Well golly, the market certainly seems to have made up it’s mind about Dubai, concluding: IT’S NO BIG DEAL!!!!!
Check out these five-day charts of Toronto, New York and Tokyo:
That’s one heck of a way of shaking off the blues and getting back to the good times. A couple of bits of news helped the equity and debt markets cheer up: 1) Dubai is only defaulting on $26 billion, rather than the feared $59 billion; 2) China seems to be growing robustly again. What’s $26 billion between friends, anyway, when you’ve got China to keep buying up all the debt the bond printers can crank out?
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The mixed news continues. Ford’s sales of cars have rebounded strongly, but their sales of trucks have slumped by the same amount as cars increased. How do you read that? Is demand growing or declining?
The bears haven’t been stilled by the cheering up about Dubai. Marc Faber, the famous investment guru, was on Bloomberg TV this morning saying that the importance of Dubai is that it reveals that state-backed entities and states can default and that will be the long term conclusion coming out of this week’s tizzy. Oh yeah, he’s still calling for a financial collapse of the United States and the disintegration of the U.S. dollar, but thinks it might occur for another six months or year. Those bears! Always gotta wreck a relief party.
Which brings us to oats. Oats, that noble crop of the northern plains, has enjoyed sharply higher prices since the end of summer, when it was trading sub-$2 per bushel on the futures. It’s now in the $2.60-plus area for March. That’s better, but still not enough to drag lots of acres into oats production next summer, thinks noted oats analyst Randy Strychar. Other crops still look just as attractive. He’s looking forward to giving the market outlook session at the Prairie Oats Growers Association annual convention in Brandon on Thursday because he’s able to be positive and optimistic about the price outlook for summer 2010 and the 2010-11 crop year.
Plus he’s still optimistic about the nearby market, thinking that the recent rally isn’t necessarily the end of better prices. He thinks that because so much of the oats crop in eastern Saskatchewan was harvested late, and because it was snowed on, rained on and beaten-up by birds and other varmints, that the healthy stocks processors have been relying on might not be there. The processors haven’t locked down their supplies yet, relying on this cushion of ample stocks to get them through, so if it turns out that quality oats are in shorter supply than they thought, there could be a nice little kick up in the market.
Overall, he isn’t too hopeful about the nearby market, seeing it as likely to be under pressure, but this damage factor could be something that makes it stronger than expected. Technical analyst David Drozd is more bearish about the near term market, expecting it to slump after the rally we’ve had, but he too thinks spring and summer will be a good time to wait for.
Randy told me “This is the kind of speech I don’t mind giving,” noting how lousy it is in the years when you have to show up at conventions like POGA and deliver bad news. This year, he’s able to offer real hope. Last week, the complacency of the world’s stock and bond markets was given a severe shake by Dubai’s troubles. It’s gotten back to that complacency awfully quickly. But if damage problems in oats cause the processors’ complacency to suddenly shrink, farmers have got to hope that the fear lasts a bit longer.
