Harrington's Sort & Cull
John Harrington DTN Livestock Analyst

Friday 08/10/12

When Your Sweet Tooth Aches

When it came to policing the candy traffic in my childhood home, my blessed mother could be a real Nazi.

That may sound a bit harsh, but few in our family fond of life and limb dared to sneak a bag of jawbreakers and gummy bears past her deceptively angelic demeanor.

"You'll make yourself sick," was her constant warning.

I often resented her low opinion of my self-control, even when stomach aches and disgusting pools of vomit surfaced as irrefutable evidence.

Yet over the years her wisdom has served me well, especially as I increasingly realized that candy was not the only dangerous thing that knew its way around shut-off values.

Bull markets can become as addictive as candy stores with each successive rally pushing blood sugar levels higher and higher. And just as an excess of sweets will sooner or later trigger a diabetic coma, skyrocketing market prices eventually work to cool the hottest demand.

Given the way today's corn market turned nauseous (i.e., nearby Sep and Dec futures closed nearly 15 cents lower) in the face of still more bullish news (i.e., the August 1 crop production report estimated the new harvest to be no larger than 10.7 billion bushels, almost 200 million smaller than the bullish-minded trade was expecting), I wonder if the sell-feeding grain trade has not finally made itself sick.

The unexpected sell-off in corn futures had nothing to do with the credibility of the government's dour assessment of yield potential. Indeed, I suspect many late-week sellers would concur with the suggestion that the actual harvest could be even smaller.

No, the market's post report reaction was less a function of supply bulls running scared than demand bears digging in. While one day's action in a huge market like this means little, the timing could eventually underscore its significance.

From coast to coast, livestock producers seem to be turning in their candy store credit cards. As tempting as the sugar-rush remains, they just can't afford any more cavities.



Posted at 3:04PM CDT 08/10/12 by John Harrington
Comments (1)
Get real people, Why didnt u buy some of my 5.00 corn? We all have the same "RESPONSEABILITY" to make sure we survive. No one talks about record BEEF prices. Oh sorry, u deserve them
Posted by Unknown at 2:14PM CDT 08/15/12
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