6.87 inches. He also points out however, that in the previous two record wet years that the November rainfall was near normal. This would suggest that the pattern can change quickly. This would be just what the farmer ordered as harvest progress of just 20% completed is the slowest start since records have been kept by the U.S. Department of Agriculture. This is well behind the 5-year average pace for this time of 63% harvested. The largest 1 week jump in harvest progress that we have seen was 23% in 1993.
By Scott J. Harms
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Coming off the Benchmark
The combination of two rare occurrences helped send the energy complex falling. The dollar actually got stronger and gasoline supplies increased! Yes, that can actually happen! I know, I was amazed myself. Well it does seem amazing as in recent weeks the dollar has been getting hammered and refiners looked like they had refined their last gallon of gas. I am exaggerating of course but that has been the market mood. But with an unexpected 3.6% drop in new home sales and a 1.7 million barrel increase in gasoline supply, it made some people question some of the things they had believed in. But now the question is whether the NYMEX West Texas Intermediate is a contract the world can believe in.
By Phil Flynn
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The Economy, Interest Rates and Stock Index Futures
Even though it does appear that the worst of the global economic downturn is behind us, there is a continuing feeling that the anticipated recovery will take longer than previously thought. There are a variety of fundamental factors that the bears and the “slow growth proponents” on the economy are citing. While much of the economic data in August and September was, on balance, stronger than the analyst’s estimates, some of the very recent reports have disappointed. For example, the October consumer confidence index was a weak 47.7, when 53.5 was anticipated and the September new home sales report showed a 3.6% decline to 402,000, which compares to an estimate of 440,000. This housing report was a surprise and the first drop since March. The bears on the market have ramped up their rhetoric now that they finally got their long awaited correction. As a result, we are seeing more intense bearish comments from the analysts that are negative on the economy and on the equity markets. One analyst said stocks will “drop painfully from current levels.” One well known fund manager went so far as to say that U.S. stock markets had topped out, while other analysts were not quite as pessimistic when they said company valuations were far ahead of where the fundamentals are. One common theme among the bears is their predictions of the possibility of a double dip recession. My work suggests that there will not be a double dip recession. However, I must admit that I have been and remain in the “slow growth” camp for the near term, but I believe that it is very likely that the rate of growth in the recovery will accelerate next year and beyond.
By Alan Bush
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