A Science And An Art


Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

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Below is my weekly newspaper column Commodity Insite from a week ago entitled, A Science And An Art. I hope you enjoy it. My weekly column is first sent to the handful of newspapers that have been kind enough to publish my writings for the past 30 odd years, to my subscribers and brokerage clients.


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November 1, 2019

A Science and An Art


Trading commodities and in particular agriculture markets such as grains and livestock the past few months has been frustrating, exasperating and humbling. And not because money has been lost and forecasts off base and wrong. It has been a tough environment because in most cases, the ag-markets have simply gone nowhere.


In fact, there are only two commodities in the past months that have been in a trend and gone somewhere. One is cattle where futures bottomed in early September near $98 and approached $120 this week. The other is hog futures where prices peaked out in late September, shy of $73 but approached $63 this week. The livestock complex possesses the single most bullish ag-market anywhere while also owning the most bearish ag-market anywhere.


Hog prices continue to leak despite news articles about swine fever in China devastating their hog herd. Weekly, there is news about how much US pork is going to be sold to China and other countries struggling with swine fever. All my work suggests loudly that a global shortage of pork will indeed lead to a historic rush to buy US pork despite hog prices being the most bearish of ag-markets. Hog futures are quite bullish long term.


Just how bad is it in China and Asia regarding the scarcity of pork? From the South China Morning Post. Chinas pork shortage puts dog and rabbit meat back on the menu in rural communities. The price of pork continues to surge across China because of supply shortages driven by the poor handling of African swine fever. Chinese people are looking for alternatives, including dog and rabbit, as the countrys most popular meat becomes unaffordable.


Also from the South China Morning Post. And there is no sign Chinas pork crisis will be over any time soon. Chinas National Bureau of Statistics said the average price of pork nationwide shot up 69 per cent in September from a year earlier, pushing the consumer price index up to 3 per cent, the limit of Beijings inflation tolerance for 2019. Prices are expected to rise further given the continued decline in the countrys stock of pigs.


But trading other ag-markets such as grains has been as disappointing and baffling as hogs futures. In the grains, tweets, press releases and jaw-boning flow out of the White House about a trade deal to be struck with China allowing the US farm economy to improve. A few weeks ago, President Trump stated that US farmers need to buy more land and newer tractors to keep up with the demand about to come from China. It has yet to happen!


It is very difficult to trade commodities profitably be they, ag-markets, metal markets, currencies, stock futures, and so on. Commodity trading is high risk speculation and not for everyone. And the frustrating and bewildering commodity markets over the past few months shows clearly why trading is as much a science as an art.


History, on the other hand, shows that frustrating and challenging markets have been seen before. In fact, back in 1978, an up and coming singer whose name escapes me, had a big hit with a song entitled, I believe it was,

Mammas Don't Let Your Babies Grow Up To Be Commodity Traders." And here is, if I recall properly, the second verse of that all time classic;



Mamas, don't let your babies grow up to be commodity traders.

Don't let 'em pick guitars or drive them old trucks

Let 'em be doctors and lawyers and such

Mamas don't let your babies grow up to be commodity traders

'Cos they'll never stay home and they're always alone

Even with someone that has margin money.


But I must, fess up while attempting to make a point. I fess up about that song above. That is not the right title. And the first name of the vocalist that turned it into an all time classic hit is Willie. If you cant figure out the true song title and vocalist, drop me a line and I will let you know.


The point I wish to make is this. There are looming weather issues facing US grain and livestock producers in 2020. Find a book, take a course, call someone and learn about the art and science of trading commodities. If history repeats itself this growing season as I expect, trading commodities may be a talent to cherish and appreciate.

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Drop me a line at commodityinsite1@gmail.com if you wish to know more about my twice a day newsletter. Or, call me at 406 682 5010.


The time is 8:00 a.m. Chicago


















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