High Water Mark?

*For what it is worth… It is interesting to remember the ignition role that energy prices had on the entire commodity price trend pattern and especially the agricultural markets. Inflation became the buzz word in the investment community and this helped to create/sponsor longer-term trade commitments to strategies that would benefit from inflation, of which agricultural markets have also received plenty of investment energy for its trends, along with biofuels, which in essence was also actually an offshoot of the entire energy phenomenon. Yet, do you realize that if spot crude oil futures were to close this week at current levels, it would be the lowest Friday settlement for crude since mid-October?

The US economy has some serious problems and this is becoming a more accepted assessment. If economic conditions/indicators continue to point to recession and if the backbone of the inflation argument, energy, begins to lose its luster, how long will the investor be seeking inflation-styled campaigns?

With the US $ having been in the process of stabilizing since early November, enduring sharp interest rate cuts and still stabilizing and in fact appearing to be climbing up and out of a chart bottom formation, is it possible that there is already a quiet move underway in the investment community to prepare for recessionary times of reduced consumptions by returning to “safe-haven” mentality and away from “inflation” mentality?

It would likely be a mistake to look at yesterday’s price action in corn and soybeans and to expect such dramatic reversal action to immediately transform into a complete price collapse. However, it seems very reasonable and prudent to consider yesterday’s prices and activity a high-water mark. If true, it may be time to adjust one’s thinking toward further trending possibilities, trading range possibilities, and/or the ability of the market to unfold notable corrections. It would seem to be a time where producers should go through a serious evaluation of their inventory and expected production and make sure they have valued the merit of today’s prices and its significance on any producer’s operation.