megiddo666

Commodity Analysts Believe the Party's Over

Bespoke, usually I might generally agree with the analysts....However on wheat, and especially rice, plus other grains, there is too much damage, drought, floods, snow, and shortfalls of fertilizer use in India, Pakistan, Africa, etc, to make the case for prices to fall that much. China -- who really knows how much the Chinese are hedging on what they say to not have prices go sky high on crop shortfalls......Rice, for example, is not expected by most analysts I've read in Asia to drop in price, even after spring harvest, and the US is announcing that less rice will be planted this year...for 08-09.

Recession Fears Will Bring Oil Down to $70

Appreciated your thoughts, however there are a few factors that may change the assumptions.

Chinese private vehicle ownership in 2007 was up 10.92 percent over 2006. Trucks ownership increased 7.5%. China added 15 million new drivers in 2007. China will build over 2000 miles of new interstate highways in 2008, not including new provincial highways and will still not have completed its national highway system. Chinese new car sales are expected to be increase around 20% yoy in 2008.

The Chinese are already experiencing long lines at gas stations, and trucks are rationed diesel purchases in many cities and provinces. China is still expanding its national petroleum reserves.

This demand problem is not one that will be solved soon. This does not consider increased oil use elsewhere, outside the US and Europe.

On the supply side, OPEC is not increasing production and has stated high oil prices will continue through 1Q 08.

Given the above, I would expect gas prices to rise to meet oil costs as much as oil prices to decline.

Thursday Outlook: Sectors and International

David, I always look forward to these reports and find them extremely helpful. However on your DBA comments, while wheat planted area was down in the US last year, that is no longer the case. Corn acerage is now down, wheat and soyabeans has increased and is expected to increase for 08/09. See the Dec. 11, 2007 U.S. Wheat Associates report for the latest, slide 56.
www.uswheat.org/supply...#

$100 Oil By Monday (Read: The Lebanon Crisis)

Not exactly, but that might be a result. The market is pricing a certain amount of risk into oil prices in regard to global crisis i.e. Iran, etc.

My point is that the Lebanon crisis risk that has not been fully priced in, and that events in Lebanon may be enough to shift the focus from a slowdown in the US economy to one that prices a crisis in a very sensitive locale in global relations, and results in prices over $100/bl, in conjunction with other market forces, such as the continued decline in the USD, etc.