Technicals versus Fundamentals

The Ag commodity markets have become to me much more perplexing in the last couple of months. I consider myself more of a technical trader than a fundamentalist, but I will admit that at the end of the day fundamentals will eventually rule. Technicals will determine the route in which we get there though. Fundamentals affecting the Ag Commodities have changed dramatically in recent years. Large fund driven companies can move markets all by themselves. I believe so much so that these funds are a Fundamental all to themselves!  That said, I believe if you’re participating in markets that I trade in specifically like live cattle feeder, cattle corn and wheat, your fundamental outlook has to be worldwide in scope.

A specific example of this is the corn market here in the last week of October. What is driving it?  Well none other than the European debt crisis. I see very little correlation between the two, but it is what it is so you have to respect it. The world has shrunk dramatically in the last few years, so that now what is happening around the world while you are asleep is having a financial impact on your business here at home! The opportunities, but also the risks, have never been greater.

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