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Advisor
Posts: 3,976
Registered: ‎05-03-2010
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Hurricane Harvey, The Market's Black Swan?

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I just received a note about the current Hurricane (Harvey) and what it could mean to exports. In this period of the markets looking for trading material, it made me wonder if this could be the Black Swan-like event to move the markets?

 

Mike Steenhoek, Executive Director Soy Transportation Coalition, stated in an email Thursday, that many are monitoring Hurricane Harvey as it approaches the Gulf Coast of the United States.
 
"As you may know, the area of the country in Harvey’s crosshairs is the Texas Gulf.  For U.S. agricultural exports, Texas Gulf accounts for 24 percent of wheat exports, 3 percent of corn exports, and 2 percent of soybean exports (Source: U.S. Department of Agriculture).  Last week, 66,000 metric tons (2.5 million bushels) of wheat were exported from the Texas Gulf.  No soybeans or corn were exported from the Texas Gulf last week.
 
From a soybean and corn logistics perspective, the larger concern occurs as the consequences of Harvey extend further east to the 230 mile stretch of the Mississippi River from Baton Rouge, Louisiana, to the Gulf of Mexico.  This area accounts for 60 percent of soybean exports, 59 percent of corn exports, and 14 percent of wheat exports (Source: U.S. Department of Agriculture).  Last week, approximately 500,000 metric tons or 18.4 million bushels of soybeans were exported from the Mississippi Gulf.  This is the equivalent of 8-10 ocean vessels.    
 
It is expected that the hurricane system will slow down once it reaches the Texas coast, increasing the risk of prolonged heavy rain in southern Louisiana.  Some estimates for rainfall include 10-15 inches in the Baton Rouge to New Orleans area.  Grain handlers who export from and service the Mississippi Gulf region are taking Hurricane Harvey very seriously.  Obviously, heavy rain will delay the ability to load ocean vessels and unload barges.  Heavy winds and storm surges, if they occur, could damage the export terminals."

 

What say you?

 

Mike
 

 

Honored Advisor
Posts: 7,599
Registered: ‎07-18-2011

Re: Hurricane Harvey, The Market's Black Swan?

Well the spin has reached land.....

 

Mike can you objectively present the other side....?

Highlighted
Senior Advisor
Posts: 1,061
Registered: ‎05-20-2010

Re: Hurricane Harvey, The Market's Black Swan?

[ Edited ]

sw there is no "objective other side"   the damage to growing crops in the area is bearish because rain makes rain!

 

just think about it...there is no one left on the planet that is worthy of a statue. Not even

Jesus Christ himself is deserving (he was opposed to same sex marriage and transgender

issues of course...luckily no restrooms back then for him worry about!

Advisor
Posts: 3,976
Registered: ‎05-03-2010
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Re: Hurricane Harvey, The Market's Black Swan?

sw,

 

The other side would be that the hurricane peters out. Is that the other side to which you refer?

Otherwise, think about this, if the Gulf ports get swamped, we start shipping more out of the Pacific Northwest. Even so, the markets might consider that bullish, if it takes orders longer to reach a vessel. The other side is that we simply export less, because global buyers buy more from other sources.

 

Mike

Honored Advisor
Posts: 7,599
Registered: ‎07-18-2011
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Re: Hurricane Harvey, The Market's Black Swan?

I sure wish i was in indiana this week.......... ...

Indiana with its rich religious background ............

 

I once spent a day in the base of a statue in downtown indianapolis, learning things about the "the war of northern aggression"  that probably aren't allowed in school these days     Smiley Happy

 

I trust the state of Indiana to protect that statue and its records concerning my quaker heritage.  

 

Not sure I would agree that Christ was opposed to whatever, or even pro marriage.  But Christ was fully knowledgable of the design of reproduction and gender, and seemed to expect mankind to understand and be in control of those factors......... Not controled by those factors, and not to use our gender or sexual choices to gain power over others.

 

I think he is much more concerned with the dishonesty and level of worship given to sexuality practiced in our society.  The very idea that beings with the ability to reason, build, create humor and plan activity should waist their short lives desiring to live so primal is an embarrassment to us all.

 

 

Honored Advisor
Posts: 7,599
Registered: ‎07-18-2011
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Re: Hurricane Harvey, The Market's Black Swan?

That is a pretty limited view Mike.....

No effect on the crop now being harvested in the south.  It's quality or delivery.

No concern for being able to get that new crop back up to the feeding areas it might be needed in the next 60 days.

 

And does Missouri and Illinois need their low lying "record" crop standing in water.

 

Export levels have already been delivered for this year ......... not sure how that gets reversed by the ports being down for a couple of weeks.

I just don't remember huricanes as being negative to the grain market.  Since they happen in the fall and are usually too late to boost yields and are more often harvest hinderance or tend to drown out crop and delay harvest.

 

The only crop production enhanced is wheat usually since it will be planted on that moisture in the high plains.  Think the black swan already sailed for wheat, but then wheat isn't really a crop these days.

 

 

Veteran Advisor
Posts: 1,225
Registered: ‎06-30-2010
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Re: Hurricane Harvey, The Market's Black Swan?

Hurricane Katrina was this same time of year, in 2005.  What happened to exports and grain prices as a direct result of that hurricane, during the hurricane period and for the weeks following???

Honored Advisor
Posts: 5,301
Registered: ‎01-10-2012
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Re: Hurricane Harvey, The Market's Black Swan?

What's the problem?

Massive supplies.

You inferring a two or three week supply isn't in the end users bins?

Just in time doesn't delivery doesn't get any respect from ol MA Nature
Honored Advisor
Posts: 7,599
Registered: ‎07-18-2011

Re: Hurricane Harvey, The Market's Black Swan?

Katrina in 2005 was a down trend market that turned slowly(in todays terms) downward  into harvest beginning in July and maintained that into the end of the year..... But nothing like the last four weeks.  Katrina had little effect on changing that and certainly did not cause lower markets that were always underway.

 

http://www.agriculture.com/markets/analysis/corn/market-needs-a-black-sw_9-ar51937

 

Just for reference.................. 7 potential "black swan" events are mentioned in that article.  Only 2 of them actually affected grain markets significantly.  And both raised commodity proces ...... the others did not.  Including Tony's prediction of Trumps win being a black swan event......... using the usual press protection.... "quote someone else".

 

Explain to me why the assumption was that Harvey would drive grain markets down as a black swan event?  seldom happens that way....... black swan events are suprise events that shock financials and stock markets and usually drive inventment to the commodities.  Even the stock market crash of 1920 did not drive wheat prices down quickly.  It took two more crops and nearly three years for wheat to drop 30% of its value from $1 in 1929 to $0.49 a bushel in 1932.  And two large crops and combined with the soviet selling grain to finance "the Party" in the later 1920's may have been the real cause of the grain market drop....

Now with that in mind please(  and assuming that a "black swan" event could have negative impact on grain prices as Mike seemed to) .... Explain to me what the event was the last 5 weeks in the HRWheat when it lost 30+% of its value with a "no comment" ???????

 

There was not a large crop ............ Acres have been down for several years..... Europe was not a good crop...... Russia had a good crop but not ukraine.  Nor australia....... It is a non event in the press.... 

You cannot search market charts throughout history and find comparable commodity price actions to what we have had the last 5 weeks..... without justifiable economic collapse.

and yet we treat it as "expected" because someone tells us we should.

 

history-1.png

 

history.png

 

 

So I am expected not to respond when someone who is supposed to be involved in marketing, wakes up to the idea that we could see a "black swan" event hurt grain markets...... 

 

  Go back and read tony's article.  Black swan events..... how do they affect commodities?   And how should an interuption in a source of supply affect the prices???  It is a world market isn't it??

 

The logic of every event is negative price just baffles me...... But that is life in the unregulated casino......

Esteemed Advisor
Posts: 2,478
Registered: ‎04-29-2011

Re: Hurricane Harvey, The Market's Black Swan?

It's only a matter of time that Trump will get blamed for this hurricane.