Beware the Dollar

Farm and Ranch December 15, 2009 Many a grain market analyst will tell you that wheat futures haven’t been really trading much on fundamentals as of late, but on events on the world stage and in particular the value of the dollar. That’s what Helen Pound, an analyst with Chicago Based Penson GHCO believes. And she offers some words of caution regarding the U.S. dollar.

Pound: “For quite a while here every time we‘d come up with something that shook the world financial markets the dollar would rally a little bit and immediately get sold off. And here for the last month that really hasn‘t happened and over the last week in fact the market has bounced and held its bounces pretty well. So we are at the point where it wouldn‘t take much of a shock to edge the dollar higher and with so many companies and nations short dollars we could create quite a pandemonium. If that happened and I would say it is only about 50-50 that that is going to happen. If that happened you could see a real break in grain prices. So any particular day the value of the dollar, crude oil, stock market, could send shivers throughout the grain markets.”

Pound says watch out during the holidays.

Pound: “You have less people paying attention. You have less people trading the market. And so that really is a circumstance where you can have some big moves and some volatility and some big moves one direction and then the other direction.”

I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on the Northwest Ag Information Network.