Soybeans, Corn Close Down for the Day!

What an unbelievable day of trading. After both soybeans and corn touched lock limit up, both grains sold off and closed down for the day! (Note in the charts below that the dotted red line represents yesterday's settlement prices.) Was it a reaction to Fed Governor Plosser's comment that inflation could restrain the Fed from further rate cutting action? I don't know, but by talking to the market in this way, Plosser may have effectively, but artificially, created a top in grains prices -- temporarily. However, if the Fed doesn't back up the talk with walk, the Fed will have undermined its credibility in fighting inflation, and prices will escalate and re-inflate again. And that would undermine also the Fed's credibility as an inflation fighter.

I have noticed that the Fed often tries to manipulate markets by talking in such tones. The effect is only temporary unless Fed policy backs up Fed talk. This merely creates more turmoil in the financial markets. It does not calm them! And that's fine with me, because the volatility simply creates more opportunity for me to trade and make more profits! I love days like today! Let's do it again tomorrow!

Corn

Soybeans