In journalism circles we call this “Silly Season.” There’s nothing going on with the government, with business, with industry, with anything in August. Everyone’s off at the beach, with the kids, and no one with any power to do anything cares about anything other than the weather forecast. So when something newsy does happen – any small, petty, silly thing – the media monster, which needs to consume, chew up and spit out the same amount of material every day regardless of the season, leaps on it as if it’s a Big News Story.
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Producers face the reality of shifting grain price expectations
Significant price shifts have occurred in various grains as compared to what was expected at the beginning of the calendar year. Crop insurance prices can be used as a base for the changes.
That sometimes makes really big stories out of really little things. Remember that weeks-long mania over Chandra Levy, the young aide to a U.S. congressman named Condit? She went missing and with nothing else to cover the U.S. political media went wild, suggesting Condit – who was involved in hanky panky with Levy – might have killed her. (There was zero evidence to support this.) The story went on and on and on, for no reason other than there was nothing else to report. This was 2001, and on September 11 something big really happened, and that was the last front page mention ever made of Condit-Levy. (She was, in fact, killed by a repeat killer in the exact spot she went missing – nowhere at all near Condit.)
In the markets a similar phenomenon exists in late summer. It’s something I notice every year. Most traders are off on holiday and those who are working seem to be in a dreamy, who-caresy state, both having trouble caring too much about commodity markets and annoyed that they’re chained to their desks. Last week I had a tough time finding any traders or analysts who cared much about the StatsCan crop production survey. This is the first production report of the 09-10 year, and in any other time of the year traders and analysts would leap on it immediately and tear it to shreds looking for understanding and possible plays. But when I called a bunch of traders a couple of hours after the report came out, instead of being fully-informed about every facet of the report, most I talked to had “heard about it,” but most hadn’t bothered to read beyond the summary at the report’s top. I found a couple of guys who were pretty interested in it and interviewed them about it, but even they seemed much less excited by something like this than they would at other times of year.
The mood’s evidently the same in Minneapolis. A recent market summary report by a hedging firm posted on the MGEX’s website had some bizarro paragraphs mixed in with the grain market analysis, in which the writer discussed lightheartedly the problem of poachers catching lemurs in Madagascar and selling them as meat, and some inside-the-beltway discussion about stuff going on in the burg’s baseball field. Not the kind of discussion you’d expect to see in late-September as the crop rolls in and everyone’s watching, but the analyst was probably having trouble caring about the lacklustre late summer market, was longing to be out of the office at a baseball game or visiting an exotic locale like Madagascar, and figuring that no one was likely reading his commentary anyway. I’ve got to admit, it’s the best grain market report I’ve read in months, so I hope he manages to keep this mood going.
Volume in most ag futures contracts is steady or even a little bit up in the past month, but if you check out the volume in the equity markets you see a more typical late-summer phenomenon: a slow slide downwards to Labour Day. Traders are away and those still working can’t find much enthusiasm in themselves or from guys on the other side. I mentioned in my last post that this is probably why September and October have often contained such market shocks: traders are back at their desks and finally taking seriously all the market reports they ignored over the summer and having a variety of “Holy sheet” moments as they wake up to the neglected realities.
Everyone’s still talking about Vs, Us, Ws when it comes to the econ sit, with a general sense among most that a bit of a set-back is due after the 50 percent gain in the equity markets since March 9. So there may be a small hiccup coming in the next few weeks. Or it could be severe, if the apocalyptists are right. I received a special interim report from one of the market analysis firms I subscribe to this morning, and it’s expecting the market – maybe even today – to have peaked in a corrective advance and be set for a plummeting collapse to far below the March lows.
So I’m going to enjoy the dreamy, wacky, off-beat feeling of these last couple of days of summer before people start taking the markets seriously again. Weird is sometimes more enjoyable than serious.
