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Tag Archives: Commodities

A Modest Proposal: “Victory Tofu”

America needs all-tofu school lunches, subsidized tofu pizza, a Tofutti ice-cream substitute campaign… and more. I figure 205.4 pounds of tofu per American should do the trick. The situation facing American soybean farmers is dire, as shown below. Figure 1: PPI for soybeans, by calendar year (blue, left scale), end-of-crop year soybean stocks, in millions of bushels (red, right scale). Source: BLS via FRED, and USDA ERS, WASDE May 2019.  End crop year 2018/19 (Sep 30 2019) soybean stocks...

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Moore on Gold and Commodities

TweetApril 30, 2019 —   A century ago, the gold standard was considered a guarantor of monetary stability.  That golden era is long-gone.  (If it ever really existed at all.  The general price level fell 53% in US and 45% in the UK during 1873-1896 due to a dearth of gold deposit discoveries.) Continuing my thoughts on the Fed candidacy of Stephen Moore: he has said several times that he favors a return to gold.  In true Trumpian fashion, he recently denied having said it despite the...

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A Gold Standard Exchange Rate Regime for the 21st Century

The quasi-nomination of Stephen Moore and Herman Cain to the Federal Reserve Board has resurrected the issue of the gold standard. Jim Hamilton has repeatedly — and convincingly — critiqued the idea of a return to the classical gold standard, here, here, here, and here. But here I talk about what a gold standard for the 21st century would entail. In “A Gold Standard Does Not Require Interest-Rate Targeting“, Lawrence White critiques an article by Matt O’Brien, noting the operation of the...

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Soybean Prices on the Eve of the US-China Trade Deal

Why haven’t they risen? May 2019 futures for soybeans: Source: barchart.com/futures. Some observers have pointed out that the record 900 mn odd bushels of soybeans in US stockpiles might be exerting some downward pressure. I agree, but the “news” that would accompany a deal that Chinese are buying US soybeans would mean that ceteris paribus future stockpiles would be smaller than otherwise. Of course, this prediction is predicated on the deal being “credible”. And the one thing we know...

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“[I]t’s a big IF that soybeans futures are LONG TERM predictors at all.”

AKA CoRev Memorial Post. The quote is from CoRev, and motivated a July 15 post that contained this graph: Figure 1: Soybean futures for July 2019. Source: ino.com. We haven’t made it to July 2019 yet, but so far we’re on track…Here’s the front month (May) contract. It’s at 888 right now, pretty darn close to the 876 value. The current July 2019 contract is at 902. Now, this could be just happenstance. Maybe one could get repeated instances of futures contracts, and check out how ex post...

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Why Haven’t Soybean Futures Recovered?

As Brad Setser noted last month, US, Brazilian and Argentine soybean prices have converged, suggesting the end of arbitrage profits. Yet, as shown in Figure 1, current prices have not recovered to the average of the past five years (only one year of which is from before the appreciation of the dollar). Source: Barchart.com accessed 3/23/2019. The Chinese tariff on US soybeans should open up a gap between US and non-US soybeans, if one can prevent arbitrage. If not, the prices should...

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When Will Trump Deliver on the Trade War: Soybeans

Stock market meltdown, government closure, coup d’etat at DoJ, announced exit from Syria, maybe-exit from Afghanistan, tanks on the Russia-Ukraine border, DPRK still developing nukes, and Mattis departs. But at least we’re winning the trade war, right? Source: Barchart.com, accessed 12/21/2018So, despite the “truce”, soy prices have not recovered measurably. From FarmProgress.com: China’s return, if it holds, could increase old crop export demand by 50 million or maybe even 100 million...

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US Gets China to Agree to What It Was Going to Do Anyway

From NYT: In a significant concession, Mr. Trump will postpone a plan to raise tariffs on $200 billion worth of Chinese goods to 25 percent, from 10 percent, on Jan. 1. The Chinese agreed to an unspecified increase in their purchases of American industrial, energy and agricultural products, which Beijing hit with retaliatory tariffs after Mr. Trump targeted everything from steel to consumer electronics. So, China will buy some soybeans from the US, which it was likely to do anyway, since...

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