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| The trend is your friend
New highs in soybeans due to continued strong demand.
The February 11 possible climatic highs in chg & kc wheat were due to short supplies. A caution sign for wheat.
March Mpls failed to get thru $20, the shorts have been squeezed and appears close to the end.
Soybeans have the momentum.
Soybean harvest in Brazil is underway, the reality, with this strong global demand, we need those supplies sooner, rather than later. Absent those supplies the soy complex would be performing like Mpls wheat.
The old news out of china in regard to their canola crop set fire to the market, but that is the nature of a bull market. The Malaysian palm oil data of 22.3% increase in Jan exports suggests there is yet no rationing of vegetable oil.
This is a runaway freight train and anyone that wants to stand in its way better have deep pockets. The soybean and oil mkts racing toward the finish line. Volatility and wild swings –will be the nature of this beast.
Meanwhile, the corn is trudging along, not spectacular, but is insuring a record high insurance price for 2009 crops enticing producers to plant as much acreage as possible to soybeans, corn & wheat.
Since 1980, I took a random look at breeding stock kill as a percent of total kill.
Sows & Cows, January eyeball ave. rates.
1980 Sow 6% cows 19%
1985 4.8 & 21%
1990 4.6 & 20
1995 4.0 & 19
1996 3.8% & 20
2000 2.8 & 16
2005 2.9 &18
2007 3.3 & 19
2008 3 & 19%
Sows & Cows, July high rates
1980 Sows 7.8% & 17%
1985 6.3 & 17
1990 6.1 & 16
1995 4.7 & 15
1996 4.3 & 19
2000 3.6 & 14
2005 3.2 & 13
2007 3.3 & 14
At this writing, my Chinese sources indicate China will be out of the corn export market for a long, long time. Huge losses to their livestock industry as well as the mandate to increase self-sufficiency in meat production dictates this posture. You raise it, or produce it...we will buy it--seems the current prevailing attitude.
Private estimates suggest the Chinese inflation rate for this current month and March could reach 8%-their interior situation is critical in terms of food supply to ensure reasonable domestic prices-theirs is not a true democracy.
Yesterday’s breakout to new highs & conversations last evening indicate to me the speculative trade is now concerned about acreage, crop failure (even though the crop is not yet planted), inflation & the kitchen sink. A lot of new, first time money coming into these markets concerned agriculture may not respond. We are going to be close to that magic point shortly. We will, in my opinion, see acres, world-wide, we're going to see a lot of acres.
I bought some complex analysis software last evening as it has become too time consuming to evaluate these option premiums on my own using excel, I believe in these weather critical months & the market may reach the point prior to the acreage report, where calls should be evaluated and aggressively written on all grains & oilseeds & the opposite on selected items of livestock.
Yesterday I noted Bank Credit Analyst calculates there is $3 trillion dollars in cash sidelined at the moment, ready in their view, to again approach the equities markets. Since everything does have a price, I suspect we soon will be close to the level where some of these ill-liquid financial instruments will be scooped up by folks who this time, know what they are doing in terms of value.
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Notes.
