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Veteran Contributor

markets down, why?

we have read several reasons why the past 2 days........IMO, the number one reason why the commods in general are down? all this grandstanding by certain members of Congress and much of the media towards China while their President is visiting the US over this stupid currrency fixing nonsense!!!!!!!!!!!!!

 

the trade is concerned China may not take kindly to all this bashing during President Hu's visit..........IMO?

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9 Replies
Veteran Contributor

Re: markets down, why?

That might be part of it, but don't forget sometimes even when the fundamentals are bullish and once the long side is too heavy a market needs a "healthy" correction. Everything published has been bullish lately. The old saying when the newspapers and television are telling people about it......watch out. Also, China has been putting the breaks on their economy for a few months now maybe now that is starting to show? They have been building reserves of soybeans in a huge way, maybe they are ready to stop buying.......Wheat fundamentals are not as bullish on the world scene and have been a follower of corn except for the Australian weather which would be a temporary story. That only leaves corn. I would imagine $6.00 has started to curb demand.

K.

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Veteran Contributor

Re: markets down, why?

the late surge today should help answer some of your questions regarding demand, rationing & such? profit taking the past few days and trade jitters over the political poppycock has offered a buying opp.

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Senior Contributor

Re: markets down, why?

Cattle on feed numbers up. Meat prices up. No indication ethanol producers are cutting back.

 

There may be rationing, but I haven't seen any figures that demonstrate it. Just anecdotal and expectations.

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Frequent Contributor

Re: markets down, why?

It might be fairly noted that there never is any data to support demand reduction until after it happens. There was no data about the ethanol company double longs at the top in 2008 that bankrupted them until September of that year for example.

 

As well, the world has seldom actually reduced the amount consumed, rather it delays it as long as possible, and it increases production. Cargill can grow and sell $8.50 wheat thru 2013 from the Black Sea area. I bet they sink additional hundreds of millions into production and infrastructure, just a guess. Production will increase...of course, not today.

 

Let the bulls have their day....the bears will have theirs as well, just not today. The profits are extreme in all of ag. The similarities to 1980 are everywhere.

 

Every continent has had bad weather, just like most of the short crop years. As someone else would say....crops will mostly grow....and yields will recover to the mean or above. Again, just not right now.

 

I for one would love to see high FEB insurance gaurantees....they will gaurantee total production investments....and thus very high yield potential....that has a very good shot of being realized.

 

jmo....it is time to be selling the 11 and 12 crops...admitting that they might not top out to April, but we are close in price for new crop. If you don't take record profits when they are offerred....that is your choice...makes no difference to the rest of us.

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Senior Contributor

Re: markets down, why?

I agree that the hard evidence for rationing comes in after the fact has begun. However, just recently saw charts showing ethanol, hogs and cattle on the same trajectory as corn, even though in some cases the margins may have edged back and forth on spread. If the price of grain continues up and the others don't keep pace then it would signal a sure problem ahead. Right now I detect wheat may have the most room to rise, but I'm not positive it will outpace soy or even corn, though I think the historical price relationship is low for wheat.

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Advisor

Re: markets down, why?

   The grain marketing guy at the elevator I deal with said the funds are repositioning themselves.  I take that to mean the big boys think the markets in grains have topped out for the time being and are moving on to something else to make some money in.

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Advisor

Re: markets down, why?

   I've stated before in this forum that when everybody is bullish and I even read about high grain prices in the daily newspaper the highs have been reached or are close to it.   Usually.

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Senior Contributor

Re: markets down, why?

Ah ha!!!! Therein lies a problem. As an opportunist I need to know whether the market has a good chance of going up or topping out - because that's where the money is. The only way I know to do that is know what the physical fundamentals are.

 

At this point I think the physical fundamentals seem very solid for now. That doesn't exclude the idea that the psychology of suspense and 'food security' for certain countries at risk prompts them to buy and reduce their exposure to future price rises and/or shortage.

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Advisor

Re: markets down, why?

   I don't claim to be any sort of market predictator at all.  If I was I would have gotten invited to the JD salesmans daughters wedding.  All I can go on is that FOR NOW the SA news is in the market along with the latest on the Chinese buying spree.  The law of supply and demand doesn't always work the way one thinks it should.  I will venture 1 new thoght though.  All this "get tough"  chatter with China over unfair trade makes me nervous.  I read where 68% of our grain exports go to China.  Will it go anywhere?  I haven't a clue.  It's just another item to scare some bulls I guess.  Almost $14 for old crop beans and almost $13 for new crop is looking better every day to me.

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