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URL:  http://boards.fool.com/brett-new-to-the-board-but-i-suspect-your-call-was-26824564.aspx

Subject:  Re: High grain prices to trigger high meat price Date:  7/17/2008  6:36 PM
Author:  c0ffeen0te Number:  96 of 113

Brett
New to the board but I suspect your call was very prescient...haven't checked the markets precisely but guess here is that the various meat futures markets are nothing but up since you wrote it.

As far as feedback for the article itself other than the outcome, my view is that calling a market like commodities is sort of like calling the football games against the spread. We can list a half a dozen reasons why the Patriots will beat the Jets (better quarterback, better coaching...) but once the spread is set, and Pats are installed as a 7 point favorite, why do we think they will win by more than 7 points? Your article did a good job listing those factors that explained why meat prices are high, but the market tends to take that stuff into consideration and the guys that trade meat (or buy it for the food companies) spend all day long poring over meat economics. Of course you also have the technicians that don't give a whit about economics that trade on market movement (technicals).

No I don't believe in perfect market efficiency. The question is, what do I know that the "market" doesn't know. Where did the market get it wrong? Maybe stocks/use ratio is low and the price is not as high as it normally is when stocks/use are this low. Maybe there is a historical seasonal pattern that suggest prices are too low right now.

I think there is a danger that amateurs will pour into the long side of a market based upon some compelling reasons, not realizing that the smart money got in 50 cents ago and is looking for an exit.

But as an aide to understanding why we are paying so much for meat; as a way to participate in the discussion about the impact of ethanol subsidies on us, your article is useful and informative.
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