Did you duck, or is that shiner something you are proud of?

The worst week for the U.S. stock market in 5 years ended with nothing resolved.

The front month WTI crude oil contract rose $3.66, finishing one of the most volatile weeks in oil trading in recent memory. The financial press blamed the rise on the possibility that OPEC would require importer customer to pay in Euro's rather than U.S. Dollars.

The financial press has a warped sense of cause and effect, and this report continues that trend. The funny thing is, there just are not enough Euros around to replace the Petro-Dollar as the oil trade currency, and if there were, can you imagine the import inflation of the Persian Gulf nations? Last time I checked, their currencies were still pegged to the U.S. Dollar... It then follows that either; A: the press is wrong (as usual), or; B: OPEC was just jaw boning the price back to a more "acceptable" level, or; C: none of the above and it was just the Oil market reacting to an over sold condition. I am going to go with "C" until proven otherwise.

Coal continues its meteoric rise. Can Natural Gas be far behind? Not likely, unless you intend to pull an Abe Lincoln and start reading by candlelight.

"And The Hits Keep Coming"...

Folks, the U.S. is literally running out of WHEAT.

The situation for corn is not much better.

Farmers will, no doubt, chase last years commodity winners, wheat and soy beans, at the expense of corn. At some point, however, you simply don't have enough acres and available fertilizer to keep this game of musical chairs going - hence the greatest bull market in agricultural commodities since "The Flood" (you know, the one Noah made famous).

But my long term readers knew this was coming. The problem now is that the world MUST DO SOMETHING RIGHT NOW to avoid very real, and very serious, food shortages.

American's have this sense that it cannot happen here, and if that includes you, you would be incorrect. It can. It might not, it does not have to - it is not ineluctable... but it can CERTAINLY happen here. And if this inventory trend continues it WILL HAPPEN HERE. That's it. Either the production and inventory trend reverses... or the U.S. will experience EXTREME increases in the prices of wheat, corn, milk, eggs, bread...

It seems that the supply/demand equation of many commodities - Oil, Natural Gas, Food Grains... are balanced on the edge of a knife, and that is a tough place to stand. Some of these are going to fall off that knife's edge - and into the abyss.

"And that's the way it is"...

Mentatt (at) yahoo (d0t) com