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Prepared by Jerry Welch

News & Views

(September 10 , 2010) "STOCKS SNAPPED BACK from a summer of negativity with a 5.3% rally over the first three days of September. Alas, this doesn't herald the return of optimism. It merely shows where traders are most comfortable heading into a political season where anything can happen--they prefer to crouch in neutral, neither bullish nor bearish, ready to zig or zag." Barrons 9-07-10

"Ah, youth. The time for body piercings, staying out late and...a portfolio of ultrasecure T-bills? Traditionally, we associate the early years with risky behavior--but one consequence of the recession appears to be a shift in the way 18- to 34-year-olds handle money. Affluent millennials and 30-somethings say their tolerance for risky investments is much lower than it was a year ago, rivaled only by people over the age of 65, according to a new study by Merrill Lynch Global Wealth Management. "It truly is a generational change," says Dave Geske, an executive at Ameriprise Financial." Newsweek, 9-09-10

"Corn futures in Chicago generated record trading Sept. 3 as signs that U.S. farmers won't harvest as large a crop as once expected fueled buying from speculators. A total of 556,034 corn futures contracts changed hands at the Chicago Board of Trade on Sept. 3, the exchange said today. That was the corn market's busiest day since the CBOT began trading the grain in 1877, topping the previous one-day record of 516,076 contracts on June 12, 2008." Cattle 9-07-10.

"Cashin said although the buy-and-hold strategy is dead, markets go through 17.6-year alternating cycles where investors can either "throw darts at the wall and everything goes up" during the "fat" years--or wait until the market bottoms out during a "lean" cycle, like the current one. "We've got about 7 more years to go [on the lean cycle]," Cashin said. Unlike during the fat cycle, investors and traders have to be hyper-vigilant and "be there every day" to react nimbly to(stock) market moves." 9-09-10

"The economy has shown "widespread signs" of slowing over recent weeks, the Federal Reserve said on Wednesday in a report suggesting that while the recovery has been faltering, the economy may skirt a second recession." Reuters 9-09-10

"Consumer borrowing fell again in July as households cut back on their credit card use for a 23rd consecutive month, adding more drag on an economy struggling to mount a sustained rebound. That marked the 17th drop in credit in the past 18 months." Associated Press 9-08-10

" says, "U.S. corn ending stocks are expected to decline to 1.1 billion bushels, down 196 million bushels. At this level, 2010/2011 carryout would be the lowest since 2003/2004. Stocks as a percentage of total use would be the lowest since 1995/96." And now you know why I forecast that 2001 corn futures could rise to $5.50 a bushel!" Commodity 9-10-10

"The USDA, in their supply/demand table outlines the bullish situation facing the beef. They're projecting beef imports to continue to decline into next year and they're also projecting beef exports to continue to expand. At the same time total beef production will continue to decline. A big surprise contained in the table was a downward revision in total poultry production for this year and a significant reduction in poultry production again next year. Total protein supplies are going to get real tight moving forward especially when viewed from a per-capita basis.

Moving forward, the beef complex is going to get "real tight."' Archer Financial Services, Dennis Smith 9-10-10

"The USDA in a widely anticipated report this morning pegged this years corn yields at 162.5 bushels per acre, a figure viewed as price neutral for prices. But one of my favorite research groups, AgResource, after viewing the report said, '""Our expectation is that the final U.S. corn

yield will fall to 156-159 BPA which causes a rather dramatic need for demand rationing." If AgResource is correct about final yields for this years corn crop I will be forced to raise my upside target for 2011 corn to $6.50 a bushel. Commodityinsite 9-10-10

"Cattle and corn prices will trend in the same general direction for the foreseeable future. Thus, my bias remains that of a wild eyed bull for cattle prices the rest of 2010 and well into new year." Commodityinsight. 9-10-10

September 10, 2010
Jerry F. Welch, Publisher
Commodity Insight
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