The following editorial was published in Price Perceptions issue #1429A on March 12, 2011
Shift to Caution...
Many commodity markets fell sharply this week as investor attitudes began to shift from bullish to cautious. The following were primary reasons for the shift to caution...
With fiscal restraint now engulfing Europe and the US, as well as monetary tightening in many Asian nations to combat inflation, it is possible markets are beginning to consider the possibility global recovery may be near its peak.
However, because recovery may be near a peak does not necessarily mean a return to recession... Instead, a slower rate of growth is more likely. We have said many times over the years that demand is fickle and illusive... It comes in spurts and can disappear at a moments notice.
Demand for grain futures suddenly disappeared this week as world events reduced risk propensity. However, unless these outside events cripple the global economy, demand can be expected to return in weeks to come. We believe a period of price consolidation will be necessary before markets regain a more positive psychology.
TRADING IN COMMODITY FUTURES OR OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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