Scary Monsters (And Super Bulls)

Posted by Nogger - a legend in his own mind at 22:52 | Categorized as

09/11/10 -- The USDA report was scarily bullish for soybeans. They have long been to my mind the strongest leg of the complex, although it is always disconcerting when every man, his dog and now his goldfish are all as bullish as hell.

Who said recently that "the only bearish factor is that there are no bearish factors?"

It wasn't that long ago, just in case you've forgotten, that the self same goldfish was actually as bearish as hell. There was only one sensible option left open for EU barley growers, and that was intervention.

The world was awash with burdensome wheat stocks, and we were all falling over ourselves to sell to China, the Philippines, Thailand or anywhere else that would take the wretched stuff off our hands. Yet suddenly the same wretched stuff is gold dust.

Has a drought in Russia and the loss of around 20 MMT of wheat off the world market really made THAT much difference between feast and famine? Surely not.

I mean, don't get me wrong, I'm in the bullish camp myself now if we are talking where prices are going short to medium-term. But do you REALLY think that this is the dawn of a new era? Are current prices REALLY here to stay long-term?

There are lots of plausible and compelling reasons to suggest that we are indeed at the "new normal" and that all that has gone before is merely history. But then again didn't most people believed that only two, or two and a half, relatively short years ago too?

Somebody emailed me today the old adage that the cure for high prices is high prices, in fact they actually said that the cure for high prices is REALLY high prices.

It looks like we might be about to see REALLY high prices. Prices that the livestock industry REALLY can't afford to pay.

Printing money causes inflation, printing money at a time of soaring food commodity prices coupled with the mandatory use of food for fuel is surely insane. The lawmakers from the White House to Whitehall are overdue a rethink, although sadly it would seem that things look set to get worse, possibly much worse, before they are forced to do so.

I think that we might have been here once before, and not that long ago. Timing might be everything on this one. One swift political u-turn and all bets could be off.