It's Time to Short Oil: CNBC's Debating $300 Oil

When CNBC starts asking if oil will hit $300 anytime soon, that probably means we've got a short term top in place.

In fairness to Kevin Kerr - I think very highly of his commodity insights, and this interview is worth watching...his points are all good ones.  

However if you're contrarian trading against CNBC - usually a profitable strategy - that would indicate oil is a short here in the near term.

Expert Commodity Picks for 2009: Jim Rogers and Marc Faber

What a crappy year 2008 was for commodities! Will they rebound in 2009? If you believe, as I do, that we are in the middle of a secular bull market for commodities, then current prices represent a tremendous buying opportunity.

Jim Rogers has been saying it best lately - that you want to buy assets where the fundamentals are unimpaired. And the only asset class where the fundamentals are currently unimpaired is commodities - in fact, the fundamental story for many commodities has even improved since the financial crisis took hold, as there is a lot of supply coming off the market.

Jim is also fond of referencing the performance of commodities during the Great Depression, where they were the first asset class to turn up because there was no supply.

Since I agree with Jim's point of view, I decided to research specific commodity picks experts are making for 2009. My "expert" criteria is highly biased, based on the two people I've been following the closest during this commodity bull run - Jim Rogers and Marc Faber - because of their prescient calls and knack for spotting commodity trends before the herd.


Jim Rogers

• Likes agriculture and says prices are down due to forced selling, not fundamentals, which have actually improved. "Farmers can't get loans for fertilizer now."
• Also loves oil - says it has been crushed - it's price is below the cost of production - he's been buying more, and believes it will roar back in a big way.
  

Marc Faber

• Says 2009 will be a "total disaster" for the global economy.
• Believes commodities have corrected within a bull market, and there are opportunities to be found there.
• Sees significant inflation coming as a result of the Fed's actions.
• He continues to like gold and gold miners - believes exploration companies are very depressed with respect to the price of physical gold.
  
• Oil at this level is becoming attractive, as are oil companies.
• Shares his specific picks at the 7:45 mark of this interview.
  

Editor's Note: This article was also published by Seeking Alpha.

Click on their respective names to read more Jim Rogers and Marc Faber coverage.

For more information on investing in gold miners, check out some of our recent coverage of gold and gold stocks. I personally subscribe to BIG GOLD, produced by Casey Research, which is an excellent service.

The Every Increasing March of Oil Prices

Kevin Kerr gives CNBC his thoughts on the oil market.

Kevin makes a great point - demand destruction is overblown, as it took $140 oil for to trigger a measly 2.5% drop in US demand. A drop in the global bucket, he says.

He sees oil back up towards $150 by years end.

I agree - until we see new supply coming online, the trend of oil will be inexorably upwards. And since we're not discovering any new elephant oil patches, that supply will have to come in the form of alternative energy - which is quite a ways off today, especially when we're talking about transport energy.

Remember, solar and wind energy are great, but they are not going to power your car, or an airplane. That's oil and nat gas for now and the foreseeable future.

For a great article on this subject, check out David Galland's article on the export land model, and what it means for energy prices.

Side note - David writes for Casey Research, a publication I am a very satisfied subscriber of. In fact, local Casey Research subscribers have begun gathering recently here in the Sacramento area to discuss the global economic situation and investing on a monthly basis. Let me know if you're in the area and would like more info about this.

Kevin Kerr Interview on BNN (video)

Kevin Kerr discusses the current resource situation with BNN

• Likes gold and silver (has $1200 price target for gold, may hit this year he believes)
• Thinks oil will trade between $85 and $105 for a bit, before continuing its rise
• Current correction in base metals and grains is a good thing for traders looking to enter the long side, as prices got out of hand for awhile

Basics on Trading Meat Futures

Nice article here by Kevin Kerr on the basics of the meat markets and trading meat futures.

Everything sure is setup for higher meat prices. I think this is a temporary breather this week, as the live cattle charts were going parabolic for the last couple of weeks.

I have not checked my account since Sunday - I don't want to see the raw $$$ I'm off. Instead I'm just watching the charts and trying to keep perspective on things - by later next year and early next year, these prices are most likely higher, so I want to ride this through thick and thin.

A Host of Kevin Kerr Videos

4 videos from his blog - good TV. The guy is right on the ground following the grains, gotta love that.

I also love the pained look on his face when he talks about these shortages, when you know the guy is trading these markets and making millions. Priceless.

Kerr Trading Blog

Kevin Kerr recently started up a blog on his trading site. I've added a link here on the left.

Crappy day today, winding down on a crappy week. Corn has been getting absolutely whacked on the good weather reports - I'm still in the trade, with a stop down at 578.

Natural gas has been doing what nat gas does - bouncing all over the freaking map. The short term and long term trends are both up, but trading NG can really drive you nuts.

And the icing on the cake for me was a sudden drop in pork bellies - in a matter of minutes, it went from making new highs and pushing the 84 mark, to a quick cliff drop down to 80.50. We'll continue to watch the meats closely - I believe they had turned the corner and are posed to breakout, but only time will tell.

Kevin Kerr: The Food Crisis, A First-Hand Report

Same story we've been following here. A nice rally in the grains today, and a little bit of life in the softs as well.

Can corn continue to break out from here? It's been rangebound for the past couple of months - I keep thinking that fundamentals will eventually prevail and push corn past the $7 mark.

In a "close your eyes and buy" trade, I picked up a mini Nat Gas contract this morning. I've been itching to buy it since it crossed the $8 mark, but lacked the testicular fortitude. I hate the volatility of Nat Gas, but no doubt which way the trend is going.

Also keeping a close eye on the Yen and Swiss Franc here. Both appear cheap, but could head lower as long as the "good times" remain on Wall St. When the next leg of the bear market hits, I expect these two to shoot up.

Agora's Kevin Kerr still likes corn in '08

From Agora's 5 Min Forecast - Kerr sees corn north of $7 in '08. I know, yet another post about plantings behind schedule.

Also worth noting - as long as I've been following Kerr (~3 years), his calls on corn prices have been spot-on.

Corn futures, on the other hand, are still on the rise. Now over $6 a bushel, corn is just a breath away from passing its record high from a few weeks ago.

Corn’s trip to $6 comes on the heels of the latest USDA planting progress report. According to the government, U.S. corn farmers have planted 10% of their 2008 corn crop as of this week… far behind the five-year average of 35% and trade estimates of 15-19%.

Kevin Kerr left the Midwest with the impression the median price for corn in 2008 would be $7.50… a buck fifty higher than today.

Kevin Kerr Video on MarketWatch

Link to video

He thinks:

• Oil may be due for a pullback
• Low carryover stocks for soybeans

Kevin Kerr: A Grainy Picture

Unfortunately Agora has not yet posted the full article yet in their Rude Awakening archives - keep an eye out.

Same story we all know - agriculture is poised to go much higher, and the softs (sugar, cotton, cocoa, coffee) look particularly undervalued.

Agora's Kevin Kerr Still Loves Cotton

From Agora's 5 Min Forecast:

“The cotton market has been very depressed the last few years due to high carryover stocks and lower global demand. All that may be changing. Farmers in key cotton-growing states are rejecting the idea of continuing to grow cotton and are opting for more profitable crops that have lower input costs.

“We are already seeing buying interest come back into the cotton, but it is still underperforming the other highflying grains. I would look at buying either call options or futures on the December 2008 cotton (CTZ8).”

Russia May Ban Wheat Exports

From Agora's 5 Minute Update:

Among other things, Kevin (Kerr) will be commenting in Milan on the fact that Russia -- the world’s fifth largest wheat exporter -- is considering banning the sale of wheat to foreign nations. Moscow officials are concerned about wheat’s skyrocketing price and its effect on the Russian consumer… especially on the eve of national elections.

“The announcement that the Kremlin is considering a ban on exports is absolutely one of the most bullish pieces of news we’ve heard for wheat in a while,” Kevin wrote to us. Wheat is currently priced at $8.06 per bushel. "Given this news, $9 a bushel is a real possibility,” says Kevin. ”Export inspections are running very high and demand is huge.”

Wheat Up Again - Two Day Record Rally

From Agora's 5 Minute Update

“Wheat is up another 20 cents this morning… that’s a two-day record rally.” says our Maniac Trader Kevin Kerr. Wheat has been shooting up all year long, and is currently at an all-time high of $7.60 a bushel. Since the start of 2007, wheat’s up 51%, and according to Kevin, it still has room to grow [sic].

“Wheat is actually becoming a victim of its own success,” says Kevin. “It seems like there just wasn’t a lot of forethought or planning on the government’s part… It just told farmers, ‘Grow wheat and we’ll pay you’ without a serious plan to combat an increase in transportation, storage and other rising cots.”

“In essence, record wheat prices are now the result of another infrastructure problem. The agricultural pipeline is full and not able to handle the increased volume. Crops are perishable and time is money. With land rates, fuel costs and wages rising, every additional cost takes a bit out of an already shrinking profit pie."