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  • USDA - Bumper Crops Again; Forecasts Are Optimistic [View article]
    Andrew, your articles are a pleasure to read. An addition to your analysis:
    * Let's look at the ratio of carryover to demand. If you are good with accounting and I bet you are you agree that carryover to demand is like profit to expenses ratio (supply = incomes, demand = expenses, carryover = residual return).
    * This ratio WAS at the end of agri year 2013/14 for wheat/corn/beans as follows: 24.3%/9.2%/8.8%. I calculated these yields myself from respective balance sheets using WASDE numbers. In other words - after 2013/14 stocks of wheat equaled to 24.3% of annual demand, 9.2% and 8.8% - for corn and beans respectively.
    * After August WASDE the same ratio IS projected for 2014/15 W/C/S to be as following: 39.3%/12.8%/12.6%.
    * This means that stocks are anticipated to grow larger. In the end what matters is carryover - residual result for the year of operations.
    Every month USDA update numbers as for this forecast. This explains movements in June - July when these ratios were declared smaller by 1% across the board.
    Important note - market knows about large carryover stocks so do not be carried away with bullish dreams. Numbers won't just evaporate, growth potential is limited or none unless a serious disaster happens.
    Aug 17, 2015. 10:20 PM | 1 Like Like |Link to Comment
  • Natural Gas - Mispriced, Overlooked, And Poised To Rally [View article]
    El Nino brings wetter summers and milder winters. This explains imo.
    Aug 10, 2015. 09:59 PM | Likes Like |Link to Comment
  • Sanctions And Commodity Prices Continue To Squeeze Putin And Prices Lower [View article]
    No one invades Russia today. Quite the opposite.

    Well, long story short - present government is very unfriendly to Western business and they did a very good job destroying good image that was carefully built bit by bit since mid 80s.

    One may say 'buy when it is blood on the streets' - OK, no argument about that but there will be more of it unfortunately so present buyers are about to lose a fraction of value before things return to growth. This KGB-gang is not able to compromise and is not about to stop until it is forced to stop. I would not be a buyer until then. Things may turn very ugly - they already talk about confiscation of foreign-owned assets. Still want to be a buyer?
    Aug 5, 2015. 02:29 AM | 1 Like Like |Link to Comment
  • Sanctions And Commodity Prices Continue To Squeeze Putin And Prices Lower [View article]
    You do not know history and make pathetic statements by looking at the map. Russia lost war with Japan in 1905 and de-facto lost World War I cause unlike France and Britain all it gained was a disaster - ruined economy, depressed new regions, army that hated its emperor (and many of them betrayed him a couple of years after). USSR also lost war in Afghanistan after 11 years of intervention. Now tell me about survivors of a war against Russia. They are no different than any other nation.

    Do you know that there is no electric/gas coverage in many regions of this 15 time zones swamp? Do you know that after 25 years of post-Soviet era of capitalism all they learn to do well is to sell resources not produce final goods? Do you know the scale of immigration, alcoholism and crime? No country can expect a bright future with such fundamentals.

    Russia will not share anything with foreigners, you are very, very, very naive to think like that. They invited and then cheated on many foreign investors including BP, GM, HP, and Morgan Stanley. Used and abused. Read their 'Law on Foreign Investors' before you join those "who seek to share abundance". There are many other masterpieces of legal nihilism but that one should be enough to give you a flavor.

    And I have not mentioned metastatic spread of corruption all over economy, society and government.

    All said above is based on my knowledge of the country, its political, economic and social conditions, living and working experience and my own origin. I was one of them.
    Aug 4, 2015. 09:41 PM | 1 Like Like |Link to Comment
  • Cracks Provide Support For Crude Oil [View article]
    Andrew, I would appreciate your comments on my thoughts below.

    I look at cracks charts (3-2-1, HO, RB spreads) and see that drops in crack values coincide with petroleums local bottoms and vice versa.

    Right now we are at the point of local top in 3-2-1 and RB spreads which may translate into further price softness as markets have accumulated enough strength and phase of slowdown is due. Spreads were incredibly low around 20th of Jan when CL hit the bottom. Low oil and low spreads translate into oil producers were unhappy and refiners were unhappy too. Together they turned the tide and prices went up.

    But we are NOT there today - oil producers may be unhappy today but refiners are happy today. Then why would they try to change present state of things? Oil producers and refiners are not allies today (although they might be the same people or related parties) meaning that there is not enough gunpowder to fight the bears.

    What do you think about this logic?
    Jul 27, 2015. 11:31 PM | Likes Like |Link to Comment
  • Natural Gas - Late August Surprise Ahead [View article]
    Although I have sold calls in natgas I do expect a bottom to sell puts and build a strangle USD2-3.5
    Jul 27, 2015. 09:34 PM | Likes Like |Link to Comment
  • Natural Gas Building Upside Momentum [View article]
    Jul 20, 2015. 11:17 PM | Likes Like |Link to Comment
  • Sugar Will Be Sweet Again [View article]
    I could say the opposite - after 1990 sugar price was below 10 cents for 2/3 of the time. Maybe things are getting back to "normal". You are a super bull, Andrew. Thank you for the article.

    The glut you write about is the thing that makes me sell more and more calls. If supply and demand equation is broken than what else matters? This calendar year at least.

    A couple of words re El Nino's effect - a year ago I did a study and wrote on it in my blog here at SA. In a nutshell - the only thing that was up most of the time during El Nino years was cocoa.
    Jul 20, 2015. 11:14 PM | Likes Like |Link to Comment
  • Grains: Second Quarter Review And The Outlook For Q3 [View article]
    A year ago wheat carryover to demand was 25%, this year about 37%. Other questions are subjective and depend on many things but focus on this yield change and look at price hike again. Numbers are plus/minus correct, took them from memory, no data in hand right now. Refer to WASDE.
    Jul 15, 2015. 08:19 AM | Likes Like |Link to Comment
  • USDA Leaves Yields Unchanged Despite Poor Conditions [View article]
    Indiana, Illinois, Ohio are about to take wet damage. But these states only a part (and not the best part) of corn and beans area and produce very little wheat. Rest looks good. I guess market exaggerates poor news.
    Jul 10, 2015. 11:38 PM | Likes Like |Link to Comment
  • Grains: Second Quarter Review And The Outlook For Q3 [View article]
    Grain carryover stocks are large. They won't just evaporate.

    Also, speaking of weather - some people mention 2010. This is not 2010. It was La Nina in 2010 that caused heat waves all over Northern Hemisphere - the US, Canada, Russia. They (the heat waves) started in spring and spawned one of the hottest summers. This is not the case today so do not charge overly bullish. We had a very good spring, summer is a bit wetter but the wetness is not in the most producing areas. See Crop Progress report - situation is alright and even improving. Europe is hot but this is not 2010.
    Jul 6, 2015. 09:04 PM | 1 Like Like |Link to Comment
  • Animal Protein: Meats - Second Quarter Review And Outlook For Q3 [View article]
    I second the motion. Looking at Hogs and Pigs report you can see a striking difference betwen 2Q 2014 and 2015 numbers. This can be very misleading as 2014 was not a common year. Look at 2013 vs 2015 - numbers will be the same. But prices between October contract in 2013 and 2015 differ by 20 cents. This imbalance will be corrected so jump in.
    Jul 6, 2015. 08:09 PM | Likes Like |Link to Comment
  • Grains: Awakenings [View article]
    Hello Andy. Thank you for the article. Do you not think prices shoot up too fast too soon? To me they go parabolic these days. Also, I do not see much fundamental reasoning for that - rains did not cause damage, not to the extent prices reacted so far. Although markets sometimes act irrationally. RSI went mad, Bollinger Bands breached on the upper level. Lot's of news state funds short-covering in wheat but when I look at CFTC report - yes, funds are net short but they are only half short of what they were a couple of months ago and they covered those shorts weeks ago! Not to mention that funds are net short wheat most of the time. To me it looks like a hype, unexplainable and irrational. But I can be wrong and emotional. What do you think?
    Jun 29, 2015. 09:51 PM | Likes Like |Link to Comment
  • Natural Gas Is The Only Commodity I Want To Own Right Now [View article]
    Be careful with longs. Not everything is so rosy for bulls:

    - Coal price declined this year too. It declined by +/-10% margin which is more or less the same margin by which NG price changed, thus limiting NG's upside.

    - To continue coal's subject - year-on-year less coal is used for power generation due to various reasons (pollution, price, transportation and storage). Thus, the factor of substitution is weaker every year and NG takes bigger share of production (without drastic price moves). And most electricity from coal is generated in Texas, California and NY rely more on electricity produced from gas. So substitution for coal would be weaker in CA and NY in any event. OK, enough coal.

    - I agree with your statement regarding 1/3 of production coming from oil rigs. But rigs production volumes is different - there is talk already that cutting rigs numbers by half won't cut production by half, no way. But you know it better than me.

    - Oil rigs fall is slowing down. Or nearly stopped. Choose either statements depending on your positioning.

    - Weather. Do not have a crystal ball but El Nino summers in the US are usually mild and wet. Recall last summer.

    Bottomline - closed my shorts on late 8th or early 9th of June (depending on where are you are - I am in Hong Kong, 12 hours ahead of NY). Thinking to re-enter shorts above 3.00 when bulls start to show fatigue on daily charts. Instruments - selling September calls with 3.50 strike.

    Good luck.
    Jun 11, 2015. 12:33 AM | 1 Like Like |Link to Comment
  • NatGas Traders Anticipate Big Inventory Builds As Winter Quickly Fades [View article]
    Guys, you are too focused on fundamentals and exclude technical factors and market sentiment from the picture entirely. This is not right. Market is undecided. If you extrapolate the storage and the prices of a year ago and two years ago (remember that fracking was there with us already) you see that market has had a strong bearish bias already! In other words there is a big fat chance that smart bears got their prey already but newcomer bears will stay hungry. I do not intend (ok I do a little) to advertise myself but please go read the latest post of my blog re natgas.
    Mar 23, 2015. 08:39 AM | Likes Like |Link to Comment