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Thread: The biggest Bull run the Futures market has ever seen

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    The biggest Bull run the Futures market has ever seen

    If you followed the agricultural market over the past few weeks, you would have been witness to the biggest Bull-run SAFEX has ever experienced.
    Some pretty amazing leaps, with maize futures contracts trading at limit within minutes from the market opening and no one selling had you wished you joined the party (like today). People have and continue to make HUGE profits, doubling, tripling and quadrupling their money within a week! Just to give you an idea of what I'm talking about, let me give you an example:

    Say you took R10 000 and put it down as margin (deposit) on buying one White Maize Futures Contract for delivery in Dec '12, 4 weeks ago on Monday, the 18th of June and you only sold it again this Monday (16 July), you would have made a whopping R70 000! That's R80 000 back in your pocket as you get your R10 000 margin back. If you went further and bought another contract with every R10 000 you made over these four weeks, the figure would have been double that! That's a profit of around 1600% in 4 weeks! Amazing stuff.

    So what happened?
    In short, it's a question of expectations and reality.
    This season American farmers planted a record area of corn. The last time they planted this much was back in the forties. The expectation of course then was that a record amount of corn will be harvested as well, forcing the market into a bearish trend. All this changed with the corn belt experiencing hot and dry conditions around a critical stage in the development of the plant. With each passing week the condition of the crop worsened and every report that comes out looks worst than the last. Now, it's a question of supply and demand and with the harvest looking like the worst in 20 years, the supply is dreadful and this created a buying frenzy within the market.
    To add to the already extremely bullish market, countries like China and Japan are buying grains like mad men. Just like the rest of the world, they were also under the impression that the price of corn were going down and so they waited to buy at the cheapest price possible. As the situation turned and did not recover to the previous lows they are now left to buy their yearly consumption needs a bit late and at the current prevailing prices adding support to the market.

    It's uncertain how long this is extremely bullish trend is going to continue. Technical analysis shows that the market is way overbought and that a pullback is imminent, but with the situation being as it is, it seems that that will not happen soon. A pullback will occur for sure, but with the next WASDE report coming out in about three weeks time and the sentiment being as it is, it's very difficult to predict when

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    Diamond Member Blurock's Avatar
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    Food security is under threat due to droughts and general mismanagement of resources. The global population explosion just exacerbates the problem. the problem is not global warming, but global breeding.

    Sadly the penny has not dropped with many countries and governments and our own government is also doing their bit in threatening food security in South Africa.
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    I agree - look what happened to Zimbabwe. The only focus was on obtaining farmer's land, without giving any regard to what they produce and what the country consumes. It seems like they didn't stop for one second to consider what it will do to their economy and the welfare of the Zimbabwean people, or given thought to where their food is going to come from .. and Zim used to be a bread basket for Africa.

    Sad thing when greed overcomes common sense.

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    Full Member andrecv's Avatar
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    Riaano...do u invest online yourself...? I in turn have been keeping my investments at Satrix but have seen recently read a book about day and intra day trading (online) and would not mind to get my hands dirty so to speak...do you have any training materials/website for futures/options/etc...?

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    I see COSATU is starting to bitch about the increase in the price of mealie meal??

    What do they expect when they stand by doing nothing when the essential/basic food growing sector is diminished by allowing the USA to dump excess product here.

    Now that there is a shortage of USA grain as a result of drought you can't complain when the local producers want to claw back what they have lost in the last few years.

    Nature ensures that this will happen again and again.
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    A few years we had speculative trading on the price of rice. Some traders made a fortune and some went out of business. While every dog and his pal were chasing their fortune, the consumers were the ones suffering the high speculative prices. It then turned out that there were big traders who kept prices artificially high by hoarding stock.

    There is currently a severe drought in the USA that has decimated their maize crop. The pirates are once again out to make a fast buck which will push prices up even more. While I am all for a free market, I sometimes wonder if it is ethical to speculate with food and contribute to the high food prices. Short term gain with dire consequences for all!
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    Riaano...do u invest online yourself...? I in turn have been keeping my investments at Satrix but have seen recently read a book about day and intra day trading (online) and would not mind to get my hands dirty so to speak...do you have any training materials/website for futures/options/etc...?
    Yes Andre, I am a full time trader / broker. I work for a brokerage in Middelburg. I only started recently though. I have an opportunity for you to learn to trade along with me .. I think it's brilliant and am quite proud of it. Have a look here:
    http://www.theforumsa.co.za/forums/s...ree-Mentorship

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    Quote Originally Posted by Blurock View Post
    Food security is under threat due to droughts and general mismanagement of resources. The global population explosion just exacerbates the problem. the problem is not global warming, but global breeding.

    Sadly the penny has not dropped with many countries and governments and our own government is also doing their bit in threatening food security in South Africa.
    Add to that the biofuel production and the pressure that it imposes on the food system

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    Quote Originally Posted by riaano View Post
    I agree - look what happened to Zimbabwe. The only focus was on obtaining farmer's land, without giving any regard to what they produce and what the country consumes. It seems like they didn't stop for one second to consider what it will do to their economy and the welfare of the Zimbabwean people, or given thought to where their food is going to come from .. and Zim used to be a bread basket for Africa.

    Sad thing when greed overcomes common sense.
    Some questions of the Land grab in Zimbabwe, which is sensitive issue, the farmers did feed the nation by as a bi-product of what they were exporting, of which much of the export proceeds were not returned to the country? Zimbabwe largest cash crop is-was tobacco that does not feed the people, the major demand in Zim would be maize and the new farmers are mostly focusing on tobacco, so more to poor planning and greed? Most of the new farmers are on a sanctions list that means they cant export crops ? If a nation grows only tobbaco a gold of a crop and uses that revenue to feed itself so be it.

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