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Thoughts for Week 24-04

Every new day presents a new set of challenges and problems, especially with changing technology. I need to remind myself that these challenges are learning opportunities. If I could just increase the size of my memory banks to retain all the new things I am learning, maybe I could work more efficiently. Computers are great at keeping me young and challenged!

Paranoia and uncertainty seems to know no bounds in the world we live in, and that is immediately reflected in the marketplace. After about 5 years of bottoming formations in the grains, most of us aren't quite sure how to handle the present volatility.

One of the benefits of instant online communications all over the world is that you don't need to have a news feed, as a technical trader, to know what's going on. All you need is the real-time chart to tell you the interpretation of the current news. The problem is, of course, when is the news really news, and when is it disinformation?

Good traders do not trade to be right, they trade to make money, and when you loose that perspective, as a trader, you are done, and it takes a long time to get back into the swing of the market place. That is why it is so important to walk away from the markets every few months, for a week, and clear your mind.

As a trader, you need to buy a market when everyone else wants to sell it, and vice-versa. This usually takes more emotional capital than real capital, but obviously, if you are wrong, it can absorb a lot of real capital also. As a producer, always sell it when everyone else wants to buy it.

Are you a producer or are you a trader? Very few of us can be both. You need to know that clearly in your mind as you use the marketplace to mitigate or enhance your risk.

One of my clients who is experiencing some health issues told me this past week, "The brevity of life is not something to take it for granted." These words of wisdom are worthy of being shared!

The June High in CZ has been above the May High 14 times (45%) since 1973, 11 times by more than 5 cents, and 7 times by more than 10 cents.

The June High in SX has been above the May High 17 times (55%) since 1973, 13 times by more than 10 cents and 10 times by more than 20 cents.

There is an old saying in the grain trade, "If we can't buy it higher, we'll buy it lower." SN, the July Soybean Futures Contract, seems to be in tune with that axiom!

In 1973, USDA Central Illinois Cash Corn went from 260 on June 5, to 220 on July 6, to 290 on July 26, to 266 on July 30, and finally to 340 on August 14. So far in 2004, USDA Central Illinois Cash Corn has gone from 314 on April 8, to 279 on May 21, to 312 on June 1.

In 1973, USDA Central Illinois Cash Soybeans went from 1154 on June 1, to 613 on July 7, to 1140 on July 25, to 900 on July 30, and finally to 1125 on August 14. So far in 2004, USDA Central Illinois Cash Soybeans have gone from 1031 on April 2, to 927 on April 21, to 1034 on May 7, to 814 on June 3. As you can see, the swings were bigger in 1973 than they have been so far this year.

Out of the 12 months of a calendar year, the greenest most-lush month of the year is the month of June. That is one of the reasons it is so difficult to build or maintain price rallies in June. Until proven wrong, the trade usually assumes normal production patterns of growth and weather.

I find it unpalatable that Americans are looking for relief from expensive Crude Oil prices from the same country that was native to most of the September 11 terrorists!

Monty Guild of Guild Investment Management Inc, stated on June 1st, "In our opinion, there are three problematic issues in Saudi Arabia. First, it is well known that the majority of Saudis are unhappy with the current economic situation in Saudi Arabia. Secondly, it is also well known that within Saudi Arabia there is strong support for Wahabi fundamentalist Islam. Thirdly, within the Saudi Royal Family, there is a battle for control of the Kingdom." Therefore, given that the above statements are true, I won’t be surprised to see continued Al Qaeda attacks in and around the Saudi oil fields in the weeks and months ahead. They have already led attacks against Saudi interests on Saudi soil, 4 times in the last 5 weeks.

Will America end up being like Europe? We peaked out in the 1990's, from both a financial strength and esteem point of view in the World's eyes. If the US economy goes south, will Asia own us by default? The more volatile the times are, the more we need an anchor!

According to Peter Lavelle, an independent Moscow-based analyst and the author of an electronics newsletter on Russia, Untimely Thoughts, "Putin is on top of the world. He is in the process of creating a Kremlin Oil Cartel at home and he just might land himself the prize of sitting at the very center of international oil politics." Mr. Lavelle also reports that Russia is now the world's number one producer of crude oil at 9 million barrels a day. Production is up 48% since 1999.

Isn't it paradoxical that Russia, the country the U.S. defeated in the Cold War, is now winning the Energy War?

Once the cat is out of the bag, it hard to get it back in. Now that China and India's entrepreneurs have tasted Capitalism, it will be difficult to stop it when those two nations control almost 40% of the world's population.

Another one of my clients told me this past week in regards to China, "We aren't the drivers anymore because China is the driver! China is trying to control its growth like a baby needs to learn how to crawl before it walks, and to walk before it runs, so it won't get ahead of itself and fall down if it stumbles."

China's Ministry of Commerce said on Wednesday that it expects the surging economy to grow at an annual rate of 9.8% in the first half of this year. That is far above the 7% target set by officials who are trying to avert possible inflation and other problems. Pepper or Flyspecks?

The month of June is a wonderful time of year. When it's not raining, it's warm enough to enjoy the outdoors all day long and most of the night here in the Midwest as well. It's delightfully pleasant to enjoy our children or grandchildren's, or neighbor's children's ball games. It's inspiring to observe the lush growth of the Corn and Soybean fields, along with our gardens and yards. It's refreshing to experience the songbirds singing in the morning and eating at a birdfeeder. It's overwhelming to witness the vastness of the star lit heavens while in a hammock or on a nighttime stroll, especially now at Full Moon time. Elohim, the Triune God, The Creator, can and will be our anchor. The month of June is a perfect time to reflect on His faithfulness to all of us, and to the earth.

Enjoy! Bill