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Grain / Cattle Market Test Again

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    Grain / Cattle Market Test Again

    The Feb bull run has been amazing for
    both cattle and canola, but these
    markets are again at another technical
    crossroads. A bull market always has to
    be fed.

    The ultimate lead in these markets has
    been the strength of stock markets in
    2012 to date. Can it last? Believe
    Greece is still just the warm-up act in
    Europe.

    Demand and fund buying has been a
    powerful driver of canola prices of
    late. But the cash market is due for
    test very soon. Maybe by mid March . . .

    Barley bids will be supported by roadban
    season. 10 to 15 cent/bu premiums will
    likely hold for a few weeks.

    Like the cash pulse markets: ie: peas.
    Stronger spring pea bids appear
    possible.

    U.S. cattle prices hit an all-time
    record of $130/cwt, but will the
    consumer accept a 10% beef price hike at
    the supermarket? Cdn cattle prices
    continue to show signs of weakness.

    Is the U.S. economic recovery for real?
    True or False

    Soybeans are now technically overbought
    and nearing exhaustion while the South
    American harvest ramps up.

    Cotton . . . I know we have differing
    money supply viewpoints. If we live long
    enough, we'll both be right. But the
    money supply will affect the degree of
    inflation or (in my opinion) deflation
    ahead.

    Interest rate hikes are 'dead in the
    water' There is way too much debt out
    there for central bankers to tinker with
    this.

    Is the pot stirred enough?

    Errol

    #2
    The U cannot recover. Pars

    Comment


      #3
      If you cry wolf enough you might be right eventually. Probably a pullback and profit taking for a week or two.

      Comment


        #4
        I use macro info to determine general market
        direction in the medium/long term.

        I use technical analysis for short term marketing.

        I posted this 28 hours ago on canola:

        I don't think we will breach 600,close enough
        now,and 700 is even tougher hurdle,correct down to
        525 and sideways for a time.

        I have not run specific numbers on cattle and don't
        play to close attention because i do not have a
        position of paper or physical,but without looking at
        the chart and only the futures price this morning i
        don't believe the technicals have broken down
        yet,which eventually they will.

        Its not about being right all the time its about being
        right 7 out of 10, and limiting your losses.

        Comment


          #5
          So how do you protect a hedge if you have
          a crop failure? Hedging works only if you
          actually have crop to sell, but is there a
          way to get around the risk of not
          producing anything and not having anything
          to deliver against your hedge? Seem to me
          the only way is not to hedge at all.

          Comment


            #6
            Whoops,the daily feeder cattle chart has broken
            trend.Guess i should look before i talk,lol.

            Comment


              #7
              Markets are a lot like the weather. If you just say that it will be the same tomorrow as it was yesterday, you will be correct 80% of the time. That's 8 out of 10 for the flunkie mathematicians, the definition of trained or self taught economists.

              Nevertheless, I continue to like the way Errol writes without the typical economic BS jargon.

              Comment


                #8
                If you stay on this theme you will eventually be
                right but how much does it cost you in the
                meantime?
                posted Jan 31, 2012 23:03      
                Also, crude oil is at least $20 per  
                barrel overvalued, maybe more. When that  
                bubble bursts, corn and canola are in  
                big trouble. U.S. corn could be a sub  
                $5/bu market quickly. Canola may dive  
                into a $9 to $10/bu range which is still  
                considered high when looking at the big  
                picture. 
                 
                Even bulletproof cattle could run for  
                cover triggering some nasty feeding  
                losses.  
                 
                These markets can tumble hard and fast  
                if the right market ingredients converge 
                I've seen it many times in my career and  
                it will happen again. Commodities are  
                clearly at deflationary risk in my mind. 
                 
                Errol
                IP: Logged
                Edit?    

                Comment


                  #9
                  If prices drop, does that not create an opportunity for more demand?

                  If a pullback creates demand, what happens to the rationing logic that is currently in place for canola?

                  Comment


                    #10
                    rhoff . . . thanks for repeating.

                    Stand by this projection. Crude oil
                    remains highly overbought (in my
                    opinion). Precious metals also remain
                    overbought. Corn will no doubt be
                    volatile, but downside risk remains
                    high. USDA on Friday.

                    Cash canola bids may have a sharp
                    correction, but markets are always
                    right, not analysts.

                    Errol

                    Comment


                      #11
                      Hey Errol, I suspect you are right. A correction is ahead of us. Could even be severe.
                      BUT. Timing is everything. In early December with Canola sub$500, it looked like the good times were all behind us. Now at $80 higher, that wasn't the case.
                      So while I know you are right, when do you think this is going to happen? It could, no WILL, make quite a difference.

                      Comment


                        #12
                        I could always predict the markets with
                        almost 100 percent accuracy,however my
                        timing was horrible. If someone could
                        predict the weather, we could all be
                        better marketers. With all the
                        volatility in the world, financial and
                        climatic, I'm reluctant to hold any
                        position. Interesting times.

                        Comment


                          #13
                          Kodiak . . . you are right, timing is
                          everything.

                          Typically, I can look like a donkey for
                          quite a while, but evolution of commodity
                          funds has made markets more volatile and
                          much tougher to access. Have to rely on
                          fundamentals ultimately, sort out market
                          noise and use a 15 year old broken ruler
                          as my technical indicator. No magic here.

                          Comment


                            #14
                            errol

                            What happens when you link your historical trade data to that of the historical weather patterns?

                            It wasn't that long ago the western canada couldn't produce a 10 million tonne canola crop, what happens if the weather reduces the crop to sub 13 MMT???

                            Comment


                              #15
                              Why would you lay a historical weather map down? According to bgmb good farmers grow a good crop every year regardless of weather. Therefore you need to lay down a map of stupid farmers and good farmers and then you would see what the yield expectations for canola are next year! Cannot help but laugh as I write this. When we look at reality of yields what is the first thing we all look at WEATHER. When some look at the margins of stability program they say it is the stupid farmer.

                              Sorry to interrupt your conversation. But of course the weather map should be used and it would be interesting.

                              Comment

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