Warning Lights are Flashing on all Commodity Prices : Paul Sommerville

John_F

Paul Sommerville (Market analyst with 22 years expreience in commodities, forigen exhange, and derivates in Tokyo & London) has a piece in todays journal on page 16.

He says that because the usa started to print dollars meaning a lower dollar value and due to greece and maybe spain the euro is set to value higher (increase in interest rates), but if eu cannot increase rates and with the usa programe of pumping dollars in ends the end of july then both currencies will drop in value putting pressure on commodities.

also he says that demand is stalling from usa to china and beyond, growth fighres are lower than expected, so demand will fall putting pressure on prices later in the year and into 2012. sommerville says that commodity prices follow a foward price mechanism and not the economy. producers being over confident thrown in with the lot is very dangerous mix he says.

and just across the page that paddy o keeffe has a line "the headline is set for a paying expansion in milk in 2015"

are we all gone too confident, alot of the optimism around now particularly with dairying is a reminder on 2007 for me, lets hope we dont get another 09

6600

Yep read that too, thought it was the kind of article you'll remember in 2 yrs time when things are gone to sh1t. This year's beef price €3.76, last year €3.14 max, that's 20% up. Milk even more. The grain price is not so rosy anymore either. People in most countries have had a reduction in their spending power so this has to filter down to food prices. Also the currency effects are going to make our exports more expensive for non-EU countries to buy.:eek:

5live

We all knew it was going to happen. When prices rise too high, buyers will use up stocks first then buy less and substitute more, with less expensive ingredients being used to replace the more expensive.

Plus the power of the multiples mean that they constantly look for lower margins by manufacturers which puts more pressure on manufacturers to buy lower again.

At this stage, all the retained gains by purchasers of our output from 2009 have been eaten up and the only place they can get margins is in purchasing. Werent the manufacturers of the Mr. Kiplings ranges delisted by Tesco (iirc) recently because they wouldnt cut their prices by enough to suit Tesco.

But then again 3 years ago they said prices would never again fall and the year after that would never again rise:rolleyes:.

Big pinch of salt but it will happen sometime

Birdnuts

Sommerville is on the money - the whole commodity space screams bubble ATM and I would have serious concerns about what is going on in China, between massive ghost cities and regional governments up to their eyes in trillions of dollars of debt:(

bob charles

Paul Sommerville (Market analyst with 22 years expreience in commodities, forigen exhange, and derivates in Tokyo & London) has a piece in todays journal on page 16. Hmmm I wonder about his credentials

the black clouds are on the horizon. I was told today that is was reported there are a huge number of students looking for non available green cert places. Well I think these unfortunate boys and girls should count on there blessings. there is a very bleak future for the people in the Ag industry at present let alone another few thousand qualified farmers coming from college each year. Maybe I have a very negative view as im an all beef but this year is more of a catch up year to arable and milk as we are paying the same input prices as those with a much smaller return if any. Whats the current percent of beef farms making a profit before SFP i wonder. 20%?

Dont get me started on the con that is China at the moment

John_F

bob charles wrote: »

Paul Sommerville (Market analyst with 22 years expreience in commodities, forigen exhange, and derivates in Tokyo & London) has a piece in todays journal on page 16. Hmmm I wonder about his credentials

the black clouds are on the horizon. I was told today that is was reported there are a huge number of students looking for non available green cert places. Well I think these unfortunate boys and girls should count on there blessings. there is a very bleak future for the people in the Ag industry at present let alone another few thousand qualified farmers coming from college each year. Maybe I have a very negative view as im an all beef but this year is more of a catch up year to arable and milk as we are paying the same input prices as those with a much smaller return if any. Whats the current percent of beef farms making a profit before SFP i wonder. 20%?

Dont get me started on the con that is China at the moment

why?

is this what we are going to see every time there appears to be money in milk, a pure gold rush like youd see last century, everyone flocking to the same thing as fast as possible. i dont think the ag industry is bleak though, lost too many people with potential to the construction industry, the more skilled people there is surley the better??

pakalasa

In the past, there have always been price fluctuations on commodities, but these were hidden to some extent by inflation.
Now that we are in the Euro, inflation is a lot lower, so fluctuations are a lot more obvious.

irishh_bob

the last crash in commodities hurt farmers hard as they were in the midst of huge investment in slurry storage facilitys etc , a lot less investment in the likes of sheds this past few years so the effects shouldnt be as severe , i think most farmers now accept that it will be a topsy turvy ride in the coming years

5live

The speculators buy futures and inflate the price causing others to do the same on predictions of population growth/commodity shortages. Eventually they cause a bubble like 2008/2009 when everyone bails out and counts their losses/gains.
It seems like they are getting a bit itchy now and may be ready to sell and take their gains.
The problem that arises is that others may start selling too and start a domino effect even if the future predictions of demand/supply havent changed much. Like irishh_bob says, China is the big unknown

Tora Bora

Didn't read his article, BUT, looking at and listening to him, in his breathless, panicky voice mode, I begin to wonder where he get's the credibility accorded to him by doomsday prophet reporters and commentators on RTE and TV3 and the likes.

Again he is telling us what's coming down.
Can he tell us what's going up, I ask you, so we can all make a euro or three.

keep going

irishh_bob wrote: »

the last crash in commodities hurt farmers hard as they were in the midst of huge investment in slurry storage facilitys etc , a lot less investment in the likes of sheds this past few years so the effects shouldnt be as severe , i think most farmers now accept that it will be a topsy turvy ride in the coming years

100% agree with you this is what it is going to be like in the future.and at least if china or usa go wallop it will force down costs not like before when china kept world demand up

reilig

I suppose its no harm to keep our feet on the ground. Although farmers are fairly good at this anyway. Most of us didn't become overnight property developers (unlike many other economic sectors in this country). Its always going to have its ups and downs, It always has had them. We got through them. I always say, as long as I can grow enough food to feed myself and the family, we'll still be alive.

Still waiting for this global food shortage to hit that has been predicted for the last 10 years. I'll be quitting the day job and going farming full-time when it does :D:D

blue5000

Ah ffs lads this thread is gone a bit like David Mcwilliams preaching doom and gloom in the property boom, then since the bubble bursts he has been on a rant 'I told you so,' of course prices go up and down.

Food is different, people have to eat everyday, the world population is growing every day. The ag industry is one of the best industries to be in at the moment, that's why speculators are in on the act. Trouble is their meddling doesn't do much good for us producers, except exaggerate any swing up or down in price. They do however make the consumer pay more for their food.

I think we as farmers need to put some money away when times are good so that we can ride out the times when prices are low.

Tipp Man

blue5000 wrote: »

Ah ffs lads this thread is gone a bit like David Mcwilliams preaching doom and gloom in the property boom, then since the bubble bursts he has been on a rant 'I told you so,' of course prices go up and down.

Food is different, people have to eat everyday, the world population is growing every day. The ag industry is one of the best industries to be in at the moment, that's why speculators are in on the act. Trouble is their meddling doesn't do much good for us producers, except exaggerate any swing up or down in price. They do however make the consumer pay more for their food.

I think we as farmers need to put some money away when times are good so that we can ride out the times when prices are low.

I'm with you Blue on this - maybe the excitment of Sunday is getting to us

I believe the long term trend for agricultural commodities is upward, and by quite a bit. However there will be downs along the way which we need to be prepared for. As Blue5000 says it will be essential for farmers to have money put away for the bad times.

I also wouldn't call 2009 a bubble burst for agri's. The bottom did fall out of the market but in the scheme of things prices rebounded fairly quickly - unlike the housing bubble for instance where prices probably won't recover for what 10-20 years.

Cash management is going to be a farmers biggest problem in years to come.

bob charles

Tipp Man wrote: »

As Blue5000 says it will be essential for farmers to have money put away for the bad times.

but what happens when there is no money to put away and any money that is being made is covering deaths from the past. People talking about population growing and we needing to feed them are talking crap. Have any of you's traveled and seen the huge tracts of land that as of yet hasnt been farmed. Ireland is just a little pimple on the worlds ass

20silkcut

bob charles wrote: »

Tipp Man wrote: »

As Blue5000 says it will be essential for farmers to have money put away for the bad times.

but what happens when there is no money to put away and any money that is being made is covering deaths from the past. People talking about population growing and we needing to feed them are talking crap. Have any of you's traveled and seen the huge tracts of land that as of yet hasnt been farmed. Ireland is just a little pimple on the worlds ass

We have a lot of advantages in this country as regards suitability to agriculture. Just imagine if we had to sink wells into deep aquifers to keep our fields green and our grass growing.
There are billions and billions of acres in the world where barely a blade of grass would survive.

irishh_bob

reilig wrote: »

I suppose its no harm to keep our feet on the ground. Although farmers are fairly good at this anyway. Most of us didn't become overnight property developers (unlike many other economic sectors in this country). Its always going to have its ups and downs, It always has had them. We got through them. I always say, as long as I can grow enough food to feed myself and the family, we'll still be alive.

Still waiting for this global food shortage to hit that has been predicted for the last 10 years. I'll be quitting the day job and going farming full-time when it does :D:D

plenty of farmers lost the run of themselves this spring and early summer when you consider the crazy prices being paid for cattle in marts

Tora Bora

R

20silkcut wrote: »

We have a lot of advantages in this country as regards suitability to agriculture. Just imagine if we had to sink wells into deep aquifers to keep our fields green and our grass growing.
There are billions and billions of acres in the world where barely a blade of grass would survive.

We have a few acres ourselves where the snipe has to circle about five times, before he can chance landing. :rolleyes:

whelan1

bob charles wrote: »

but what happens when there is no money to put away and any money that is being made is covering deaths from the past. People talking about population growing and we needing to feed them are talking crap. Have any of you's traveled and seen the huge tracts of land that as of yet hasnt been farmed. Ireland is just a little pimple on the worlds ass

agreed i for one used up all my reserves over the last 2 years .... have realised after seeing my accounts from last year where i supposedly made a big profit while i lived on fresh air that scrimping and saving gets you no where only a bigger bloody tax bill...... at the end of the day if i have no money i will still be able to feed the kids - milk , meat , etc as long as they dont go hungry feck the rest!

irishh_bob

bob charles wrote: »

but what happens when there is no money to put away and any money that is being made is covering deaths from the past. People talking about population growing and we needing to feed them are talking crap. Have any of you's traveled and seen the huge tracts of land that as of yet hasnt been farmed. Ireland is just a little pimple on the worlds ass

yes , some of us have been to south america ( argentina ) and seen land which makes the golden vale look like leitrim only its an area the size of france yet not farmed in anyway intensely

Tipp Man

bob charles wrote: »

but what happens when there is no money to put away and any money that is being made is covering deaths from the past. People talking about population growing and we needing to feed them are talking crap. Have any of you's traveled and seen the huge tracts of land that as of yet hasnt been farmed. Ireland is just a little pimple on the worlds ass

Not saying its easy at all Bob - for most it will be extremely difficult and some will go under.

I've travelled a bit, Oz, south America etc and yeah your right we are a pimple on the worlds ass. However for the most part we are a productive pimple. A good Irish acre can produce 5 or 10 times what an acre in some of these places can produce - we have a very stable climate, we already have a good farming infrastructure, we have a very stable (albeit ****e) government, we have the worlds richest food purchasing market on our door step with no trade barriers. These are factors that cannot be underestimated. And we should not underestimate ourselves. For such a small place we punch way above our weight and are in the top 4 or 5 countries for milk and beef exports. When you think about it and look at a map that's actually amazing.

Sometimes we can be overly critical of ourselves and look at other places in envy. There are very few places on earth that can match good Irish land - There are very few other places in the world i'd rather farm than here - parts of France and maybe NZ (although haven't been).

I just think there are reasons for Irish farmers to be relatively optimistic - far away hills aren't always greener

Tipp Man

reilig wrote: »

Still waiting for this global food shortage to hit that has been predicted for the last 10 years. I'll be quitting the day job and going farming full-time when it does :D:D

It's going to be a fairly long drawn out process - but food will become scarce. It is starting to happen already - I think wheat stores are at there most empty for 30 years or something like that

blue5000

whelan1 wrote: »

agreed i for one used up all my reserves over the last 2 years .... have realised after seeing my accounts from last year where i supposedly made a big profit while i lived on fresh air that scrimping and saving gets you no where only a bigger bloody tax bill...... at the end of the day if i have no money i will still be able to feed the kids - milk , meat , etc as long as they dont go hungry feck the rest!

Yea the trick is to put a bit away without paying the taxman. Probably the best thing is to invest it safely ON farm not OFF farm, in a way that will be accessible 3-5 yrs down the road, perhaps longer if you have young kids who will probably want an education in 15-20 yrs time.

whelan1

blue5000 wrote: »

Yea the trick is to put a bit away without paying the taxman. Probably the best thing is to invest it safely ON farm not OFF farm, in a way that will be accessible 3-5 yrs down the road, perhaps longer if you have young kids who will probably want an education in 15-20 yrs time.

yes the bit i am dreading is 3rd level education.... well it will be a few years away but as we stand one wants to be a poultry farmer , another wants to be a shop keeper and the youngest wants to help mickey mouse:rolleyes:

irishh_bob

Tipp Man wrote: »

Not saying its easy at all Bob - for most it will be extremely difficult and some will go under.

I've travelled a bit, Oz, south America etc and yeah your right we are a pimple on the worlds ass. However for the most part we are a productive pimple. A good Irish acre can produce 5 or 10 times what an acre in some of these places can produce - we have a very stable climate, we already have a good farming infrastructure, we have a very stable (albeit ****e) government, we have the worlds richest food purchasing market on our door step with no trade barriers. These are factors that cannot be underestimated. And we should not underestimate ourselves. For such a small place we punch way above our weight and are in the top 4 or 5 countries for milk and beef exports. When you think about it and look at a map that's actually amazing.

Sometimes we can be overly critical of ourselves and look at other places in envy. There are very few places on earth that can match good Irish land - There are very few other places in the world i'd rather farm than here - parts of France and maybe NZ (although haven't been).

I just think there are reasons for Irish farmers to be relatively optimistic - far away hills aren't always greener

i think your over egging the pudding a wee bit in terms of the status you have attached to irish land in terms of quality , the percentage of bad land in ireland is higher than in the likes of england , its not all like tipperary , limerick and louth , land in argentina has a yard of top soil and this area is bigger than ireland , i do agree about ireland being perfectly possitioned in terms of consumer markets , new zealand will never have that and while south america is a big population , thier not wealthy consumers