Fiscal cliff and grain prices

[wd9]

Can't help but wonder what is gonna
happen to grain prices if congress
doesn't agree and all the Bush tax cuts
from early 2000 kick in again on Jan 1,
2013.

Average family taxes will increase by
4000 bucks. Talk of deep recession for
Canada also, but certainly for the US.

Thoughts on the effects of all this and
grain prices?

[errolanderson]

fiscal cliff = fiscal drag = recession

all commodities will be affected in 2013

[vvalk]

Soy oil hit a 52 week low. Still can't
figure this out. They have singificantly less
soybeans to sell yet the sales or export pace
is 30% ahead of last year. What is going to
give?

[sumdumguy]

Do you really think the US will let that happen,
when its so easy to print up a newbatch of cold
cash. No worry.

[errolanderson]

U.S. may have to print money a lot faster
. . . . Soybeans broke their 200-day
moving average last nite. Jan soyoil took
aim at 46 1/2 cents.

Thankfully, canola market is closed today.

For what it's worth, have been purchasing
Dec '13 corn put options as a general
guard for new crop grain price protection.

[cottonpicken]

Chart in beans looks bad,i see support at
14,13,11...ouch.

[vvalk]

Question is do we wait this out. From what I read,
USDA has ignored all potential problems in south
america and expect beyond bumper crops. Have
too high harvested acres for most US crops and
possible over estimating yields as well. Have
basically ignored problems in australia and
haven't given much thought to export restrictions
in the Black Sea area and low wheat acres and
possible yields in argentina The news that is
negative that I read about is the oceansof palm oil
and potential exports of Indian wheat. Add in the
large increases to US soy exports and Canadian
canola crush and exports to date and am
wondering what is going on. I realize the charts
and trader direction are all that matters but come
jan when things may be more clear, could we see
a run then?

[vvalk]

I guess one more neg thing to add would be the
fiscal cliff

[cottonpicken]

We are over the fiscal cliff,the debt cannot be paid
back,the welfare state cannot pay for itself,this means
we have a currency crisis on our hands because....the
currency is paper.

There are many good reasons for gold being named a
tier one asset.

[TOM4CWB]

WD9,

Black Oil is the base. Where fuel goes will likely determine the rest of our farm products.

Prices
Global Crude Oil Prices
EIA projects the price of Brent crude oil will average $112 per barrel in 2012 and $103 per barrel in 2013, both mostly unchanged from last month's Outlook. EIA expects the WTI price to average $89 per barrel in the fourth quarter of 2012, about $4 lower than last month's Outlook and to mostly remain at this level throughout the forecast period averaging $88 per barrel in 2013. After increasing to $22 per barrel in October of this year, the WTI crude oil spot price discount to the Brent crude oil spot price will average $20 per barrel in the fourth quarter of 2012 before falling to $11 per barrel by the end of 2013, according to EIA.

Energy price forecasts are highly uncertain (Market Prices and Uncertainty Report). WTI futures for February 2013 delivery during the five-day period ending November 1, 2012, averaged $87.21 per barrel. Implied volatility averaged 31 percent, establishing the lower and upper limits of the 95-percent confidence interval for the market's expectations of monthly average WTI prices in February 2013 at $66 per barrel and $115 per barrel, respectively. Last year at this time, WTI for February 2012 delivery averaged $93 per barrel and implied volatility averaged 39 percent. The corresponding lower and upper limits of the 95-percent confidence interval were $66 per barrel and $130 per barrel.

http://www.eia.gov/forecasts/steo/report/prices.cfm

[TOM4CWB]

C.P.

We HAVE been through this before.

After WW2... the global economy was in much WORSE shape than it is now.

If the Governments of the world; generally plan to provide the opportunity for their people to eat... and don't force them to starve to death (like what was done in the 1930's)... economic stability is the likely result.

Where huge supplies of grains will come from... or where would food consumption will radically decrease...?

Very unlikely. Even black oil has a better chance of going up than down... with instability in the Middle East.

I am not at all surprised that our grain prices are dropping now... it is as seasonal as cold weather coming in winter in western Canada!!!

Cheers!

[ASRG]

Tom: Do you think the volitility in crude prices and the middle east will be a little more stable now that Obama has been re-elected?
The USA seems to be toning down the war talk with Iran?

[liberty]

Count on Bernanke to juice the money supply even more than he is presently doing in order to counter the negative aspects of higher taxes and increased regulation of the American economy. That's going to be positive for commodities and gold. The U.S. is destined to inflate its way out of its debt problem. The fact that this creates an inflation problem is....well...a problem for the future. There is no plan beyond that. I can't see this mess imploding more than five years hence.

[errolanderson]

liberty . . . how do you inflate
yourself out of a debt problem?

The only way out of this crisis (IMO) is
bankruptcies, foreclosures and the new
green economic buds (those with cash)
appear purchasing indebted companies for
pennies-on-the-dollar. There has to be a
new economy and a changing of the guard
in the rich.

Central bank intervention does not
create wealth, but just kicks-the-can
down-the-road. This has got to end and
the pain has to begin to fix this mess.

[TOM4CWB]

ASRG,

It really depends on where the Arab Spring is actually headed.

$Billions flowing in from oil revenues... is there actually going to be a peace dividend?

WW2 is a good example. The US let things pile up (Germany/Japan/Spain)... and we had a horrible mess (Russia added to it). Will Obama abandon Israel... ???

The extermination of Israel is high on the list of many Middle Eastern nations. Obama said he would stand behind Israel; and in the end... I think he will be forced to by politics at home.

Food in the end... is the biggest peace dividend... and feeding hungry people the highest worldly calling down in the here in the material realm.

China and India now are the backbone of the world economic system. The US/EU have provided the tec solutions to advance the prosperity. Negotiation of debt 'forgivness' is likely next for southern Europe.

Obama is the key. I personally do NOT see future direction changing significantly; just as here in Alberta/Canada with Provincial/Federal politics.

Cheers!