Earlier this morning (Sunday), I saw a piece on MarketWatch that talked about how Americans are changing jobs less frequently than they have in the past. Thirty years ago, or about the time I was entering the job market, the average tenure was about 3 1/2 years. Today, it is just over 4 1/2 years. Believe it or not, I have an Excel workbook containing a series of charts tracking my job history from the time I graduated college in May 1987 through the present. Up until January 2004, my average tenure at any one place was 25 months, or just over 2 years.
Why do I bring all this up the weekend after a "major" event like the January round of USDA's chaos? Because today (January 12, 2014) marks 10 years since my first day at DTN, which oddly enough was the release date of that year's January USDA reports.
Needless to say, but there has been a number of dramatic changes in market analysis (and the market analyst, as the attached combo picture of his first DTN PR photo and one recently taken will attest). Back then, March corn was trading near $2.50 prior to USDA projecting an ending stocks figure of 978 mb, total demand at 10.2 bb, putting ending stocks to use at a relatively tight 9.5%. Still, national average cash price for the 2003-2004 marketing year was projected between $2.15 and $2.45. For what it's worth, planted acreage for the previous harvest had been pegged at 78.7 million acres with national average yield at 142.2 bpa.
Fast forward a decade (fast being the key word), and what did we see in the 2014 report? USDA predicted ending stocks at 1.63 bb while total demand came in at 13.15 bb. Ending stocks to use were calculated at 12.4% with a national average cash price estimated near $4.40. When all was said and done, the March futures contract closed near $4.33, an increase of 73% over 2004. Oh, and as for acres (a subject of another column at another time) USDA estimated 2013 plantings at 95.4 million acres, a 21% expansion over the decade.
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Similar price gains have been seen in other markets as well with soybeans up 65%, Chicago wheat up 47% (Friday's sharp sell-off included), and live cattle up about 80%. Outside markets also show solid gains with crude oil up 172% (back in 2004 it was near $34.30), gold up 190%, and the Dow Jones Industrial average up 57%.
Those familiar with my analysis over the years know the increased influence noncommercial (investment, speculative, fund) traders have had on commodities as open interest has grown considerably over the years. I have argued, and will maintain, that this group's activity at times continues to neuter fundamental analysis, though as I told then DTN Editor in Chief Urban Lehner when I first interviewed for the position of Grains Analyst, eventually supply and demand wins out.
Ten years and so many changes in the market and at DTN. I've had the great privilege of working for one of the best in the business, Urban Lehner, who taught me too many lessons to mention about writing, clear thinking, and life in general. Not to mention introducing me to sushi, a dish considered bait back home. Greg Horstmeier now holds the title Editor in Chief and the newsroom continues to grow.
I also want to mention DTN Managing Editor Cheri Zagurski. Cheri has edited the majority of my Newsom On the Market columns over the years, making sense of the initial drafts I send in and making them better for your reading pleasure. And Kim Adrian, DTN Associate Editor, who has worked with me on building DTN's wide variety of charts from the beginning and is one of the few people on earth who can decipher my chicken scratches when I start in on my white board.
That having been said, I'll bring this blog to a close. Thanks to all for the last 10 years and looking forward to whatever the next decade has to offer.
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Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.