Well, the good news is that spring wheat futures aren’t plunging all by themselves today.
The bad news is that they have simply fallen along with all the other big North American crops, at about the same rate.
Here are the present futures prices at about 10:30 as listed at barchart.com:
It’s a grim part of November, when the sun gets weaker every day and everyone begins noticing they are spending most of their time in darkness. And turning on the world economic and financial news is enough to depress anyone these days: Eurozone unravelling, U.S. stagnant, signs that China’s heading into a hard landing and recession.
Even this next news could depress you, as reported by the Canadian Press news service:
More patients come forward, allege fake US doctor pumped toxic materials into their buttocks
MIAMI – Several possible victims have come forward alleging a woman posing as a Florida doctor and promising buttocks enhancement pumped their behinds with a toxic concoction of cement, superglue and flat-tire sealant, state health officials said Tuesday.
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(Fortunately that was Miami, Florida in the placeline, not Miami, Manitoba.)
Boy, that’d put you in a foul mood, wouldn’t it? You pay a doctor to give your buttocks a bit of extra padding, and you end up with a trunkload of concrete and superglue and scars. So imagine if you lost $200,000 on your house when the subprime meltdown occurred, your investment in commodity funds has lost much of its value this month, and you now have trouble rising from your chair because your enhanced butt is too heavy. Not a cheery situation.
This morning as I watched Bloomberg TV while eating my breakfast grapefruit I endured a litany of dreary econ news. The most worrisome news for those of us who live in the commodity sphere was about China, and the most anxiety-inducing analysis was offered by Jim Chanos, the famous short-seller who is mega-bearish about China. He thinks China’s economy is riddled with banks and manufacturers who are just a hiccup away from insolvency, and that any economic slowdown could cause a 2008-like bank meltdown and ensuing deep recession.
That’s bad for commodity producers, like farmers, because China has been the demand growth story of the past decade. Remember when we were all terrified that Brazil was going to flood the world with cheaply-produced soybeans and crush the world vegoil market? No problem: China now consumes all the extra production. Need someone to buy all the extra canola Canada now produces? China – come on down! The same goes for copper, coal, oil, etc. Commodity producers have gotten rich off of China’s booming demand and growing demand.
So if China goes down like Europe and America, commodity demand is going to collapse and the ongoing medium term bull market in commodities will be over. That’s one reason commodity and crop prices have slid so much recently: everyone’s coming to terms with China’s lead feet.
If we’re lucky, Chanos is wrong and all these problems will dissipate and commodity demand will pick up and this ugly little period we’ve been going through will end and we’ll back back atop the bull soon.
I have trouble making myself believe another leg of the bull market is just ahead of us, but then I’m like everyone else right now: caught in the fading light of November, feeling the chill of winter set in, and unable to see the cheer of Christmas ahead of us. Perhaps a week or two from now the pall will lift, China will zoom ahead, and we’ll forget all about this slough of market despond.
