http://www.washingtonpost.com/wp-dyn/content/article/2010/05/21/AR2010052101854.html

The whole situation with Greece kind of reminds me of a marriage gone bad. Instead of having a divorce, the parties drag things out and air their dirty laundry. They involve the larger families, (even more distant relatives) and things get ugly, real ugly. Instead of trying to save the marriage, maybe a swift divorce would have been the more appropriate option. Such a move is frequently is better for the kids. Now those kids will have serious need for years of counseling.

“By any legitimate measure, Greece was unworthy of eurozone membership. That it achieved card-carrying status was down to the sleight-of-hand skills of its Brussels fixers and the acquiescence of central bank bean-counters. Now we know the truth, jet-hosing it with yet more debt makes no sense. Another dose of funny money will delay but not extinguish the need for austerity.

This is why the euro, in its current form, is finished. The game is up for a monetary union that was meant to bolt together work-and-save citizens in northern Europe with the party animals of Club Med. No amount of pit props from Berlin can save the euro Mk I from collapsing under the weight of its structural dysfunctionality. You cannot run indefinitely a single currency with one interest rate for 16 economies, when there are such huge fiscal disparities.

What was once deemed unthinkable is now, I believe, inevitable: withdrawal from the eurozone of one or more of its member countries. At the bottom end, Greece and Portugal are favourites to be forced out through weakness. At the top end, proposals are already being floated in the Frankfurt press for a new “hard currency” zone, led by Germany, Austria and the Benelux countries. Either way, rich and poor are heading in opposite directions.” This was taken from “Whatever Germany does, the euro as we know it is dead” here is a link to the full article.

I mention this because Greece’s recent escapades in economic disaster are a sobering example to the United States of the consequences of allowing government spending to far exceed revenue. Like these comments will do any good, but there I have said my peace. Even the  The International Monetary Fund (IMF) recently released a report that the United States’ debt could surpass 100 percent of Gross Domestic Product (GDP) as early as 2015. So, while these comments here are mine, they needed to be said, if only to allow me to spit out the bad taste in my mouth. I’m concerned about the situation and believe it is worse than is being presented in the major media in our country.

Cutting off the head will kill the beast….I use that in an effort to express what has been happening on the trading floor to paper brokers. Paper brokers are those who fill customer orders for a living. I am one such person and while I take pride in my work, I am growing increasingly frustrated with the treatment I receive from the exchange. And things continue to move in the direction toward the elimination of floor brokers.

I recently was fined $500.00. My crime? Not placing a mark on my trading pad under the heading of clearing house, even though the order tickets all included the appropriate account and clearing house information and trades were submitted in timely fashion and in the appropriate manner. I cannot appeal this, as that rule has been abolished.

From conversations with compliance I subsequently learned that the CFTC has been “cracking down” and not enough fines have been levied.  To me however, it’s more like a cop pulling over a speeder going two miles an hour over the posted limit to please some politician and enhance revenues. There are much bigger fish to fry.
A few other paper brokers, (not local traders) were recently fined for not having a full time stamp following an order’s execution. Two time stamps are required, one when order arrives, or is taken, and following any change,s or once filled. The offender seemed to not notice that the time stamps were only partially legible. Perhaps he was in a rush and the machine didn’t work properly, but then it is the exchange who maintains the time stamp machine’s integrity.  That fine also cannot be appealed, as the appeal process has been halted.

Paper brokers have recently incurred increased fees from their Clearing houses, as a surcharge for doing business. A Clearing House guarantees, or stands behind the solvency of the broker. Many firms now charge a per contract fee, with a monthly minimum of $1,000.00.

In the past few years I have found it necessary to let go two clerks due to the lack of revenue and now operate my business solo.  Revenues have been reduced as brokerage fees have dropped in an effort to remain competitive with electronic markets. And the excchange charges fees for booth space rental, and well suffice to say that costs continue to grow and revenues go down.  All this places a strain on small businessmen such as myself. Many have left the business, others retired when the exchange went public.

If you want electronic trading, just kill the paper broker and there you have it. Although I tend to believe its a safeguard to have an experienced professional to oversee your orders .  Just ask any of my customers if I provide them with better fills on occasion, market information that helps them trade,  or saved them from making a mistake.

Anyway, needed to vent. Have a nice weekend, Jurgens

Crude Oil has now gotten to the illustrious $70/barrel level as the debt concerns in Europe worsen.  It seems as the WTI spreads have finally lead the market lower as the Jun/Dec spread continues to liquidate trading down to -1200 at one point.  Technically this market has a nice support level at $70 from 6 months ago but right now with the USD gaining momentum and supplies still increasing, this barrier may be broken very soon.

Following the breath taking bounce in equities, coffee is up, cocoa down, and cotton little changed. Sugar so far seems to have held up against a wave of pressure and OJ is sharply higher as yields were reportedly lower. At any rate, the mixed response is indicative of uncertainty and while stocks continue to advance there likely will be more of a technical play among the softs until some fundamental evidence becomes clear.

Coffee needs to prove itself capable of staying over 13585 basis July, but with June options going off the board on friday it is indeed possible that we may see a rush to a strike price, maybe 140, or maybe 135? Who knows?

Now that OJ has put in the best upside move seen in a while, I am hearing there are reports that it may be due to Brazil’s crop being reduced.

I cannot help but wonder if sugar can now form a base from which to attempt advancement, so far so good as it weathered a lot of stress.

Cannot think cocoa is finished moving down. Specs have pushed that market up. Grindings were higher in anticipation of higher demand, but that demand is questionable.

Gold gets to $1,200 on the rising fear factor as Europe continues its tumultuous slide as riots start to brreak out heavily in Greece.  Gold is starting to become the worlds reserve currency as the correlation between Gold and the USD becomes obsolete for the moment.  Gold  has a top here at $1,225 and i think for the moment that you will see some resistance at this level between there and $1,210.  The Eurozone however seem to be in desperate times so stay on top of the news over there to see if there are any big bailouts coming that way.  This will surely have a negative effect on the Gold market

Crude Oil finally liquidated to $75 on the back of a plunging equity market and the trouble going on in Europe.  WTI spreads were the first key indicator as spreads started to get very weak 3 weeks agio as supplies continued to rise in cushing.  I believe that this $75 mark is a very big support area and Crude will bounce off this as traders start taking profits on the 13% slide.  The VIX has increased every day and this is good for the day trader as you can probably see swings of $2 or more every day in the energy market.

An article I found:

Author: LeAnn Ormsby
December 2010 corn futures traded to a high of $3.95 in mid-April, retreated to a low of $3.67 early last week, and then rallied back to $3.95. The current price is about $.40 above the contract low established in early September 2009 and about $.75 below the high reached in early June 2009. The contract high, reached in mid-2008, is over $7.00.

According to University of Illinois agricultural economist Darrel Good, weakness in corn prices starting in mid-April primarily reflected supply considerations: generally favorable weather for planting, expectations that acreage could exceed March intentions, and expectations that the 2010 yield would be above trend value due to a majority of the crop being planted early.

“The current strength in corn prices reflects more favorable demand prospects,” Good said. “There is a fair amount of optimism about corn demand in each of the three major categories of consumption.”

Recent data confirm increasing production and consumption of ethanol. Expansion is being driven by extremely favorable ethanol blending margins. Wholesale gasoline prices have increased from about $2.00 per gallon in mid-February to over $2.40 now. During the same time period, ethanol prices have declined from about $1.75 per gallon to about $1.60 per gallon.

“The current spread between gasoline and ethanol prices results in a very high return to ethanol blending, even before the $.45 per gallon blender’s tax credit,” Good said. “The price spread is large enough that E-85 prices could be competitive at the retail level. Favorable blending margins should continue to support demand for ethanol so that corn consumption for ethanol production during the 2009-10 corn marketing year could exceed the current USDA projection of 4.3 billion bushels. There is ongoing concern about the ‘blend wall’ for ethanol if mid-level blends are limited to 10 percent, but that wall clearly has not been reached yet.”

Good said the recent increase in hog and cattle prices has also triggered ideas that feed and residual use of corn during the current marketing year might exceed earlier expectations. However, even with a decline in the feed and residual use of sorghum and another summer of relatively low feeding rates for wheat, feed and residual use of corn above the current USDA projection appears unlikely.

“The low level of use during the first half of the year combined with declining hog and cattle numbers and expanding production of distillers’ grains makes the current projection of 5.45 billion bushels look a little high,” he said. “That projection is 200 million bushels above use during the 2008-09 marketing year.” Good added that the category of use is feed and residual, so that surprises can occur. The USDA’s June 1 Grain Stocks report will shed more light on the rate of use.

According to Good, improving corn export prospects have provided most of the recent optimism about corn demand. The release of some corn from domestic reserves in China, along with the issuance of import licenses a few weeks ago, has been followed by some small purchases of U.S. corn. China has not imported significant quantities of corn since 2001-02, when it imported 40 million bushels. The last year of large imports was 1994-95 with 170 million bushels being imported.

“The magnitude of U.S. corn imports by China this year is very uncertain, but recent purchases come at a time when overall sales of U.S. corn have been increasing,” Good said.

The USDA weekly reports indicate that new export sales averaged 50 million bushels per week for the four weeks ending April 22, compared to an average of 28 million per week in the previous 10 weeks.

“New sales need to average 38 million per week from now through August in order for sales to reach the USDA’s 1.9 billion bushel export projection,” Good said.

Weekly shipments averaged 38.2 million bushels per week during the seven weeks ending April 29. To reach 1.9 billion for the year, shipments from now through August need to average about 38.8 million bushels per week.

“The tug of war between improving demand prospects and expectations for a large crop in 2010 will likely continue, resulting in a continued wide trading range for corn prices,” Good said. “Stronger demand, however, increases the importance of crop size. If improved demand is confirmed, there may be less downside price risk and an opportunity for a move back to recent highs if crop problems develop.”