Extreme hot and dry weather

Extreme hot and dry weather in the U.S. Midwest has sent crop prices surging since mid-June.

Corn prices increased by 47%

Wheat price +35%
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And soybeans price +25%

The unprecedented heat and the extreme dry weather over extended period this summer are causing havoc to the U.S. farms. U.S. Department of Agriculture has revised downwards the crop production figures for 2012. International food prices will be greatly affected so will the Crude Palm Oil price. However, how much the CPO price will move up from here will have to depend on the actual global CPO supply and demand as well as the movement of the speculative funds in the commodity market.

I expect the CPO price to continue with its current monthly downward trend due to the gloomy global economy. Once the commodity speculators turn bearish, the price will come down really fast. The adverse weather condition in the U.S. may only have a short term impact on the CPO price.

My reading on Dow remains bearish

Option 1 : Long-term bearish

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Option 2 : Short-term bearish follows by a last surge.

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