Is this the start of a deflationary wave?

[errolanderson]

The drop in commodity prices appears
quite broad-based right now. The
collapse of the feeder cattle futures is
disturbing. Demand is king in this
market, not supply.

And Chicago grain markets are in a price
struggle.

All we need is for crude oil to break
$80 per barrel and the goose is
officially cooked for commodity markets,
Alberta and Canada.

This will impact us all . . . . hone
your marketing skills.

Errol

[bucket]

I love your pep talks errol!

Do you think inputs will decrease as well?

[wd9]

Thought these were to be highly volatile
times. As in stuff goes up and down lots.
If it was down only, it wouldn't be
volatile.

Now i'm confused.

[bucket]

Shit, I hit the wrong button.

Sometimes its not what you make, its what you don't have to spend that makes you more money. If fertilzer drops 100 bucks a tonne that is a 40grand saving for my farm. Makes the downtrend in prices a little more bearable.

My first look at new crop wheat a few months ago, had me targetting 8.25 for new crop spring wheat. Didn't trigger, so now I may wait to see if there is a pop, when the winter wheat reports come out of dormancy.

If the industry or markets continue to move canola down it doesn't bode well for the crush plants. But as one of your previous posts mentioned "how much does wheat have to drop to make canola look attractive" comes to mind. That may be what is happening now.

But its also february and no crop has been made or lost at this point in time.

[errolanderson]

bucket . . . realize that no one wants
to talk about deflation because it means
our standard of living will slip for
everyone.

Media wouldn't write about as it doesn't
sell papers. No politician will bring
this to our attention. Governments would
rather run into a brick wall first and
then blame it on the oil price.

Bringing this up, because there is a
genuine risk (IMO) of a broad-based
decline in commodity prices this year.

In this environment, 'demand' rules the
roost. Money printing ain't going to fix
this mess as the Americans are now
realizing.

[bucket]

errol

Yes, you are right, no one wants to talk about the fact their 600,000 dollar house in Regina is really only worth 125,000 tops.

But the real question is, do inputs also decline?

Commodities can't decline in price and have inputs at all time highs. That might decrease the burdensome stocks but for only so long.

Decrease prices for grains might solve some problems short term but ultimately the world has to be fed or it gets ugly real quick.

[rhoff]

Errol what is your time frame for this broad based
deflation? A global currency war looks imminent
to me.I don't see how heavily indebted gov'ts
around the world will be able to deleverage
without devaluing their currency. It will basically
be a race to the bottom. And Japan is just getting
started and has a long way to go so I struggle with
the idea we are headed for deflation that would
last any amount of time.

[ColevilleH2S]

Where is all of the money going? If
dollars are so short in supply that
120,000 of them will eventually buy what
600,000 of them does now, that means
they will become more valueable with
time. I find this hard to believe given
what central banks have been doing over
the last few years.

[cottonpicken]

Deflation would lead to total economic melt down.

[cottonpicken]

When the state goes to far in debt and can not fund
itself and cannot pay the debt off the,the debt is
restructured,the currency is devalued and currency
induced cost push inflation is the conclusion.

This is how it works.

[Burbert]

Oh no, wes need/want prices climbing,
climbing all the time, our economy depends
of it. Ripping off customers is the only
way that the thing will work, otherwise we
need schemes, scams, and theft ta maker
work. Oh and pipelines, lottsa pipelines
to pump er dump oil whereever, whenever
theres a bitchbubble forming. Go Comedia,
go. Heil Harper

[crusher]

I was starting to get a little concerned
about grain prices, now that there is
talk of deflation we should be all right
for a while.