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kraft-t
Senior Advisor

From this point of view

I wonder how much manipulation is done by the chinese on a day like this. We know and they know they will be big buyers. Will they jump in with more orders after a limit down day or will they wait for more. We also know they peg their currency for the trading advantage, so their government is indeed involved. To what extent is the question.

 

Supply, demand, currency fluctuation and manipulation and wild and crazy financial markets make marketing a sport not for the faint hearted. Perhaps that is the real reason I bailed out a week ago.

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14 Replies

Re: From this point of view

You're looking like a marketing genius kraft t.  I've stated on here it's scary to know China is holding the purse strings.  I was nervous all week and sold a bushel and a peck this week.

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R John
Frequent Contributor

Re: From this point of view

Couldn't agree more. My question is, 'Does anyone else think that the Chinese aren't the only ones?' What about the USDA? What about the 'funds' that are referred to in most all market analyses? Does the American farmer really participate in a truly supply demand market? There are so many outside influences on the commodity markets that I wonder.

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R John
Frequent Contributor

Re: From this point of view

As a followup to my previous post, this is from today''s WSJ:

Those once white-hot commodities were dumped at a startling pace.

The selloff swept across the board, with sugar being the biggest loser. After tumbling 11.3% on Friday, sugar’s loss for the last two days was compounded to more than 20%. Elsewhere, grains – corn, wheat and soybeans – all fell more than 5%, with energy and precious metals posting relatively modest losses. Lean hogs and orange juice were the best performers: down 0.3% and 0.6%, respectively.

“There are a lot of small players in these markets,” said Kurt Kinker, chief market analyst at Mirus Futures, a commodities broker in Chicago. “It’s no longer about supply and demand. It’s more trading for trading’s sake,” he said.

Sugar, although a relatively niche market, is viewed as a “trend-leading” commodity, he said. Many traders are watching it to gauge where the commodity markets are moving.

The real test will come next week. “If these moves are carried through, there will be more downside.”
In the sugar market, there is a standoff between producers and consumers, with both sides hesitant to commit at current prices, said Marcos Nogueira, a sugar broker at FCStone Group in Brazil. Producers are still in the process of “recovering themselves,” while consumers are bidding prices lower and lower, he said. The selling force mainly came from trading houses, who were long sugar but didn’t actually want the physical sweet stuff.

 

Says it all, doesn't it?

 

 

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kraft-t
Senior Advisor

Re: From this point of view

Genius? What a joke!  If you go back a few pages you will see where I wrote corn contracts for 2010 for $4.05 and if you wait awhile it may go to new highs.  I don't have a clue as to what it will do but  the math looked good so I took a big bite. Sometimes it is good to b lucky but I may not look so lucky next week.

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k-289
Esteemed Advisor

Re: From this point of view

Did sombody say BOOO ? ?

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Re: From this point of view

Better to be lucky than good.  Things not always being what they seem at 1st glance and having time to ponder the following came to me:  Could it be the Chinese are afraid the grain market and other commodities were going too high in their desperate need for them?  With uncertain weather in SA who knows what can happen in grains.  Purchases and usage of steel, copper, etc can be put off or delayed and cause some disruptions and complaints but having an unhappy hungry population can be catastrophic chaos.  This could be an act of desperation on their part to bring prices down, if only shortly, to jump in and buy a gob and a bunch.

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Red Steele
Senior Contributor

Re: From this point of view

The Chinese are not going to be "desperate" buyers of US commodities for anytime in the foreseeable future. If you do the math, they are in a position to buy the entire US soybean crop for several years running, and still not make much of a dent in the amount of money that we owe them.

 

Sell the highs in these grain markets as you need to pay off or service debts, prepay inputs for 2011, but make sure that you invest your profits in something not tied to the US paper dollar. $5 and $12 beans could look like bargains unless the tea party takes control of the deficits and makes meaningful cuts to the bloated US government.

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Re: From this point of view

Good point of view.  The flip side is that one can't be too certain of news about or coming from China.  Having still a government controlled press they let out as news what they want to.

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hardnox604008
Veteran Advisor

Re: From this point of view

Hi Don,

 

It is impossible to know what China is up to.

 

We may later conclude that they had essentially manipulated prices of all comms higher by growing their money supply 70% over the last two years. I'm not saying that is so, am just saying that we assume that X is the baseline and try to proceed logically when X wasn't the baseline case at all.

 

BTW, nice sales and perfectly good rationale. I am out of old crop and fine with that and took a good swing at new.

 

With costs mostly locked in I could have sold 75% of APH, taken out 75% RA and essentially been guarnteed breakeven with a every bushel over 75% pure profit. Chose not to go that far becasue in terms of a perfect hedge you really can't do it until the spring price is set on insurance.

 

I've been weaning myself off ag.com by posting a bit over here rather than going cold turkey. It was a dark day when I started posting at ag forum- happened during the election/financial crisis days when posters here felt that some of my posts were too political. Ugly world over there although pretty much representative of the world we live in.

 

I think I'm pretty well through detox and plan to fade away further.

 

Will probably check in here at marketing occasionally if for no other reason than to keep in touch with a few of the old friends from a kinder and gentler time.

 

Best to you, hope your health continues on the mend.

 

Best, h

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