Years ago, I remember a conversation among cotton traders: "Cotton is a straight line mover. When it moves it shoots straight up and when it falls its like a stone. ... If you ever get caught on the wrong side of cotton, you'll lose your shirt."

Someday, traders will tell their grandchildren about the great cotton bull market of 2009 to 2011, and how they bought 100 contracts at 60 cents a pound in 2009 and saw the price go to $1.9455 per pound. They will talk for hours about how they made $1.34 per pound on each contract (each 1 penny equals $500). So they made 134 pennies on each contract at $500 per penny times the 100 contracts. They will ask their grandchildren to figure out how much money they made. "Grandpa, you made $6,700,000!"

Continue reading Global Cotton Demand Outstrips Supply

Global Cotton Demand Outstrips Supply originally appeared on BloggingStocks on Sat, 12 Feb 2011 11:40:00 EST. Please see our terms for use of feeds.

Last year, Archer Daniels Midland (ADM) was included in my stock picks for 2010 and it lost 4.9%. I gave some consideration to keeping it in the mix this year but thought more highly of other stocks in 2011, so I cast it off.

The turning of a calendar page is arbitrary and investments have only modest correlation to it in most instances. However, two weeks into the year ADM is already up, closing Wednesday at $32.56.

Corn prices have been rising and when last I checked futures were up another 1.47% in early morning trading.

Continue reading Chasing Value: Corn Soaring, ADM Boring, Investors Snoring

Chasing Value: Corn Soaring, ADM Boring, Investors Snoring originally appeared on BloggingStocks on Thu, 13 Jan 2011 12:00:00 EST. Please see our terms for use of feeds.

The U.S. Department of Agriculture (USDA) cut its estimates of last fall's corn and soybean crops.The soybean harvest was revised sharply downward to 3.33 billion bushels from 3.38 billion. Corn inventories are already at a 15 year low, were cut by more than 10% to 745 million bushels, as reported in theWall Street Journal.

Let's look at what happened around the world to the grain harvests:

Continue reading USDA Cuts Crop Estimates for Corn and Soybeans -- Prices Soar

USDA Cuts Crop Estimates for Corn and Soybeans -- Prices Soar originally appeared on BloggingStocks on Wed, 12 Jan 2011 17:00:00 EST. Please see our terms for use of feeds.

Grain markets have been on a roller coaster since the summer, when Russia banned exports due to drought conditions. Friday, the United States Department of Agriculture (USDA) cut its projection for this year's corn harvest by 3.8%, as reported in the Wall Street Journal.

That news was like pouring gasoline on a fire. The grain markets exploded to the upside, closing limit up. Some exchanges place a limit on how high or low prices can trade on a given day. The limit for corn is 30 cents, for wheat 60 cents and for soybeans 70 cents (each penny equals $50).

Continue reading USDA Forecast Drives Grain Prices Limit Up

USDA Forecast Drives Grain Prices Limit Up originally appeared on BloggingStocks on Sat, 09 Oct 2010 12:40:00 EST. Please see our terms for use of feeds.

What is the connection between feeder cattle and corn? Feeder cattle are placed on feed lots to fatten up before slaughter. Their weight gain is between 800 to 1,200 pounds each. The biggest expense for feedlot owners is grain. Corn is used as the main feed grain. Therefore if corn prices drop, feedlot owners pay less for feed and consequently will reap higher profits.

What kicked off the drop in corn prices was a report by the U.S. Department of Agriculture (USDA) that inventories before harvest were the highest in four years, as reported in Businessweek. That news hit the corn market hard. December corn futures traded at $4.95 per bushel, down 9.4 cents.

Continue reading Feeder Cattle Prices Jump as Corn Slumps

Feeder Cattle Prices Jump as Corn Slumps originally appeared on BloggingStocks on Fri, 01 Oct 2010 13:30:00 EST. Please see our terms for use of feeds.

Don't look now, but the shirt in your back could be worth more today. Why? Cotton prices are surging due to supply shortages.

Rumors often drive commodity prices. Pakistan is experiencing the worst flooding in history. Pakistan is the world's fourth largest grower of cotton. Another rumor of frost in China added to the rally. China is the world's largest cotton producer. India is placing high export duties on cotton, thus fueling the rally, according to data reported by the Financial Times.

Continue reading Cotton Prices Surge on Supply Fears

Cotton Prices Surge on Supply Fears originally appeared on BloggingStocks on Mon, 20 Sep 2010 13:00:00 EST. Please see our terms for use of feeds.

Yes, you can expect to pay more for your cup of coffee. Supplies of prized Arabica beans are in short supply, driving prices to a 12-year high. Prices for December delivery jumped 3% to $1.852 per pound. Retail prices can be more than double that price.

J.M. Smucker (SJM), distributor of Dunkin Donuts, Millstone and Folgers, already raise prices by 9%. Kona Haque, commodities analyst for Macquarie, was quoted in the Financial Times, saying: "The coffee futures market had attracted speculative buying. It's completely dominated by funds right now."

Continue reading Coffee Prices Jump to a 12-Year High

Coffee Prices Jump to a 12-Year High originally appeared on BloggingStocks on Sat, 21 Aug 2010 11:40:00 EST. Please see our terms for use of feeds.

This a story about rumor and weather. Wheat prices have skyrocketed to within 16 cents of their 2009 high, closing at $6.61 per bushel. The 2009 high was $6.77. Prices have surged 56% from their June lows.

You are no doubt asking: "Why such a big jump in prices?" The key word is drought, specifically the drought in the major growing areas of Russia, Ukraine and elsewhere in the Black Sea area. The drought is so bad that rumors are flying that Russia will limit wheat exports, driving purchasers to the U.S. According to Macquarie Group, parts of Europe also have been hit with drought, and Canada had excessive rain at planting time.

Continue reading Wheat Prices Surge to a 13-Month High

Wheat Prices Surge to a 13-Month High originally appeared on BloggingStocks on Sun, 01 Aug 2010 11:40:00 EST. Please see our terms for use of feeds.

Commodities often move counter to the U.S. dollar. The dollar is selling down, mainly because of the European Union agreement to support Greece.

Grain traders, seeing the weaker dollar moved in on the buy side of wheat and soybeans. Here are prices as of 9:30 EDT:

Continue reading Weaker Dollar Triggers Higher Wheat and Soybean Prices

Weaker Dollar Triggers Higher Wheat and Soybean Prices originally appeared on BloggingStocks on Mon, 12 Apr 2010 11:50:00 EST. Please see our terms for use of feeds.

Lean Cuisine 'Tuscan' and 'Mediterranean' chicken meals recalled originally appeared on BloggingStocks on Tue, 18 Nov 2008 16:38:00 EST. Please see our terms for use of feeds.

Continue reading Archer-Daniels Midland (ADM) rises on favorable USDA corn report

Archer-Daniels Midland (ADM) rises on favorable USDA corn report originally appeared on BloggingStocks on Tue, 12 Aug 2008 13:27:00 EST. Please see our terms for use of feeds.

USDA reverses course, Tyson must junk 'raised without antibiotics' labels originally appeared on BloggingStocks on Tue, 20 Nov 2007 09:35:00 EST. Please see our terms for use of feeds.

Agrium (NYSE: AGU) volatility is flat as AGU at record high on strong fertilizer demand. AGU, an agricultural retailer and fertilizer producer, closed at $54.38. AGU over all option implied volatility of 39 is near its 26-week average of 38 according to Track Data, suggesting nondirectional risk.

Terra Industries (NYSE: TRA) volatility is flat; TRA is near record on demand for nitrogen. TRA, an international producer of nitrogen products for industry and agriculture, closed at $31.26. TRA is expected to report EPS on 10/25. TRA over all option implied volatility of 52 is near its 26-week average of 50 according to Track Data, suggesting nondirectional risk.

Option update provided by Stock Specialist Paul Foster of theflyonthewall.com.

Option update: Fertilizer companies rally on rising grain prices originally appeared on BloggingStocks on Sat, 29 Sep 2007 12:40:00 EST. Please see our terms for use of feeds.

Personally, I don't feel a compelling need to know about where exactly my beef comes from. Yes, it would be interesting to know where those burgers I eat originate, but to me that's not essential information. That's not to say that I don't think about my food's place of origin, and I can understand the value of meat packing tracking. I'm just not in much of a position to do anything about it so I choose not to worry about it.

However, in 2002 a labeling law for meat was enacted as part of the Farm Bill. That law has yet to become enforceable. This does give me cause for concern because what I see here is that those people who find meat labeling a vastly more important issue than I do have been routinely thwarted in their attempts to make those laws a reality, and it seems perfectly clear to me that the whole issue is being controlled by carefully directed political contributions. The Democrat-controlled Congress will soon be addressing the issue. You might want to send them word of how you feel about it.

An expose in yesterday's The New York Times addresses the subject very eloquently and it brings to light some of the facts regarding how corporate cash has held the implementation of meat labeling requirements in check. Yes, I know full well that's the way things work on Capitol Hill but that certainly doesn't mean everyone's best interests are being served. When those political contributions blatantly override the will of the people, we need to take a good hard look at where those contributions come from and why.

There are two arguments being fielded against the proposition of meat labeling requirements. The first complaint regards the costs to implement such a program. That complaint is just plain stupid on its face. The USDA is already on the job, so we can add a penny a pound surcharge onto the price of meat and cut a couple perks from the legislative bodies. Yeah, that should do it.

The second argument calls meat labeling requirements a "protectionist proposition." I took just a moment to analyze that. Protectionist: One who seeks to provide or receive an act, theory, method or device of protection.

Yes, I think I can accept that.

The politics of food safety: Where's that burger from? originally appeared on BloggingStocks on Tue, 03 Jul 2007 13:30:00 EST. Please see our terms for use of feeds.