Wt Grains Discussion Threads

[leedskier] 07/3/2008 13:51

:) the FED has doubled the liquidy injection it had initially proposed...the Market knows it must therefore be really bad panic measure and this is part of the reason the FTSE is now tanking.

[leedskier] 07/3/2008 13:36

U.S. Lost 63,000 Jobs in February; Unemployment Rate at 4.8%

By Shobhana Chandra

March 7 (Bloomberg) -- The U.S. unexpectedly lost jobs in February for the second consecutive month, reinforcing concern the economy is contracting.

Payrolls fell by 63,000, the biggest drop since March 2003, after a decline of 22,000 in January that was larger than initially estimated, the Labor Department said today in Washington. The jobless rate declined to 4.8 percent, reflecting a shrinking labor force as some people gave up looking for work.

A weakening job market, combined with lower home values, higher fuel bills and stricter lending rules, raises the odds consumer spending will keep slowing. Falling employment is one reason Federal Reserve Chairman Ben S. Bernanke has signaled central bankers are prepared to lower interest rates again.

``The labor market is experiencing a significant slowdown,'' Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, said before the report. ``Growth will probably contract in the current quarter as consumer spending is stagnant.''

add: Yes I had noted the GD£ was rising against the US$.

[dasv] 07/3/2008 11:07

ls - maybe I'm wrong about sterling. This from money morning: "Turning to forex, the pound hit its highest level against the dollar - $2.0130 - since December this morning, following yesterday's decision to keep UK interest rates on hold. Sterling was also trading at 1.3073 against the euro. And the dollar was at 0.6493 against the euro and 102.12 against the Japanese yen."

[leedskier] 07/3/2008 10:22

DGO is a real winner I wished I had followed your lead there in Q42007.

[dasv] 07/3/2008 09:46

Yes and I noted them. Prior to reading your comments I was considering returning to the ring, but thanks to you, abstained. I kept DGO and TLW however.

[leedskier] 07/3/2008 08:56

dasv, thanks for your kind comment. I am still reflecting on what to do with my pension funds. Slightly off topic...I see my 'cash flow' concerns about the Russian oil company were, sadly, proved correct...

[dasv] 07/3/2008 08:49

again with respect to RIO CEO Tim Albanese's comments:-

"LONDON (Thomson Financial) - Merrill Lynch remains positive on the outlook for the metals, mining and steel sector and has revised all of its commodity price assumptions, leading to earnings forecast upgrades of up to 88 pct, market sources said.

In a note published this morning, Merrill Lynch said that it was raising its price target on Vedanta Resources to 2,900 pence from 2,450 pence and retaining its 'buy' stance on the group, based on its new January 2009 net present value estimates.

The broker added that Vedanta was one of its top picks and that higher prices for all the group's products drive higher earnings estimates. Another of Merrill Lynch's top picks is Anglo American, for which it has raised its price target to 4,200 pence from 3,800 pence and reiterated its 'buy' stance.

Elsewhere, Merrill Lynch has raised its price target on Lonmin to 4,200 pence from 3,700 pence and retained its 'buy' stance. The broker added that Lonmin's recent poor operational performance makes it vulnerable in an industry that continues to consolidate. Meanwhile, Merrill Lynch has raised its target price on Aquarius Platinum to 1,000 pence from 725 pence and retained its 'buy' stance. The broker said that Aquarius has been a clear out-performer relative to its PGM peer group and this is reflected in its strong share price performance and its valuation remains attractive.

And, Merrill Lynch has raised its target price on Norilsk Nickel to 390 usd from 360 usd and retained its 'buy' rating on the group. The broker added that nickel is down some 50 pct off recent highs driven by an aggressive stainless steel destock and consider the potential for a rebound in nickel.

Merrill Lynch said that short term, it believes Chinese nickel in pig-iron production costs are about 10-12 usd/lb and that this marginal price puts a floor under the nickel price. "

[dasv] 07/3/2008 08:38

leedskier - a great post, even if I find the scenario you paint unpalatable.

Chartwise the DAX, FTSE100 and DJI are certainly are at critical points at the moment - however:-

WRT to the BRIC economies, when re-iterating RIO's rejection of the bid from BLT, CEO Tim Albanese did not see a US recession as impacting on demand for base metals and iron ore:-

"Albanese noted that Rio Tinto is strong in iron ore, copper, and aluminium and that these are the three commodities associated with the economic growth and urbanisation of China and, in the future, India. "We expect continuing double digit GDP growth in China in 2008 and metals demand to continue to rise at a rate well above GDP growth," he said. "Because of the focus on troubles in the US economy, there's a perception that mining and metals once again face declining demand and over capacity in the short term. This is not how we see it. Important as the US is to the world economy, it is not as influential as it once was to global demand for metals and minerals."

He said he does not think a recession in the US will have a significant impact on the demand for steel, copper and aluminium in China. "

There may therefore still be gains for Natural Resource companies in 2008. Certainly the diversified miners are the stars of the show in the FTSE100. If it were not for them the index would look even more anaemic. It will be interesting to see how the Canadian and Brazilian indexes fair in the coming 12 months.


Paradoxically, I have had solid gains across my portfolio all week and am currently up 10% on last Friday. Then again I still hold RRS and DGO :).

Today is my first fall in ages - down 0.3% against a fall of 1% on the FTSE.

Perhaps it's time for me to yet again take profit and wait on the sidelines. But as you know I am uncomfortable holding Sterling - as I think it will track the decline of the dollar against the euro.

I moved my SIPP into some new funds on Monday: CF Junior Oils, CF Eclectica Agriculture, Merrill Lynch Gold and General, First State Infrastructure. Hopefully these will have a relatively low correlation with the wider market. Time will tell.

[leedskier] 07/3/2008 06:30

"The US markets tumbled overnight after the Mortgage Bankers Association
reported that US home foreclosures rose to record levels in the fourth quarter.
Credit market worries also heightened after Thornburg Mortgage and a Carlyle Group bond fund revealed troubles with mortgage-related investments, while Merrill Lynch said it is closing down its subprime mortgage lending unit. Dealers said many investors also moved to the sidelines ahead of key US jobs data tonight."

My blog on this is:-

On Wednesday I optimistically thought that there may after all be light at the end of a short tunnel. I was wrong. The reaction in the City yesterday and the fall in the World Markets o/n has caused me to re-think my previously optimistic view that the effect of the financial problems in the US would in the course of the next few months resolve.

I think the next 3 or 4 weeks could decide not only the general direction but the pace of change of the market for at least the next two years. If the jobs data due out this afternoon in the US further evidences the extent of the US recession, coupled with the evidence yesterday, that US mortgage failures are escalating, the Dow will continue to spiral down. Asia and the exporting countries of Europe will track it down. London will go with the flow. What is, sadly, clear, is that any UK Bank with any sub-prime exposure in the US or dependant upon earnings in the US, is likely to get caned, dragging down the FTSE.

The UK financial services sector could contract by at least 25% as the flight from equities and lending snow balls. This contraction reflecting not only concerns about sub-prime and the US generally, but a loss of confidence in equities.

A reduction in interest rates by the Fed, may ease those with mortgage difficulties in the US but it will not ease cash liquidity or assist bond insurers (the inability to insure bonds will impact heaviy on companies' abilities to raise funds). A substantial interest rate cut by the Fed will cause a further devaluation of the US$ against the Euro and the GB£. This will cause a further spike in oil prices and (despite the best attempts by the Fed to control the price of gold) an increase in gold prices. Both increases will encourage the flight from equities.

Devaluation of the US$ will increase inflation in the US as the costs of oil and other imports (including food) accelerate and deepen its recession.

The Euro zone and GB have (wisely) decided that attempting to control inflation is more important than attempting (the impossible, namely) to protect companies and share holders from a fall in the stock markets. European interest rates will not track down the Fed rate. Whilst the strength of the Euro and GD£, will hurt exports outside the EEC, it should at least help to keep imported oil, food and raw materials cheaper than would otherwise have been the case (however all the indications are that food prices will inevitably rise this year, irrespective of the strength of currencies, because of shortages and export restrictions). A significant fall in UK house prices is inevitable (and overdue) but this will increase debt. As the real level of taxation and borrowing is factored in there will be a contraction in UK GDP.

The only potential upside lies in continuing growth by the BRIC countries and by the European Union taking a more protectionist policy. However, to the extent that European countries are dependant on exports to the USA or dollar based revenue, they will be affected (the european airbus being a clear example). China is now taking steps to control its own inflation and I anticipate Russia will follow.

If this doom & gloom scenerio comes into play (and I hope it does not), the resulting downturn in the FTSE will at least match the 2001-2003 graph. Hedge Funds and those selling short will gain at the expense of those locked into traditional pension funds or holding long on equities and hoping for a rally to correct any 'book losses'. The impact on the UK 's long term standard of living by a contraction in the value of UK pension funds by at least one-third, will be significant. Greater dependance on state pensions and the Goverment's underwriting of failed company pension schemes will force up taxation, which coupled with high oil and food costs, will limit the private sector's ability to spend the UK out of the downturn.

The real irony is that all of this is beyond the control of not only individual countries but the G7.

The OPEC countries could assist but they appear unwilling. A reduction in the price of oil down to 70$ could do much to lessen the extent and duration of the recession in the US and elsewhere.

[dasv] 04/3/2008 22:47

not enough rain for wheat:-




other commodities sharply correct down:-



coffee, cocoa and mayhem on cotton market:-

[dasv] 04/3/2008 22:05

hodginsjkp - correct:-

this from win2003 on COTN:-

Cotton futures prices jumped on Friday on speculation soaring corn and soybean prices that American farmers will cut their plantings in favor of grain and soybean.

May cotton futures rose 2.53 cents, or 3.2% Friday to 81.86 US and touched 82.33 US cents, the highest for a most-active contract since October, 2003.

Forecasters say US cotton farmers may trim plantings acreage to 9.5 million acres this year, the lowest in 25-years. 2007 plantings were cut 29% to 10.83 million acres.

Cotton prices have risen 20% so far this year while corn is up 22%, wheat has more than doubled and soybeans rose 21% last month alone: hence the speculation that cotton farmers may switch from the fibre to gains and oilseeds.

[hodginsjkp] 04/3/2008 21:27

COTN flew though

[dasv] 04/3/2008 17:06

Yep I don't know what's going on with price data from ETF securities but the top losers screen on Proquote is entirely composed of 100% losses from all of their ETFs.

[mr roper] 04/3/2008 16:49

That intraday chart looks like someone has lost control of an Etch-a-sketch!

Mr. R

[dasv] 04/3/2008 13:26

ls - thanks for the article.

Ironically I sold out in April entirely having made some good gains since 2003.

Then (as Chris puts it) the 'greed monster' ushered me back into the ring and I found myself pretty much fully exposed in July/August. Since then I've been scrabbling up a greasy pole trying to recover my losses.

I'm nearly there but it's been a hell of a ride. Losing all my profits taught me many a lesson.

chris, moneyweek are now saying sell grains, but I don't see technical reasons to do so - macd and rsi don't indicate a sell yet. You may well get a buying opp at a price more attractive than today's. Don't know if it's of interest but I moved 25% of my SIPP into CF Eclectica Agriculture fund recently. It's been a good perfomer. As for the other 75% they are in:

CF Junior Oils
First State Infrastructure
Merrill Lynch Gold and General

Annualised I think this is only rising slightly faster per month than last year.

However I have built up a bit of profit and it's tempting to cash in while the going is good.

[chrismcglone] 04/3/2008 11:40

leedskier, yep, good article. The problem i have had in general this past year is this. I have been convinced that a BIG fall was coming our way. I have made some great profits over the last 2 years in particular and i don't want to see them eroded.

However, had i moved to cash last year when i felt it was time, i would already have missed out in one of the biggest rises in my largest (by far) holding, ie. Centamin Egypt.

If you get out i think it is always likely to be early and you probably have to live with that fact. If you stay on you risk losing juicy gains and the greed monster can render you impotent as the market falls.

My solution is to ride the gold bull and diversify some of whats left into agriculture.

ps. by the way dasv, still sitting waiting in hope that we get a decent correction to switch some funds into this. It has been some run hasn't it.

Here's hoping.

[huntie2] 03/3/2008 16:45

hallo, dasv, don't know about a platinum play, I do have PHPP which has some exposure, and some ETFs in gold and silver, plus some AVE in gold mining. I shall have a look at Ridge. Best wishes,Huntie2

[leedskier] 01/3/2008 10:36

The author, who is rather well qualified, wrote this in April 2007. That is before sub-prime.

[dasv] 29/2/2008 17:07

huntie2 - yes I am in PHPT and PHGP also I hold RRS and CEY for gold and am interested in a decent platinum play - maybe Ridge?

[huntie2] 29/2/2008 09:38

Best of luck, whatever,davs. Are you in precious metals as well? I feel in many ways that with the likely continued weakness of the dollar they are jsut as safe or safer than the softs.

[dasv] 28/2/2008 21:41

Fair play huntie, I have to say the rate of rise is consistence since Nov when ETF was launched. I.e. its not exponential.

Nothing goes up in a straight line but for me this was meant to be a safe inflation hedge not a fast growth gamble.

I'm continuing to hold the full amount and will see how this pans out.

[huntie2] 28/2/2008 21:05

worried by the speed of the rise - have sold half my AGGP and moved into AIGS, bit of diversity. Time will tell if it is the right move.

[mr roper] 28/2/2008 17:29

x3

Mr. R

[mr roper] 28/2/2008 15:48

x 2!

Mr. R