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07-12-2012 07:36 AM
Don't think I have ever seen price action like I saw yesterday. 62.75 cent range. Amazing stuff. As for direction, I think the pullback was good for the bulls. A healthy market needs some checks and balances every now and again. Up again this morning so we will see how we go.
Macro wise the world hasn't changed and is still getting slightly worse. Until we wake up to true wealth destruction and starting over, the QE this and QE that are just mechanisms to stall in the hopes of growth down the road. And it just isn't coming any time soon.
This is getting more interesting by the day.
07-12-2012 10:49 AM
You're right. Things haven't changed much. And the average family in the US saw 40% asset destruction since 2007 - AVERAGE - not just those caught up in housing. Farmers have lucked out in the meantime if they had a crop and/or insurance.
But, these prices won't be held back. Makes no difference regarding the macro scene. The food aspect of demand will not change - that is, go lower. Ag is not a useless widget factory. Therein lies our success.
07-12-2012 11:56 AM
I agree Pal, except for one aspect. The average american could probably get by on half what he/she calls food--- for a long time. And I wouldn't have to share my seat on the plane so often. I wonder if the "largest" selling item in clothing now is the xxL T shirt?
07-12-2012 12:25 PM
That's EXACTLY what I'm saying for basic commodities. Just go to your basic demand charts. You will get mnor variation - say for wheat. Why? Because there is a basic component of feed in much of the world where there can be switching - but it is minor. Daryll Ray has covered this subjec tn depth and you can go to his site and look in the archives.
Duriunng the Asian crisis the exporters told us the countries in SE Asia involved were buying less grain commodities because of the sudden poor exchange rates and grain prices plunged. They were lying. The record speaks for itself. Egypt during the last wheat crisis continued to import at normal rates. It's the way it works. China will too. Though they have reserves to tap if it REALLY gets bad. But consumption WILL continue.
You may have the luxury of eating steak at home rather than going out to eat, but that is a service related charge.
This is basic grain market principle. The complicating issue now is ethanol as an industrial/political product. You CAN classify ethanol as a widget and use industrial economic models to some degree (though politics screws it all up). Food is not a widget and will not follow an industrial economic model for consumption. Never has. Never will.
07-12-2012 03:11 PM
Pal, my only concern is the the "definition" of food. World wide you have it nailed. In the US a lot of what we consume is entertainment food, stuff we could live without and if the budget gets tight we might back up to water a couple of times a day instead of soda constantly.------------------there is some "elasticity" in the US calorie crunching industry -----but your right food consumption is not lost.
Alot of what we get in print is very creative. We do believe the end justifies the means when it comes to news releases.