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fuelstrader
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Joined: January 29th, 2007, 12:00 pm

financial crisis vs commodity

August 22nd, 2007, 10:16 am

1. The Western economy is going to slow down and therefore the East is going to export less. Overall commodity demand is going to wane and prices are set to decrease.2. The Western stocks are going to be hit hard and using credit is going to be expensive. As a consequence Mining and oil stocks are going to slow down their investments and exploration programs. The commodity shock which has mostly been demand driven is going be more dramatic as supply will be even more constrained going forward.3. The Western economy is going to suffer but the classic response from governments is to adopt a Keynesian view and to spend more in infrastructure, which would therefore support commodity prices.Which one will have the largest impact?
 
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ppauper
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Joined: November 15th, 2001, 1:29 pm

financial crisis vs commodity

August 22nd, 2007, 12:49 pm

4) the western fiat currencies continue to be devalued leading to a rise in commodity prices
 
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nazzdack
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Joined: March 3rd, 2004, 9:50 am

financial crisis vs commodity

August 22nd, 2007, 3:08 pm

(5) People will continue to waste time making irrelevant forecasts.
 
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Thinker
Posts: 53
Joined: May 2nd, 2007, 2:21 am

financial crisis vs commodity

August 22nd, 2007, 10:49 pm

(6) China & India growth cycles will lead to unparalleled demand for commodities, combined with a bit of (4) (& by default (5)) you end up with continued price increases, especially in USD terms
 
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quantmeh
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Joined: April 6th, 2007, 1:39 pm

financial crisis vs commodity

August 22nd, 2007, 11:58 pm

western countries will recolonize commodity rich countries
 
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Thinker
Posts: 53
Joined: May 2nd, 2007, 2:21 am

financial crisis vs commodity

August 23rd, 2007, 12:14 am

touche - of course, that has already started ...
 
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fuelstrader
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Joined: January 29th, 2007, 12:00 pm

financial crisis vs commodity

August 29th, 2007, 8:00 am

disappointing responses...
 
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ImamicPH
Posts: 130
Joined: December 28th, 2005, 4:36 pm

financial crisis vs commodity

August 29th, 2007, 11:30 am

As far as European commodities, what's included? Does anyone have a link to some figures like what percent of copper comes from where?
 
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Traden4Alpha
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Joined: September 20th, 2002, 8:30 pm

financial crisis vs commodity

August 29th, 2007, 11:48 am

Why are these responses disappointing? Economics has shown a very poor track record in forecasting. The structure of the models are debatable, the coefficients in the models are unknown, and the tendency of the world economy to spawn new macroeconomic connections means that old models and coefficients are obsolete before the ink is dry on the working paper. As they say, economists have predicted seven of the last five recessions.Even forecasting the price of a single commodity, e.g., oil, is well nigh impossible. I was talking to a forecaster at Exxon and he said the company explicitly doesn't try to predict oil prices because they know they can't do it. If anybody has the real-time data and billion-$ incentive to forecast prices, it be somebody like Exxon. (And if they could forecast prices, then they could dump the dirty and costly business of extracting it to focus on making zillions on the commodity markets).I guess I agree with Nazzdack on this one. Although it is useful to consider the scenarios you presented, the likelihood of picking the right one is very low and therefore the effort is trying to pick the right one isn't well spent. I do notice that the vast majority of the scenarios lead to increasing commodity prices. Only alternative #1 (slow West leads to slow East) leads to a drop in commodity prices. And even this is debatable when you consider that China is becoming a consumer nation in its own right. At some point, internal economic growth will mean that China does not need as much exports -- the low-labor-cost interior will "export" its goods to the high-consumer urban areas on the coast. At some point the 10% growth rate of China will more than offset a 1% or 2% decline in the growth rate of Western countries.
 
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Traden4Alpha
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Joined: September 20th, 2002, 8:30 pm

financial crisis vs commodity

August 29th, 2007, 11:48 am

dup
Last edited by Traden4Alpha on August 28th, 2007, 10:00 pm, edited 1 time in total.
 
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fuelstrader
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Joined: January 29th, 2007, 12:00 pm

financial crisis vs commodity

August 29th, 2007, 3:00 pm

Well I do believe that if you trade commodity fundamentals based on a very rigurous approach per commodity you will make money on the long run....Oil is a very oriented commodity and I agree flat price forecasts are very tricky to make. Others such as gas, coal, ags are more predictable in my opinion.
 
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bogracer
Posts: 94
Joined: February 7th, 2005, 5:35 pm

financial crisis vs commodity

August 30th, 2007, 5:34 am

85 by T Boone's 85th, hooah!I'm sure XOM is never going to come out with forecasts but one observeable behavior is spending on infrastructure and asset acquisitions/exploration. Marathon (think it was them) paid premium for what right now must be the most expensive marginal barrel of oil on the planet -- the oil sands stuff.
 
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Traden4Alpha
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financial crisis vs commodity

August 30th, 2007, 11:20 am

QuoteOriginally posted by: fuelstraderWell I do believe that if you trade commodity fundamentals based on a very rigurous approach per commodity you will make money on the long run....Oil is a very oriented commodity and I agree flat price forecasts are very tricky to make. Others such as gas, coal, ags are more predictable in my opinion.I would think that the rise of biofuels is presenting an interesting long-term opportunity/threat to commodities traders. The movement to convert corn, sugar cane, palm oil, etc. into fuels should increase the coupling between ag prices and oil prices. This will even affect non-fuel ags (e.g., cattle & wheat) because these other commodities compete against biofuels for crop output or land.
 
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fuelstrader
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Joined: January 29th, 2007, 12:00 pm

financial crisis vs commodity

September 3rd, 2007, 8:44 am

Long term will come from cellulose - not ags to me.
 
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Traden4Alpha
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Joined: September 20th, 2002, 8:30 pm

financial crisis vs commodity

September 3rd, 2007, 11:27 am

QuoteOriginally posted by: fuelstraderLong term will come from cellulose - not ags to me.Agreed, but won't cellulose become the new ag commodity? If cellulosic biofuels grow in importance, I can imagine cellulose futures in various grades. I'd also imagine that cellulose-based biofuels would distort the traditional ag markets by either competing for land or changing the mix of crops grown to maximize a sustainable yield of waste stalks.
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