Bower Reacts to Thursday and Recent Market Movement
The grain futures market showed some unusual strength in the face of massive outside pressure yesterday. Corn, soybean and wheat futures prices at the Chicago Board of Trade all went higher even though crude oil, the stock market and metals markets all dropped significantly, and the U.S. dollar was much higher.
Jim Bower of Bower Trading in Lafayette said it made for a very unique day. He told HAT, “Over all these years of trading I’ve been taught and educated by the market itself that when you see a market that is very divergent away from the other core markets, it tells me the market has come down to a level where at least it wants to hesitate. It wants to make sure it’s doing the right thing trying to press the market lower. This market Thursday did flash divergence and that’s very unusual in the way these markets have been trading since the first of the year.”
Weakness in the market since the USDA crop production report last month is attributable to a number of factors according to Bower. One factor is the dollar continuing to strengthen, and another is the South American crop. “So far anyway it has proven to be quite a good yielding year for both the Brazilian and Argentine producer,” Bower said.
As 2010 unfolds Bower expects to see plenty of volatility in the market. And what producer strategy is working the very best right now? Bower offers his thoughts.
Listen here:
Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. You also need to have JavaScript enabled in your browser.