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Rice Speculators Expect 50% Jump In Price

Tyler Durden's picture




 

Analyzing last week's CFTC Commitment of Trader data continues to confirm our assumption that ever more speculators are honing in on rice as the fulcrum commodity. Jumping to a fresh year high of 6,652, non-commercial net spec contracts are the highest they have been since December 2009, when they hit 6,773, and approaching the record from early 2008. Yet while the price of rough rice in late 2009 was comparable to recent price levels in the $16 region, the peak from early 2008 was 50% higher, approaching $25. Therefore it is safe to assume that should speculative interest continue surging at the current rate, and if it were to approach the spec exposure of ~8,000 last seen in early 2008, then the price of rice has a long way to go...

And some other CFTC charts, confirming that spec exposure in grains and softs continues to be near recent all time highs:

Looking at the 2, 5 and 10 Year Treasury spec exposure, we see a huge plunge in 2 Year spec positions, which dropped by 100k in the past week, the biggest drop in over a year, as increasing more spec are worried that the short end is about to surge. There was also a pick up in 10 year spec contracts, confirming that specs are expecting a flattening of the curve.

Lastly, and no surprise here, dollar non-commercial net specs have dropped to a fresh multi year low, declining by 3.8K contracts W/W to -7.4K. There was a modest increase in Yen and GBP specs, and a modest decline in CHF and EUR positions.

 

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Sun, 02/13/2011 - 15:36 | 957935 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

January was hard on gold bugs, but it was worse for dollar bulls.  The dollar now trades on a flight to gold.  Monie is pouring into gold.  How long will the dollar be a means of exchange is contingent on how long until it is recognized it is not a store of wealth.

When the rice producers only accept currencie backed by gold the gig is up, and the first currencie to declare so will suck all monie into it.  Will the Chinese wait until they accumulate thousands of more tonnes og gold?  Or will they depeg and do it now?

 

Sun, 02/13/2011 - 16:34 | 958052 Michael
Michael's picture

Everyone who can on the planet should go on a limited fast to drive down food prices. Another twitter protest?

I wouldn't normally suggest such a thing, but people are actually starving of malnutrition due to high food prices from speculation and money printing.

Sun, 02/13/2011 - 17:23 | 958148 topcallingtroll
topcallingtroll's picture

why junk him?  Except for the fact he is handwringing about the third world.

 

Actually most of us fat fuckers could probably benefit from the occasional fast.

Mon, 02/14/2011 - 04:01 | 959085 uhb
uhb's picture

.

Sun, 02/13/2011 - 20:06 | 958410 quasimodo
quasimodo's picture

Good idea in theory, but it would work about as well as the "nobody buy gas on Thursday to drive down gas prices" idea.

Sun, 02/13/2011 - 15:35 | 957941 gwar5
gwar5's picture

There's going to be more global riots. I think rice is still the worlds most common staple.

Maybe China will unpeg to the USD.  North Korea will have real trouble. They've suffered enough.

Bernankecide has found a way to weaponize food.

 

 

Sun, 02/13/2011 - 15:37 | 957950 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The dollar has been the ultimate weapon for the banksters.

Sun, 02/13/2011 - 17:22 | 958144 topcallingtroll
topcallingtroll's picture

North Korea has not suffered nearly enough.  there are still a few of them still alive.  I'm all over that future dollar unpegging though, but they won't unpeg.  They may let the yuan move up a little faster than they originally intended.

Sun, 02/13/2011 - 17:26 | 958155 Sudden Debt
Sudden Debt's picture

It sure looks like it.

First the people of the 3th world will turn against their leaders which they blame for rising food prices.

Second will be when we'll start to see mass migrations from those ereas.

Thrid will be when they turn against  us when they realise another government doesn't change things and we still have all the food we want.

The fourth cycle will be when they join their causes and fight as one against us. And that one we might lose.

 

 

Mon, 02/14/2011 - 04:04 | 959086 uhb
uhb's picture

not as long as its us who got the nukes.....

Mon, 02/14/2011 - 06:51 | 959175 Grappa
Grappa's picture

Ah yes and what happens to you when you start to use them in a very large scale?

Sun, 02/13/2011 - 18:05 | 958215 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Egypt removes a dictator by people power after the people protest rising food prices. A bit too neat and tidy, considering the Egyptian Army might as well be a branch of the US Army. The Bernanke works for Langley ... (only half joking)

What does the CCP think watching this one on TV?

 

Mon, 02/14/2011 - 17:41 | 961255 flattrader
flattrader's picture

If Indonesia comes undone due to rice price spike the SWHTF.

>>>Around 62% of the world's Muslims live in Asia, with over 683 million adherents in such countries as Indonesia (the largest Muslim country by population, home to 15.6% of the world's Muslims[8])<<<

Indonesia has a significant pro-Taliban element and active cells.

This is at least if not more worrisome than events in the ME given the sheer sizen of population involved.

Sun, 02/13/2011 - 15:37 | 957948 Iwanabanoilman
Iwanabanoilman's picture

You guys are the professional traders dream--

Perfect for the hype needed to get the elevator full--just before the cable snaps. That's the reason Every commodity bull dies a horrible death (no exceptions in history).  I do enjoy this site for the news --The ZH prognostications are awful.  Good thing you guys don't manage money.

Sun, 02/13/2011 - 15:39 | 957955 Mr Lennon Hendrix
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A = A

Sun, 02/13/2011 - 15:45 | 957966 tmosley
tmosley's picture

Point out for me some "prognostications" that have been wrong.  All I have seen is a long line of predictions that have come true.

Sun, 02/13/2011 - 17:19 | 958136 topcallingtroll
topcallingtroll's picture

see above.

Sun, 02/13/2011 - 15:49 | 957975 EscapeKey
EscapeKey's picture

Traders? I didn't realize HFT boxes could interpret ZH articles.

Mon, 02/14/2011 - 04:05 | 959087 uhb
uhb's picture

True, but we can interpret ZH articles and program our HFT boxes accordingly.

Sun, 02/13/2011 - 17:19 | 958134 topcallingtroll
topcallingtroll's picture

I would point out that the prognosticators who urged people to stay away from the stock market have missed out on one of the greatest bull runs in history..  However to his credit TD will often point out various anomalies but rarely make speculative recommendations. 

Sun, 02/13/2011 - 15:37 | 957949 bugs_
bugs_'s picture

WMT and Costco have already had to limit quantities of rice per customer - so you see the unabashed bringing their families with them and telling the clerk that these bags are his, these bags are hers, etc but I am paying for them all.

The keynesians won't ask the Unicorns how to deal with food hoarders - the hoarding is going to really heat up.

Sun, 02/13/2011 - 15:52 | 957982 cossack55
cossack55's picture

I've been thru the years:

A boarder

A corder (F/O cable stringer to missle batteries)

A porter (hotel during college)

A sorter

A torter (in Paris only)

and I am certainly now a bigtime fuckin hoarder

Sun, 02/13/2011 - 17:37 | 958173 Freewheelin Franklin
Freewheelin Franklin's picture

Ever been a snorter?

Mon, 02/14/2011 - 09:33 | 959321 The Profit Prophet
The Profit Prophet's picture

Or a Shorter?

Sun, 02/13/2011 - 15:56 | 957994 Id fight Gandhi
Id fight Gandhi's picture

Don't know if the stories are true. But saw the Chinese are making fake rice. Using various foodstuffs like potatoes, but shockingly and dangerously using plastic.

Sun, 02/13/2011 - 16:27 | 958045 EscapeKey
EscapeKey's picture

The Keiser Report (E119 or E120, I forget), had a segment on this.

Sun, 02/13/2011 - 16:31 | 958055 Id fight Gandhi
Id fight Gandhi's picture

It would not be surprising if they were using plastic to make rice. Sounds plausible and with shortages and prices soaring you know people are out to make a yuan anyway they can.

Sun, 02/13/2011 - 18:01 | 958207 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Uncle Ben's Plastic Rice

Cooks in five minutes ...

Sun, 02/13/2011 - 15:58 | 957997 bogey4
bogey4's picture

Isn't big speculative open interest a classic reversal signal?

Sun, 02/13/2011 - 16:09 | 958014 BORT
BORT's picture

Any ideas on why the Baltic Dry and the CRB and other commodity indexes have completely decoupled.  There seems to be lots of speculation but no increased shipping demand.  Doesn't anyone have money to take delivery.  How long can this historical disconnect last?

Sun, 02/13/2011 - 17:26 | 958154 topcallingtroll
topcallingtroll's picture

I had read somewhere that there were a record delivery of new ships these last couple of years.  I am too lazy to look it up.  If true it might explain some of it.  A better indication is probably shipping tonnage rather than rates.  Is there anywhere to find total totall shipping tonnage or number of containers?  Any other metric that might not be potentially confounded with excess ship supply if such excess supply exists?

Mon, 02/14/2011 - 04:06 | 959089 uhb
uhb's picture

har har!

Sun, 02/13/2011 - 16:20 | 958032 props2009
props2009's picture

Did any read of China Communist party threat to dump dollar if pushed to the wall?

http://dawnwires.com/investment-news/china-we-will-dump-the-dollar-if-yo...

Sun, 02/13/2011 - 19:13 | 958325 BigJim
BigJim's picture

Interesting.

But whenever I hear about how China has the US by the short and curlies because it holds so much of the US' debt, I'm reminded of that saying:

"If you owe the bank $10,000, and you can't pay, you have a problem; if you owe the bank $10,000,000 and can't pay, the bank has a problem."

(...course, that was before TARP etc)

Sun, 02/13/2011 - 16:51 | 958087 dick cheneys ghost
dick cheneys ghost's picture

let them eat ethanol

 

 

http://nakedempire.wordpress.com/

 

Sun, 02/13/2011 - 17:54 | 958193 EscapeKey
EscapeKey's picture

That site needs more comic sans and exclamation marks!!!111one!

As believable as the average Jim Marrs book.

Sun, 02/13/2011 - 17:49 | 958188 toros
toros's picture

Does it really cost more for rice today than it did yesterday?

Sun, 02/13/2011 - 17:56 | 958200 Id fight Gandhi
Id fight Gandhi's picture

Sure does. Im sure some here probably know off the top of their head what percentage of income goes Towards food in various countries.

The poor countries are getting hammered. People are starving and dying just because of money printing and speculation.

Speculation is one thing, but we don't need the printing to fuel it.

Sun, 02/13/2011 - 18:24 | 958248 time123
time123's picture

Nice article. Although I would be feeling better seeing this return in the stock market. That will really make a difference in a positive way.

 

time123

admin: http://invetrics.com

Sun, 02/13/2011 - 18:45 | 958278 toros
toros's picture

So the work I do today is less valued than it was yesterday?

Sun, 02/13/2011 - 19:15 | 958327 BigJim
BigJim's picture

If you've been paid the same number of *insert inflating fiat currency here* then yes, probably.

Mon, 02/14/2011 - 08:52 | 959264 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

RICE, RICE THAT'S ALL I HEAR FROM THE SPECULATORS. DO YOU THINK I DON'T KNOW THAT, MR? RICE IS FOR PUDDING NOT FOR SPECULATING!

Wed, 02/16/2011 - 07:39 | 966142 SilerLibertyLondon
SilerLibertyLondon's picture

Guys, the price rice is dereasing now... what s your point on it ?

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