Vancouver Investment Advisor Ritch Wigham

This sums up nicely the current problems in the U.S. crops

See this post on The Pig Site about the current grain market situation in the U.S:

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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 Research Capital Corporation (”RCC”). 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 RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to RCC 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.

Standoff over fertilizer prices imperils world food supply

After reading this article from the Globe and Mail: I have just finished a special report that you can request with my current recommendations on the Potash companies that we follow.

-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.

It’s up to China

This article by Kenneth Rogoff helps explain why we have a dynamic change in the way the world is going to work moving forward. As you know if you have read any of my recent blogs/posts I am a firm believer in the premise that it will be Asia (read China primarily) and the other BRIC economies that will lead the world recovery.

The way that I interpret Mr. Rogoff’s assumptions is essentially that China primarily, and other emerging economies, can either spend their U.S. reserves back into their own economies or buy what they need in the open market for what their economy needs to develop further on it’s own. Spend it or loose it.

In the case of a currency that means basically spend it or watch it devalue ‘till you will only get a fraction of what it was once worth. The unwritten and verboten subject, and attitude in the U.S. may well be to allow their currency to devalue vis a vis the Yuan/Renminbi until it hurts. Remember that all those dollars have already been devalued by as much as 50% depending on when they were accumulated by the Chinese central bank. We also have almost everything that these economies needing, having gone up substantially in U.S. dollar terms. Copper, oil even the prices of the grains should continue to get support as these dollar rich economies continue to “spread the wealth” before it devalues further. Other producers such as the Oil cartel will continue to try and force higher prices from their production as the value of dollar pricing continues to decline and the monies they receive in U.S. terms diminishes their ability to support their own economies, and import purchases.

Again, as I have said before, as long as U.S. interest rates stay low, the need to spend dollars will continue, as the currency relationship is the proxy for these rates and gold becomes also the store of wealth that you would normally ascribe to the U.S. dollar as the primary reserve currency in global terms.

In essence Mr. Rogoff is suggesting as we have that Chinese spending will be of benefit to all and they not the U.S. consumer will lead world economic recovery.

Talk to you soon

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.

Being wrong and being right.

By, Ritch Wigham

We have all had situations were we have been right longer term and wrong on the near term. Very frustrating, but also very human. For those of us in the investment business this can pose a bit of a problem. “Sticking to your guns”, as they say, could result in some serious stress while you are trying to decide if you are still right or are simply WRONG.

One of my favourite sayings regarding this principle is often repeated by my friend Dennis Gartman: “The market or markets can stay illogical longer than you can stay solvent”. This is particularly true if you are covering margin call after margin call in the futures markets.

This blog is not about how to fix this aspect of trading, this is about recognizing that if your first assumption is correct (or proven to be) you must still recognize this and act accordingly.

I found myself in this position all summer as we watched the best crop in a generation crumble agricultural stocks, fertilizer stocks and grain futures in spite of an unusually cool and late growing season. There were no sun-spots, but it didn’t matter until now!!

I had suggested that:” if you weren’t going to be long this group, you had better not be short.” I said this early on in the year just as farmers in North America were seeding their fields and preparing for the summer growing season. Was I wrong? Near term it appears I was. Now that we have had a very early freeze, and snow through a vast stretch of the crop area in central North America, maybe not so wrong after all.

If one had gone long stocks you are fine. Most of the favourites didn’t really move higher but are now certainly poised to do so. Potash Corp., Potash One, Agrium etal, are now finally in a position where all the great crop news is behind them. The world still needs fertilizer, and that season is now upon us. (Improving exports,etc)

If you had been long the grains, one can only hope that you were able to go to the sidelines early in the summer as this “great” crop emerged. If that was the case now “IS” the time to get long again. There will not be any more great crop news to come. It can however get rather lousy. Frost and wet ruin crops. If the Great Plains don’t dry out quickly from here, yields will tumble for corn and beans, and grade for what wheat is still standing. Large amounts of the corn crop in particular may be affected by the recent weather. Follow this link for a good article on this by Stu Ellis.
If he is correct and we see as much of a yield decline as he suggests, we will see some very smart price increase. Either way, we have put the big bottoms in.

So we go back to the top. Sun spots (lack of them) did muck up the weather. I guess I was “Right” longer term. The ability of this cooler than normal weather to give one of the best crops in a generation, did however have me very “Wrong” for the bulk of the summer, or for the “near term”.

The really important thing is to recognize when you are wrong. In the futures markets that is important very quickly. In the stock markets, that is important, but you have more time to decide whether you can hold through the pain of waiting. In this case I am very bullish all that is agricultural still. On the near term, and the long haul as well.

Talk to you soon,

Ritch

Research Capital Corporation (RCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from RCC and that RCC 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 RCC.

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.