Posted on 02/22/2011 10:50:54 AM PST by FromLori
Even as Crude continues its strength in light of Gaddafi's filibuster that may soon dethrone's Bernie Sanders record-setting speech, other commodities are not sharing oil's enthusiasm. In fact, the Ag board is a bloodbath, after wheat, corn and soybeans have all traded limit down, on what are rapidly becoming pervasive margin liquidations. Perhaps the fact that the market forgot that it can go down and is experiencing its biggest drop since November, is forcing many specs to unwind huge margin positions (remember that margin levels on the NYSE are the highest since Lehman), causing a rout in virtually every risk asset. One thing is certain: even with stocks down for the first time in arguably forever, the vol in FX and commodities continues to be the place to be for those who pursue rapidly repricing asset classes.
Full commodity pricing array below.
This is definitely not my bag, but isn’t this very strange? The big news last week was worldwide food shortages. Now prices are plummeting?
So, does this mean,
*the devalued dollar magically, overnight, re-valued??
*all of the crop failures were mis-reported bumper crops??
*everybody in the world is going on the Michelle Obama diet??
*Rainbows and Unicorns are appearing in the brisk morning sunshine??
Yep, it reeks. But this is the time of year farmers go to the baank for operational loans (seed, fertilizer, etc.) and if the markets have been 'blipped' to the down side, those loans will be harder to get. Which means somewhere, someone, is going to be driving farmers out of business and buying the 'means of production' (farmland) up cheap.
This is more about the market then the commodities themselves. It doesn’t mean that food prices are plummeting.
Deflationistas win again!
Great day so far. Housing down, now commodities.
Glad I bought all the USD I could afford.
Nothing goes down forever, and nothing goes up forever. Commodities have been a bubble for quite some time now.
No this is all about the market not a particular commodity but that would be nice. It should help in the future though if that is passed.
Exactly. Hot money has been chasing commodities because of the leverage allowed and used.
The move up has been so strong and so sustained that sooner or later, there was going to be massive profit taking.
And it has started.
145lb bag of cocoa selling for 582,585?
That’s over $4000 per pound.
Is that cocoa as in “chocolate” or cocoa as in “smack”.
Prices on the futures markets increasingly have little to do with fundamentals.
It is increasingly about hot money, ETF’s and ETN’s rolling their positions forward and leverage.
Congress produced a report on commodity prices in the futures markets vs. cash or spot prices in 2008. It showed how much effect outsized speculative positions in the futures markets have on commodity prices. I don’t have time right now to get you the URL, but it is out there on some Congressional web server, I’m sure.
Beat me to it.
an old hand in investmenst once told me:
“Buy on the rumor, Sell on the news”
looks like the market had over estimated the bad news.
IE the harvests were/are bad, but not as bad as the market had anticipated, so prices fall.
It’s the season. Foreign nations are selling off some inventories. Watch next winter, and do some gardening.
I think the price given is per ton, and delivery is in the form of 145-lb bags.
that might be cents per ton not dollars per ton
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