Market sentiment and fundamentals

[Rareearth]

I also like to hear the Ausi, on the farm thoughts.
Similar thoughts here, with many fundamental differences - perspectives . It used to be the big traders had arbitrage/ multi origin opportunities buying from the most vulnerable, uninformed, or other influencing factors (supply, currency, ocean freight etc). With the internet more info is available faster to every one. Now the biggies will rely on satellite and producer information to trade markets to keep profit opportunities maximized.

[farmaholic]

O we're selling alright. Deliveries to licensed facilities are 21.3% ahead of last year at this time. And last year was the best start to deliveries in the last 10. So, like ever.
And it's priced too. Most big graincos will be contracted. Smaller places like feedlots will likely have a quote recorded in a notebook or price is displayed on the wall. Some offer direct deposit now too. Some plants with a good front office will still give you a check before you drive away, but those days are likely about gone and besides the virus has thrown a big wrench in doing things efficiently. Love to hear about the system in Australia.

Your point about many getting more bullish the higher the price is common. To some extent we all get in that mindset. But of course it should be the other way around. Higher prices=less bullish.
Countering that is the fact that history shows the good, profitable years are not too common. So, it can set a guy up for a while if you can capture some gravy in a 2 in 10 year. You really don't want to miss out on the whole run up. If the actual grain is gone, there is the futures and options for re-owning. Some are buying price insurance but I haven't done any research myself; more common with cattle I think.

As far as the charts and drawing lines, angles , arcs, fans, forks, circles, spirals, wedges, waves and curves well it can get confusing. And when prices break out of a trend you need to throw a lot of indicators aside. They quit working. The ones left are not as precise and the first thing they will tell you is there is some major volatility on the horizon.

Fundamentals are the final piece of the puzzle many times. Speculation is one of the first pieces. So what actually and eventually turns out to be the final chapter is not known till you get there.

Talking wheat, right now looking at forecasts, ending stocks and the like to me does not provide a clear picture as to why prices are going higher; the charts show close to six year highs in the Chicago wheat pit on the weekly nearby chart.
Latest numbers show major exporters will rebuild stocks (Australia) and keep world exports level with last year.
So, right now in part it is importers increasing stocks because of covid and also speculation.
I do not think the speculators are done. There is more M2 money in the world then there ever has been.
Eventually fundamentals will decide but speculation bats first

In layman's terms.

Thank you.

[malleefarmer]

Hedge funds speculators etc how long are they?

And when they take profit will it just be a blip?

Will they re establish a position?

What’s the mindset of funds at moment guess that’s a impossible question to answer

And is it mostly beans and corn there most active in?

What’s the Baltic dry index doing that’s a barometer at times Larry if he’s reading this would know that.

[errolanderson]

Hedge funds speculators etc how long are they?

And when they take profit will it just be a blip?

Will they re establish a position?

What’s the mindset of funds at moment guess that’s a impossible question to answer

And is it mostly beans and corn there most active in?

What’s the Baltic dry index doing that’s a barometer at times Larry if he’s reading this would know that.

When markets are straining to the upside or downside, we start to watch open interest as a heads-up indicator of a sudden price change. It doesn’t matter how bullish or bearish a commodity market is; should the funds bail positions en-mass, prices peak or bottom. Grains are raging and cattle are plunging right now, both a watch on open interest right now (IMO).

[errolanderson]

When markets are straining to the upside or downside, we start to watch open interest as a heads-up indicator of a sudden price change. It doesn’t matter how bullish or bearish a commodity market is; should the funds bail positions en-mass, prices peak or bottom. Grains are raging and cattle are plunging right now, both a watch on open interest right now (IMO).

Just an added note . . . . fundamentals start a change in price trend ie: China buying, but technicals tend to end it (fund liquidation) or in this rally, the word ‘cancel’ from China. The sky isn’t the limit in any commodity rally.

[jazz]

Errol some blog I came across claims Canada is in a 3 part crash. GDP crash, debt bubble and impending currency implosion.

Double digit UE in our most populous provinces currently undergoing 2nd lock down.

Thoughts?

[farmaholic]

Whole number double digits is quite a range......10-99.

[errolanderson]

Errol some blog I came across claims Canada is in a 3 part crash. GDP crash, debt bubble and impending currency implosion.

Double digit UE in our most populous provinces currently undergoing 2nd lock down.

Thoughts?

Depression . . . . No V-shaped recovery as advertised.

[jazz]

Whole number double digits is quite a range......10-99.

11-13% Toronto, Vancouver, Montreal, Calgary

min 25% of mortgages, leases, rents, loan pmts in arrears.

[Rareearth]

Markets and risk to the up side are substantially higher than commodity prices going down.

How often do Commodity producers have to pay the market to take product away ( once Alberta crude, and that didn’t last long). If prices, any commodity fall to 0 cost - that’s 100% price change, if commodity prices double that’s 100% - but what if price triple or go higher- paper exchanges with margin calls hurt.