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Old Nov 21, 2011, 10:51 AM
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2008: Bear Stearns, Lehman get caught telling accounting lies and markets crumble.

2011: MF Global gets caught telling accounting lies and markets choke, spit, backfire.

I think commodities will end down for the year and next year looks like 2009.
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Old Nov 21, 2011, 11:24 AM
AustinTatious
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Hurst, Texas, United States
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I am actually shocked at food prices and how low they are!

Turkey is selling for .68 a pound right now. That is insanely cheap for such a delicious meat!

I have over 20 lbs to cook and it was less than $20.00. If they ate ONLY. Turkey I could probably feed 25-30 guest for less than 1.00 each.

Beef is the thing I am shocked at price wise. I've never seen it so high.
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Old Nov 21, 2011, 11:29 AM
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Originally Posted by AustinTatious View Post

Beef is the thing I am shocked at price wise. I've never seen it so high.
That the reason I buy it by the cow these days from a slaugter house..
Guess once I add up the cost of the deep freezer I break even
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Old Nov 21, 2011, 11:38 AM
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I don't remember the details, but it is a good story anyway. Some years ago a friend was living in a commune. They decided to buy a peanut butter production facility and make natural healthy peanut butter. There were some problems getting peanuts, as most were already contracted. They figured something out and got options on a bunch of peanuts. The peanut plant plan crashed, but they made $120,000 off their peanut options.
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Old Nov 21, 2011, 12:47 PM
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Originally Posted by Jim Thomerson View Post
I don't remember the details, but it is a good story anyway. Some years ago a friend was living in a commune. They decided to buy a peanut butter production facility and make natural healthy peanut butter. There were some problems getting peanuts, as most were already contracted. They figured something out and got options on a bunch of peanuts. The peanut plant plan crashed, but they made $120,000 off their peanut options.
That is pretty much my point in a nutshell. And it proves the serendipity of the commodities market vs. "doing it yourself".

Trading futures is a risk, when it pays off, where does the money come from? Those who bet the wrong way? The repercussions felt in the marketplace as a result of the trading are without real basis in supply and demand, at least, the trading magnifies those results beyond actual real market pressures. Unintended consequences perhaps, but real consequences none the less.
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Old Nov 21, 2011, 12:53 PM
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That is pretty much my point in a nutshell. And it proves the serendipity of the commodities market vs. "doing it yourself".

Trading futures is a risk, when it pays off, where does the money come from? Those who bet the wrong way? The repercussions felt in the marketplace as a result of the trading are without real basis in supply and demand, at least, the trading magnifies those results beyond actual real market pressures. Unintended consequences perhaps, but real consequences none the less.
Or put simply - Gambling, not Investment!
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Old Nov 21, 2011, 12:58 PM
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Originally Posted by Treetop View Post
That is pretty much my point in a nutshell. And it proves the serendipity of the commodities market vs. "doing it yourself".

Trading futures is a risk, when it pays off, where does the money come from? Those who bet the wrong way? The repercussions felt in the marketplace as a result of the trading are without real basis in supply and demand, at least, the trading magnifies those results beyond actual real market pressures. Unintended consequences perhaps, but real consequences none the less.
How did the value of the peanuts suddenly not become related to supply and demand? In the example Tim gave, do you think that the demand dropped suddenly and the supply expanded, but magically people paid a lot more just because his buddy owned peanut shares?

Your post is more proof you don't understand the free market.
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Old Nov 21, 2011, 01:17 PM
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You mean like government subsidies for crops to make ethanol?

This seems to come up over and over

The whole ethanol debacle is due to just what the 99% ers are complaining about

Corporate BIG Money(Archer Daniels Midland) influencing Congress.


The Tree huggers had nothing to do with that mess
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Old Nov 21, 2011, 01:50 PM
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Bad harvest due to heat and drought. Simple. Pay one way or pay the other. How 'bout them cotton prices?

http://money.cnn.com/2011/10/31/mark...ices/index.htm

Prices for a ton of runner peanuts, commonly used to make peanut butter, hit nearly $1,200 this month, according to the U.S. Department of Agriculture. That's up from just $450 per ton a year ago. Overall, the USDA projects that American peanut production will hit 3.6 billion pounds this year, down 13% from last year.
Analysts attribute this drop to the intense heat and drought that hit the southern U.S. this year, as well as to high prices for other crops that led farmers to focus their efforts elsewhere.
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Old Nov 21, 2011, 02:12 PM
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Originally Posted by saltyzoo View Post
How did the value of the peanuts suddenly not become related to supply and demand? In the example Tim gave, do you think that the demand dropped suddenly and the supply expanded, but magically people paid a lot more just because his buddy owned peanut shares?

Your post is more proof you don't understand the free market.
Do you think if the trading of the commodity was stopped and the end users were the ones that created the demand that the price would go up the same amount?

I'm not saying one way or the other. I'm just asking the question because this is something I don't completely understand. It just seems to me the traders in the middle are making a profit by adding cost to the end user without adding value. Unlike oil, peanut butter is something we could easily live without. Maybe we should all boycott peanut butter and see what happens. It certainly would be an interesting experiment.
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Old Nov 21, 2011, 02:36 PM
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Do you think if the trading of the commodity was stopped and the end users were the ones that created the demand that the price would go up the same amount?

I'm not saying one way or the other. I'm just asking the question because this is something I don't completely understand. It just seems to me the traders in the middle are making a profit by adding cost to the end user without adding value. Unlike oil, peanut butter is something we could easily live without. Maybe we should all boycott peanut butter and see what happens. It certainly would be an interesting experiment.
So your contention is that supply and demand does not apply to luxury items?

This thread certainly illuminates a lot of other things that are said on this forum.
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Old Nov 21, 2011, 02:38 PM
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So your contention is that supply and demand does not apply to luxury items?

This thread certainly illuminates a lot of other things that are said on this forum.
Woosh....
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Old Nov 21, 2011, 02:42 PM
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Woosh....
My thought exactly.
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Old Nov 21, 2011, 02:59 PM
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Originally Posted by saltyzoo View Post
My thought exactly.
Nice, I ask an honest question and all you got is insults.
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Old Nov 21, 2011, 03:03 PM
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Originally Posted by Treetop View Post
So, peanut harvest down 13%, so if I bought 100 jars at $239, I should still be able to get 87 jars at $239, or $2.75 a jar. Yet the price has gone up from $450 a ton from last year to $1200 a ton on the commodities market. Sounds like oil and gas prices and that market to me.

Not making sense. Once again, speculation driving prices in the commodities markets?
Tree it looks like you are thinking that a 13% reduction in supply should be related to some specific (like 13%) increase in price ?- that is not the case. What you wrote makes sense if demand suddenly dropped by the same amount as the supply - but there is no reason to think that that would happen - unless the price rises to the point that 13% less is sold - the question is - how much does the price have to rise to generate 13% less sales.

The term for this behavior is price elasticity - which varies from product to product - factors to consider are how critical the product is, and how easily it can be replaced by another similar product.

In the case of a critical item that cannot be replaced by another - it is easy to see that even a small reduction of supply below demand can drive the price to huge increase.

When looking at perishable goods like peanuts, IMO commodity futures contracts are very well anchored to actual commodity prices. Remember that real producers can sell their future inventory at these prices - a speculator on the other end of the deal will suffer a real loss if the product or contract cannot be sold at that time at a profit. High prices will generate increase planting the next growing season. Driving prices back down.
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