The Gart-Man Is Right

This marks the second large gap in posts I've had, so my apologies for that. This one is due in large part to the trading vacation I am (and will be) taking for a month. I am announcing a walk-away after the severe pain I just suffered in this last down turn. I referenced Dennis Gartman in the subject because on CNBC's Fast Money the other day, he made the statement that he is out of the market all together until things calm down. Now that the dollar will start to rally slowly and the bubble has burst on us, there is no telling exactly what will happen and when. Therefore, I need to take a break from trading and not return until I have the proper mindset. Nothing is more dangerous that trading out of spite against the market or against yourself. Neither one is very forgiving, and actually, the market could care less WHO you are. Happy trading to all and best wishes to you. I will likely continue to post now and again to keep myself up to date, so check back every now and again on me. I'll be back though, you can count on it!

Holy Rice Shortage!

Thought is was only third world countries with rice problems? Well, in some cities, San Francisco and the Bay Area in this article, they are not exactly rationing but they are asking their customers to not hoard any rice and to only consume based upon their normal habits. Interesting. Where do you think the price of rice is heading?

Record High Natural Gas Short Positions

According to the April Committment of Traders report, June Natural Gas contracts have a record number of short positions open, greater than 182,000 (non-commercial) open short positions to be exact (closer to 182,000). Just for comparison there are roughly 130,000 open long positions in crude oil in this same report. Energy across the board is on its way up, and if these traders get caught in a short squeeze, that could be quite a rally to the upside. Food for thought. I wish I had a link for you here, but for some reason I'm having trouble uploading the table or the link to this information, I'll have to try again later.

An Interesting Perspective On Biofuels

I was reading through the Hard Assets Investor again today (as I do every day as you may have noticed) and came across this interesting look at biofuel prices and the correlation to rising commodity prices.

Hard Assets Article

Anyways, I just thought that this was interesting given that so many people just assume that the run up in commodity prices is based upon using food to create fuel. I hate to disappoint them, but it looks like food prices will continue to rise this year.

No Room For Error With Corn This Year

I just got done browsing through another one of my favorite regional publications, the Delta Farm Press, and there was a piece in there from yesterday reiterating the seriousness of the corn shortage. There is basically no room for error according to the report. So if you think that perfect weather and bumper crops are on the horizon, then get short corn. Otherwise start coping with the thought of December corn testing levels at and above $7.

More on Rice

This article in the Financial Times is very brief but says all that it needs to: rice traders are panicking. And why wouldn't we? I sold all of my contracts this morning because any buying up on a frenzy is likely to end in the same fashion. Even if all of this increase in cost is rooted in fundamental analysis and there really isn't enough to go around and this increases the price of rice, there's just something about the manner in which this is happening that smells of nasty correction. I'm not alone. While watching Fast Money on CNBC earlier this week, Dennis Gartman stated that he doesn't want any part of it either. He's focusing in on energy right now, and I for one tend to agree with him, not that it takes a lot of guts to agree with a bright guy like that, but for what it's worth, rice will likely tumble back to earth and land with a thud.

World Unrest Over Food Prices

When I read this article posted on CNN.com, all I can think about is not an end to rising food prices, but more problems ahead.  When governments step in and try to institute price controls, this will only drastically limit supply, so the only other option is for governments to pay the open market price and subsidize the remainder of the price to its citizens.  Bear in mind, if you are feeling emotional or feel there may be moral implications to making money off of this, then be comforted by the fact that most nations produce enough rice for their populations, it is the remainder that needs to be filled or the amount that gets fed to animals to create more food that is bid up in open markets globally.  This is increasing the price of subsistence for many people struggling to make it into the middle class and eat more than just a bowl of rice.  However it is also not just the open markets setting these prices, so again, take heart.  If there was truly enough supply then this would not be much of an issue.  The major culprits here are not free markets and profiteers, they are global growth in the face of global shortages in food supply.  Simply put, profits are made in inefficient markets, not ones with well defined supply and demand.  Currently we have a dearth of supply and enough demand to incite riots.  

I'd get long soft commodities here.  And on the way up for some time.