Last week we saw the US economy and the world market continue to show signs of rapid growth, yet the commodity markets stayed quiet and calm. U.S. jobs and salary data out last week showed the economy is heating up. Energy and equity markets were volatile, and the dollar began to recover from recent lows. Jim Bower, with Bower Trading, says world economic growth is red hot which will, in time, straighten corn, soybean, and wheat prices, “For the first time in history, we have the top 50 world economies all with a growing GDP. That is why I think commodities at this price point are well balanced and will be purchased by these economies in larger amounts that most people think.”
Meanwhile, weather continues to be a factor. Winter kill and very dry conditions in the western wheat areas are keeping the market nervous, “If they don’t get some moisture soon, this situation with the hard red winter wheat crop could get serious, and we could see a very dynamic market by spring.”
Finally, the situation in South America is stabilizing with Brazil expected to have a bumper soybean crop, “Some people are talking a Brazilian soybean crop as large as 115 million metric tons, that would be a new record.” But Argentina is another matter. Dry conditions there may cut production, and that could be a short term market factor to watch.
For more market strategy information, contact Bower Trading at 800-533-8045 or bowertrading.com.
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