The Dow Jones average closed on Friday at 25,295, a 200 point jump. Jim Bower, with Bower Trading, says a high flying stock market will have an impact on the commodity market, “I think the stock market could move higher and pull commodity prices up with it. It is like the stock market is the engine pulling the farm and commodity markets along behind.” He noted that the economic growth worldwide that he has been talking about for months is part of the reason the stock market is moving higher.
In the short term, however, Bower says big funds and investors may ignore the commodity market, which is at historically low levels, in favor of the red hot equities, “We are getting some serious premiums on equity prices compared to commodity prices right now.” While corn and soybean prices have been steady since the beginning of the year, the Dow has moved from 24,000 to almost 26,000.
Meanwhile, Bower says soybean and corn markets are focused on South American weather where crops are nearing harvest and weather continues to look good, “They are harvesting some early soybeans in Brazil, but the real critical time frame for yield will be toward the end of January.” He added that, so far, weather has not been an issue, “Every time they needed some rain, they got it.”
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