01/05: On the doorstep of a rally?Chip FloryThere's a lot of...

01/05: On the doorstep of a rally?
Chip Flory

There's a lot of interesting things happening in the grain markets right now. But one of the most interesting things I saw yesterday was on CNBC-TV. They interviewed Dennis Gartman, founder of "The Gartman Letter." It's a newsletter that goes to interested investors and covers all investment opportunities... stocks, bonds, commodities -- everything. Gartman spent most of his time talking about commodities -- started with energies and went to precious metals. But he did that very quickly... he was saving his time to say, "The surprise of 2006 will be in the grain markets."

He said the current drought in the Midwest and the Southern Plains is a precursor to what will be a "substantial" rally in the grains in 2006. He explained, "If you change the supply or demand in the grain markets by just 1% or 2%, you change the price outlook substantively."

Now... I don't know if Gartman is right -- it's risking basing an investment plan on the idea that there might be a drought. But... people listen to Gartman -- people that currently have no interest or understanding of the grain markets. Heck... they even took a little time to explain that if you buy wheat, you won't end up with 5,000 bu. of wheat in your front yard.

If other investment advisors start getting on board with this same line of thinking and start moving even small amounts of money into the grain markets, we could be on the doorstep of repeating the price action we saw last year about this time.