Corn update

I never was able to get a full boat on in corn futures. I did add on the dip, but I thought the market was going to punish the long specs more than it did. So I'm at about 60% long. The weather in the corn belt has warmed up, and the soil is getting warmer. Still, the forecast is for slightly below average for the first 2/3 of May.
At this point, the upside of the corn market is all optionality. There is nothing in the stats that could be called tightness now. But with the lower plantings and the possible poor planting weather, I think prices should be firm for the next week or so at least. After that, we will have to see.

Egg Consumption

Eggs are one of my favorite commodities. Why?
- There is no futures market, and therefore little research is done.
- There's a pure way to trade it, Cal-Maine Foods Inc.
- It exhibits strong mean reversion, important  for a value guy like me.

However, even though eggs should be the essence of a stable commodity, something weird has been going on. US consumption has been increasing fairly fast. You wouldn't think this would happen. After all, humans have been eating eggs since the stone age. I would think that people's egg patterns would be pretty stable. But no. Here's a graph of US per capita egg consumption.

So consumption has really taken off in the last five years. In my experience, when long time patterns get disrupted, big things happen in the associated markets.

Russia

I don't normally comment on macro stuff, but here's one...
I simply do not understand what Putin is thinking about geopolitics. He seems to be going out of his way to antagonize nations with natural alignment of interests. It seems obvious to me that Russia's long term security problem, if it has one, is hegemony by the US or China. Mind you, I really do not even think that's a real problem, but it's possible.
If so, Russia's natural friend here is Europe. There is also a natural economic relationship as well. So why is he refighting the cold war? And while we are questioning things, why is he emphasizing the natural resources industries over all other? Russia has an immense store of human capital in tech. Most people know that Russian emigres have created great value in the US (for example, Google and Ethereum). He could have developed this locally.
Of course, I'm just a speculator. I don't make the rules, I just try to forecast what they foretell.

The technical situation in silver

There's an interesting technical situation in silver. The speculative community, which is normally bullish, has actually gotten short of silver. According to the CFTC  commitments of traders report, "non-commercial" traders (another word for specs) are now a total of 85 million ounces short. This is the largest in recent memory. This is very unusual, since specs are traditionally bullish on both gold and silver.
Now just because a group of people who are normally bullish have turned bearish, doesn't mean that the price is headed higher. There are good reasons to be bearish on silver. However, one can assume that these are weak hands. They probably don't want to be short, but are following trends. So if something happens to change the trend, they will head for the exits ASAP. In that case we will get a fierce rally.
Is this enough to go long silver. Probably not, unless you have some idea of the catalyst that will turn the trend. If you do, it's a nice risk/reward situation. Making it even better is that option volatility is on the cheap side, so you don't have to risk much.
I'm thinking about it - will let you know if I pull the trigger.

Ruthenium, Part Three

So how do you invest in Ru? There is no company that specializes in it. Also, there is no ETF, as there is for Rhodium. So you have to physically buy the metal. Most precious metal investors like to buy bars or coins. They are easy to store, and you have something to look at/show your friends if you are into that sort of thing.
But Ru is an industrial rather than a precious metal. It is value dense, but all its usage goes to industrial applications. So I believe buying the industrial form is better. This is in the form of a sandy powder. You buy a can(s) of this. This blog will not recommend any vendors, but you can find some if you search the web. Make sure they are reputable, both the seller and the manufacture who produces the material.
I only buy physical commodities very rarely. There are a lot of disadvantages, including trading costs, counterparty risk, and storage risk. But in this case, I simply don't see another way.

Ruthenium, Part Two

Because of the large move Ru has had, one might think that its price is historically very high. However, after adjusting for inflation, it's still in the general range it has been for a long time. Here's a chart of the price in 2018 dollars going back to 1972.

It's at the top of its normal range. If I'm right about the fundamentals, it should eventually break out of that range.

Tomorrow I'll talk about the hardest question: how to find a vehicle to invest in it.

Ruthenium and Iridium

These are two minor platinum group metals. I am very bullish on both, especially ruthenium. It is not used primarily for internal combustion engine cleanup, as is platinum and palladium. Instead it is used in many high tech applications, especially electronics and chemicals. These are expanding sectors of the world economy. So demand is good.
No so for supply. As palladium's price has risen vs. platinum, the southern African miners have shifted their capex to Pd - intensive regions. These produce lesser amounts of ruthenium.
The price of  Ru has already more than doubled, but I believe it has further to go.

More on this over the next few days. In the meantime, check out:
http://www.platinum.matthey.com/ for a chart, and:
http://www.platinum.matthey.com/services/market-research/pgm-market-reports for some stats.

Here's a graph of soil temperature over the last 16 years at 4 inch depth for April 9th. This year is the lowest ever.

More on Agriculture

As of yesterday, the soil temperature in Slater Iowa at two inches below the surface was 36.0 degrees F. The 10 year average of temperature on this date is 50.6 degrees F. Corn requires a minimum of 50 degrees to germinate, but it's better if it's higher than that.
The cold weather has added another risk to the crop. If the crop can only get in late, it will be at risk for an early frost. Until the weather turns, I will buy any dip.

Added a little to my corn long

Fundamentally, I like it. However, the specs have gotten quite long, and this seems like a good excuse to cause some pain. I will continue buying scale down.

Full boat in CALM

I forgot to post this yesterday. I finished out my position in CALM. The egg market has healed, and I believe this will once again be a very successful company. Over the past 20 years, CALM has given an annual total return of 21%! That's what being the low cost producer in a commodity business will do for you.