Traders turned bitter on agricultural commodity ETFs Monday on
better-than-expected crop yields, while the stock market dipped
modestly on poor economic data.
IPath DJ-UBS Grains (
), tracking corn, soybeans and wheat, plunged 4.11%. Soybean
futures hit their daily trading limit, experiencing their biggest
one-day drop in 1-1/2 years on reports of better-than-expected
production in the Midwest.
JJG broke below its 50-day moving average for the first time
in three months. It flew 50% trough to peak during the summer and
has been trading in a sideways range the past two months.
Teucrium Corn (
) gapped down 3.33% to a two-month low, slipping below its 50-day
moving average in high volume. It's trading below that key level
for the first time since mid-June, when its stratospheric rise
began. It shot up 50% in two months as major growing states
suffered the worst drought in at least 25 years.
U.S. corn production fell to its lowest level since 2006, the
U.S. Department of Agriculture reported the past Wednesday. The
USDA projects 2012 corn output to undercut last year by about
20%. Soybean production is down 14% over last year.
It appears fears of drought-induced shortages already have
been priced in and the market sees improving conditions.
"Harvest is getting into full swing, demand is awful and some
record yields coming out of central Iowa have shocked everyone,"
said Shawn Hackett, president of Hackett Financial Advisors in
Boynton Beach, Fla. "Yield (projections) may need to be raised if
actual yields coming out of harvest continue to show this kind of
"Speculators are all in and need to get out by the end of the
year to book profits," he added. "They own 35% of U.S. grain
production, so if they decide to sell all at once, which is their
tendency, then watch out below."
U.S. Markets Overview
SPDR S&P 500 (
) shed 0.36%.
PowerShares QQQ (
), tracking the 100 largest nonfinancial stocks on the Nasdaq,
SPDR Dow Jones Industrial Average (
) eased 0.30%.
"While only half way over, September 2012 is almost certain to
end up positive," Randy Frederick, managing director of active
trading and derivatives at Charles Schwab, wrote. "It would mark
the seventh positive September in the last nine years; hardly
what you would expect from a month that has the reputation of
being the most bearish month of the year."
The S&P has rallied 15% from its June low to a five-year
"As the market rallies, some retail investors will try and
jump on," Ronald Lang, principal of Atlas Wealth Management,
wrote in a client note. "Some will be there for part of the
climb, but when the core retail investors usually come back in
(typically at the top of the market), its time to get out (or at
least lighten the more profitable positions at that time)."
The Federal Reserve Bank of New York reported that
manufacturing activity worsened this month, according to the
Empire State Manufacturing Survey released Monday. It fell to a
negative 10.41 this month -- a 3-1/2-year low -- from a negative
5.85 in August. That was much worse than an expected reading of
zero and the fifth straight month the index has declined.
Forward-looking new orders fell to negative 14.03 -- a
two-year low -- from a negative 5.50.
Employment readings fell also. The index for the number of
employees dropped to 4.26 from 16.47 and the average employee
work-week index declined to negative 1.06 from 3.53.
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