The Pro Farmer crop tour over the weekend suggested that crop yield expectations of the USDA are about 1% too high. The lower yield estimates were expected to buoy higher prices. However, prices have fallen significantly all morning so far. What gives? Good question! This is one more example why I follow the charts, regardless of what the fundamentals suggest. Falling yield should almost certainly provide ample impetus for higher prices, but we are seeing lower prices instead. Perhaps today's US Dollar strength is a large factor. A stronger Dollar increases the cost to foreign countries to purchase much-needed U.S. grain products. This might cause demand decay, but this is food they are buying, after all.Monday, August 25, 2008
Grains Topple From Recent Highs
The Pro Farmer crop tour over the weekend suggested that crop yield expectations of the USDA are about 1% too high. The lower yield estimates were expected to buoy higher prices. However, prices have fallen significantly all morning so far. What gives? Good question! This is one more example why I follow the charts, regardless of what the fundamentals suggest. Falling yield should almost certainly provide ample impetus for higher prices, but we are seeing lower prices instead. Perhaps today's US Dollar strength is a large factor. A stronger Dollar increases the cost to foreign countries to purchase much-needed U.S. grain products. This might cause demand decay, but this is food they are buying, after all.
