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A Few Comments.
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SeniorCitizen
Posted 1/24/2008 20:56 (#292210)
Subject: A Few Comments.


Firstly, I am very uncomfortable with the way these markets are behaving. I remain friendly to beans & wheat but don't like that market flip flopping & feel pretty much the same way with corn.

I am going to hold these small positions until the smoke clears. The Fed cut rates, Europe did not follow...could be a problem unless that is solved in short order. China growth continues & have to hope they don't but the brakes on too hard. The stock market has rallied, but my guts tell me we may again run into trouble again, unless we address some basic problems.

We have a consumer driven economy. We've beat housing apart. We've drained the consumer with high energy & I fear some of these investments floating throughout the world are so complex no one knows their worth. Markets don't appreciate uncertainty. When this housing thing was initially evaluated the experts suggested it would be a $100-$150 billion hit...of course it is much larger..now, will a $150B stimulus package be large enough? No one knows. My point, if you cannot accurate identify a problem, how do you solve it or treat it? The Fed has thrown a lot of cash at this market & it still acts spongy to me. I am not going to get bearish on the stock market at current levels or lower, as I think the Fed will continue to feed liquidity into the system & Congress has an open check book. My gut feel is, Bernanke is less afraid of inflation than of deflation & that in the long run will benefit ag prices but will be volatile. No place for the faint of heart, as costs will also be difficult to control.

Cow Herd. I recall, and I am sure there are a couple of others with identical memories, attending several seminars hosted by LBAS back in the 70's after cattle prices left the price era of $20's rallied into the $40's & in 1979 cow beef demand sent the market sharply higher.

The LBAS subject was frequently...ranch land prices are too expensive & etc. etc..those ranch land prices have gone a lot higher, and in my opinion are not going to decline except in a normal cyclical fashion. Therefore, the expansion & contraction of our cow herd will float within a formula of corn prices, roughage supplies & price of fat cattle.

The key is herd liquidation. Wholesale meat prices are predicated on processed beef supplies. Cow meat is a 90% lean souce. The fast food people utilize 73 & in some cases higher...the source being cows, selects &/or fed cattle chucks. IF THE COW HERD is in strong enough hands & we do not see herd liquidation...fat cattle prices have to go higher or corn prices lower. In our current grain demand scenario, I don't envision a collapse in corn prices. I see lower, but then into a trading range of sorts. And, my ideas of lower just might come from yet higher prices. Therefore, at some point I expect fed cattle prices to advance.

Our hog herd is also in strong hands, except that business is getting pretty stressed. Plus, there is a lot of pork around, but we are selling it either domestically or exporting it.

A strong grain export market adds the frosting on the cake. However, strong domestic demand is also required to maintain these kinds of prices.

We are in markets in which the day to day action can lead to whip saw trading and as I continue to study various relationships, I think many of the price patterns of the old days are evolving into new relationships. Additionally, the part which I dislike, some of these extreme prices are going to encourage massive increases in foreign production & add to our swings & makes international weather something which we must all begin to follow in addition to everything else.

I am going to watch for another few sessions to try to detect either a continuation of trends or reversals. I threw the worry beads away as the rattling irritates the spouse & keep getting them tangled on the computer and right now I need a free keyboard to keep track of all this stuff & more time, patience and the most adrenalin I can muster. Hoping that when I do again get a hot hand, I don't experience a senior moment.






















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