Pearlman CTA
Grain Alert
Dec 12 '5
CBOT Dec. Wheat is just $2.93 a bushel and Corn is $1.90 a bushel, near 30 year lows in real $ terms.
How much lower if any can prices go? To $1 a bushel? To zero?
Pearlman CTA expects wheat and corn prices to rise due to:
Demand rising annually due to world population growth.
The massive growth in world wealth over the past 4 decades.
The passing of harvest pressure.
The clear Mississippi river for grain movement after hurricane induced backup.
USDA programs to help farmers store grain.
Greater Index fund demand expected with the expanded position limits.
Dropping world supplies despite government agricultural production subsidies.
Agricultural production subsidies under attack from fair trade and budget concerns.
High demand for feed use due to high livestock prices.
Increasing usage for bio-fuels and the move away from other hydrocarbon to carbohydrate products.
Accelerated loss of productive land to soil erosion, and real estate development.
Human exploitation accelerating global warming resulting in even more extreme weather patterns.
Tight supplies and high cost of substitutes such as KCBOT hard wheat, soybeans, oats and sugar.
Envy: people in the pit see $1,006 platinum, multi decade highs in gold and other markets, and want to have a turn.
Higher production costs due to higher energy, fertilizer, land, water, interest rate and labor costs.
Low supply, under 2 months of stocks to usage, memo for complimentary graphs.
A slowing economy or a pause in fed tightening, may cause the dollar to resume dropping.
Diminishing effects of the patriot act which may have helped a recent bounce in the US$.
Gold prices over $500 shows currency in general losing credibility. Gold at 100x wheat can be considered a fair value.
The fat contango to the market with sharply rising prices making it tempting to buy and hold the physical product and nearby contract.
A weak dollar, easy credit, and increasing money supply make it easier to hoard limited supply.
The high short speculator interest in corn and wheat can fuel any rally.
The potential is great:
Corn has been to $5, Wheat has been to $7, the inflation adjusted numbers are even higher, during the past thirty years.
Several asset groups have already gone five to ten times their thirty year lows.
If a food shortage develops other asset groups will submit.
Memo for complimentary graphs showing historically low stocks to usage ratios, the commitment of traders report, and other sources.
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is not easy, we suggest you use Pearlman CTA.
Pearlman CTA has the know how to properly position
you in the event of rising grain prices.
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