Thursday, Jun 11, 2009
Baltic Dry selling. Index crashing again.correction in the Aussie at least to the mid US$0.70 level
Www.fnarena.com: Baltic Index Warns Of Commodity Price Correction
Chinese port warehouses will be full and traders will look to beginNot only will the demand for fresh shipments collapse, but the queue of ships will be freed up once more, both of which should send the Baltic Dry selling. Index crashing again.
This may have already begun, notes ANZ. The BDI is down 15% in the previous four trading days and another 4% overnight. The index is also in steep backwardation (expensive in the front month, becoming cheaper in latter months) which implies a short term squeeze.
It is no great leap of logic to understand that movement in the Aussie exchange rate is closely correlated to movement in the BDI. ANZ would not be surprised to see a correction in commodity prices leading to a correction in the Aussie at least to the mid US$0.70 level in the second half
4 Comments
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1. uncle tom said...
Link doesn't direct to the article..
Anyone who writes about Chinese port warehouses filling up, doesn't understand how the Chinese trade..
..they only make to confirmed order - never on spec - so when orders stop, the factories stop.
2. inbreda said...
I'm not sure backwardation is a real word.
3. Avidfan said...
Try http://investmenttools.com/futures/bdi_baltic_dry_index.htm for some graphs. The third one down shows recent changes and you can clearly see the beginnings of a downturn.
To the last poster: http://en.wikipedia.org/wiki/Backwardation
4. devo said...
"I'm not sure backwardation is a real word."
or 'contango'