Prepared by Commodity Insight

The grain complex is trying desperately to divorce itself from the surrounding markets by rising in value, rather than falling. If the grain complex continues to display such character, it could prove to be exceptionally bullish for prices.

If the time arrives when the only genuine bull market on the board is grains, there is no telling just where prices can go on the upside. Six months ago for instance, palladium divorces itself from the other metals and quicker that a blink, the market was at a 17-year high. This happened despite gold prices at a 15-year low.

With stocks of corn at their lowest levels in history from a global standpoint, while demand for soy products is at an all-time high, the grain complex in general could get hotter than a pistol, if additional problems rise due to the current El Nino. Mother Nature has it in her power to send grain prices considerably higher despite the fact that most other markets on the board are struggling.

I see little to do in the other markets at this time. My bias is to be a buyer of sugar, cocoa and coffee, primarily because of El Nino. During El Nino years, it is not unusual for crops of all kinds to be plagued by growing problems. That simply means that hard breaks for anything that grows should be viewed as a buying opportunity.

This past week, the soybean complex rose sharply as fears that the El Nino was finally rearing its ugly head. Do not be surprised to see the tropical markets begin to show strength due to those very same fears. When an El Nino decides to “do its thing” all growing things are subject to stress.

November 9, 1997Jerry R. Welch, Publisher

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