Tuesday, March 10, 2009

Baltic Dry Index Reaches 5-Month High: Does This Signal a Commodities Bottm?

March 9 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, rose to its highest level since Oct. 9 on demand to ship South American grains (see chart above). The index advanced 37 points, or 1.7 percent, to 2,262 points, according to the Baltic Exchange today. Rates to hire so- called panamax vessels, used to haul grain, climbed 3.9% and have jumped 59% on a nine-day run to $18,562 a day.

9 Comments:

At 3/10/2009 9:17 AM, Blogger Webutante said...

I do think it signals a bottom, Mark. And I also think equity markets are starting to rally for at least a little while.

 
At 3/10/2009 9:54 AM, Blogger Dave Narby said...

"A" bottom.

Not "THE" bottom.

And again, why are you showing just a tiny portion of this graph? This is the journalistic equivilant of 'burying it out back'!

Looking at a larger time frame, that looks pretty freakin' grim to me.

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

Especially when we don't know just how many of those container ships are being used to store consumer goods instead of ship them!

 
At 3/10/2009 10:31 AM, Anonymous Cromagnum said...

Wait until US HR669 (2009) "Hardrock Mining and Reclamation Act of 2009" gets voted in.

If that happens, i expect bulk shipping to skyrocket.

See US mining industry's take at http://www.icmj.com/article.php?id=56&keywords=Rahall_Proposes_Bill_to_End_All_Mining_in_the_U.S

H.R. 699 would completely wipe out all small-scale mining in the United States. Small-scale miners do not have the time and resources to handle the fees, lawsuits and reporting requirements.

Large-scale mining would be also phased out as mining companies would be unable to deal with the unattainable requirements of these regulations, citizen lawsuits, thin profit margins, reporting requirements, and the uncertainty that comes with the federal government’s new authority to halt a mining operation when “undue degradation” is occurring or a scientific, biological or cultural resource is discovered. Many areas that may have potential would be inaccessible. No one in their right mind would provide funding for exploration or operations under the proposed conditions.

The most likely outcome would be that the environment would suffer as mining companies move all operations to countries with little or no regulations.

Like the current situation with oil, Americans would be forced to obtain natural resources overseas, sending money to countries that don’t like Americans and would love to control our prices.

 
At 3/10/2009 4:51 PM, Blogger David said...

DaveN...don't know if any container ships are being used for storage, but at least one auto carrier is now being used to store car inventory. (Toyotas, in this case, at Malmo)..of course, you can stack containers on top of each other, but you can't do that with cars!

Baltic Dry Index refers specifically to bulk carriers (grain, coal, iron ore, etc)

 
At 3/11/2009 6:24 AM, Anonymous Ralph Short said...

Cromagnum, thanks for mentioning that proposal. When I googled it I was directed to a site that follows every bill in congress. http://www.govtrack.us/congress/legislation.xpd

This particular bill is just one of many measures being introduced that are an assault on our liberty and prosperity. Of course, you have to go to internet sites to find these things as the MSM will never cover it.

 
At 3/11/2009 8:13 AM, Anonymous Machiavelli999 said...

4/16 will be the make or break day for the economy.

Citi and Bank of America both report 1Q results on that day. If Pandit and Lewis come through on their claims that both banks have been profitable then this really could be the start of the new bull market.

If they lied, they should be shot right on the spot and we can get ready for Dow 5,000

 
At 3/11/2009 10:37 AM, Blogger QT said...

Machiavelli,

Thanks for the information. Will make a note of this date.

 
At 3/11/2009 11:58 AM, Blogger Dave Narby said...

@ David

Google is amazing, isn't it?

http://www.google.com/search?hl=en&as_q=container+ships+being+used+for+storage&as_epq=&as_oq=&as_eq=&num=10&lr=&as_filetype=&ft=i&as_sitesearch=&as_qdr=all&as_rights=&as_occt=any&cr=&as_nlo=&as_nhi=&safe=images

 
At 3/11/2009 3:00 PM, Blogger ExtremeHobo said...

If they lied, they should be shot right on the spot...

Haha, I am all for the Chinese response too.

 

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