Download Linn Group 2007 Outlook 1/8/2006

2007 Price Outlook
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The challenge of publishing a price outlook for the coming year has never been more daunting. Index
funds, hedge funds, an unsettled world, and a dash of change in the air have created an environment where
6 months is an eternity, as market velocity can escalate in a New York minute.
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As we try to assess what is new that might change the landscape of the marketplace for 2007 we first must
look at the sheer size of Index and Hedge fund positions and trade that can distort the magnitude of both an
upswing and a downswing in price (note 2006 metals and natural gas gyrations). Secondly, the new
electronic dominated markets seem to be creating a lack of transparency that is resulting in a more volatile
intra-day trade and wider bid and asked spreads in the basic commodity markets..
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A more subtle change is in the makeup of big money trading. We have about completed the cycle of
creating new commodity products for the novice investor to trade, ala index funds and ETF’s. Those
investment vehicles are now in place and understood, but in short term retrospect, have not been very
successful in making money for the investor. And, when you consider the return on an investment in the
U.S. equity market was in excess of 15% last year and 30 to 90 % on overseas equity markets, where is the
incentive for the investor to seek out commodity based products this coming year? This could create
unpredictable volume liquidation across all the markets, and predictably reduce energy trade and take some
luster from the metals markets in 2007…..
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Finally, we come to the biggest change in our commodity markets in 20 years – the subsidized and dictated
utilization of productive farm land in the U.S. and the world to produce renewable fuels. This change has
already positively affected farming economics and raised price floors on the larger acreage agricultural
markets. It has created the need for a more involved user community, demanded a new awareness of
weather threats to production globally, and initiated a new era where food competes with energy for
available agricultural energy alternatives.
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On a longer term basis the worlds’ emphasis on bio-fuels will dictate how and where crops are produced,
increase monies available for crop and bio energy research, shift subsidies from agricultural and energy
production to bio-fuels usage and production, and ultimately eliminate the phrase ‘farm subsidies’, How all
this will play out and what the impact will be on farming, the political landscape, and particularly on the
consumer, is a matter of debate. However, it seems inevitable that at some point the potential dramatic
influence on food prices will demand the market’s attention and ultimately the worlds’ attention. The only
upside in this scenario would be the resulting focus to develop new and better energy sources to hopefully
eventually reduce the world’s dependence on petro-fuels.
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So the stage is set for an exciting year – “The Year of the Agricultural Markets”. Even without an “event”
we could see unprecedented volatility, risk, and angst in that arena. In looking backward, last years; energy
and metal trading hysteria may seem calm in comparison to what lies ahead for the agricultural marketplace
in 2007.
For your convenience, and when helpful, we have inserted links to last years Linn Group Trade Outlook 2006 charts. In order to access these slides you need to select
the text box so that it is highlighted, then Right-Click your mouse and go to “Open Hyper Link”. This will open a web browser in which you can view last year’s chart
and related recommendations. If you are unable to launch the window, the full pdf of the Linn Group Trade Outlook 2006 can be accessed by clicking Here
Linn Group 2007 Trade Outlook
CRB Index
Link to Linn Group’s 2006 CRB Outlook
Linn Group 2007 Trade Outlook
Dow Jones
Link to Linn Group’s 2006 Dow Jones Outlook
Linn Group 2007 Trade Outlook
S&P
Linn Group 2007 Trade Outlook
Bonds
Linn Group 2007 Trade Outlook
Dollar Index
Link to Linn Group’s 2006 Dollar Index Outlook
Linn Group 2007 Trade Outlook
Natural Gas
Linn Group 2007 Trade Outlook
Heating Oil
Linn Group 2007 Trade Outlook
Crude
Linn Group 2007 Trade Outlook
Unleaded Gasoline
Link to Linn Group’s 2006 Unleaded Outlook
Linn Group 2007 Trade Outlook
Corn
Link to Linn Group’s 2006 Corn Outlook
Linn Group 2007 Trade Outlook
Wheat
Linn Group 2007 Trade Outlook
Wheat-Corn Spread
Linn Group 2007 Trade Outlook
Soybeans
Link to Linn Group’s 2006 Bean Outlook
Linn Group 2007 Trade Outlook
Soybean Meal
Link to Linn Group’s 2006 Meal Outlook
Linn Group 2007 Trade Outlook
Soybean Oil
Link to Linn Group’s 2006 Soybean Oil Outlook
Linn Group 2007 Trade Outlook
Oilshare
Linn Group 2007 Trade Outlook
Lean Hogs
Link to Linn Group’s 2006 Lean Hog Outlook
Linn Group 2007 Trade Outlook
Feeder Cattle
Linn Group 2007 Trade Outlook
Live Cattle
Link to Linn Group’s 2006 Live Cattle Outlook
Linn Group 2007 Trade Outlook
Feeder Cattle – Live Cattle Spread
Linn Group 2007 Trade Outlook
Gold
Link to Linn Group’s 2006 Gold Outlook
Linn Group 2007 Trade Outlook
Silver
Link to Linn Group’s 2006 Silver Outlook
Linn Group 2007 Trade Outlook
Coffee
Link to Linn Group’s 2006 Coffee Outlook
Linn Group 2007 Trade Outlook
Sugar
Link to Linn Group’s 2006 Sugar Outlook
Linn Group 2007 Trade Outlook
Cocoa
Link to Linn Group’s 2006 Cocoa Outlook
Linn Group 2007 Trade Outlook
Cotton
Link to Linn Group’s 2006 Global Trade Outlook (PDF)
Link to Linn Group’s 2006 Cotton Outlook
Reproduction or rebroadcast of any portion of this information is strictly prohibited without the written permission of the Linn group, inc. the information reflected herein is derived from sources believed to be reliable; however, this information is
not guaranteed as to its accuracy or completeness. Opinions expressed are subject to change without notice. this material and any view expressed herein are provided for informational purposes only and should not be construed in any way as
an inducement to buy or sell commodity futures or options contracts. The Linn group and its officers, directors, employees and affiliates may take positions for their own accounts in contracts referred to herein. Trading futures involves risk of loss