2011 Predictions for Corn, Beans and Wheat
Dec 31, 2010
I was asked by a few subscribers to give my New Year predictions. Unfortunately as most of you may know I have never been given that special pass to the proverbial "Crystal Ball Club" that so many advisors seem to have access to. In good spirits I thought it might be fun to throw out a few of my thoughts and best guesstimates for the New Year...hope you enjoy.
- One thing for certain is that with an estimated $70 billion more pouring into the commodity markets "volatility" is going to be extreme. Look for the funds to push these markets to extremes in every way possible in 2011. Extreme highs will be met with massive, week long profit taking blood baths for those getting to the party late. Keen timing and pocket full of "Tums" will prove to be essential. Make sure you have the right "Guide" to help you navigate this one...I am afraid you are soon going to be heading into "Unchartered Waters"...
- I will throw my hat in the ring and predict that China's corn imports soar to over 7 million tons in 2011. That is up substantially from the 1.5 million imported in 2010. China eventually gets caught in a production jam and is forced to import more than 25 million tons with in the next three or four years.
- This kind of any easy one, but you have to believe Spain will be the next to fall in the European debt debacle. Italy will soon follow. From there I am not so sure, but I will predict that Germany will take the reigns along with the European Central Bank and help from China, to fund a massive bailout and restructuring program to end this madness once and for all.
- I will not be as bold as the former president of Shell Oil, John Hofmeister, who is predicting that Americans could be paying $5 for a gallon of gasoline by 2012. I will take half that bet though and estimate fuel prices at the pump could approach the $4 level within the next 12 months.
- Maybe I am just getting older and watching the weather more, but it certainly seems that more extremes in weather conditions have become the theme as of late. I predict 2011 will be even more intense, look for more extreme droughts and more extreme rains. I am not sure if we will see more of a La Nina, El Nino or Speedy Gonzalez type weather type pattern, all I am saying is that I could see the trend for extreme weather intensifying.
- This one is sure to get me in trouble if I am wrong, but what the heck. I think gold will continue to climb higher breaking the $1500 mark and possibly going much higher than that. Funds may jump the other precious and industrial metals like platinum, palladium, silver, and copper as they feel they can push and manipulate these markets much easier than they can gold. If you are apprehensive buying gold, spreading these other metals against the gold market might be just the right play this year.
- The S&P 500 continues to push higher and ends 2011 with double digit gains. Some serious blood will be shed on fears of a European crash, rising US debt, etc... These massive down days will keep the doom and gloom followers on the sideline as they watch one of the biggest dog and pony shows ever make the bulls from the Lehman Brother lows, millions on the ride higher.
- As for the housing market, I am afraid we remain stuck in the rut. The divorce rate has pulled back the past few years since the economy has turned bad. Wether you want to believe it or not this has affected the housing market. One of the main things fueling our housing boom from the 70's to the 200's was a skyrocketing divorce rate. Instead of one home, divorced families were forced into buying two homes. Now not only has the divorce rate fallen significantly, but the families who have experienced foreclosures are moving in with other family members and finding out life is not all that bad. It seems that having money in their pocket and spending more time with family is kind of fun. Not to mention our younger first time home buyers who have had to live through the embarrassment and shake up associated with a foreclosure or falling equity values are opting to avoid the potential pitfall by simply renting. One thing I have learned in life is that it takes a long time to change someone's perception or perspective about an event that has rocked their life. I doubt we see this housing thing rebound anytime real soon.
- I don't think I need to point out the obvious, but what the heck. With Cotton prices skyrocketing expect to pay a significant amount more for clothes and cotton related goods.
- Some of our friends in the government become even more confused about our founding fathers' definition of "Capitalism" and "Communism"...I'll leave it at that.
- The Fed will continue to be the primary buyer of treasuries to the chagrin of far too few people to make any difference. The Treasury markets will have become "Comfortably Numb" to the charades. Continued efforts will be like spitting into the wind. As I have said all along, manipulating short term rates is one thing, long-term rate manipulation is a crap shoot at best.
- I think both the US Dollar and the Euro will ultimately find stable ground. The Euro may be pushed off another cliff before it hits bottom, but stabilization will eventually come in 2011. The Canadian Dollar, Australian Dollar and Swiss Franc may strengthen against both. Don't ask, I stopped pretending years ago to know what-the-hell will happen with the Yen or Yaun. These guys beat to their own drummer...I just keep my dog out of that race.
- I will join the masses and throw out a Crude Oil estimate of $110 plus per barrel, on increasing Chinese demand and surging economy.
- The Korean Peninsula crisis heats back up after Kim Jong II passes the throne to his "mad-man" son. As he tries to flex his muscles and prove ownership to the title, massive military actions will get under way. The US and China look to be in opposite corners as this middleweight bout gets under way. Lets just hope one of the two fighters' corner men don't decide to jump in the ring, or this could get real ugly in a hurry.
- Similar to the housing market "Unemployment" will not improve. I believe we are chasing a ghost. These jobs are gone, gone, gone...Only two people I know ever said "I'll Be Back" and meant it...One was Jesus Christ, the other was Arnold Shwarznegger in the movie Terminator. These jobs are not coming back. Companies have learned to make due with out them. Companies understand they need to stay lean to compete. Companies are refinancing and taking the money and investing in the explosive overseas markets, not in the tax laden US market. Manufacturing type companies of the past that employed thousand and thousands in large factories are being replaced by innovative new business like Craiglist, who's entire company works out of a house in San Francisco. Wake up America the manufacturing jobs have left the building. If you were going to open a factory to manufacture goods, would you want to try and do it here in the US where you may face years and years of bureaucratic red tape, spend millions and millions repairing your battered image from the damage protesters have done as they try to keep you from building in order to save a unique species of spotted horsefly's. Seriously, the days of the big American manufacturing machine is gone forever. I hope my kids are innovative...
- Along those same lines you have to believe "Facebook" and the "Social Networks" will take over the internet. If I have a question about a certain car I am thinking about purchasing, or more insight regarding a candidate on the ballot, why not just ask one of my 10,000 online friends who all have similar interest and likes. I have to imagine CEO, Mark Zuckerberg will start to plan for the biggest IPO in US Stock market history and before age 30 will become the worlds richest man, all from a program he designed in one fleeting night while sitting in his college dorm room...Now that is what I call the "American Dream" and that is something we must all fight to keep alive. With both my father and grandfather having fought to defend this great country, I feel I owe them at least that much, for all they had to endure....I challenge you to give something back to this country in 2011 and help get us back on track. I would hate to think that one day all of the sacrifices our fathers and grandfathers have made will all be for not...
Hope Everyone Had A Great 2010...Lets Work At Making 2011 Even Better.
*** I almost forgot...I really just wanted to tease you. The "Crystal Ball" says new highs across the board in 2011 for Corn, Beans & Wheat. Lets shoot for $8 corn, $17 beans, and $10 Wheat...Happy New Year!!!
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