While Kevin Rudd and his crew have been whopping it up on our taxes in Copenhagen, ProFarmer has been battling the decay and lack of public infrastructure out in the bush – one of the few industries Australia has a significant advantage over the rest of the world and where all Kevin Rudd and his green crew want to do is shut us down.
Currently I’m in the bush in NSW. I can’t get mobile phone reception, overcast skies have made the internet connection dodgy, mum’s already blown up the washing machine and the tele is on the blink (storms and power surges overnight no doubt to blame). With the outlaws arriving for Christmas shortly, we will have to resort to the usual remedies to get through…at least the fridge is still working.
Markets were deadly quiet this week and it was hard to get anything coherent or tangible from our usual trade sources – either the result of too much Christmas cheer or a lack of ideas. It reminds ProFarmer of the market sentiment that abounded in 2004 when all the talk was about how to get rid of massive stocks.
But there are three huge differences in this market compared to 2004. The first is the active involvement of commodity funds in our markets, second is the ongoing growth in the global bio-fuel industry and the third is the ominous buying presence of China that can change market sentiment with the stroke of a pen.
US ProFarmer told us this week that fund activity will be heightened in January with one major index fund indicating in its prospectus that it will buy roughly 70,000 contracts (350 million bu) of corn futures in the middle of January. This sort of thing can lead to herd mentality and should be closely watched over January.
And there is renewed activity in the bio-fuel industry with a major energy company Valero Energy Corp. last week purchasing 3 additional ethanol facilities. These facilities were idle. When Valero starts production, each plant will absorb about 35 million to 40 million bu of corn from the local market. When fully operational, Valero will have an ethanol production capacity of 1.1 billion gallons annually. Valero Chairman and Chief Executive Officer Bill Klesse said in a company press release, “The ethanol plants we bought earlier [through VeraSun bankruptcy] have been very successful for Valero.”
For any indication of how powerful China has become, the phony deal in Copenhagen was secured by a wink and a nod between Obama and his Chinese counterpart….no real need for the rest of the 100,000 delegates.
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