It will be an ugly couple days ahead!!

[wd40]

Beans, and Canola will be locked limit tonight, and Monday, and possibly Tuesday.

Look for support in Beans at the old high around $1285, if we break this it could be ugly.

We need these margin calls to get straightened out.

[cottonpicken]

I'm hearing its chinese causing this and i hope the b@stard shorts get burnt!

[Hopperbin]

Cotton you can only be short for so long.
The Chinese are purchasers of oil, beans, and canola. How could they be on the opposite side of the market? Can you explain? Now the Chinese could tell George Bush to stand on his head and he will. There could be a connection.

[Hopperbin]

I agree CP the Chinese are defintley using there power to munipulate the market no doubt about it.

[Hopperbin]

And another thing STOCKS TO USAGE HASN'T CHANGED!!! The market needs every bushel of Beans grown possible to meet demand.

[charliep]

Spent time with a Chinese delegation that manages their internal food supplies/pricing and got a good handle on their approach/internal concerns about food inflation.

Cottonpicken. Always confused by your definitions of shorts and longs. In the Chinese case, the need soybeans/vegetable oil - my definition is they are short cash. They are looking around for soybeans/cash to cover these needs. They would have their risk covered in this case. If they can't find the cash commodity, then they can cover by getting buying/getting long futures (which I guess makes them a good guy). As they source the vegetable oil they need, they will be liquidating the long futures side by selling.

I could run through examples where someone would short the futures (may because they are long cash) and be doing the right thing. Maybe you can help me understand why these individuals are ______?

Now if you are speaking your position and are on the wrong side of a speculative trade I understand. Kinda reminds of watching the running of the bulls at the Strathmore rodeo. I don't think either the bull run or the bear pit are overly friendly these days. Initial margin and daily topups will not be fun.

[cottonpicken]

If a large number of specs pile up on the short side of a market they will pull the price down.

If a large number pile up on the long side the price will rise.

This is the way markets can be manipulated.The technicals get broken down,the black boxes come in and do the rest.

Now another broken record rant that continually falls on deaf ears.
If you want to find out if the cwb was doing a criminal job,you would simply compare their sales dates with the charts.

One final thing-it is in ABSOLUTELY nobodies interests to have soaring food costs.

[charliep]

You might have to admit some of the recent declines may have been profit taking. Lots of reasons a market moves different directions on different days.

[chaffmeister]

CP:

I'm with Charlie on this (unsure of what you are trying to say).

Are you saying the Chinese are heavily selling futures, which is pushing the markets down? (Your idea of large numbers piling up on the short side.) So on top of them being a natural short (as Charlie points out) they are adding to it by selling futures? And they are doing this to drive the price down?

Just want to be clear as to what you're saying.


On your CWB comment:
"If you want to find out if the cwb was doing a criminal job, you would simply compare their sales dates with the charts."

First problem: Where do you get their "sales dates"?

Unless I totally misunderstood what you're suggesting, it sounds like what you may be suggesting is that if the CWB sold at the wrong time in the market, it would have screwed up.

If you think CWB marketing performance can be vilified on the basis of market timing alone, you've missed some fundamental facts about marketing grain.

Working for my past employer as a grain merchant/trader, we never ever turned down a sale because we were bullish and "the timing was wrong". As you know, there are many ways to mitigate "bad timing": sell out of a long position, replace the cash sale with purchases of cash grain or futures, and so on. Where the CWB is different is that it can't do any of these. It just sells grain.

Perhaps the simplest idea is this. Since a grain merchant's job is to both buy and sell grain, when you're bullish, on any given day you buy more grain than you sell. (After all, you want to stay long, right?) If you can't do that, you raise your selling price so you can raise your buying price.

The CWB is a bit different. It's a natural long. And as Charlie has pointed out many times, it needs to sell grain when it can. And that’s when the buyers are buying. Can it replace sales with futures positions so it doesn't reduce its long position? I don't think so.

Being long and able to merchandise (sell) grain into a bull market is a grain merchant's dream. Or a farmer’s. Acting on behalf of farmers, the CWB would be no different here except the decisions are out of farmer's hands. Whereas US wheat farmers can (1) time their sales to fit their cash flows and other operational considerations, and (2) replace their sales with futures if they want to stay long, Western Canadian farmers can't do either. And the CWB can't either.

Yes, the system is flawed. That's what many of us have been saying for years (speaking of falling on deaf ears).

So, from my perspective, your idea of using market timing to criticize the CWB doesn't make any sense. But maybe I misunderstood you.

(By "criminal", I assume you mean "lousy", and not really "criminal" in the legal sense.)

Reading your posts, I have always thought of you as a market speculator, not a merchandiser or hedger. This latest idea is just one more example supporting that view.

[cottonpicken]

Chaff,i've only been studing technicals for a few years and it will take a lot more before i'm a qualified expert,but some of these things are pretty basic to understand.

Have you ever heard of a "breakout level"?I know Lee has even mentioned it(maybe he can help explain some of this)

What do you suppose selling at a breakout level does?

How about selling at the "bottom" of a trend channel?

What about selling at a double top?

I'm trying to think of some simpler explanations but it would take a bit of technical understanding on your part for you to ever agree.

As far as the market mechanics of shorting a market or going long(selling-buying futures,buying-selling puts and calls)I guess you either believe this effects price or you dont.

I'm surprised this needs explanation.
Snappy can you help me out on this?

When i said criminal i ment criminal,although i dont know of any particular laws that they could be prosecuted under.Just the moral kind.

[cottonpicken]

Chaff, and Charlie. What CP is trying to say is that when your in a bull market as we are right now. China controls the market with all their BS all the time. They know they don't have their Soya stocks met for the Olympics this summer. But they come out now saying they have all these Gov't reserves that they may even be able to export out!!! So they tank the market knowing this.....So they go short selling the futures in a bull market. Once they have the capital again they step in and buy at their price........... So what CP is saying let the shorts burn, we hope the bast#$^ds get caught. No it's not illegall what they are doing.......but I agree it's not right.

This is what CP means, and if it isn't....This is what my take is.

[charliep]

My experience is that China is an good trader with the objective of buying low (just like every other buyer). They are not the issue in current market however. I expect the market has over reacted and funds that have been along for the ride for a long time are cashing in on profits. A signal for the bottom of the market will be China stepping up and buying to cover their needs. That would be the begginning of the next leg. Lots of other information. Seeded acreas. Weather. World economy. Energy costs.

[charliep]

snappy

Curious on what evidence there is that China shorted the market? I would be cautious of gossip in newsletters.

[chaffmeister]

CP:

OK, so let’s say you’re the marketing manager at the CWB and Indonesia is in the market for 100,000 tonnes of wheat. (Assume we don’t care what kind or grade – let’s keep this simple.) Market fundamentals are terribly bullish (again, let’s not worry about the details). Trouble (from your perspective), is the market (futures) price is at the bottom of a trend channel – not a place or time you want to sell.

What do you do? (As the CWB, you have two options: you can sell or do nothing.)

I’m going to guess that you would say “don’t sell anything” because technically we are at support levels and if anything, you’d want to buy. Or you might say “if you absolutely have to sell or else lose the business to someone else, then sell it and replace it with futures”.

What I was trying to say in my earlier post was that as the CWB, you really don’t have those two options. As the CWB, if you pass on business, it doesn’t come back. And, as far as I know, the CWB’s mandate does not include being long futures.

So, to reiterate my last post, you can’t vilify the CWB on timing of sales alone and call it criminal. What I have said over and over is that the CWB system of selling somewhat evenly throughout the year diminishes any market power it might have. Price comparisons have shown that this kind of marketing results in less than average returns. And farmers can’t do anything to counter it.

Criminal? No.
Piss-poor? Absolutely.

Snappy:

As for China, my experience is that they aren’t known to get short futures in a major way (although who knows, right?) since they are often a natural short (when they are net importers). So, I wouldn’t go so far as to say they are selling/short futures, but they have been known to send the market bogus signals (as you’ve suggested). Problem is you never know whether it’s true or bogus. I’m with Charlie on this one – be careful about rumours. Can you or CP direct me to where it’s being said that China is short futures?

CP/Snappy: A technical service I get stated the following this morning:

“With last week’s trade in the SK, the market completed a weekly key reversal. The daily cycle is continuing to head for its low but it is a whole new ballgame with the weekly key reversal in place. This key reversal is very good evidence the weekly and potentially the monthly cycles are in their respective down phases. If you will recall the bi-weekly update dated January 11, 2008, you will have read that from a probability point of view the ideal month for the monthly cycle to peak is March 2008.”

So you see, technically, this reversal has been suggested for some time. As a technical signal, the key reversal is one that been very good to me over the years.

[cottonpicken]

http://www.jsmineset.com/

Scroll down to the friday,march 7 204 pm article by dan norcini.

Then read the whole page and get yourselves up to speed on whats going on.You are embarassing yourselfs.