PAST PRESENT FUTURES NEWSLETTER
1831 Wilshire Blvd., Ste. 645, Santa Monica, California
310-829-3176
(March, 2002) WHEAT: WHEAT AND CORN--In Figures 10 and 11, we show the charts of the July, 1972, wheat and the July, 1972, corn. As you can see, the trade during the first half of 1972 was uneventful. In the wheat, the final decline into the historic buying low occurred between April 10, 1972, and June 29, 1972. In the corn, the final decline occurred between April 10, 1972, and June 23, 1972. Once these lows were in place the bull markets got into full swing.
Figure 10: 1972 July Wheat
Figure 11: 1972 July Corn
In Table 3, we show the advances in the agricultural markets during 1972. In Table 4, we show the advances in the agricultural markets during the entire bull markets into the 1973 and 1974 final highs. As you can see in Table 3, the soybean meal, wheat and oats were the strong sisters into the end of 1972. Although it will be important to have a diversified approach to the markets, this provides a clue as to which markets could lead. Nevertheless, if an agricultural bull market takes place on the order of what took place 30-years ago, all of the markets will have their day in the sun and it will only be a question of the degree to which they advance.
| Table 3
1972: Low To High In Actual Contracts |
||||||
| Market | Date of Low | Price | Date of High | Price | % Gain | |
| 1 | Soybean Meal | Jul 18, 1972 | 92.40 | Dec 14, 1972 | 200.00 | 116% |
| 2 | Wheat | Jun 23, 1972 | 146.00 | Dec 14, 1972 | 272.75 | 87% |
| 3 | Oats | Jun 04, 1972 | 68.25 | Dec 19, 1972 | 166.00 | 70% |
| 4 | Corn | Jun 29, 1972 | 120.88 | Dec 14, 1972 | 163.50 | 35% |
| 5 | Cotton | Aug 21, 1972 | 26.34 | Nov 27, 1972 | 34.76 | 32% |
| 6 | Soybeans | Jan 13, 1972 | 295.75 | Nov 15, 1972 | 386.75 | 31% |
| 7 | Soybean Oil | Oct 13, 1972 | 9.17 | Nov 02, 1972 | 10.40 | 13% |
| Table 4
1972: Advances In Agriculturals |
||||||
| Market | Date of Low | Price | Date of High | Price | % Gain | |
| 1 | Soybean Meal | Nov 10, 1969 | 66.50 | Jun 05, 1973 | 451.00 | 578% |
| 2 | Wheat | Sep 19, 1968 | 114.25 | Feb 26, 1974 | 645.00 | 465% |
| 3 | Oats | Aug 12, 1968 | 56.00 | Oct 04, 1974 | 202.00 | 261% |
| 4 | Corn | Sep 30, 1968 | 101.25 | Oct 04, 1974 | 400.00 | 295% |
| 5 | Cotton | Jun 24, 1969 | 23.75 | Sep 24, 1973 | 99.00 | 317% |
| 6 | Soybeans | Oct 01, 1969 | 236.13 | Jun 05, 1973 | 1290.00 | 446% |
| 7 | Soybean Oil | Oct 11, 1968 | 6.91 | Oct 01, 1974 | 51.00 | 638% |
At this time we are partial to the wheat. Of the total of 36 major buying lows since 1877, 26 (73%) occurred during June, July and August. In Figure 12, we show the runaway advance off the June 23, 1972, in the December, 1972. In 5 month, 21 days, the market advanced 87% in price. We are not saying our market is going to experience a move of that magnitude, but we do expect an advance of at least 45%.
Figure 12: 1972 December Wheat
CARRYING CHARGE PREMIUMS--One thing we want to see is for the carrying charge premiums of the distant contracts over the front months to decline to reasonable historic levels into our projected summer lows. At present the corn, cotton and coffee remain at prohibitively high levels whereas the soybeans, wheat and soybean oil are at acceptable levels. Between now and the summer months, we want to see all of these premiums reeled in.
James Flanagan, Editor