Impact of an 91 cent loonie

[charliep]

Just a note to highlight the impact of the dollar on prices. Not talked about but is one of the reasons why canola futures never hit $500/tonne.

On March 5, ICE canola futures closed about $405/tonne (Nov.). CBT beanoil closed at about 32 cents/lb. Loonie same day 78 cents. My fancy back of envelop calculation would result in a canola benchmark price of Cdn $410 (soyoil converted to Cdn $ times 10).

Fast forward to current values. Canola November futures $465/tonne. December soyoil - 39 cents/lb for a nice round number. Loonie - 90 cents. Envelope calculation - $433. If the loonie was worth 78 cents, the theoretical price would be $500/tonne.

An emalt quote to finish.

Quote of the week

" Management is doing things right; leadership is doing the right things."
Peter F. Drucker

[MoeAgostino]

[pilpilsner]

Sorry to break it to you but even the semi retarded kid that hangs around the slurpy machine at seven eleven new that the cando would move higher and when it did it would be fast and furious

[cottonpicken]

Sell dollars and buy more risky assets like commodities?

Maybe the dollars are risky?

[charliep]

Just curious. As a Canadian hedger, would you guys suggest being long or short the loonie? If you have grain inventory, what impact has the higher dollar had on the value of your commodity?

To put bragging rights into perspective, how many dollars do either one of you have you made on hedge/speculative currency account as a result of correctly calling the market?

Talk is cheap. Money in the bank is what counts.

[charliep]

The second paragraph is on currency by the way.

[cottonpicken]

Somewhere around 300% percent over 5 years.
When i started saying the cando would rise.

We can not get around the fact that as our commodities rise so to does our dollar.

This loss is not as bad as it seems because our purchasing power rises with our dollar.

Not to long from now the usdx will completly fall apart.

What is so important about this,besides the obvious.

IT IS THE WORLDS RESERVE CURRENCY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!

If you do not understand what RESERVE CURRENCY means,i would get edgchamacated.

[charliep]

Fair enough. If you had a business that had major currency exposure (oil company, the CWB, a manufacturer. etc), would you be long the loonie today as a hedge strategy?

[charliep]

For what its worth from today's newsletters.

Malaysia and China mull ending trade in dollars: report

By Chris Oliver & Michael Kitchen, MarketWatch
HONG KONG (MarketWatch) -- U.S. Treasury Secretary Timothy Geithner said Tuesday that China has confidence in the U.S. economy, even as official Chinese editorials and news reports berated Washington for selling a "devalued dollar."

Geithner, who was wrapping up a two-day visit to China, said officials there shared his positive economic outlook for the U.S. and understood the Obama administration's need to run higher deficits for a temporary period.

"They've got a pretty good feel for what we are trying to do and are very supportive," he said in an interview with CNBC.

Geithner's visit to Beijing, his first since assuming the helm of the U.S. Treasury, included scheduled meetings with Chinese President Hu Jintao, Premier Wen Jiabao, and the nation's top commerce, finance and banking officials.

In the CNBC interview, Geithner downplayed his earlier criticism of Beijing, in which he accused the Chinese government of keeping the yuan at an unreasonably low level against the U.S. dollar in order to boost China's exports.

He did say, however, that China recognizes the need for a more flexible exchange-rate system, saying such a move "will help them ... to use monetary policy to address future growth and inflation challenges."

source: http://www.marketwatch.com/story/geithner-chinese-media-offer-dueling-outlooks

[charliep]

Wrong story.

Malaysia and China mull ending trade in dollars: report

By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) -- Malaysia's prime minister said his country and China are considering conducting their trade in Chinese yuan and Malaysian ringgit, according to a published report.

"We can consider whether we can use local currencies to facilitate trade financing between our two countries," Malaysian Prime Minister Najib Abdul Razak told reporters at a briefing Wednesday, according to The Wall Street Journal. Najib spoke after meeting with China's premier, Wen Jiabao.

"What worries us is that the (U.S.) deficit is being financed by printing more money," Najib reportedly said. "That is what is happening. The Treasury in the U.S. is printing more notes."

In recent months, a chorus of Chinese officials has expressed concern about their country's investments in dollar-denominated assets.

Source: http://www.marketwatch.com/story/malaysia-china-mull-ending-dollar-trade-report?siteid=rss&rss=1

[cottonpicken]

I'll turn you into an inflationist yet Charlie.

The wierd thing to me is how its gone on for so long.

Uncle sam must have a nice smile and an even nicer gun.

Imagination the simple fact that china has enough dollars to pretty well buy all the ag land in the us.

And this happened in a few years..

Hope they dont hold a grudge after that ass kickin we fed them during the opium/boxer wars.

If its true they think in hundred year time frames were fubared.

[charliep]

Not an inflationist yet but I recognize the risk. Suspect that if you reviewed postings the
last two years, inflation has been the issue on a lot of peoples minds (including mine).
Reality may be closer than anyone thinks.

Will note you have been right on gold with the comment it has move to a trading range
of $900 to $1000/oz. Moving to the top end of the range. Thoughts?

[cottonpicken]

My big gut is telling me were headed for a big gap up sooner rather than later.

I dont actually see a dow crash which goes against the shiffs and rodgers,just sideways movement.

As for the usdx its going lower but.......maybe not against global currencies,it will be a hidden move lower,its purchasing power will decrease when compared to tangibles.

The bond market is still the wild card.

Can the fed get away with printing money to purchase debt to keep interest rates low?

Its such a massive market it is hard to say.

Two years out does the world start looking like the bad parts of the bible?
Maybe not but some places in the world are going to get hit hard.

[Hopperbin]

Looks like China lost a bid to purchase a big chunk of Billiton. The way I look at it, we need to own our resourses or we will just end up slaves to the Chinese.