Agricultural Commodities

Tifosi · Newbie Joined: 24 May 2005 Posts: 11

Dear Henry and all subsribers,

Puru Saxena has an interesting article today at www.safehaven.com/article-5000.htm (re: Cash is Trash) where he lists past Bull markets

'70's - sugar went up 45 times
'70's - oil went up 30 times
'70's - gold went up 24 times
'70's - silver went up 24 times
'80's - NIKKEI went up 8 times
'80's -'90's - NASDAQ went up 50 times
'80's -'90's - Dow went up 14 times

and notes that in the current ongoing bull-market in commodities, gold and silver have doubled in value, oil has increased six times, sugar has risen three-fold and stuff like corn, wheat and cotton haven't even moved.

I am wondering as to your perspective and those of others.

Also, any stocks to consider should corn, wheat and cotton be the next plays.

Finally, would we consider OIL, GOLD and Silver to be over-extended at these levels or is there further momentum, especially in light of the quick pullbacks?

Thanks.

rffrydr · Posted: Wed Feb 06, 2008 5:47 pm Post subject:

Mighty reversal today in the grains. That POT short is gonna pay off...if we can just get wheat off limit up. A man's gotta eat.
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rffrydr · Posted: Thu Jan 17, 2008 9:57 am Post subject:

Well obvioiusly no followtthrough Embarassed

But these are the almighty grains, the beginning of the food chain for a hungrier world. Beans are sitting there at 13.01. I still don't think it will hold. But it's a trade I passed on for that very same reason.

Cramer's seed companies are certainly not holding. That one I didn't pass on. Very Happy

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HenryTo · Posted: Wed Jan 16, 2008 11:58 am Post subject:

When Bloomberg gives so much air time to Jim Rogers - you know that something just doesn't feel right.

rffrydr · Posted: Wed Jan 16, 2008 11:40 am Post subject:

And, there, at last, go the grains:

http://futuresource.quote.com/markets/market.jsp?id=grain

We'll obviously need to see followthrough but there's something almost "mystical" about soybeans, a weed, being in the "teens." If it stays there, it can't be a myth anymore.
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rffrydr · Posted: Sun Jan 06, 2008 12:24 am Post subject:

While corn end users and grain analysts are growing increasingly alarmed about demand outpacing supply over the next 2-3 years, Washington policy makers, farmers, farm suppliers, and index/trend follow fund longs are perfectly content to preside over the demise of what they term as “an era of cheap food.”
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rffrydr · Posted: Thu Jan 03, 2008 8:31 am Post subject:

Monsanto blows out earnings:

http://biz.yahoo.com/rb/080103/monsanto_results.html?.v=3
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rffrydr · Posted: Wed Jan 02, 2008 10:20 am Post subject:

...And limit-up in the grains at historical highs. New Year money-flows chasing the commodities and taking any excuse. Actually this news is bearish: China is hugely net importer of grains and, although it is mainly a qualitative distinction in terms of what they send out, the end result will be marginally SMALLER imports.
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rffrydr · Posted: Tue Jan 01, 2008 7:42 pm Post subject:

China throws up the wall:

http://www.ft.com/cms/s/0/871c9990-b742-11dc-aa38-0000779fd2ac.html

That's a big shift in two years and follows Argentina, Ukraine and others trying to hold down inflation.

Who does this help--other than the dollar.
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rffrydr · Posted: Thu Dec 27, 2007 4:45 am Post subject:

Soybeans close on record:

http://futuresource.quote.com/news/story.jsp?i=DJC00auY71226

More importantly, those old highs were all typical commodity spikes based on fundamentals like drought scares. No spike here, just front-running funds "janurary effect."

Interesting that China is expected to delay it's rotatation to S. America. Trade balance, politics, is taking precedence over price. The new China in action.

The source: http://www.cnbc.com/id/15840232?video=614142090&play=1
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rffrydr · Posted: Fri Dec 07, 2007 3:25 pm Post subject:

Have we been had?

http://www.reuters.com/article/companyNewsAndPR/idUSN0564071920071205
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rffrydr · Posted: Sat Apr 22, 2006 7:01 pm Post subject:

In the 70's gold peaked its nose up over $800. Are you sure there's that much potential here. Then it was petrodollars. Now?

Cotton in 90's when textiles WERE the China story--highest price since the Civil War. Maybe it's already had its day.

Bunker Hunt = Hedge Funds ? That was done with petrodollars, arabian AND texan.

rffrydr · Posted: Sat Apr 22, 2006 9:10 am Post subject:

Soybeans really ARE the wonder fuel, they fuel humans--they fuel the Chinese! They go into everyting. Henry Ford wanted to use them for body panels on his cars but oil was just too cheap.

See my Easter post on the hog, corn, oil triangle. All commodities are NOT the same--not even in the same asset Class.

What you're seeing now is MONETARY PHENONOMENON--a perception. I might not be so bullish. We don't really have the shortages of the 70's. Nat Gas finally broke when, and only when, there was no more room to put it! Same with the grains in last year's hedge fund move. (this WAS the move you're looknig for now--there was no real drought in Brazil) There is amle world capacity and labor demographics that should keep the inflation mentality (of everyday life) controlled in the long term. Gold is an extension of too much money tainted by its success in real estate. That money will soon get very tight (at 9% ARMs).

We'll see. But all that said, much depends on China. Don't forget, it's a land of revolutions and chicken flus. Don't invest in commodities without an opion there.

Goodfella · Veteran Poster Joined: 14 Oct 2005 Posts: 301

Have to be patient with softs, spike every few years. Maybe buy futures a long way out, or get the timing right.

Might pick up some soya beans

Goodfella · Veteran Poster Joined: 14 Oct 2005 Posts: 301

HenryTo · Posted: Fri Apr 21, 2006 6:58 pm Post subject:

I am still long-term bullish on the commodity markets.

As you know, I have been ST bearish for the last few months. Obviously, I haven't really timed this too well recently - but I believe major headwinds have been developing such as:

1) Rising "carrying costs" in both the U.S. and Western Europe. Will Japan now ending its quantitative easing policy, it looks like commodity investing for now may be a race against time.

2) Major bullish sentiment developing not only among professionals but in major publications as well, such as USA Today, Business Week, and Newsweek.

3) Major over-extension and overbought condition.

At this point, I am waiting for a significant pullback in most commodities before entering - and preferably when most folks believe the bull market has ended. This may take anywhere from 12 to 24 months. The perfect entry point for crude oil, for example, will be a U.S. recession (barring a major lifestyle change on the part of Americans).

In the short to intermediate term, I am looking at natural gas, silver, and uranium. I am still very much long-term bullish on natural gas. Sure, there has been a lot of industrial demand destruction during the post Katrina price spike as well as the spike during the colder-than-expected weather we experienced in December last year, but industrial demand will matter less and less going forward.

I also had been slightly bearish at the end of last year (which was the correct view to take, in retrospect) primarily because of increased LNG capacity - but as it turned out, a significant amount of LNG imports were not coming in due to higher prices in Western Europe. Going forward, natural gas prices will also be determined more by world supply and demand as opposed to domestic supply and demand - and natural gas prices are generally higher in other developed countries than the United States.

Crude oil is really the "wonder fuel" (since it can be used almost for anything) but natural gas contains less carbon atoms and is thus cleaner-burning and easier to transport. There is no question that natural gas demand will continue to increase going forward.

I also have not studied the softs at this point - but I don't believe others have either. I don't particularly recommend futures but I am guessing that just like the 1990s bull market in stocks, one can probably make a lot of money by just investing "blindly" in soft commodities or in companies that will profit from a soft commodities boom. I will do more in-depth analysis of the softs in the months ahead.