Unsettled Markets

Greetings Tuesday morning from a both windy and cold Mifflintown. The markets continue to chop around. I was pretty impressed yesterday with corn's ability to hold off weakness from the outside markets. I believe that the battle lines are fairly well defined in the grain market. We have seaonal forces being exerted on the market versus the poor feeding and ethanol margins. Seasonal weather and production uncertainty against economic weakness.

The dollar has a bid that has pushed crude oil back from its highs last week. As you may all wonder from time to time why I talk about the crude market, or the S & P 500 . The above chart is a daily of crude and corn and the S & P 500. Take note to how well all of the lines fit into each other, the market gets sick and returns to health in unison. If we believe that the worst is behind us economically, then more demand lies ahead and the market finds a "bid". Conversely, should we have another round of bad economic news that brings fear back to the market, people will either stop buying and or start betting against the market. I realize that weather and production concerns will trump the above correlation, but I believe that we must keep an eye on the outside markets when making plans or decisions. No matter how hard some fight this linkage, we are at the end of the day all on the same ride.

What do I expect to see today?

The overnight markets were a little weaker trading off a stronger dollar and a soft tone from the financial market. This may lead us a back and fill consolidation pattern as we approach the report on Thursday.

Short week with Good Friday has volume very light. This can make markets more spastic and unpredictable, especially with a report Thursday.

I think there are plently of dip buyers out here, this should support the market on any pull back. From my desk, the risk is to the upside in the short term. Feeders should be buying in coverage and farmers be slow patient scale up sellers. Prices will be supported until '09 US crops are well underway.

For those trading, buy any 20 cent pull back in the July- Nov spread, long N- short X for a lottery ticket. Stop out on a close below 50 cents.

Good luck,

Jon Hart