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| Daily Jurojin - Thursday, June 18, 2009 |
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Thursday, June 18, 2009 News you can use - and some you can'tKeeping our eyes peeled during the trading day we occasionally come across little tidbits that all go into the melting pot, which from time to time we dip into in order to serve up our trading recommendations. We often come across great stories and some not so great. Today we found one of each.According to the Organization for Economic Cooperation and Development (OECD) in an agriculture preview through 2018, we should look forward to restrained commodity prices over the next few years before sharply higher crop and food oils prices thereafter. Meat and dairy products will likely remain unchanged over the coming decade. Does anyone know who pays these mandarins to deliver such stunning conclusions? First of all, the OECD is renowned for arriving pretty late to the party on most occasions. And when they do finally crash through the door, tie skew-whiff, they have a knack for excitedly announcing the death of Queen Victoria. To anyone who ever sat on a trading desk, you will most likely be familiar with watching prices blip like a cardiograph as news headlines hit the screen. Only, when traders have realized that the source id the OECD, they immediately sell into the news realizing that it's already priced in. To predict that commodity prices might be restrained for two-to-three years, which is what it said in its outlook report, misses the massive rally we're just at the tale end of. They could have at least dressed it up a little with a 'stand behind the line - there's nothing to see here' comment at the least. Failure to recognize the rebound shows a lack of understanding or appreciation of market dynamics. The OECD further predicts that through 2018 corn prices might rise between 10-20%, while vegetable oils might surge by 30%. But it's a 'might' mind you. But then again, we'd really appreciate the wake-up call if someone from the OECD wouldn't mind setting the alarm clock for the day this is sue to happen - we'd hate to miss the big event! Neither meat prices nor dairy prices should budge much. So the trade then would be what? Buy corn and sell live cattle. Perhaps that's a theme we could spend some time working on - we'll have to give that some thought! But then again, they also warn that commodity prices will be dampened for two to three years courtesy of slow global demand. That kind of prediction makes us want to sell volatility, except we look over our shoulders to see a huge rally behind us and a void ahead. Perhaps we shouldn't. So then there's news you can use. During a recent Dow Jones Indexes /STOXX conference in London Investec Asset Management Ltd. Announced they'd "very recently" bought gold in a wager that the yellow-metal might rally more than 20% to $1,200 per ounce. The fund manager holds a hefty $50 billion in assets and is banking on a move within a year, says their investment strategist. This little sound-bite is current, specific and has a short-shelf life. We actually think this strategist must be a regular reader to the Daily Jurojin since we actually raved about gold at under $900 per ounce on April 17. Take a peak at our new archives on the website under Gold's Cold Shoulder. Investec apparently also likes natural gas - it's underpriced they say. Gentlemen, we are in agreement! The Supreme Council of the Secret Order of Jurojin |
