Are Commodity prices moving up due to El Nino?

[boarderbloke]

[URL="http://www.realagriculture.com/2012/02/realweatherwatch-western-canada-farmers-at-the-mercy-of-el-nino/"]Shaney-El Nino Interview[/URL]

El Nino brings hot dry weather to western Canada, but what does it bring to the US Midwest/cornbelt? Anyone know the pattern?

[errolanderson]

The quick answer is 'not yet'.
Commodities are moving up because of a
huge flow of outside spec money entering
markets as the U.S. economy expands.
There a lot of money that has been
parked on the sidelines and now is
finding a home in the commodity world.
Crude oil rally is heavily spec driven
with a middle east war premium starting
to be built in prices.

China has been an active buyer of canola
and soybeans of late which is partly to
do with port delays in South America.

El Nino may become a factor if our
spring stays dry. Then a larger weather
premium will build. Sense increased
price volatility ahead.

Personally view crude oil as too high,
but it may flare higher nearterm and
then come crashing back down eventually.
This could be a wild ride ahead.

Errol

[boarderbloke]

I think China's buying "veggie oil stuffs" because it know SA bean production is dropping everyday.

I see the Dow has completely recovered back to 2008 highs, that could be shaking free sideline cash, with confidance the recovery is real. This has everything to do with the federal election, and I don't trust it.

[errolanderson]

European Central Bank (ECB) injection to
European banks overnight supporting
markets today. Not sure how long central
banks can keep propping up these markets
without consequences.

Interest rate hikes very unlikely as
consumer debt load is way too high. And
Bernanke is not likely to do a QE3 (in
my opinion) as this could deepen the
economic mess ahead.

Errol