Skip to main content

Strange day

This morning I woke up to the radio going-on about how oil prices had dropped, getting to my Bloomberg terminal at 7 this AM, I looked at oil prices and saw, WTI at $110/bbl – not far from Friday’s close, so a big WTF moment, then I realized that overnight WTI crude had gone up as high as $112/bbl.  Hence the radio freekout.

This morning, TSX opened down 45 pts, and is now near -85 pts, the news is that commodity prices are off.  So I checked “King” copper, and he’s up.  Mr. Aluminum (he’s up too, so are steel prices).  Oh and VIX index is down at 18, like everything is fine, 18!  So I just don’t know what’s going on here.  Actually, European and Asian markets were all off in Monday’s trading  – that makes more sense than commodities reflex, and the reality of the U.S. market is driven by POMO activity (Feds’ money injection machine).  My guess is that around 3 this afternoon the U.S. market will roll over.

Kaddafi (or Gadafy depending on your preferred spelling) is looking at a serious problem with the “rebels” and is in the process of buying time (maybe looking for a country that would take him and his family in?) from the “Coalition” (read the French Air Force here).  Hence oil prices are off a little this morning.  Fundamental problem in the oil market is the excessive speculation in the OTC market – we are talking net long position close to the 2007 peak.  The other problem in the oil market is demand and supply – there is virtually no systemic spare capacity:  America’s oil production has not changed in a decade, Mexico is falling fast (will start importing by 2020).  Canada is still growing but from a low base.  Middle East has not risen for more than 4 years.  Iraq oil is the only game in town now for supply growth.  Finally, and this is the kicker whereas in 2002 demand was 80/20 OECD/Developing world, it’s now 50/50 – and developing world is growing fast.

Back home we are in election mode.  You almost have to disregard the news cycle because the level of BS is simply astonishing.  Worse of the lot are the Conservatives (my natural affiliation), who are picking up cash from thin air on a daily basis (actually on Sunday nearly $7 billion magically appeared).  Ignatieff (the guy running for the Liberals) continue to behave like a university professor – and a particularly pompous one at that (you know the type, he’s always got to show how *&$# smart he is!).  Fortunately, I live in an electoral riding which consistently picks the Liberal candidate – Conservative candidates usually finish in 3rd place, so my very reluctant conservative vote will be wasted.  Moreover, I really really like the Liberal candidate – smart and well spoken.

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu
Post a Comment
Read more