Weekly Commodities Report - Waiting on the Grains and Softs

Grains and Softs Showing Some Signs

With the stock market showing some signs of life this week, many of the agricultural markets followed suit.  Corn put in a particularly strong week, driven by reports of strong export sales of the past couple of weeks, as well as strong equity and oil prices.

Seasonally this is the time of year for corn to rally - as the saying goes, if corn doesn't rally by the Fourth (of July), it's not gonna happen.

We reported earlier this year that farmer's may have a difficult time making money with corn at $4 - and speculated that some may switch their crop to soybeans.  This may be an interesting time to take a flyer on corn and see if it can make a run back up towards $5.

We are in "wait and see" mode across the board with respect to agriculture.  We continue to hold our sugar position, and coffee looks particularly interesting once again, as I continue to see reports of disappointing supply this year.

Update on Japanese Yen Short Position

The Japanese Yen was quite volatile this week - down, then up, then down again - ending the week about where it began.  

Japan posted it's first trade deficit in 13 years, as exports have fallen off a cliff.  But then the man known as "Mr. Yen" made a bullish statement regarding his expectations for the Yen, propelling it above the 104 mark mid-week.  Finally the market refocused on Japan's deteriorating GDP, sending the Yen back down.

Japan seems to be in a real economic pickle.  The country has serious demographic problems, and it's likely that Japan as we know it has entered what will be a long, terminal decline.  Everyone is just getting too old, and there will soon not be enough people left to work.

Since Japan's economy is largely export driven, expect Japan to do whatever it can to weaken the Yen vs. the dollar.

Around the Investing World

• The Swiss - of all people - give up on their own currency in a last ditch effort to stoke exports.  Expect this move to spark further rounds of competitive currency devaluation, which can only be bullish for gold.

• Jim Rogers continues to wait for a chance to short US Treasuries, noting that it's feasible that Bernanke could drive interest rates to zero in the short term.

• "Perma-bear" Jeremy Grantham is starting to deploy some capital into stocks, as he estimates the fair value of the S&P to be about 900.

Current Futures Positions

Date Position Qty Month/Yr Contract Entry Last Profit

03/02/09 Short 1 JUN 09 Japanese Yen 1.0271 1.0222 $612.50
02/27/09 Long 1 MAY 09 Sugar #11 13.79 12.89 ($1,008)

Net Profit/Loss On Open Positions ($395.50)

Current Account Value: $28,992.67

Cashed out: $20,000.00
Total value: $48,992.67
Weekly return: -0.4%
2009 YTD return: -42.9% (yikes)

Prior year's results:
2008: -8%
2007: 175%
2006: 60%
2005: 805%

Initial stake: $2,000.00