 PUBLISHED
BY INSTITUTIONAL ADVISORS - JUNE 30, 2009
Commodities
Bob Hoye
Institutional Advisors
Jul 3, 2009
"The world faces "mass
starvation" following North America's next major crop failure.
So says Don Coxe, one of the world's leading experts on agricultural
commodities."
-Commodities Online,
June 30, 2009
Mr. Coxe is concerned about
global cooling shortening the growing season by a remarkable
amount, and rather quickly, with soaring grain prices. Well he
has the cooling right, but unless there is a huge volcanic eruption,
cooling could be slow.
Today,**
corn closed down limit on a USDA crop report that "shocked
the market." The slump encompassed soybeans and wheat, suggesting
a turn in commodity markets. [Editor's note: **This report was written on
Jun 30th]
Our grain index set its high
at 2223 on June 1, which was about the time that Calpers pension
fund reported that it was "reentering" the commodity
markets.
Most commodities were likely
to reach a significant high in late spring and then roll over.
After mid-year the next phase of credit distress was expected
to start, which, again, would have a profound effect in driving
most commodities down.
Beginning on June 1, the ChartWorks
noted the upside excesses and advised of a pending decline. Other
"in house" financial indicators began to turn as well.
Grains soared 63% from 1374
in December to 2233, which is good action within a long bear
market. The high was 2948 on June 26, 2008.
The ChartWorks called for a
rally in gold, which we got. And with the right work in COT figures
(which we did not get) the rally might have made it to around
990. Today's drop in silver relative to gold is a warning on
the resumption of bad times.
Wrap: As noted a couple of weeks ago in Pivotal Events,
slight changes in the dollar index were prompting disproportionate
moves in stock and commodity markets. This suggests aggressive
trading on the popular side.
The dollar index, as part of
the fun out to around May, was likely to decline -- and then
increase. The low was 78.33 at the first of June, now it's at
80.2.
One of the features of lengthy
post-bubble contractions is the bewilderment about so much hardship
in a world of plenty. By plenty is meant lots of supply and little
money with which to consume. It has puzzled the establishment
for hundreds of years - and seems likely to continue to do so.
Jun 30, 2009
-Bob Hoye
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com
Hoye Archives
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