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| The important item is the Rate of Usage. Experts and commentators always take notice of shortages when the market is near a top the same as the huge surplus they see when the market is at the bottom. Plus, there are also other factors, usually not noticed except by the very vigilant. In 1973, I glady told anyone who asked, "sell your beans at $4." So, you can imagine how many friends remained 6 months later. However, part of that is due to being raised on a farm in the fifties (The Bensen Years) and watching beans bounce around the $2.35 area just a couple of years prior to the great bull move. I finally did "get right" in the market, but those were special times..soybeans advanced to $13.10, the last $4 was due to a shortage of fobbing capacity (transferring the grain from train or barge to a vessel)..the export elevators had been performing that service for 1 cent per bushel...the grain industry oversold (mainly to the russians and third world countries) our capacity to load vessels and the fobbing charges raced to $1.50 per bushel...you could take delivery of chicago futures where the in & out charges were fixed at 10 cents...therefore, importers used 'lakers' to take delivery of futures...topping off some vessels at the St. Lawrence and in some cases re-loading onto 'salties" at the St. Lawrence...this caused the phenomenal demand for futures. Transportation is always an important consideration. We won't run out of wheat! Another item to consider...is there a BIG stuck short in this market...I have not heard of any..but frequently in markets as dramatic as the wheat...some folks cannot help themselves but to try to pick a top, particularly if they have a lot of money (at the beginning). | |
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From DTN Wheat's "Impossibly Tight" Situation
