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BloggingStocks http://www.bloggingstocks.com BloggingStocks http://www.blogsmithmedia.com/http://www.bloggingstocks.com/media/feedlogo.gif BloggingStocks http://www.bloggingstocks.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[USDA's Crop Report Signals Higher Food Prices]]>http://www.bloggingstocks.com/2011/04/01/usdas-crop-report-signals-higher-food-prices/http://www.bloggingstocks.com/2011/04/01/usdas-crop-report-signals-higher-food-prices/http://www.bloggingstocks.com/2011/04/01/usdas-crop-report-signals-higher-food-prices/#commentsFiled under: International Markets, Economic Data, Commodities, Agriculture

corn Here it is in a nutshell: Prices of grains and cotton have skyrocketed year to date. The United States Department of Agriculture's (USDA) report released Thursday stated that corn and wheat prices have doubled in the past year. Soybeans were up 50% and cotton was up 155%, as reported in the Wall Street Journal.

What has caused these sharp increases? The key mover has been exports. China, India and countries in the Mideast are stockpiling grains over fears that they will not have enough to feed their people. Corn in storage fell 15% on March 1. Corn has been hit doubly hard because 40% of it is used for ethanol production and a large amount goes for livestock feed.

Continue reading USDA's Crop Report Signals Higher Food Prices

USDA's Crop Report Signals Higher Food Prices originally appeared on BloggingStocks on Fri, 01 Apr 2011 10:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>agriculture plantingscommoditiescorncorn ethanolcottonexportsfeaturedinternational marketsinthenewssoybeanswheatFri, 01 Apr 2011 10:00:00 EST<![CDATA[Crisis in Japan Creates More Demand for Commodities]]>http://www.bloggingstocks.com/2011/03/17/japan-crisis-creates-more-demand-for-commodities/http://www.bloggingstocks.com/2011/03/17/japan-crisis-creates-more-demand-for-commodities/http://www.bloggingstocks.com/2011/03/17/japan-crisis-creates-more-demand-for-commodities/#commentsFiled under: Major Movement, International Markets, Market Matters, Commodities, Oil, Headline News, Agriculture, DJIA

In many parts of Japan, food products jumped. In some areas residents were told not to leave their homes. That alone is enough to create a fearful and hoarding mentality. Traders on the U.S. commodity exchanges didn't take long to work out how to play this. Pretty much across the board, prices rose.

Here are a few late prices:

WTI crude was up $3.67 per barrel to $101.67. Brent crude rose $2.10 per barrel to $110.62.
In the grain market, June wheat futures rose 48-2 cents per bushel to $7.10 per bushel.
Corn futures were up the 30 cent limit to $6.46 per bushel.

Continue reading Crisis in Japan Creates More Demand for Commodities

Crisis in Japan Creates More Demand for Commodities originally appeared on BloggingStocks on Thu, 17 Mar 2011 18:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Cattlecommodities rallycottonfeaturedgoldgrainsinterantional marketsinthenewsJapan crisisoilU.S. dollarThu, 17 Mar 2011 18:00:00 EST<![CDATA[Commodities Have Been Clobbered over the Past Week]]>http://www.bloggingstocks.com/2011/03/15/commodities-have-been-clobbered-over-the-past-week/http://www.bloggingstocks.com/2011/03/15/commodities-have-been-clobbered-over-the-past-week/http://www.bloggingstocks.com/2011/03/15/commodities-have-been-clobbered-over-the-past-week/#commentsFiled under: Market Matters, Commodities, Oil, S and P 500

cotton Except for the safe haven of U.S. treasuries and the U.S. dollar, most other commodities are getting slaughtered in the wake of the Japanese crisis.

Here are some prices of nearby contracts compared to five days ago:

WTI crude is trading at $97.68 per barrel, down from $105.
Wheat is at $6.89 per bushel, down for $7.89.

Continue reading Commodities Have Been Clobbered over the Past Week

Commodities Have Been Clobbered over the Past Week originally appeared on BloggingStocks on Tue, 15 Mar 2011 17:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>cattlecoffeecommoditiescottonfeaturedgoldinthenewsoilsilversugarwheat corn soybeansTue, 15 Mar 2011 17:00:00 EST<![CDATA[Comfort Zone Investing: Bubbles Always Burst]]>http://www.bloggingstocks.com/2011/02/26/comfort-zone-investing-bubbles-always-burst/http://www.bloggingstocks.com/2011/02/26/comfort-zone-investing-bubbles-always-burst/http://www.bloggingstocks.com/2011/02/26/comfort-zone-investing-bubbles-always-burst/#commentsFiled under: Comfort Zone Investing

woman blowing a bubble - comfort zone investing

In the 1630's, it was tulips. More specifically, it was Semper Augustus, a tulip of extraordinary beauty; deep, deep blue with a band of white and touches of crimson flares. In its day, it was the must have thing. There was one man who owned the dozen flowers known to exist. He was offered the equivalent of one year's annual income from a wealthy merchant for one bulb. He turned it down.

Tulip prices increased throughout the decade as more speculators got into the game. In 1633, a farmhouse was traded for three rare bulbs. By 1636 any tulip could be sold for extraordinary sums. Futures markets started. Trades were made in fields or taverns, between farmers and merchants. Some bulbs were bought and sold 10 times in a day. One father left his seven children an inheritance of 70 tulips. One sold for the all-time record price of 5,200 guilders.

Then, one day in 1637 everyone decided to stop playing. No buyers showed up at the local tulip auction in Haarlem. Within days, panic started, then spread. Tulips that sold for 5,000 guilders soon went for less than 50. (Source: Tulipomania by Mike Dash)

Continue reading Comfort Zone Investing: Bubbles Always Burst

Comfort Zone Investing: Bubbles Always Burst originally appeared on BloggingStocks on Sat, 26 Feb 2011 10:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bubblescomfort zone investingcottongoldhousing bubbleoil pricestulipmaniaSat, 26 Feb 2011 10:30:00 EST<![CDATA[Cotton Closes Above $2 per Pound as Market Remains in Chaos]]>http://www.bloggingstocks.com/2011/02/18/cotton-closes-above-2-per-pound-as-market-remains-in-chaos/http://www.bloggingstocks.com/2011/02/18/cotton-closes-above-2-per-pound-as-market-remains-in-chaos/http://www.bloggingstocks.com/2011/02/18/cotton-closes-above-2-per-pound-as-market-remains-in-chaos/#commentsFiled under: Major Movement, Industry, Market Matters, Commodities, Agriculture

The cotton market is in a state of chaos. On Friday, March cotton on the ICE exchange closed at $2.1102 per pound, up the 7 cent daily limit, the Financial Times reported. The market opened limit up at $2.1102. That means that you cannot buy cotton even if you wanted to. The market is frozen.

Commodities are much different from stocks. Commodities are a zero sum game. Contracts usually last for three months. At the end of the three months, the longs take delivery from the shorts who deliver their cotton, and zero contracts are left.

Continue reading Cotton Closes Above $2 per Pound as Market Remains in Chaos

Cotton Closes Above $2 per Pound as Market Remains in Chaos originally appeared on BloggingStocks on Fri, 18 Feb 2011 10:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>AgricultureCommoditiesCottonFeaturedFirst Notice DayinthenewsLast Trading DayLongs And ShortsFri, 18 Feb 2011 10:30:00 EST<![CDATA[Higher Commodity Prices Are Grabbing Your Money]]>http://www.bloggingstocks.com/2011/02/03/higher-commodity-prices-are-grabbing-your-money/http://www.bloggingstocks.com/2011/02/03/higher-commodity-prices-are-grabbing-your-money/http://www.bloggingstocks.com/2011/02/03/higher-commodity-prices-are-grabbing-your-money/#commentsFiled under: Consumer Experience, Commodities, Federal Reserve

This year get ready to open your wallet wider and expect higher credit card bills for the basics like food, clothing and energy. You are probably wondering what is going on. While you weren't paying much attention, the price raw commodities surged in 2010. Corn, sugar, wheat, cotton, coffee and soybeans prices soared last year, as reported in the Wall Street Journal.

A confluence of factors pushed prices up. We had and still have demand explosion from China and India. The United Nations Food and Agriculture Organization's monthly food index which monitors a basket of commodities including meat, dairy and sugar rose for the sixth straight month to a record.

Continue reading Higher Commodity Prices Are Grabbing Your Money

Higher Commodity Prices Are Grabbing Your Money originally appeared on BloggingStocks on Thu, 03 Feb 2011 14:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>agricultureapparelbeefcerealsclothingcommoditiescorncottoninflationinthenewsoilporkpoultrysoybeanssugarwheatThu, 03 Feb 2011 14:30:00 EST<![CDATA[Higher Cotton Prices Will Push Up Apparel Costs in 2011]]>http://www.bloggingstocks.com/2010/12/02/higher-cotton-prices-will-push-up-apparel-costs-in-2011/http://www.bloggingstocks.com/2010/12/02/higher-cotton-prices-will-push-up-apparel-costs-in-2011/http://www.bloggingstocks.com/2010/12/02/higher-cotton-prices-will-push-up-apparel-costs-in-2011/#commentsFiled under: Forecasts, Consumer Experience, China, Economic Data, Commodities

We can expect higher apparel prices next year, according to Investors.Com. The supply/demand factor in raw cotton will be a key mover. Cotton futures hit a 140- year high earlier this month. Apparel manufacturers have yet to deal with the spike in prices. Many companies have not purchased their supply of cotton and are hoping that prices will come down. That may be wishful thinking. Analyst Tracy with FBR Capital said: "There is still an underlying supply and demand problem for cotton. Cotton should stay at elevated levels."

The second big factor coming to bear on the apparel industry is the rising inflation in China. Labor costs have risen 20% to 25%. In addition, shipping costs are also higher.

Continue reading Higher Cotton Prices Will Push Up Apparel Costs in 2011

Higher Cotton Prices Will Push Up Apparel Costs in 2011 originally appeared on BloggingStocks on Thu, 02 Dec 2010 09:30:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>apparelapparel retailersclothing pricescottonfeaturedinthenewsThu, 02 Dec 2010 09:30:00 EST<![CDATA[Gold Climbs to Yet Another Record High]]>http://www.bloggingstocks.com/2010/11/09/gold-climbs-to-yet-another-record-high/http://www.bloggingstocks.com/2010/11/09/gold-climbs-to-yet-another-record-high/http://www.bloggingstocks.com/2010/11/09/gold-climbs-to-yet-another-record-high/#commentsFiled under: Major Movement, Commodities, Financial Crisis, Currency

Gold prices have marched to a new high of $1,422.45 per troy ounce in London. This marks the fourth day of the gold rally.

The Wall Street Journal (subscription required) cited that the prime mover was continued worry over European sovereign debt defaults.Traders and investors are riding the bull higher and higher. To help the gold along, the U.S. dollar is weaker, sparking a rally in key commodities like oil and grains. Cotton is also up again.

Continue reading Gold Climbs to Yet Another Record High

Gold Climbs to Yet Another Record High originally appeared on BloggingStocks on Tue, 09 Nov 2010 11:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>commoditiescottonEuropean sovereign debtgoldgold pricesgold rallyinthenewspalladiumplatinumprecious metalssilverU.S. dollarTue, 09 Nov 2010 11:00:00 EST<![CDATA[Bernanke Says He Does Not Want to Create Inflation]]>http://www.bloggingstocks.com/2010/11/07/bernanke-says-he-does-not-want-to-create-inflation/http://www.bloggingstocks.com/2010/11/07/bernanke-says-he-does-not-want-to-create-inflation/http://www.bloggingstocks.com/2010/11/07/bernanke-says-he-does-not-want-to-create-inflation/#commentsFiled under: Consumer Experience, Economic Data, Commodities, Federal Reserve, Currency

Reuters quoted Federal Reserve Chairman Ben Bernanke as saying: "We're not in the business of trying to create inflation. Our purpose is to provide additional stimulus to help the economy recover and to avoid potentially additional disinflation, which I think we'll all agree could also be worrisome."

Bernanke claims that inflation is below the Fed's 2% target. That's hogwash! Sure if you use the "core" CPI, which leaves out food and energy, that may be the case. Not to worry.

Continue reading Bernanke Says He Does Not Want to Create Inflation

Bernanke Says He Does Not Want to Create Inflation originally appeared on BloggingStocks on Sun, 07 Nov 2010 11:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankecommoditiescore CPIcorncottondollarenergyfeaturedfood pricesgasolinegoldinflationinthenewsoilsilversoybeansstimulussugarwheatSun, 07 Nov 2010 11:10:00 EST<![CDATA[How Did Commodities Do in October?]]>http://www.bloggingstocks.com/2010/11/01/how-did-commodities-do-in-october/http://www.bloggingstocks.com/2010/11/01/how-did-commodities-do-in-october/http://www.bloggingstocks.com/2010/11/01/how-did-commodities-do-in-october/#commentsFiled under: Major Movement, International Markets, China, Commodities, Agriculture, Currency

One of the broadest measures for commodity prices is the 19-commodities Reuters-Jefferies CRB Index. For October, the index was up 4.8% after an 8.5% gain in September, as reported in Investors.com.

Sugar and cotton started the trend, rising more than 20% each. Corn was up 17% and arabica coffee rose 11%.

Continue reading How Did Commodities Do in October?

How Did Commodities Do in October? originally appeared on BloggingStocks on Mon, 01 Nov 2010 09:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>coffeecommoditiescorncottoncurrencyinthenewssilverMon, 01 Nov 2010 09:30:00 EST<![CDATA[Chaos in the Cotton Market: Hedges Cost Merchants and Farmers Billions]]>http://www.bloggingstocks.com/2010/10/26/chaos-in-the-cotton-market-hedges-cost-merchants-and-farmers-bi/http://www.bloggingstocks.com/2010/10/26/chaos-in-the-cotton-market-hedges-cost-merchants-and-farmers-bi/http://www.bloggingstocks.com/2010/10/26/chaos-in-the-cotton-market-hedges-cost-merchants-and-farmers-bi/#commentsFiled under: International Markets, Commodities

cotton hedges Here is a story about hedges gone awry. It involves cotton farmers and cotton merchants, both of whom use the futures markets to hedge their product.

A hedge is a very simple tool. Let's say a farmer's cost for growing his cotton is 50 cents per pound. Now let's say the futures contract for December is 60 cents per pound. The farmer decides to sell December cotton contracts at 60 cents against his crop, even though it is not harvested yet. In normal times, he would deliver his cotton to the exchange at 60 cents and pocket the 10 cents per pound profit. Each penny equals $500, so he made $5,000.

Continue reading Chaos in the Cotton Market: Hedges Cost Merchants and Farmers Billions

Chaos in the Cotton Market: Hedges Cost Merchants and Farmers Billions originally appeared on BloggingStocks on Tue, 26 Oct 2010 10:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>cottoncotton hedgesfeaturedinthenewsmargin callsTue, 26 Oct 2010 10:00:00 EST<![CDATA[Shortage of Cotton in China Drives Prices to Near Record High]]>http://www.bloggingstocks.com/2010/10/15/shortage-of-cotton-in-china-drives-prices-to-near-record-high/http://www.bloggingstocks.com/2010/10/15/shortage-of-cotton-in-china-drives-prices-to-near-record-high/http://www.bloggingstocks.com/2010/10/15/shortage-of-cotton-in-china-drives-prices-to-near-record-high/#commentsFiled under: China, Options, Economic Data, Commodities

China is the world's biggest importer of cotton. Last week, the U.S. department of Agriculture identified a "severe shortage" of Cotton in China. That was the trigger for a buying spree in cotton like no other, the Financial Times reported. "We're just seeing blow-offs here that nobody can imagine," Herman Kohlmeyer, with brokers Michael J Nugent told the paper.

The buying frenzy started on China's Zhengzhou Commodity Exchange where prices shot up to $1.60 per pound. That move set off the rally in New York's ICE Exchange electronic trading, the FT reported. Prices shot up the 4 cent limit to $1.1487, just shy of the record of $1.1720 per pound set in 1995.

Continue reading Shortage of Cotton in China Drives Prices to Near Record High

Shortage of Cotton in China Drives Prices to Near Record High originally appeared on BloggingStocks on Fri, 15 Oct 2010 10:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>commoditiescottonfeaturedinflationinthenewsFri, 15 Oct 2010 10:30:00 EST<![CDATA[Cotton in Short Supply Drives Prices Higher]]>http://www.bloggingstocks.com/2010/08/03/cotton-in-short-supply-drives-prices-higher/http://www.bloggingstocks.com/2010/08/03/cotton-in-short-supply-drives-prices-higher/http://www.bloggingstocks.com/2010/08/03/cotton-in-short-supply-drives-prices-higher/#commentsFiled under: International Markets, Commodities, Agriculture

cotton: short supply

Where is the cotton? Cotton inventories monitored by ICE Futures U.S. have plummeted 96%. This is noteworthy because the U.S. is the world's largest cotton exporter.

Textile buyers are not waiting for the next crop. They are buying now. This has caused a sharp rally in the cotton market. Nearby October ICE cotton futures spiked to 82.36 cents per pound, up 1.68 cents. Since January 2009, cotton has risen from 50 cents per pound to a high of 84.94 cents in 2010 (each 1 cent equals $500).

The U.S. Department of Agriculture (USDA) reported that farmers will harvest 18.3 million bales in the 2010-2011 marketing year, up from a two-decade low of 12.2 million a year earlier. Global production will rise 13% to 116 million bales, according to the USDA.

Continue reading Cotton in Short Supply Drives Prices Higher

Cotton in Short Supply Drives Prices Higher originally appeared on BloggingStocks on Tue, 03 Aug 2010 09:00:00 EST. Please see our terms for use of feeds.

Read | Read | Permalink | Email this | Comments]]>cottoncotton pricescotton supplyinthenewsTue, 03 Aug 2010 09:00:00 EST<![CDATA[Cotton price spike mystifies traders, prompts inquiry]]>http://www.bloggingstocks.com/2008/08/13/cotton-price-spike-mystifies-traders-prompts-inquiry/http://www.bloggingstocks.com/2008/08/13/cotton-price-spike-mystifies-traders-prompts-inquiry/http://www.bloggingstocks.com/2008/08/13/cotton-price-spike-mystifies-traders-prompts-inquiry/#commentsFiled under: Other Issues, Commodities

cotton

Add another case study to the controversy over speculators and market manipulation.

The Commodity Futures Trading Commission is investigating whether cotton prices were 'artificially inflated' in early March, The Wall Street Journal reported Wednesday (subscription required). The March 4 price spiked from about 70 cents per pound to an intra-day high of $1.09 and closed at 93.1 cents.

In Wednesday morning trading, cotton rose about four-tenths of one cent to 70.070 cents per pound.

The Journal reported that the price spike in early March was unusual and baffled traders because cotton inventories were at their highest level in four decades, towel and fabric demand was weakened by the housing slump, and global supplies were high.

On the other side of argument, one which argues that market forces set the price, some cotton merchants themselves were trading aggressively; a little-used exchange rule suddenly required merchants to unwind sell orders; and financial investors, including pension and hedge funds, started to enter the market, which generated an eight-fold jump February 19-26 in net buying, The Journal reported, citing CFTC data.

Continue reading Cotton price spike mystifies traders, prompts inquiry

Cotton price spike mystifies traders, prompts inquiry originally appeared on BloggingStocks on Wed, 13 Aug 2008 12:20:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Commodity Futures Trading Commissioncottonfutureshedge fundshedgersinstitutional investorsinthenewspension fundsspeculationspeculatorsWed, 13 Aug 2008 12:20:00 EST<![CDATA[Gas prices: Corn is not a free market answer]]>http://www.bloggingstocks.com/2007/05/10/gas-prices-corn-is-not-a-free-market-answer/http://www.bloggingstocks.com/2007/05/10/gas-prices-corn-is-not-a-free-market-answer/http://www.bloggingstocks.com/2007/05/10/gas-prices-corn-is-not-a-free-market-answer/#commentsFiled under: Bad News, Industry, Commodities, Oil, Agriculture

Our failure to prioritize alternate fuel development over the past 20 years is showing up in more places than just the gas pump. This year, experts anticipate a huge reallocation of U.S. acreage from soybeans and cotton to corn, yet the price of corn-related products will continue to climb.

Acres planted in corn come mostly at the expense of soybeans, another hugely important crop. As our soybean inventory dwindles, look for increased prices in this market as well.

This is bad news in several ways. Many argue ethanol produced from corn has a negative energy value (NEV); i.e., it requires more energy to produce than it supplies.
The ethanol produced is more expensive than petroleum. And, worst, we are allocating the very best of our cropland to grow fuel crops, while other plants that could take advantage of marginal land remain underdeveloped.

Most of us remember President Bush's famous reference to switchgrass, a hearty grass that thrives in poor soil and produces energy fourfold what it requires to cultivate, yielding 1.5 times that of corn per acre. Another candidate, the jatropha bush, is already used to power rail traffic between Mumbai and Delhi in India. Like switchgrass, the bush can grow in poor soil and yields biomass easily converted into a biodesiel fuel.

While most of the world cannot grow corn or, like Brazil, sugar cane, crops such as switchgrass and jatropha could provide struggling economies with cash crops to aid in their development, while at the same time helping to solve the world's fuel crunch and diversify its sourcing.

Growing corn on our best land squanders our natural resources. How long will a free market support such inefficiency?

Gas prices: Corn is not a free market answer originally appeared on BloggingStocks on Thu, 10 May 2007 16:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>alternative fuelsAlternativeFuelscorncorn ethanolCornEthanolcottonfuel crisisFuelCrisisjatrophasoybeansswitchgrassU.S. crops 2007U.s.Crops2007Thu, 10 May 2007 16:10:00 EST<![CDATA[15% to 20% drop in indexes on the horizon?]]>http://www.bloggingstocks.com/2007/04/03/15-to-20-drop-in-indexes-on-the-horizon/http://www.bloggingstocks.com/2007/04/03/15-to-20-drop-in-indexes-on-the-horizon/http://www.bloggingstocks.com/2007/04/03/15-to-20-drop-in-indexes-on-the-horizon/#commentsFiled under: Magazines, Commodities

Larry Jeddeloh of TIS Group, publisher of the Market Intelligence Report, was put on Barron's Magazine (subscription required) interviewee pedestal this past weekend. Jeddeloh foresees a market drop of 15% to 20% post April.

Jeddeloh cites subprime mortgage woes and global central bankers still biased toward raising rates that could translate into a much quicker drop in GDP growth than investors are expecting. Actually, for such a substantial drop to occur, credit conditions will have to be much tighter than the market is currently discounting.

Is this a possibility? Remember the yield curve has been inverted for some time, meaning banks have had a tough time making money from the brainless act of taking deposits in and investing them in medium-term treasuries. Further, income derived from providing mortgages will also be down. The business that has continued to grow is fee income--whose growth has been masking weakness in other areas.

The Fed, prior to lowering rates during the past ten years, has liked to see liquidity conditions get tight before fueling up the monetary pump again. Maybe this will happen again.

Areas that Jeddeloh liked are similar to areas we have been blogging about -- cotton and gold. See our blog from last week on corn and cotton as to why cotton might be an attractive place to look for profits.

Regarding gold, the strategist has a $3,800 price target, expecting gold to mirror what stocks did from 1982 to 2000, increasing 1,400%. As we have blogged about in the past, Newmont Mining (NYSE: NEM) is a good place to look.

15% to 20% drop in indexes on the horizon? originally appeared on BloggingStocks on Tue, 03 Apr 2007 11:20:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>barron'sbarronscorncottongoldinterviewLarry JeddelohLarryJeddelohsub primeSubPrimeTIS GroupTisGroupTue, 03 Apr 2007 11:20:00 EST<![CDATA[Corn and ethanol = big profits... Cheap cotton = bigger profits?]]>http://www.bloggingstocks.com/2007/03/30/corn-and-ethanol-big-profits-cheap-cotton-bigger-profits/http://www.bloggingstocks.com/2007/03/30/corn-and-ethanol-big-profits-cheap-cotton-bigger-profits/http://www.bloggingstocks.com/2007/03/30/corn-and-ethanol-big-profits-cheap-cotton-bigger-profits/#commentsFiled under: Other Issues, Industry

A big crop report released this morning is once again bringing a lot of attention to corn and the global demand for ethanol. It all makes sense. With democracy and capitalism flourishing around the world, the demand for energy will boom and ethanol is a viable way to provide lower emissions fuel.

Even President Bush in his State of the Union address called for the United States to become less dependent on foreign oil. His solution: corn-based Ethanol?

However, as a reminder, investing is about "skating where the puck is going to be" as hockey great Wayne Gretsky used to say. Or as legendary John Templeton would say, look for points of "maximum pessimism."

There is little that is pessimistic about the outlook for corn today. Farmers throughout the U.S. are going to be planting it this season. Why? Because corn prices are approaching 10-year highs and the wide-spread belief is there is money to be made.

Conversely, the argument to invest in cotton might be more compelling. In a Barron's interview (subscription required) in January, Art Samberg of Pequot Capital said while cotton consumption in the US has been in decline, China's consumption, which has been growing nicely, is picking up more steam. Cotton consumption in the U.S. has fallen from 12 million to 5 million bales a year due to the growth of polyester and other materials. However, Textile spending is on a big upswing in China -- up 27% in '06, after jumping 36% in '05. Chinese consumption, which had been growing 4% to 6% per year, is now growing 15% per year.

Samberg said go long the December '07 cotton contract. Strong corn and soybean prices means U.S. farmers are going to remove acreage from cotton to earn better profits in corn and soybeans.

Supposedly, there have only been four times since 1913 when cotton was this cheap relative to grains like corn and wheat, with the last time being 1974. From 1974 to 1976, cotton tripled in price.

Corn and ethanol = big profits... Cheap cotton = bigger profits? originally appeared on BloggingStocks on Fri, 30 Mar 2007 11:01:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>art sambergArtSambergbarron'sbarronscommoditiescommoditycorncottoncropcrop reportCropReportethanolfarmfarmersoybeanFri, 30 Mar 2007 11:01:00 EST<![CDATA[Corn: to invest or not to invest?]]>http://www.bloggingstocks.com/2007/01/29/corn-to-invest-or-not-to-invest/http://www.bloggingstocks.com/2007/01/29/corn-to-invest-or-not-to-invest/http://www.bloggingstocks.com/2007/01/29/corn-to-invest-or-not-to-invest/#comments

President Bush in his State of the Union address called for the United States to become less dependent on foreign oil. The solution: corn-based Ethanol?

Every farmer in the US is going to be planting corn this season. Why? Because corn prices are approaching 10-year highs and there is money to be made. The higher prices will incent greater corn production which will be used in the production of more ethanol. Ergo, our reliance on foreign oil would materially diminish. MAYBE.

The first problem with this scenario is that higher prices lead to greater supply which at some point lowers corn prices.

Another problem, which was acutely pointed out in Bill Alpert's Follow-up article in Barron's (subscription required), is that corn and soy framers would run out of arable land before they could produce the amount of corn or soy needed to provide a viable alternative to foreign energy. If the US did go all out to produce enough alternative fuels, the price of the commodity and underlying land would become so expensive, it would be cheaper to use imported oil or gas. The market will become aware of this reality at some point that corn is not the solution.

Another very important point is that in order to grow things you need a lot of fertilizer which contains nitrogen. Crops cannot grow without nitrogen. Where does nitrogen-based fertilizer come from -- natural gas. To grow all these alternative fuel crops, you would need a lot of natural gas to make the fertilizer. Somewhat of a vicious cycle.

My investment advice: Stay with buy low and sell high. Stay with what we blogged about last week. Invest in cotton whose price is bottoming and stay away from corn whose price is peaking. Alternative fuel crops have very tough economics.

Corn: to invest or not to invest? originally appeared on BloggingStocks on Mon, 29 Jan 2007 11:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>barron'sbarronsbill alpertBillAlpertcorncottonethanolMon, 29 Jan 2007 11:40:00 EST<![CDATA[Cotton -- a compelling argument to go long]]>http://www.bloggingstocks.com/2007/01/16/cotton-a-compelling-argument-to-go-long/http://www.bloggingstocks.com/2007/01/16/cotton-a-compelling-argument-to-go-long/http://www.bloggingstocks.com/2007/01/16/cotton-a-compelling-argument-to-go-long/#commentsFiled under: Forecasts, Good news, China

Art Samberg, of Pequot Capital fame, provided a compelling argument to go long cotton in this weekend's Barron's investor round table (subscription required).

For you commodity traders out there, Samberg said go to long on the December '07 cotton contract. His reasoning is while cotton consumption in the U.S. has been in decline, China consumption, which has been growing nicely, is picking up more steam.

Cotton consumption in the U.S. has fallen from 12 million to 5 million bales a year due to the growth of polyester and other materials. Conversely, Textile spending is on a big upswing in China - up 27% in '06, after jumping 36% in '05. Chinese consumption which had been growing 4% to 6% per year is now growing 15% per year.

According to Samberg, China's cotton consumption has increased from 25% to 39%-40% of world cotton consumption.

Because of strong prices of corn and soybeans -- corn being used for ethanol production, US farmers are going to remove acreage from cotton to earn better profits in higher priced corn and soybeans. Supposedly, there have only been four times since 1913 when cotton was this cheap relative to grains such as corn and wheat. The last time was 1974. From 1974 to 1976, cotton tripled in price.

Cotton -- a compelling argument to go long originally appeared on BloggingStocks on Tue, 16 Jan 2007 08:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>art sambergArtSambergbarron'sbarronschinacommoditiescommoditycottonTue, 16 Jan 2007 08:40:00 EST