China's Stock Market down 7% today

[Hamloc]

Had a look at Cargill's grain prices this morning and the price for CPS wheat in March was 50 cents a bushel below what I sold a few loads about 3 weeks ago. I did some reading and the 7% drop in China's stock market is partially to blame. I usually look forward to life going back to normal after the holidays but this was a rude awakening! Any thoughts?

[samhill]

Uh, yeah. Farmers looking to move grain, pay bills, get ready for next crop, are ripe for picking. Floodded river traffic not helping. China stocks down 7%.

The big money can control or at least influence crop production reports from S. America.
More money can be made shorting than buying and is safer at low prices than going long.

Basically, grain prices have almost nothing to do with reality.

[ajl]

Report on agriculture.com pointed out that China was no longer the top destination for US ag exports in 2015, Canada was. The value of exports to China had dropped 17% over 2014. Mind you there were lower prices so volumes may not be affected as much but it shows how exports to China are slowing down.

[errolanderson]

and slowdown in Walmart shoppers is having a direct impact on China's manufacturing exports . . . . shipping into Long Beach in steady decline.

heavy fallout in U.S. manufacturing data of late . . . .

hike them rates Janet . . . .

[bucket]

Errol

I detect a slight level of sarcasm in your post?

That's not like you.

New years resolution?

[Klause]

Yeah the gong show is beginning like many of us predicted

[errolanderson]

bucket . . . U.S. exporters and manufacturers are now getting thrown under-the-bus for the sake of Wall Street.

And the Fed is implying to investors that the U.S. economy is now able to bask-in-a-lawn-chair while calling for more sunscreen (series of 2016 rate hikes) when in fact, failing global economics are now a massive risk to the U.S. economy.

Klause . . . you are right. It's a gong show . . . .

[TOM4CWB]

I see CDN$ vs US at .7157
NYMEX Feb Crude Oil $36.62@11:37ET

MARKETS COMMODITIES OIL MARKETS
Oil Prices Torn Between Mideast Tensions, China

By NICOLE FRIEDMAN and GEORGI KANTCHEV
Updated Jan. 4, 2016 10:27 a.m. ET

NEW YORK—Oil prices climbed Monday on concerns about increased tensions in the Middle East but weak economic data out of China capped the gains, an early showing of two themes that could help shape another volatile year for crude.

Saudi Arabia’s execution of a dissident cleric on Saturday inflamed sectarian tensions, sparking some worry among traders that crude output in the world’s most prolific oil-producing region could be threatened. Saudi Arabia and several of its allies have severed or downgraded diplomatic ties with Iran.

Saudi Arabia produced 10.2 million barrels a day of crude oil in November, or about 11% of global output of crude and related liquids, according to the International Energy Agency. Iran produced 2.9 million barrels a day of crude that month.

“Rising sectarian tensions between two large oil producers increases the potential for a major supply disruption if the situation escalates further,” said energy-focused investment bank Tudor, Pickering, Holt & Co. in a note Monday.

Light, sweet crude for February delivery recently rose $1.17, or 3.2%, to $38.21 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained $1.60, or 4.3%, to $38.88 a barrel on ICE Futures Europe.

The tension between Saudi Arabia and Iran, two key members of the Organization of the Petroleum Exporting Countries, is adding to the unpredictability of oil prices, which slumped to multiyear lows in 2015 amid a supply glut.

Saudi Arabia, Bahrain Cut Ties With Iran
Saudi Stocks Fall as Iran Tensions Escalate
Gold Rises as Investors Seek Refuge From Mideast Crisis
Brent prices fell 35% last year, their third straight annual loss, as the global mismatch between supply and demand showed few signs of abating. U.S. prices posted a second straight annual loss for the first time since 1998.

Some oil analysts and investors have argued for months that the low price of crude doesn't adequately account for a possible supply disruption due to violence or unrest.

Money managers including hedge funds added to their bets that oil prices would fall in the week ended Dec. 22, according to the most recent data from the Commodity Futures Trading Commission. Increased concerns about geopolitical conflicts could have prompted some traders to close out their bearish bets.

But further tension between Saudi Arabia and Iran could also expand the global glut of crude oil, weighing on prices, analysts said, as the two producers compete for market share. Iran is expected to increase its output by hundreds of thousands of barrels a day this year if international sanctions on the country are lifted, and Saudi Arabia has already expressed its unwillingness to cut production to make room for Iranian barrels.

The heightened tensions with Saudi Arabia could encourage Iran to accelerate its production increases, analysts said.

“For the smaller and more cash-strapped countries, such as Iran, every barrel they place in the market counts because that’s how they can get hard currency,” said Virendra Chauhan, an analyst at consulting firm Energy Aspects.

Weaker-than-expected Chinese manufacturing data and falling Asian stock markets on Monday capped oil-price gains amid renewed worries about demand from the world’s second biggest oil consumer.

Data showed Monday that Chinese factory activity fell in December. Global stocks sold off sharply on the news.

Gasoline futures recently gained 4.3% to $1.3255 a gallon. Diesel futures rose 5% to $1.1797 a gallon.

—Jenny W. Hsu also contributed to this article.

Write to Georgi Kantchev at georgi.kantchev@wsj.com and Jenny W. Hsu at jenny.hsu@wsj.com

Sign In to comment
There are 9 comments.
Newest
OldestReader RecommendedDan Laroque
Dan Laroque 1 hour ago
My one BIG fear is that Sir John Kerry will continue to muck up our relations in Europe and the Middle East. He sure was a traitor with regard to the Vietnam War. So far, he and Baroque O'Bama have truly ruined our hold over Iranian money. They both seem to think their personalities are saving the US from the evils of Islam.

I have never seen such delusional behavior as exists in this Democrat administration.


Jack Armstrong
Jack Armstrong 3 hours ago
I think the Saudis and the Iranians will build all the cash they can in preparation for conflicts. That means they will pump all they can. And since the cost for producing a barrel of oil is less than $6 for both countries, even at $30, each will make more than $24/bbl, a 400% markup.

Result: Accelerated price plunge.

[bucket]

Errol

Why is it so important to bail out wall street?

[errolanderson]

queen bee of the hive . . . .

[bucket]

But it does nothing. They are trading air.


The people that produce something in factories or farms are what countries need.

They are trading oil higher because a middle east change in attitude while inventories grow.

Gas prices at pump continue higher when between the weather and the inventories the people producing something should be getting a break.

[errolanderson]

bucket . . . you are right, trading air is called a market bubble.

The Fed built it and Wall Street is the benefactor. But two key factors will impact market direction in 2016(IMO).

1. China's economy. China does consume
about 50% of global economies. Direct impact on Canada's economy/loonie.

2. The growing cold war between central bankers. This can also be a currency war. This could get ugly in 2016.

[errolanderson]

My mistake; meant China consuming 50% of global commodities, not economies.

But heck, they are effectively gobbling up global economies are well.

[bucket]

Could be China looking for deals.

I will never forget going to a combine to customer event and talking with a salesman. He said if wheat dropped the chinese would renegotiate price while the boat was halfway across the ocean. It then became a go or no go .... usually go.

Then he finished by saying " .... they are crooks..."

And they have hundreds of years of trading experience. That and can set the deal they want because of their size.

[samhill]

I should add that since China seems to be the importer controlling prices, don't forget that they also believe farmers should have a subsistence income.
Many farmers also believe that, as they wish to produce to the point of less than cost .
Somewhat murky water as the cost of land is a large part of production and usually farmers increasing that cost.
Therefore, IDK.