Distorting Havest Data #2

[boarderbloke]

props to fjlip for posting. Not trying to steal your thread, just want to keep it near the top of the list!

I want to bring the following artical to everyones attention, titled,
Food Crisis Again
Driven by bad wheat and a serious collapse the Siberian harvest, world wheat prices and are once more flirting with those panic prices of 2007 and 2008.

<a href="http://www.upi.com/Top_News/Analysis/Walker/2012/11/12/Walkers-World-Food-crisis-again/UPI-96861352697180/"target=blank>FOOD CRISIS Again</a>

From the artical the following is an opinion from the United Nations' Food and Agricultural Organization Director General Jose Graziano da Silva.


There are two bits of good news. The first is that rice is enjoying a bumper harvest. The second is that prices aren't spiraling out of control as they did four years ago, in part because a number of reforms in the market quietly developed by the FAO and the Group of 20. With more transparency and information on crops and pricing at global level and more coordination by leading food importers and exporters, FAO Director General Jose Graziano da Silva says these reforms helped to "stop the worst drought in decades [from] turning into a food price crisis as has happened in the past."

Did you get that!!!?
"prices aren't spiraling out of control as they did four years ago, in part because a number of reforms in the market quietly developed by the FAO and the Group of 20."

QUIETLY DEVELOPED !!!

Clearly governments have conspired to manipulate grain markets this year to avoid food inflation!


More from Jose Graziano da Silva,

"Despite tight markets, a set of conditions and measures have so far stopped international food prices from spiraling up as they did in 2007-2008 and 2009-2010," he added.


Director General Jose Graziano da Silva is very open and comfortable speaking about this as there are by far more EATERS than FEEDERS! I'm sure he's quite proud and feels quite justified in what they(governments) have done to distort grain markets.

[fjlip]

You bet, less than 2% of population is feeders, they are not important, have no political power, are expendable because no land goes unfarmed.

[charliep]

2007/08 was a quite a bit different period than today. Would encourage you to look at charts that go back that far and look at the differences as projected by the markets. Some non agriculture charts.

<a href="http://www.farms.com/markets/?page=chart&sym=CLZ12&domain=farms&display_ice=1&s tudies=Volume;&cancelstudy=&a=M">Crude Oil</a>

<a href="http://www.farms.com/markets/?page=chart&sym=DJZ12&domain=farms&display_ice=1&s tudies=Volume;&cancelstudy=&a=M">Dow Jones</a>

<a href="http://www.farms.com/markets/?page=chart&sym=D6Z12&domain=farms&display_ice=1&s tudies=Volume;&cancelstudy=&a=M">Loonie</a>

<a href="http://www.farms.com/markets/?page=chart&sym=GCZ12&domain=farms&display_ice=1&s tudies=Volume;&cancelstudy=&a=M">Gold</a>

<a href="http://www.farms.com/markets/?page=chart&sym=ZSF13&domain=farms&display_ice=1&s tudies=Volume;&cancelstudy=&a=M">Soybeans</a>

<a href="http://www.farms.com/markets/?page=chart&sym=ZLZ12&domain=farms&display_ice=1&s tudies=Volume;&cancelstudy=&a=M">Soybean Oil</a>

A gentle reminder most crop futures prices have been at close to record highs (wheat is the exception). Seasonality including fundamental factors like when Russia/the Ukraine normally sell (after harvest) are also at play.

If you are bullish, stay long crop in the bin. Just realize you have made a management decision to take on the risk. Risk from my definition is the ability to benefit from higher prices but the realization you will endure pain if prices go lower.

[rook]

what are the measures they are talking about that are changing the market reaction?

[bucket]

Charts are a reflection of history, if you don't correlate those charts to the political, financial and S/d indicators of the time and how they are today, it doesn't help much.

Other than to say " the charts indicate prices are moving lower"

[hedgehog]

there is misinformation at work by govt.
they announced a 15%drop in the uk harvest, when everyone knows it is 50%.
they are trying to keep a lid on it till most farmers have sold everything.

[charliep]

Why would anyone sell under the circumstance you are describing? The answer may be cash flow or storability around moisture contents but if a farmer, they would store here.

Your other issue is that the feed market will take your wheat regardless of quality. On the quality end, North America has lots of high quality wheat that will fit your milling market quite nicely. Your price just has to move high enough to pay the shipping bill to our east coast and ocean freight. I suspect your neighbors from continental Europe are already filling the void.

A world market where grain flows like water from low prices to high prices.

Everyone is talking about Ukraine/Russia - new that has been around for a couple of months. Perhaps the surprise has been governments haven't been doing something sooner. Reality has been all the way along both countries have had smaller crops and thus will have smaller export programs.

[errolanderson]

A common misconception by growers is
that supply or lack of . . . drives
prices.

The demand side of the equation (which
is 50% of price determination) is often
forgotten or mis-judged by producers.
The fallout in current markets is a
classic reaction to a drought market
(very long in the tooth) that has simply
run out of gas. Producers now only have
a hope and a prayer that prices will
recover to their summer glory days over
the next few months.

I'm not a fan of farm storage. A much
safer strategy (which has been addressed
on Agriville) is sell the cash and
replace with calls. At least you will
only be exposed to the value of the
call, not a bin of unpriced grain. And
you get away from the risk of heating.

What has happened to canola has shocked
many bulls. But the fact of the matter
is; Cdn canola production is a drop-in-
the-bucket when it comes to the global
veg oil market. Crush margins here were
running well in-the-red while basis
levels exploded due to a lack of farmer
selling. That works for only so long in
a market saturated with vegetable oil .
. . .

The signal for strong futures and strong
basis is; sell the cash. But for many,
this turns into a storage signal. Prices
are never high enough, until they drop.

This collapse in soybean and corn prices
is no conspiracy by governments as being
implied on this thread. Markets will
adjust for supply and demand by
themselves. The power of substitution is
alive 'n well.

Now markets have shifted from the
'greed' stage to 'hope' and now 'fear'
is entering the market. The last stage
to appear is 'panic'. This will happen
time after time as markets are just a
reflection of human psychologically.

In my opinion, canola is now in the
midst of a $100/MT washout. $660/MT to
$560/MT. This is nasty for those caught
with no protection. But the market is
always right and always will be.

Errol

[hedgehog]

yes its cash every time, otherwise we would sit on everything.
distillers making scotch whisky dont ration demand according to the price, they need the stuff, period.
they cannot buy the soft wheat they need on world markets, as most of it is hard, so they are bidding up for our limited supplies.

[bgmb]

I am a fan of on farm storage. Basis improvement from harvest to winter/spring is going to pay for your bins in three years. You also have an opportunity to negotiate a better grade/protein/trucking after harvest and dont have to worry about lineups and elevators waiting for cars.