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| The international demand profile is changed. The former Soviet Union, in reality, does not know how much grain they have....no one knows & I wager if the true figure is ugly, it is a number which will not be released...Putin was KGB....he will soon know.
I once posted, prior to their big grain buy in the early 70-s, Secy. Earl Butz, on behalf of Nixon was in Paris offering the Soviets huge quantities of grain at cheap interest rates...just to get rid of the stuff & the Soviets turned them down.
A month or so later, they were over here buying everything.
I just completed the exercise of going through each major corn state & added 2 bushel to their previous record yield and the result is amusing. I am not worried about corn, a big crop is priced in & does not matter. Sure there will be some wide swings..but the die is cast. We will see excellent exports this coming season. The funds have a lot of buy ammunition yet...we will see wide swings as the funds will ease out of the long side as we get close to harvest. Just don't want to be driving 90 mph when I should be driving 25 mph...
The big question is deflation. The long bond is a yield slightly below 4%....the rule of thumb for long bonds is 3 points + inflation. The short maturities already have deflation priced in....right now the wheat guys are counting chips for next year, but we have yet to see if the corn producers will get to count chips...so the fat lady is still in the wings.
If we see demand destruction in the next 6 months, along with a shaky crude oil market.& deflation..then it will be time to grab the little woman, a pup tent & head into the forest for a couple of years. I am again short gold (with a close stop) & think there are still too many stuck longs.
Edited by SeniorCitizen 8/11/2010 12:54
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The thing that worries me
