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lannarebirth

$CRB outside candle month. That ain't bullish is it?

Spin

CRBs down 10% this month now, bleak isnt it?

lannarebirth

Not if you drive a car. People have no business "investing" in commodities. It's a closed shop. I hope they get their heads handed to them.

Spin

Corn/wheat etc are down 20% fertilizer prices are up over 50% ytd. Farmers think its bleak right now I guess?

lannarebirth

Remeber when the newspapers were full of articles on the high rice prices back in April? middle men will have booked some nice prices. let's see what farmers get at harvest time. yeah, bleak i'd say:

Barchart.com - Charts - ZRU8 ROUGH RICE [E] September 2008 CBOT

Spin

Farmers are gonna be ok, US/world grain inventories are at 8 year lows.

bkkandrew

^Don't give them facts Spin. They go into spasms of denial if you do.

Panda

The $US has been gaining strength against all the major currencies over the past 3 weeks. At the same time, food and oil have dropped in value.
There seems to be a correlation? Didn't the price of oil start to rocket up about the same time the $US went on a slide around a year ago?
Exchange Rates Graph (American Dollar, British Pound)

britmaveric

Soon will fall below $120, think we are def trending towards under a $100.

lannarebirth

It started going up (strongly) when the general public started investing in commodities as if it were a true asset class. their contributions were small enough that rolling over their futures positions made them still more money as markets were in backwardation. Now that they've gone contango and the price is falling the hot money is staring to disperse. It's pretty obvious if you follow the money and you do't get attached to your own idea of "what must be happening".

Panda

"backwardation" and "contango" ?

lannarebirth

Despite the ideologies on display here claiming to know why commodities have been rising, there is only one reason they rise, and that is because someone throws more money at the market. The last few years "investment funds" have and involved themselves in commodity markets, not because they have any particular interest in commodities, but because by buying the futures and rolling out the contracts each month, they can by themselves move the market higher. Heretofore a condition called "backwardation" existed, WHEREBY FUTURE MONTHS CONTRACTS WERE PRICED CHEAPER THAN FRONT MONTH CONTRACTS AND THESE FUNDS MADE ADDITIONAL MONIES ON THE "ROLL". nOW A CONDITION KNOWN AS "CONTANGO" EXISTS AND EACH TIME THEY ROLL OUT THE CONTRACT THEY LOSE MONEY AS FUTURE MONTHS ARE PRICED HIGHER and they're receiving a negative roll yield. It's alwayys about the money and never about the ideology, although many people can intellectualize the ideology easier it is usuall wrong.

ooh, sorry about the caps

Panda

^ Speculation then?

Butterfly

what facts ? the only one in denial seems to be you

Butterfly

exactly, accusing the Chinese or India of consuming too much oil as the reasons behind the rise in prices is ridiculous, above all when current oil supply can server everyone. No shortage, no matter how many new cars the Chinese are buying. The "weak" will fall for the lies and go where everyone is going, following the market. Meanwhile those with a clue started to unload their portfolios as soon as the rush was too obvious.

lannarebirth

In a manner of speaking yes, but when you move into a closed end market, with an incredible amount of money, it's not speculation that you can move it higher. It WILL go higher. The hard part is getting out with all your money. It's like a pyramid scheme in a way. Same as it ever was.

Panda

I am a bit naive here, but it sounds more like market manipulation than just pure speculation.

lannarebirth

That's right. Commodities are closed end markets with limited "inventory" in any given year, or in some cases, ever. Consequently regulations limit the position size any one entity can hold or they can move, even corner the market. That's what's been going on and recent legislation has been passed to curb thepractice. the regulatory hammer hasn't fallen yet, but the market is selling off in anticipation that it will. commodities markets are not a place for "investors" It is a place where producers and buyers hedge their prices for receiving shipment of commodities. The "funds" have no intention of ever receiving shipment, they just want to drive the price higher, which they did.

Noneof that means it won't go back to this level (or higher) in the future if true market dynamics warrant such a move. That is not extant at present, thus the selloff.

Butterfly

Commodities players usually deals with OTC forward contracts, not futures. The OTC is huge and private, organized through different market makers in the big banks, and all contracts are customized while Futures contracts are organized in a public open market with a clearing house and standards.

OTC Forwards is where oil companies buy and sell their oil when they need to distribute it, futures is where speculators do their arbitrage when they "imagine" things or take financial bets.

Spin

Do you have any confidence in the authorities in their quest to close the loopholes that allowed this price manipulation in commodoties?