Hello, Just a general discussion. i don't trade long term but I am interested in knowing from long term traders if they think this bull market will continue ( with possible fireworks? ). I noticed that except Cotton, other ags have remained in contango structure all the way. Your thoughts? Thanks a lot.
One theory that seems to be logical is that billions of people on Earth are moving into middle class. A person who had no money who suddenly has money will eat more. USA was x% of the population and x% of global GDP. The numbers of "new eaters" entering the global market as consumers of food is many times that of the population of the USA. On this theory, expect another ten years bull market in commodities, including and especially food. Devalue the dollar and the magnitude is greater in USD. But don't take that to mean there will not be ups and downs as ruins continue to appear in global financial markets. There will be many swings even if this theory holds water.
Interesting theory. And on shorter term, like 3-6 months from now? It seems softs like Cotton and Coffee are on a crazy train( backwardation + Specs at historical highs on COT). Grains except wheat are in a bull market but still in contango. Wheat is forming a top and specs are getting net short on COT, so I wouldn't stay long.
Sugar is also in backwardation, I think we should see a substantial pull back by may/june next year, sugar for example back down to 20 cents, but I wouldn't expect to see the lows again for a long time, and that still allows it to push higher in the mean-time.
Milling wheat on MATIF has been in backwardation since medio september. That, of course, has to do with an awfull harvest in Germany.
China buying beans, China buying corn and now China buying wheat. I sense a trend. I think we are experiencing the second great grain robbery,it is just taking the market some time to recognize it. Regards, local
To comment on the threads original question: When is this ag bull dead? There's strong demand from China, that has to go if this is to end in the near future. And there's some uncertainty regarding next years supply, acreage lost in Ukraine and Russia and poor start of winter wheats in US. Slim stocks of US corn and even soy. Even if Russia and Ukraine opens their borders the next season, who would buy unless the grain's at the dock? Russia had big potential being a great exporter, and that is set back ten years. Russia will soon enough learn what the price of unreliability is. I haven't heard much about the European sowings, other than that rapeseeds probably lost a lot of acreage to wheat. There's slim stocks of rapeseeds going into next season, and that situation probably won't be any better come next year.