Posted by e on October 09, 2008 at 21:58:57 from (75.100.68.231):
In Reply to: Crop Prices posted by tjh72 on October 09, 2008 at 19:18:20:
Well, let's look at it this way. If you look at the stocks of big agricultural players: Agrium (fertilizer), Deere (equipment), Monsanto (seed & chemical), you will see they have taken a major major hit over the last 4-5 months. Agrium has dropped from $110 to $37 as you can see above. Ok, sure, most stocks have dropped as we well know, but while the world has been watching bank stocks drop like a rock, no one has noticed that ag stocks have also dropped to 50% if not to 33% of their June value. This implies they are dropping much faster than the rest of the market (the stock market is still at 75% of where it was at in June).
So, what does this mean? Dunno for sure. However, I've been reading more and more trading notes for the above companies that mention "overinflated commodity prices" and "farm commodity price bubble." Makes a guy wonder what the "street" knows that we don't. Or maybe a better question is "what is the "street" planning?"!
What is also scary is the days when commodity prices will go limit down (or limit up), there usually is a lack of fundamental "agricultural" reasons for such wild moves. This tells me that investors and hedgers have a lot of money commodities (and there always will be and it isn't always a bad thing to have some of the messing around with futures for liquidity sake). And the day they decide farm commodities are no longer a good investment, the money will flow out like water flowing out of a tipped over bucket.
So to answer your question, it's anyone's guess. I'm starting to lean toward cashing out given all the craziness. I wish you the best of luck.
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