Issue Date: December 18, 2009
Wheat Inundated with Selling
The pressure on the wheat market continues. The overbearing burden on the wheat market is the massive global supply of wheat. The dollar remains the key factor in terms of day to day price action.
The strengthening of the dollar, which limited fund buying initially, has resulted in fund selling. Each push higher in the dollar triggers additional fund selling. Until today, the March contract in Chicago had been supported by the 100 day moving average of 527. That level was breeched today, which resulted in pretty heavy selling. My initial low level mark of 515 was also breeched today. The new objective is most likely 500. The trade will likely see some follow through selling going into Friday’s trade. If follow through selling does not materialize, the market may see a modest short covering correction. Again, the dollar will be a key factor.
By Brian Henry
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I Really Can't Sell
I really can't sell, baby it' cold outside. I've got to go long, baby its cold outside. I’ve been hoping that the oil would rise but not so fast. The carry trade has been so nice. But the bulls may start to worry if Fed gets in a hurry. The traders will be pacing the floor as they listen to the Iranians roar. So the traders may start to scurry because they don’t want holiday worries. But perhaps just one buy more. I’d better get long because baby it's cold outside. Cold temperatures and Iran worries put the bulls on ice. Reports are circulating that an Iranian military force entered Iraq. Bloomberg News reported rumors quoting Iraqi Border Guard General Zaser Nazmi that said Iranian forces yesterday entered Iraqi territory and occupied oil well number 4 in the East Maysan field in al-Fakah region, 450 kilometers (280 miles) south of Baghdad. The Iranian forces positioned tanks around the well. The order guard’s comments couldn’t be immediately verified independently and were later discounted. Yet the border guard said, “They positioned tanks around it and dug trenches, and they are still there, they raised the flag.”
By Phil Flynn
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Stock Index Futures and the US Dollar
There is a current misconception among some of the stock index futures bears that the only reason that equity index prices have been so strong is because of the persistent weakness in the U.S. Dollar. They maintain that overseas investors have an incentive to buy U.S. dominated assets due to favorable exchange rates that allow them to purchase more U.S. assets with their appreciating home currency. There is some truth to the comparative exchange rate differential advantage that foreign investors currently enjoy when investing in U.S. assets. Since the major lows for North American stock indexes were made in early March of this year, there has been a strong inverse relationship between the price movements in the greenback and stock index futures. The U.S. dollar index and the S&P 500 charts below clearly show this strong inverse relationship, especially since March of this year.
By Alan Bush
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