It’s an awfully cold government that won’t allow relief supplies to get to its citizens in need, especially when thousands already are dead and many more could expire due to an inability to get food, clean water or even shelter. The cyclone that ravaged Myanmar (formerly Burma) killing (unknown) thousands and its aftermath is a tragedy unfolding before us. Having seen the incompetence of the U.S. government after Hurricane Katrina hit New Orleans, we can understand how simple miscommunication can complicate relief efforts. When a government purposely won’t distribute relief goods to those who need it, that’s murder.
Sadly, what’s happening in Myanmar is further evidence of a world gone wild due to lack of, or the fear of lack of, food. Riots over rice are happening throughout Asia, protests over skyrocketing food prices are being held all over the world, and even here in the United States, which is a rich bread basket, there is fear that crops needed to feed people and animals may be in short supply, and won’t be enough to handle a surprise natural disaster, such as a drought.
For grain traders, and frankly, most traders, it has been a wild ride. And at least according to our experts, it won’t calm down any time soon. As long as fuel and food are battling over the same crop land, weather scares and actual events plague crop levels, it’s sure to be a volatile period for commodity prices (see “Don’t go against the grains,” by Associate Editor Chris McMahon).
Add to this the move by some countries to reduce, or cut back completely, grain exports to protect their own people. Makes sense in a humanitarian way, but threatens the ebb and flow that makes up world trade and could cause populations to panic.
The truth seems to be that many producer countries could have very good years: Australia, India, even the United States. Wheat has been the crop that many countries are growing for food, and many will have bumper crops, actually putting downward pressure on wheat prices.
Meantime, corn and soybeans still remain strong, largely due to the need for food and fuel, for which both are used. Analysts see both contracts going higher, especially if there are any weather mishaps. One area of concern in both is carryover stocks, which one analyst says could be “dangerously low.” This would have an impact beyond the human aspect, as it would affect livestock and poultry producers, thus overall food prices.
As the price of oil charged over $120 per barrel, the food quandary was subjected to a below-the-fold news item. That was until the cyclone hit Myanmar and an already fragile market put the potential of millions starving on the front page. Of course, the disaster in Myanmar has less to do with the lack of food and more to do with the inability to get food distributed to the people who need it, whether due to third world infrastructure failures or a corrupt government. But it has put the world’s fear on the front page. Add to this the price of oil hitting new highs every day, global economic uncertainty (especially in the United States) and the capriciousness of the growing season, these next several months will be a trader’s dream market. Of course, long-only funds continue to impact the regular market moves, and this even commercials have a hard time figuring out.
As a trader told me, the good news is electronic trading of these markets has leveled the playing field for everyone, but it also has leveled the playing field for everyone. Technicals always will help in trading these markets, especially in watching both long and short trends and getting into a trade. But also keep your eye on the global picture. Sometimes trendlines and stochastics go only so far and then it’s fear that takes over.
