Gold Bulls Extend 2014 Exit as Slump Erases $6.7 Billion – Bloomberg 09-22-14

Salient to Investors:

  • Gold held in ETPs are the lowest in 5 years, gold’s 60-day volatility is near a 5-yr low, and open interest near the lowest since 2009.
  • Brian Levitt at OppenheimerFunds sees no compelling reasons to be in gold, and said no inflationary pressures and a Fed that will tighten sooner than most of its trading partners portends a strong dollar and weaker gold prices.
  • Aram Shishmanian at the World Gold Council said the expansion of trading hubs in Asia will boost demand in China by 20% in 3 years.
  • George Gero at RBC Capital Markets sees a gradual return of retail buyers, says the gold price is very attractive, and expects more buying out of China and India ahead of the festival and marriage season. Gero cites much political turmoil in 2014, and says people want to hedge the bad things happening in the world.
  • Mayer Cherem at Pacific Alternative Asset Mgmt said everything comes back to fundamentals in the agricultural sector – the global crop situation is very comfortable, and there are expectations of big harvests for most crops – and sees much more downside in soybean prices, and weaker corn prices.

Read the full article at  http://www.bloomberg.com/news/2014-09-21/gold-bulls-extend-2014-exit-as-slump-erases-6-7-billion.html

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Palm Oil Seen Dropping as Mistry Has Buy Call on Planters – Bloomberg 09-15-14

Salient to Investors:

Dorab Mistry at Godrej Intl said:

  • Palm oil at a 5-year low creates a buying opportunity for plantation and processing company stocks because producers are still making money.
  • Invest in plantations when palm oil prices are low. In Q4, 2008, when in a similar situation with regard to supply, demand and price, palm oil rapidly made itself competitive and exported its way out of a crisis as Malaysian stocks peaked in December 2008.
  • Prefer processing companies which manufacture specialty fats, oleochemicals, biodiesel and own consumer brands. Upstream companies will benefit when the price cycle turns.”
  • Expects prices to drop 9.6 percent to $588 a metric ton in the next few weeks towards Asian growers’ production cost but not below.
  • Full-year output in Malaysia, the second largest grower, will be more than initially estimated, while production at the largest grower, Indonesia, is also ahead of expectations.
  • Stockpiles will continue to rise and peak in December. Chinese imports will remain thin for at least the next 3 months as high-priced stockpiles are used up.
  • After the record US soybean crop this summer, farmers in Brazil and Argentina may switch to soybeans from corn this year. Argentina will devalue its currency to boost its overseas shipments.

Adrian Foulger and Denis Chai at Standard Chartered recommend plantation stocks to profit from a rebound in prices, and say the way to make money in the palm sector is to buy growth operators when prices are low and sentiment is weak.

Read the full article at  http://www.bloomberg.com/news/2014-09-15/palm-oil-seen-dropping-as-mistry-has-buy-call-on-planter-stocks.html

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Goldman Stays Gold Bear as Bullish Wagers Increase – Bloomberg 07-14-14

Salient to Investors:

  • Jeffrey Currie at Goldman Sachs predicts gold to fall to $1,050 by year-end as the economy improves and there is more confidence in the recovery, without significant inflationary concerns. Goldman predicts higher interest rates in Q3, 2015.
  • Last week, net-long positions in gold rose to their highest level since November 2012, while short holdings fell for the 5th straight week. Hedge funds increased gold holdings for the 5th straight week.
  • Michael Haigh at Societe Generale sees a drop to $1,245 by Q4.
  • George Gero at RBC Capital Markets sees too many bears despite gold climbing and says geopolitical tensions and economic surprises are attracting more investors.
  • Jack Ablin at BMO Private Bank said supplies have rebounded so quickly that people are now more comfortable about the global crop situation.

Read the full article at http://www.bloomberg.com/news/2014-07-13/goldman-stays-gold-bear-as-bullish-wagers-increase-commodities.html

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Gold to Coffee Drive Bullish Bets to 17-Month High – Bloomberg 02-25-14

Salient to Investors:

Hedge funds’ net-long positions of 18 US-traded commodities rose 18 percent last week to the highest since September 2012. Investors tripled the net-long position in arabica coffee this month to the most bullish since May 2011

Barclays said weather is the big driver of commodities.

EPFR Global data show commodity funds are headed for the first monthly inflows since September 2013.

Brazil is having its weakest rainy season in decades, just when moisture is needed the most for coffee tree roots to absorb soil nutrients.

Rabobank Intl said yields and quality for arabica beans will be constrained during this season and the next, and prices will be supported by longer-term concern that output will be limited.

Rabobank said soybean production in Brazil and Argentina is still projected to climb 10 percent, even with the dry weather. The USDA said corn and soybean harvests in the US in 2014 will be the biggest ever, meaning an increase in stockpiles before 2015’s harvest.

Dan Cekander at Newedge USA said grain fundamentals themselves do not suggest a bull story – not without a significant Northern Hemisphere problem in 2014.

Goldman Sachs said the S&P GSCI Enhanced Commodity Index will fall 4.3 percent in the next 12 months, agriculture will decline 9 percent, and precious metals will fall 14 percent.

Gold bets climbed 31 percent to the highest since October 29.

David Mazza at State Street Bank & Trust said assets in the SPDR Gold Trust are heading for the first monthly inflow since December 2012.

Cameron Brandt at EPFR Global said commodity funds are heading for their first monthly inflows since September.

Mark Luschini at Janney Montgomery Scott said the decline in prices last year has helped re-establish equilibrium between supply and demand, so better growth should pull industrial commodities higher, though we are not back in the middle of a commodities super cycle yet.

Read the full article at http://www.bloomberg.com/news/2014-02-23/coffee-to-soybean-wagers-climb-on-brazilian-drought.html

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All You Need To Know About Agriculture – Jim Rogers On The Markets 01-23-14

Salient to Investors:

Jim Rogers said:

  • Agriculture has to change and prices and profits have to go much higher or we are not going to have any food at any price.
  • We don`t have any farmers because farming has been a nightmare for most people. In the UK, the highest rate of suicide in any economic sector is agriculture. In India, millions of farmers commit suicide.
  • More people in America study Public Relations than study agriculture, some major agriculture universities had to close or change because nobody wants to be a farmer.

Read the full article at http://jimrogersonthemarkets.blogspot.com/2014/01/all-you-need-to-know-about-agriculture.html

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U.S. Farmland Prices May Fall in 2014, Economist Says – Bloomberg 12-10-13

Salient to Investors:

Terry Kastens at Kansas State University said:

  • Farmland values are about to stop rising rapidly, flatten out or even fall 10 percent or so, but will not crash.
  • Rising global crop output and stable renewable-fuel standards are leading to a flattening in commodity prices.
  • Rents in some areas may ease in 2014, with possible big drops in Iowa and Illinois if rents are negotiated every year based on forecasts for crop prices. Rents may rise in riskier growing regions including the High Plains because gains during previous crop rallies were moderate.
  • Land sales by farmers have climbed because producers with ample cash are still buying, while demand by investors eased amid concern that the market may have peaked.
  • Farmland prices may jump if commodity prices surge, sending corn back to $7.
  • We may see higher rents and higher property values in 2 o 10 years if crop output has massive consolidation, and large companies are able to pay higher prices.

Read the full article at http://www.bloomberg.com/news/2013-12-10/u-s-farmland-prices-may-fall-in-2014-economist-says.html

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Terry Kastens at KansasStateUniversity said:

Farmland values are about to stop rising rapidly, flatten out or even fall 10 percent or so, but will not crash.

Rising global crop output and stable renewable-fuel standards are leading to a flattening in commodity prices.

Rents in some areas may ease in 2014, with possible big drops in Iowa and Illinois if rents are negotiated every year based on forecasts for crop prices. Rents may rise in

riskier growing regions including the High Plains because gains during previous crop rallies were moderate.

Land sales by farmers have climbed because producers with ample cash are still buying, while demand by investors eased amid concern that the market may have peaked.

Farmland prices may jump if commodity prices surge, sending corn back to $7.

We may see higher rents and higher property values in 2 o 10 years if crop output has massive consolidation, and large companies are able to pay higher prices.

No Young People Are Going Into Agriculture – Jim Rogers On The Markets 11-26-13

Salient to Investors:

Jim Rogers said the world has consumed more than it has produced for the last decade so inventories are near historic lows. Plus we are running out of farmers: the average age of farmers in America is 58, in Japan is 66 and no young people are going into agriculture.

Read the full article at http://jimrogersonthemarkets.blogspot.com/2013/11/no-young-people-are-going-into.html

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Agriculture: The World Is Facing A Crisis – Jim Rogers On The Markets 11-26-13

Salient to Investors:

Jim Rogers said more people in America study public relations than study agriculture which is why we have low inventories and are running out of farmers. The world is facing a crisis.

Read the full article at http://jimrogersonthemarkets.blogspot.com/2013/11/agriculture-world-is-facing-crisis.html

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Jim Rogers: Biggest Event of Next 10-20 Years Just Happened in China – Moneybeat 11-18-13

Salient to Investors:

Jim Rogers said:

  • The most important economic event of the next 10 to 20 years is what happened in Beijing, though largely ignored, particularly by the Western media.
  • Current efforts to reform, if followed through, could take a generation to really bear fruit but Chinese agriculture, railroads, medical care and defense are attractive investments, even if the country’s stock market collapses
  • Buying Chinese stocks, including financials, for the first time since 2008.
  • The overriding concept from the plenum is “when in doubt, the market will decide.” Policy makers seem to have the wind at their back and leaders have put a lot of prestige on the line.
  • Talk about China’s economy being a bubble or that its ascendance will end is reminiscent of what Europeans said about the US after the Civil War. And within a generation after WWI, the undisputed No. 1, the United Kingdom, was no longer that.

Read the full article at http://blogs.wsj.com/moneybeat/2013/11/18/jim-rogers-biggest-event-of-next-10-20-years-just-happened-in-china/

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Our Chat With Jeremy Grantham – The Wall Street Journal 09-20-13

Salient to Investors:

Jeremy Grantham at GMO said:

Commodity prices fell for a hundred years by an average of 70 percent, and then from 2002 basically everything tripled and regained the whole decline in 6 years – tobacco was the only commodity that fell. The game changed because of the ridiculous growth rates in China whose 1.3 billion people use 45 percent of the coal used in the world, 50 percent of all the cement and 40 percent of all the copper.

The most important, valuable and critical commodity is phosphate or phosphorous, which is necessary for all living things. Yet we are mining and depleting it. 85 percent of the low-cost, high-quality phosphorous is in Morocco and belongs to the King of Morocco, and the rest of the world has 50 years of reserve if we don’t grow too fast.

I would own stock in the ground, great resources, reserves of phosphorous, potash, oil, copper, tin, zinc, but aluminum and iron ore less so because there is so much. I would not own coal or tar sands because it is hugely expensive to build coal utilities, and plants for tar sands are massive. So before they get their money back, the price of solar and wind will have come down so much.

The pressures on food are worse than anything else, so invest wisely in very good farmland, though it has had a big run and you can never afford to ignore value. Look for farmland in distinctly stable countries like Australia, New Zealand, Uruguay, Brazil, Canada, and the US. Forestry is a little overpriced but we are in a world where everything is overpriced because of incredibly low interest rates that push people into investing.

A career politician has a very short horizon and is not interested in problems that go out five or 10 years, as are corporations because a dollar in 10 years has a much lower value than a dollar today. The oil industry is making a bundle so does not want to change to a system that recognizes climate change and the need to have a tax on carbon.

With politicians so dependent on campaign contributions from the vested interests, the financial world, but more particularly the energy world, it is a miracle anything gets done.

The central idea in the stock market is patience and value and mean reversion and in society, it is resources and climate damage.

The market can go a lot higher with the Fed pushing it – to yet another real bubble, like the one in 2000 with Greenspan, the housing bubble and financial bubble with Bernanke and Greenspan.

America and Australia are the two very, very optimistic-biased societies. Mention housing bubble to Australians, they hate you for years! Optimism is very useful in enterprise, in start-ups because when the smoke clears, you end up with the Amazons and the Googles – we just throw more darts at the dartboard. But the downside is only 10 percent survive, but they all think they’re going to win.

Read the full article at http://online.wsj.com/news/articles/SB10001424127887323665504579032934293143524

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