2013: A Global Commodity Slump?

[checking]

I could (lol) not help but notice all the could(s) in Errol's post. Well, I say fudge on a view until that person says "shall".

Too many unknown x's in the world to go with anyone's chart.

[ado089]

Tom, even with some population growth
you need to dig into where that is
coming from. In the west that will come
from immigration and longer life
expectancy. Old people don't spend like
young families, building houses, buying
vehicles, paying for education and
spending on entertainment. China is
projected to top out by 2025 and India
at 2040, with the remainder coming from
Africa and parts of S. America. China
has a similar demographic shift as the
west. These growing populations are
coming from areas of economic distress
due to politics and culture, any
advances in those barriers will undoubtedly come with reduced birth
rates. Tying that back to agriculture,
the poor will still be poor and we as an
industry will continue find ways to
produce more food. Even with tight
supplies if the rest of the economy is
sluggish it will bring the price of
everything down with it. In my opinion
we are in for 20-30 years of choppy and
volatile economics until the distressed
areas of the world become more affluent
and the children of the boomers hit peak
spending in their 40's and 50's in the
west. If I were 45 plus I would be
cashing in my chips right now or plan on
holding them for another 20 years.

[ado089]

In fact my farm bushiness plan has
$20/ac/yr land value loss built into it
for the next 15 years.

[cottonpicken]

I see canola making 100$'s in 5 years.

[errolanderson]

My concerns about commodity markets stem
from China.

The World Bank has forecast that China's
growth will slow to 5% by 2015. And
growth below 6.5% is effectively a
sunken economic ship for the Chinese . .
. they will again experience hard times.

And hard times for a communist country
mean lower food prices. In other words,
'deflation' is a risk.

To me, 20013, 2014 and 2015 may be (for
lack of better words)'a bag of crap' in
the commodity world. No doubt there will
be rallies, but given this global mess,
these rallies won't hold (IMO). Global
conflicts may offer temporary relief.

My apologies for being so opinionated,
but in my mushy brain this is as clear
as it gets . . . . If China goes down,
Vancouver and the rest of Western Canada
goes down. Our engine is directly
attached to their engine.

Then stir in a broken U.S. and Europe's
depression.

That's why I'm pounding the risk
management drums. Our markets now offer
solid opportunities, but the problem
with bull markets is that when they are
over; they are over very fast.

Errol

[hedgehog]

communist or not, low growth or not, the chinese need to eat.
they will buy what they need, otherwise a revolution will follow.
there is no real connection between growth and food consumption, it is inelastic, driven by supply(variable) and demand(rising).

[sumdumguy]

China and India have fueled this whole bubble.
Vancouver realtors are all shaking in their boots.
Canola has been a Cinderella crop but yellow
fields touching yellow fields may generate too
much disease to continue. Canola for fuel is not
sustainable.

Where are we going to make margin? Flax- how
much flax can be absorbed. agri-stabilty?
Keep paying the high cash rents, buy lots of
metal on credit. This pattern is just like the
governments

[bucket]

errol

So what is the answer?

Sell out to the highest bidder, send back the machinery and be unemployed in a couple of years because of a shitty economy?

Watch the money become worthless because the chinese farmers in canada need 1000 bucks for a loaf of bread?

[TOM4CWB]

Ado089,

We have been here farming in northern AB since 1881... and cashing 'chips' in; not in the rule book.

Interesting times... will be no doubt be coming our way!

Cheers!

[Hopperbin]

The World Bank has forecast that China's
growth will slow to 5% by 2015. And
growth below 6.5% is effectively a
sunken economic ship for the Chinese . .
. they will again experience hard times

I still don't get how growth like this durring these times and at the stage China is in is bad at all. Its normal they have to slow down. Everything is good. They are eating more meat that meat must be fed via soybeans. I think a lot of farm land investment companies will dissagree with Errol and I am inclined to side with them at the moment.