GO figure, Canpotex caves to Russian price
July 27, 2009
…But if it is the bottom? Well higher we go!
Please take a look at the following article on the Globe and Mail today discussing Potash Corp.
Ritch
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
GO figure, Canpotex caves to Russian price!
July 24, 2009
But if it is the bottom? Well higher we go!
Please take a look at the following article on the Globe and Mail today discussing Potash Corp.
Ritch
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
That could be a good idea!
July 22, 2009
This last week has been a “mental” mess. We started with the world on its way back to hell in the proverbial hand basket and ended it with definitive statements that the recession was over and all was back on track. Confused yet?
The first thing I would like to say is that either we all learn to dismiss the talking heads on T.V. or we are never going to be able to keep any kind of clear thought . I am now convinced that the reporting is generally and consistently more harmful than it is beneficial. I am not saying this from the view “If you don’t agree with me, you must be bad” I say this because I believe that the average person watching is enacted to make decisions that are not beneficial to their finances. If you had watched and then acted the first part of last week you would have sold all of your holdings, run for the hills, and contemplated stopping at Joes Gun’s & Gas to make sure you were well equipped to survive the next several years.
Within the next 48 hours you would have bought back all your stocks, paid more for the privilege and been told to go buy a new boat for the cottage, all was well! The reality of what happened last week was that a group of core companies released earnings results that were on track or better than our talking heads expected. Brilliant analyses, from brilliant people, who think they must “shock” to keep you watching. How about we try to report the news a little bit more and reduce the commentary a little bit more until at least after all the facts are out. I know our job is to try and “predict” the future so to speak, but my colleagues try and do this in a thoughtful manner and are taken to task very quickly if we don’t. It is becoming more clear to me that, that standard is not being met by the financial reportage that we are fed daily.
Moving forward, it has become clear to me that there is a growing stability developing in the markets. Individual stocks are still swinging more than they should, but the overall market seems to be less likely to over react to either individual good or bad news. This is what should happen at the end of a recession. “The worst is over but more bad news is inevitable.” What to do then?
WRITE CALLS!!!
In sideways to moderately increasing markets writing calls is the way to go. The premium bleeds out over time and still maintains a level of downside protection for those inevitable little short term surprises that our talking heads like to exaggerate. This also currently should give an extra level of comfort for those who are still trying to time their re-entry into the market. Buy the combination. When you buy the banks write the calls. When you buy the pharmaceuticals, write the calls. And especially when you buy your energy stocks, write the calls. Done properly this should add 8% or more to your returns over the next several months while we are finding out just how robust these markets really are and still offer a level of protection for your peace of mind. There are lots of opportunities out there right now for this.
Those goofy sun spots! At the moment and for the start of this year we have a much cooler and moister start to the growing season. “Perfect” growing conditions are being experienced in mush of the U.S. Corn Belt. Yields have been predicted to exceed generational numbers and final harvest results are maybe going to bring the second largest crop in American history. Don’t bet the farm just yet. If it stays cool early frost is the call, if it finally gets hot(currently being predicted by some models for August) it may stay that way and impact the crop because the root systems stayed shallow with all the early cool moist weather. Suffice it to say “the crop is not made yet”. It looks very good, but it is still very early. If you follow these things it looks like buying wheat and selling corn is probably a very good trade. This is no longer considered a spread trade for margin purposes by the CBOT(Chicago Board of Trade) but I still view it as one. Those who have known me for a very long time will know we have made out very well with trade in the past.
Final note; good crop or bad crop farmers in North America do not have the luxury of going another year without fertilizer. All this noise with Potash prices is just that “Noise”.
The reality of our world is that there are billions of people that continue to drain our growing soils. Only one thing fixes this, and that is fertilizer. Like it or not, it is cheaper for the Indian government and the Chinese farmer to fertilize than it is to import more grain because your population is going hungry. Remember that up to 50% of your yield can be attributed to fertilization.
Talk to you soon
Ritch
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
What is the Price of Potash?
July 13, 2009
There was a rumored shipment of potash negotiated last Thursday (July,09/09). Supposedly a shipment of some 850,000 tons from a minor producer in Russia was sold for $460/ton and delivered to a port in India.The reason I am bringing this forward is that it stinks. I don’t mean it physically smells, I mean it carries the stench of some form of collusion or even corruption. The company involved Silvinet is the smaller of the few companies in Russia that produce potash. This also makes it a relatively minor player in the world of potash. It supposedly bid for this contract $160.00 under the current prevailing price being negotiated for Chinese and Indian delivery and it is also more than $200.00 under the current spot price for the commodity. This would be like Husky selling gasoline at the pump in Western Canada at $.75/lire while Chevron, Esso, and the rest are still charging $107./litre as is the case this morning in Vancouver. It is possible but I don’t remember it ever happening.
My inclination is to believe that if this is true that the broader story is much more complex. I don’t usually trust this type of story from what is widely regarded as one of the top most corrupt countries in the world. I have seen this type of disparity in the past. It used to regularly occur in the grain and precious metals markets when the Russians didn’t need to disclose their activities. One of the most recent was the huge squeeze in the Palladium market a few years back when they held back supply and drove the price to over $1000.00/ounce. I saw it many years ago when the wheat crop went from a disaster in the Ukraine (pre Glasnost) that became a bumper crop after the price of wheat soared.
If this story holds up, look for the major producers to hold back on any contract with the Chinese and Indian governments and simply supply the spot market until supplies become so tight that a new contract is negotiated at a fair ($625+) price for all concerned.
Ritch Wigham
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
What to think of this correction?
July 8, 2009
Well needless to say, the long awaited correction appears to be with us. We are certainly now seeing a number of stocks over re-acting in the negative. The move higher was arguably more than it maybe should have been, having said that the move back down should probably be tempered somewhat by the amount of money that was sitting on the sidelines.
This is certainly an interesting correction for a number of reasons, but primarily for its breadth. From agriculture to copper, if it comes from the earth nobody wants it right now. There has been a resumption in the attitude that the world economies are in worse shape than anticipated. I don’t believe that to be the case. I feel that the markets were just a little too optimistic with the speed that things would pick up. It seems to me that if we look at most of the forecasts from a few months ago that it wasn’t until 2010 that anything would improve in any meaningful way. It seems to me that we are right on track for that to happen.
If you remember what I said in previous posts you will recall that I mentioned how political the price of oil was. Well guess what, if you are following the hoopla right now about how the price drop back to $60.00 is manipulated we should all be getting a good laugh right now. It seems to me that we spent a number of months being told that the price was too high because there was no demand, and oil was being put into storage at a record pace. Well why would we now say that the price is out of line as crude comes back down to earth and gives the poor consumer some relief from gas prices that were out of line with demand? If there was manipulation in this last price it was all on the upside as the large fund pools entered a market that they did not understand. Economically I can assure you that $60.00 dollar crude is much easier on everyone than $70 or $80 dollar crude when your economy is trying to recover.
The same situation is happening in the grain complex. The wheat, corn and soybeans have all fallen a great deal in the last three weeks. See this chart…
If you look at the December wheat chart (same as above link) you will see a very precipitous decline in the last few weeks. These moves are only partly due to farmer or end users (grain companies) hedging in the markets. These very large swings have much to do with funds chasing trades. If you look at the market you would surmise that the crop was large, wonderful and already in the “bin”. It isn’t! It is doing fine right now but ask any farmer how he feels about the next 60 to 100 days. In Canada a very substantial amount of the crop has already been written off for insurance due to drought, in most of the U.S. the pervasive cool temperatures are starting to worry many corn and soybean growers as time to tassel and head out are quickly approaching. I can promise that if you asked them they would not be nearly as sure as the market seems to be that the crop will be as good as the low prices that are with us. Remember what I said about making and breaking a crop all within a few weeks every summer. We made the crop the last two weeks, when are we going to break the crop? Next week or the week after?
So to end this at the moment, we should all be using this last price action to get ready to enter the markets that we have been waiting for. Agriculture is cheap, potash is cheap. If you like oil at all, most of the better oil stocks have sold off much more than the crude has. This correction will be the opportunity for the vast pools of money that stayed on the sidelines as the market over recovered, from the over done lows, that it made earlier this year.
Talk to you soon
Ritch
Mackie Research Capital Corporation (MRC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRC website please understand that it is independent from MRC and that MRC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital (”MRC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.