Commodities Research Sources

I was asked about sources of information about "farming" by a reader, which I interpret as a question about information for grains & livestock commodities. [Beware, I am NOT trying to encourage commodity trading - see my earlier post.] Since the super book I read in the early 1980s is out of print & I can't find it, since the late 1990s I use various Internet sources and keep a file of useful facts for reference when I need something [ e.g., the canonical hog-to-barley ratio ;-) ]

I subscribe to http://www.futures-research.com/ for current and historical fundamental research. I already mentioned I use http://www.barchart.com/ for charts & spreads. My online broker, XpressTrade, gives me interesting research from ADM and others for free. I subscribe to DJ Commodities and DJ Energy news services. The useful service, Newswatch, consolidates these and many other news services into one multi-window screen and has historical search capabilities. The yearbooks & services of Commodity Research Bureau help figuring out how high a commodity might go with historical analogs (btw, they own barchart.com).

Having read the commodity news more years, I keep paper (!) files of printed stories of interest. Having lost my book, I search the Internet when I want an update about something, such as the hog-corn ratio or the aforementioned hog-barley ratio. Then I print out the best sources & file them away in paper, saving me future searches. There are lots of "canonical" facts & relationships you need to keep in mind to understand the fundamental trends in grains & livestock & softs. For example, what are the economics of substitution between corn & wheat for feeding hogs (aka swine)? In that case, I did some online research, found data & articles from agriculture departments of universities, printed, read & filed them and created a spreadsheet model that I actually used again a few weeks ago in evaluating a trade.

All this takes time, patience & an enjoyment for detective work and thinking about the facts and relationships. [ Hehe, I love watching Hercule Poirot shows on TV & NetFlix: my "little greys cells" enjoy this work. ;-) ]

You also need a weather service. Accuweather.com offers various good paid services with maps & historical data such as 90-day accumulated rainfall in Lubbock, Texas [ ;-) a key cotton area ] or you can start for free at http://www.cpc.ncep.noaa.gov/products/predictions/814day/ and related government sites. Snoop around there. Also check http://www.cpc.ncep.noaa.gov/products/expert_assessment/drought_assessment.shtml for drought information.

Of course, you need to know where the soybeans or cotton is grown to evaluate the effect of temperature and rain. Check out http://www.ngfa.org/trygrains_corn.asp for a good summary & map of corn growing areas in the US. You can insert wheat, soybeans, flaxseed, barley, oats, and rye, too, for similar information. Print & file it.

So it's a long process of learning. [Hey, remember to control position size to keep your risk under control - otherwise you'll be sorry & be squashed like a cockroach by the beefers.]

PS: trying some June cattle here. Tight mental stop. Chart & fundie trade.