Current Thoughts

After the planting report and some time to cool my brain on vacation, I have come back with a few general thoughts about the directions of some of the commodities coming up here in the days, weeks, and months to follow. Here's where I'm at right now, please feel free to add or comment on anything you see and help steer me out of a bad decision if you can help:

CORN: Well I guess it all depends on how you interpret the concept of planting reductions in 2008. It would appear as if most of the midwest has slightly favored soybeans over corn this year. Being a midwesterner I'm not truly amazed by this for one principal reason: rotation. The past few years have been boons for ethanol plants buying up corn crops for record high prices and several farmers have even sacrificed a normal crop rotation for the possibility of windfall profits from growing corn multiple years in a row. Now, even with high prices being possible, the threat of depleting the soil for future generations of crops is simply too costly a thought and it's time to get something else in the ground. I would look for corn prices to end up higher at the end of the year even with a hearty harvest.

COTTON: Cotton prices soared, soared, the past few weeks and then plummeted back to earth just as fast the past few days. My take on this is as follows: supply will be short and the price is due for a climb out of it's current levels. However, it soard too high too fast just before a whole new wave of credit and margin concerns hit the broader markets. Then, hedge funds and institutional owernership had to pull out of the most profitable positions to pay down some margin calls. Cotton got killed because it was where most of the money was. Volume is back down as is the price and I think this is a great place to be positioned in the coming weeks to months.

RICE: I am a very big fan of rice and it has made me some great money, but the same principal concerns me here that we have seen elsewhere. Lots of other people have made money in rice too recently and I'm afraid that if the time comes, this may be the next target of profit taking and we could see prices plunge downward. Not sure it will happen, but then again, most people didn't think it would happen to any of the other softs either.

This is just a few random snapshots from my brain at this moment and where I think we're looking coming up soon. I am staying away from soybeans and coffee at the moment because even in a volatile market the swings here can give you a nosebleed. I'm also still interested in lumber once the fundamentals return. Housing is pretty much starting to carve out a bottom in the overall marketplace and therefore demand will go no lower so we may very well be observing a low in the price of lumber. Keep an eye on it, I know I will be.