Roseman's Eruptions

Hogs on Top in Brutal Market for Commodities

One of the best performing commodities since the first week of May is lean hogs and live cattle. Driven by record imports and expectations of another surge in Chinese demand, hog prices are heading through the roof this summer while most commodities struggle since May.

Seasonal demand (barbeques), Chinese and foreign purchases and a reduction of herds has resulted in newfound support for the worst-performing commodity sector over the past ten years.

Europe’s Boat Springs another Leak

Montreal, Canada

The financial press has sprayed so much information about the Greek debt crisis that most investors have probably grown wary of the ongoing malaise. Greece will probably receive another bail-out until this phase of the cash-pile runs dry in 2012.

Poor Brazilian Crop Threatens Sugar Supplies

Montreal, Canada

Sugar might be at the cusp of another huge rally for the second time in as many years.

Like corn in the United States, sugar-based ethanol in Brazil is drawing more supply away from Brazilian kitchens and into automobiles. Brazilian sugar-based ethanol is far more popular than corn-based ethanol in the United States and has long been an important input in gasoline blends.

The Trouble with Lumber

Montreal, Canada

Lumber prices are struggling again. Since hitting a high for the year earlier in March, lumber prices have declined more than 20% and seem to be following a similar pattern that occurred in 2010.

Last year, amid an ongoing depression in housing and construction, demand for lumber declined sharply and proved to be an accurate bell-weather for a weaker economy; the Fed’s QE II program squashed the swoon in lumber and a major recovery ensued consistent with other risk-based assets.

Bond Market Out to Lunch

Montreal, Canada

The American dollar might be embarking on another in a series of bear market rallies this summer but it should eventually run out of gas. That’s because the prospect of higher short-term interest rates in the United States is next to nil over the next 12 months and beyond. The Bernanke Fed will keep rates low for a long time.

It’s pretty hard to love the U.S. dollar these days. Just about everyone is a dollar-bear, including my dog, Deutschemark.

Dr. Copper Doesn’t Jive with the Bears

Montreal, Canada

Investors’ love affair with commodities is over. According to data from Barclays Capital, investors yanked almost $7 billion dollars from commodities markets in June. That’s the biggest outflow since the depths of the financial crisis in late 2008.

June marked another bad month for raw materials with the Reuters-CRB Index falling 5.5%. Every segment of the index posted a loss. Some of the biggest losses belonged to the grains complex where corn and wheat suffered double-digit declines.

Grains Chopped to Pieces in Ugly June

Montreal, Canada

A bowl of Wheaties cereal might make you big and strong, but investors and speculators betting on a recovery in wheat and other grains this week were sorely disappointed following a bearish USDA crop report this morning. The entire grains complex is getting decked.

Paging Dr. Copper

Dr. Copper has been under the weather, as of late. After hitting record highs in mid-February, the metal has retreated close to 12% as of yesterday’s close.

Rare Earth Metals in a Bubble?

Montreal, Canada

Since hitting the market over a year ago, the entire gamut of rare earth metal companies has been on a tear. Many of these stocks have gained several hundred percent over the past year as investors embrace a sector that’s virtually dominated by the Chinese in terms of net supply.

Rare earth metals include names or words that are difficult to pronounce, but they are important components in cell phones, military equipment and other devices that are regularly used by consumers and individuals every day.

Don’t Bet Against Chinese Commodity Bull

Montreal, Canada

A correction in asset values is now engulfing the natural resource space. If everyone was bullish just eight weeks ago, then the opposite is true now. Suddenly, the world doesn’t need as much oil, wheat or potash compared to only two months ago.

Even governments are getting into the act. The release of strategic oil reserves is another stupid policy by major leaders of the world at a time when prices are already falling since May.