TD Bank Warns Commodity Prices Too High

[farmers_son]

http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20080513.wtd0513/business/Business/businessBN/ctv-business

TD warns of 'dramatically lower' commodity prices
By TARA PERKINS, Globe and Mail Update

Toronto-Dominion Bank's chief executive officer says bankers making loans in Western Canada should do so under the assumption that commodity prices are too high.

TD's lending standards out West assume “dramatically lower” commodity prices than those that exist at the moment, Ed Clark told a financial services conference in New York on Tuesday.

“A banker should assume that the world financial system is over-inflating commodity prices,” he said.

TD is carefully watching oil service and gas service businesses today, he added.

[per]

Had to buy an extra load of fertilizer as I miss calculated last fall. Commodity (grain) prices are high but maybe not high enough. A softening will not be pretty. Now if fuel were to go down it would help. A reconciliation is a commin'. It will make the beef business look pretty healthy.

[kato]

We've been around long enough to see a bit of deja vu all over again.

We were just youngsters starting out in the early 70's as the bubble burst on the record high grain prices that were supposed to last forever according to the experts of the time. If history repeats itself, and it usually does, the next big thing will be inflation.

Here are my predictions, based on no knowledge other than what I've seen before.

First, inflation.

Second, increased grain production. You can see this starting now. We drove by two fields within ten miles yesterday where the windbreaks had been pushed out by bulldozers and burnt. Very scarey! This is very light sandy land.

Third. Every night on the news, a story about a strike. Settled by higher wages to match the higher prices.

Fourth. Lower grain prices, due to the increased production, but not lower inputs until farmers are too strapped to buy them, which will bring them down a bit, but not to what they were before.

Fifth. High interest rates to fight the inflation.

Anyone else here remember having an operating loan that had 19% interest attached to it? I sure do, and I don't ever want to be in that position again. EVER. It was a great time to have money, because I know people who doubled their money in five years with simple things like term deposits. For those with debt, it was a nightmare.

The experts say that this time is different, with increased global demand, but they said the same thing back then. The headlines were full of stories about how we could never feed all the people of the world, yet we did.

They also said we were heading into an ice age. Go figure......