Thu Dec 23, 2010 07:55 AM CST
Darin Newsom
"It was closer to midnight than dawn Tuesday morning when I heard my soon-to-be-12-year-old son rustling around upstairs, getting dressed and ready to face the winter chill to try to get a picture of the rare winter solstice lunar eclipse. Hoping that the early hour awakening wasn't in vain, I joined him outside to see if the sky had cleared enough to see this once every 372 years sight. Lo and behold, there it was, the moon turned blood-red as the shadow of the earth covered it.
After watching the show for a half-hour or so, the thrill soon began to wane and the chill began to set in, making the return to a nice warm bed a winning proposition, if only for a couple of hours before my day with DTN started. Since that celestial spectacular I've been wondering though, surely this was a sign for the ages, or maybe mankind, or at the very least the markets (where else did you think I was going with this?).
It only took a quick Google of the phrase "blood red moon" to show me what I had already expected -- I'll give you minute to ponder what I found: that such lunar occurrence was "certainly" a sign of the apocalypse. And what could be more for Christmas Eve than an end-of-times column? Alvin and the Chipmunks, eat your heart out!
Having made the broad assumption, like so many who have come before, that the end of days is upon us because the moon turned blood red, the tricky part is now making up ... er, I mean finding ... the evidence to support the claim, because it most certainly will have an effect on the markets.
I can't help but remember a question I was asked following my presentation at Commodity Classic outside of Dallas a couple of years ago. After spending the morning talking about the diminished role of fundamentals due to the increased influence of noncommercial money, an attendee asked me what effect the coming events of Dec. 21, 2012, would have on the markets. DTN's at-the-time editor-in-chief was kind enough to remind me that according to the Mayan calendar that is the date earth's time runs out. Taking a moment to come up with my standard Paul Lynde-esque reply, I answered, "Well, that will certainly cut into demand for commodities."
But what if this year's winter solstice lunar eclipse is a portent that the Mayans were off a year or two? Think about it, two-zero-eleven (2011) add it up and what do you get? The year of "13"! So if you happen to be an apocalyptic sort as well as a triskaidekaphobe (one who suffers from an abnormal fear of the number 13), you might want to sit out the coming year in a bomb shelter of some kind. The rest of us though have some time to puzzle over a few issues.
First and foremost, if the world is coming to an end in 2011, does it matter how many acres are going to be planted? When it comes to this question, the best possible solution may be for the world to indeed cease to exist because all other projections leave the four major ag crops (corn, soybeans, wheat, and cotton) coming up short of enough acres to rebuild supplies to a comfortable level.
As discussed at the DTN/The Progressive Farmer 2010 Ag Summit a couple of weeks ago, increasing total domestic acreage by 6.5 million (split among the four) won't be enough. And, finding those 6.5 million acres (some are putting the total increase needed closer to 10 million) could be tricky. As DTN's contributing fundamental analyst Joel Karlin pointed out, 3 million could be found in prevented plantings from 2010, but that still leaves the bulk of acres needed unaccounted for. How about CRP land coming out early? As I've often said, most of the CRP ground I've seen is aptly described by simply inserting an "A". In other words, these acres, if used, are more likely to pull national average yields down rather than cover production shortfalls.
Another key question left to us waiting for the clock to run out is this: If the economy starts to improve, will noncommercial traders continue to pour money into commodities? Well, for starters, the end of the world would seem to make this a moot point. It would be like the police raiding an illegal poker game with all the chips still on the table.
But on the chance that just maybe the apocalypse isn't upon us, this question could prove pivotal to commodities in 2011. As 2010 comes to an end, ag and energy markets seem to be building bullish momentum. Even if the economy continues to see more bullish reports than bearish reports in the coming months, it looks like investment money will remain comfortable in commodities. And if so, that means that both sides (commercial and noncommercial) of the market, barring a little thing like the end of the world occurring, would be bullish commodities at the same time. This would indicate an explosive (hopefully figuratively, not literally) new year.
With the signs of apocalypse causing a fright,
Merry Christmas to all, and to all a good night.
Darin Newsom can be reached at darin.newsom@telventdtn.com"
DTN is a great Info Service!
Darin Newsom
"It was closer to midnight than dawn Tuesday morning when I heard my soon-to-be-12-year-old son rustling around upstairs, getting dressed and ready to face the winter chill to try to get a picture of the rare winter solstice lunar eclipse. Hoping that the early hour awakening wasn't in vain, I joined him outside to see if the sky had cleared enough to see this once every 372 years sight. Lo and behold, there it was, the moon turned blood-red as the shadow of the earth covered it.
After watching the show for a half-hour or so, the thrill soon began to wane and the chill began to set in, making the return to a nice warm bed a winning proposition, if only for a couple of hours before my day with DTN started. Since that celestial spectacular I've been wondering though, surely this was a sign for the ages, or maybe mankind, or at the very least the markets (where else did you think I was going with this?).
It only took a quick Google of the phrase "blood red moon" to show me what I had already expected -- I'll give you minute to ponder what I found: that such lunar occurrence was "certainly" a sign of the apocalypse. And what could be more for Christmas Eve than an end-of-times column? Alvin and the Chipmunks, eat your heart out!
Having made the broad assumption, like so many who have come before, that the end of days is upon us because the moon turned blood red, the tricky part is now making up ... er, I mean finding ... the evidence to support the claim, because it most certainly will have an effect on the markets.
I can't help but remember a question I was asked following my presentation at Commodity Classic outside of Dallas a couple of years ago. After spending the morning talking about the diminished role of fundamentals due to the increased influence of noncommercial money, an attendee asked me what effect the coming events of Dec. 21, 2012, would have on the markets. DTN's at-the-time editor-in-chief was kind enough to remind me that according to the Mayan calendar that is the date earth's time runs out. Taking a moment to come up with my standard Paul Lynde-esque reply, I answered, "Well, that will certainly cut into demand for commodities."
But what if this year's winter solstice lunar eclipse is a portent that the Mayans were off a year or two? Think about it, two-zero-eleven (2011) add it up and what do you get? The year of "13"! So if you happen to be an apocalyptic sort as well as a triskaidekaphobe (one who suffers from an abnormal fear of the number 13), you might want to sit out the coming year in a bomb shelter of some kind. The rest of us though have some time to puzzle over a few issues.
First and foremost, if the world is coming to an end in 2011, does it matter how many acres are going to be planted? When it comes to this question, the best possible solution may be for the world to indeed cease to exist because all other projections leave the four major ag crops (corn, soybeans, wheat, and cotton) coming up short of enough acres to rebuild supplies to a comfortable level.
As discussed at the DTN/The Progressive Farmer 2010 Ag Summit a couple of weeks ago, increasing total domestic acreage by 6.5 million (split among the four) won't be enough. And, finding those 6.5 million acres (some are putting the total increase needed closer to 10 million) could be tricky. As DTN's contributing fundamental analyst Joel Karlin pointed out, 3 million could be found in prevented plantings from 2010, but that still leaves the bulk of acres needed unaccounted for. How about CRP land coming out early? As I've often said, most of the CRP ground I've seen is aptly described by simply inserting an "A". In other words, these acres, if used, are more likely to pull national average yields down rather than cover production shortfalls.
Another key question left to us waiting for the clock to run out is this: If the economy starts to improve, will noncommercial traders continue to pour money into commodities? Well, for starters, the end of the world would seem to make this a moot point. It would be like the police raiding an illegal poker game with all the chips still on the table.
But on the chance that just maybe the apocalypse isn't upon us, this question could prove pivotal to commodities in 2011. As 2010 comes to an end, ag and energy markets seem to be building bullish momentum. Even if the economy continues to see more bullish reports than bearish reports in the coming months, it looks like investment money will remain comfortable in commodities. And if so, that means that both sides (commercial and noncommercial) of the market, barring a little thing like the end of the world occurring, would be bullish commodities at the same time. This would indicate an explosive (hopefully figuratively, not literally) new year.
With the signs of apocalypse causing a fright,
Merry Christmas to all, and to all a good night.
Darin Newsom can be reached at darin.newsom@telventdtn.com"
DTN is a great Info Service!
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