Commodity prices at all time high

NZ's export commodity prices at all-time highs but volumes being hurt by bad weather, ANZ says

13th Jan 11, 3:58pm by Alex Tarrant

Prices for New Zealand commodity exports hit record highs in both world price and New Zealand dollar terms, the ANZ Commodity Price Index shows.

However, the flow-on from high prices to the general economy was currently being curtailed by adverse weather conditions impacting volumes and a rural property market that remains under pressure, ANZ said.

"But sustained lifts in commodity prices - if sustained over time - will present a tremendous windfall for the economy," ANZ said.

Here is the release from ANZ:

New record high. The ANZ Commodity Price Index rose 2 percent in the final month of 2010. This is the fourth consecutive monthly increase and takes the index to a new record high.

Meaty chunks. Ten commodities recorded a higher price in the month of December, while two recorded a weaker price. Meat prices recorded three of the four largest increases in December. Beef prices posted the strongest increase up 10 percent from a month earlier, with sheepmeat prices up 1.9 percent and venison prices up 1.3 percent. Skin prices had the second largest increase, lifting 5.2 percent from a month earlier. Aluminium, seafood and wood pulp prices lifted by just over 1 percent. Dairy and sawn timber prices rose by about half a percent.

Bottom of the wood and wool piles. The two commodities to record a weakening in price in December were wool (-2.1 percent) and logs (-1.4 percent). The price of apples, kiwifruit, cheese, butter and casein were unchanged on the previous month.

NZ dollar index also at an all-time high. When converted into New Zealand dollars, the ANZ NZD Commodity Price index lifted by 4½ percent, to a new record high. This reflects a weakening of the NZD/USD exchange rate over the month of December.

Strong commodity prices are a key crux of support to the economy. At present the flow-on to the general economy is being curtailed by adverse weather conditions impacting volumes and a rural property market that remains under pressure. But sustained lifts in commodity prices - if sustained over time - will present a tremendous windfall for the economy.

ANZ commodity price index

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Source: ANZ

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87 Comments

by Wolly | 13th Jan 11, 5:07pm 1294891677

Yes this is the right thread.....

"a flight from fixed income investments has accelerated."

http://www.marketoracle.co.uk/Article25545.html

by Andrewj | 13th Jan 11, 5:37pm 1294893477

But I would have thought this was inflation, looks like inflation to me, if it is and interest rates go up, down come property values with a crunch.

I ask is there a milk shortage or a beef shortage, is this a demand driven spike or speculation?

by Boatman | 13th Jan 11, 5:55pm 1294894525

Precisely Andrewj . The price increases have nothing to do with an increase in demand .

I cannot rationalise what is going on ,but I assume commodity exporters are demanding a fair price in weaker US$ .

The US Dollar is being watered down by the Fed and commodity futures traders are pricing for inflationary expectations .

There is no other rational explanation........... there is no beef , wheat or sugar shortage , nor is there a copper , bauxite , or iron ore shortage but prices have been going up in US$ since QEII started . There is also no crude oil shortage at present and there is certainly no shortage of proven gold or platinum reserves . Gold is at an all time high price and South Africa has 300 years of proven Platimum reserves for example , yet platinum is currently the most expensive metal on the planet

by Andrewj | 13th Jan 11, 6:29pm 1294896573

I wonder how much of this money is coming from US banks borrowing off the Fed at % .27 and punting on commodities. Who in their right mind would make a business decision in this environment.

I was getting groceries today, all the women had notebooks out and were working on budgets, even Im getting sharper as Im shopping because my wife is visiting family in the UK. I talked to a mate who works at my local BP, he said sales are way back and its getting worse. This will be a catastrophe if demand falls, while speculators push up prices and producers increase production. Id bet on a deflationary nightmare unless wages start climbing. Without more money how can people pay more they just get to consume less.

Im a believer that cash will be king, and ive put my money where my mouth is.

http://theautomaticearth.blogspot.com/2011/01/1-11-11-future-belongs-to…

by Andrew in Finland | 13th Jan 11, 9:51pm 1294908716

>>I wonder how much of this money is coming from US banks borrowing off the Fed at % .27 and punting on commodities.

Officially by regulation, a bank cannot borrow money and speculate or invest it to trade with the money on its own account. Same goes for QE. Speculation could be via the hedge funds and probably many of those are controlled by banks you would guess. An amount of commodity price increases could be speculation and not signal sustained price increases.

But some food inflation is probably a china story with a bit of western recovery thrown in. China increased Yuan bank lending over 60% last year and has a recognised food inflation problem. Some China based groups of companies had wage increases of double effective from 1st of october 2010 and minimum wages were increased around china.

Copper must also be influenced by Chinese demand where there have been irrational construction to meet targets and accelerated railway construction over the last 2 years etc etc. Chinese buying more cars means more future and present demand for cars using catalytic convertors. Higher Chinese interest rates are now going to act against all of this to control prices you would think.

India has also had high inflation for some time and now has higher rates. So together that represents billions of poorer people with higher wages paying more for the food and materials that we all need to live our modern lives.

And food prices have not been strong for many years. Salmon for example has fallen in price since the 1980's. So maybe you can argue the speculators have some reason to have a punt on higher prices since it was only the lehmans collapse that caused the previous food crisis to end with plunging prices which are now recovering, where it was BRIC demand and excessive credit that was maybe driving prices higher and you can imagine that credit is not going to fall that much from here onwards even if it does not rise so much.

by speckles | 14th Jan 11, 6:36am 1294940186

It is via the Hedge Funds who are nervous and lobbying for a back stop... :-)

The shorters will follow the trend and then go for it, watch the funds flow through the hedge funds then.

by Sheep Shagger | 13th Jan 11, 10:27pm 1294910835

Interseting take A in F.

Boatman is infact dead wrong about there not being a shortage of beef. Numbers due out any day from the USDA are expected to confirm the US beef herd at the lowest levels since 1964 at a time when their exports have shot up 19% in 2010 due to reopening of booming Asian markets post BSE restictions and a weak USD. Argentina the worlds number two exporter has had a massive reduction in herd size due to more profitable cropping options, drought and govt export restrictions etc etc.

There is genuine demand out there that is unable to be satisfied by current supply and riseing feed grain prices make a supply response uneconomical at current levels so infact the trend is still up for the forseeable future.

This is of course fantastic news for grassfed NZ product which is now hovering at record prices. That it wont be acknowledged on this site is also a given.

by Boatman | 14th Jan 11, 8:17pm 1294989434

Sheep Shagger , I take your points about 'supply responses' , they are very valid , but I can find no solid evidence of a beef shortage, and even if a shortage develops and prices get out of whack , there are substitute protein forms such as chicken , pork , lamb , soya etc .

At a certain price , a move to produce more by proift seekers and a move to substitutes by consumers has a horrible habit of levelling prices very efficiently in the free market system.

Its true that grain feed price increases could push up beef prices ( The price of maize per ton has also gone up dramatically ), but there is no evidence of a grain feed shortage either, and the price increase appears unjustified .

I beleive that current price increases of commodities are driven by too much loose money chasing to few goods , in other words underlying price inflation.

The other reality is that even I as a red meat lover, eat less red meat than my father did in the 1960's and 70's . I grew up in house with red meat on the dining table 6 days out of seven (with fish on Fridays )

That has changed.

We as a family probably eat red meat only 3 or 4 days a week, with white meat or fish twice a week.

by Sheep Shagger | 14th Jan 11, 9:56pm 1294995377

Boatman, Undoubtably you are right re a speculative influence in the soft commodity prices but surely their positions are based on their best bet as to future priceing which at present seems to be up in most. Surely no one goes long if they expect a fall? Surely that is the whole point of having a commodity market to price things to the point where demand destuction rations the supply and the price returns to a balance?

Glad to hear you are a supporter of the long suffering red meat producer, im sure your example of eating is less often is not uncommon. The flip side of that is there are now plenty of consumers in developing contries who eat meat regularily who may not have in the past.

by michael | 14th Jan 11, 3:15am 1294928158

Noboby knows any more what the real price is for anything. Supply and demand are not the price drivers now.

by speckles | 14th Jan 11, 6:37am 1294940253

agree, in most cases it is pure trading and spec.

by michael | 14th Jan 11, 3:49am 1294930172

What is going on under the radar is Africa's growth story... nobody is paying enough atention to it, What is driving that growth ? In the past ten years six of the ten fastest growing economies are in sub-saharan Africa. The only BRIC country ammong the top ten was China - second after Angola -. The other five african sprinters are Nigeria, Ethiopia, Chad, Mozambique and Rwanda. all with annual grwth rates of app 8%. Untill 2000 the only African economy ammong the top ten was Uganda, together with nine asian economies. In the next five years Africa will take the lead. Africa will grow at an average rate of 7% in the next 20 years. So, what is driving that growth ? Chinese demand. You can't belive that China will keep paying Australia what they have been paying for Coal and Iron Ore or for New Zealand beef.... Of course they are looking for real prices investing in countries that allow them to participate in the price chain... Get ready for the emerging Lyon King.

by speckles | 14th Jan 11, 6:39am 1294940385

well said!!!

by Simpleton | 14th Jan 11, 8:09am 1294945749

But didn't you know? The world owes us a living!

by Kunst | 14th Jan 11, 6:56am 1294941377

New Airlines, new airplane fleets, Asians/ Indians are flying – the “OverProduction Bubble” or a lucrative business ? What is the scenario, considering worldwide political, financial, mineral resources, Climate Change etc. issues ? How much longer can we afford to insure, kiwisafe, rates, taxes, even drive, fly, eat ?

Or is it just a matter of some countries can - other’s can’t ? Wealth distribution is shifting. What is the position of New Zealand ?

by Andrewj | 14th Jan 11, 8:11am 1294945917

Shagger of sheep,

I wasn't wanting a debate about farm gate prices Im very pleased with the $110 I got for some old ewes last week, more than I got for some 17 kg lambs.

I was more interested in why, in what appears to be a recession, commodities ramp up and whether or not it was going to be an inflationary event.

I see the Bof E has held rates

http://blogs.telegraph.co.uk/finance/jeremywarner/100009258/surprise-su…

I can understand beef prices going up but all commodities are going up and the beef market is much more dynamic and I wouldn't be one to make assumptions my knowledge is so 'last decade'. Brazil and other parts of the world will increase production, Chicken and pork is %80 more efficient to grow than beef and if the big power houses of the world are hurting then why are they not switching to chicken? we are in our household for a few weeks until the steer I killed yesterday gets processed.

Im watching oil prices up another %1.2 last night Lme nickel %4.8 this will flow through to all parts of our economy, if we are in an inflationary time then why are central banks sitting on their hands. If the central banks get forced to rise rates then debt would be a big problem. Im not convinced this is a real recovery or sustainable. I wonder how the pension funds are going with the low interest rates.

I think we are being dragged to the cliff edge without even kicking and screaming.

Ch smith wrote today in his blog oftwominds

What is the basis of my doubts? I think Michael Panzner of Financial Armageddon has pegged the macro situation exactly: the Federal Reserve and the other central banks, and all the governments frantically borrowing and spending trillions of dollars on fiscal stimulus and financial bailouts, are assuming this is merely a cyclical downturn which can be "cured" by massive intervention with a time-stamp of a few years.

Well, the clock is ticking, and the authorities have borrowed, printed and pumped unprecedented sums of money into the global economy to "get it through this rough patch" for two years.

Authorities are claiming the "recovery" is now "self-sustaining." Fine: then stop the QE2 goosing of the stock and bond markets, and cut Federal spending by $1 trillion, returning the deficit to "only" $500 billion a year rather than $1.5 trillion a year.

Does anyone seriously think the economy and stock market will continue "recovering" if the trillions in intervention and stimulus were pulled?

But as Panzner asks: what if the downturn is structural rather than cyclical?In that case, the central banks and Central State authorities are simply digging a deeper hole with every loan, every bailout, and every deficit.

Many of us have spent years describing the myriad ways that the global economy is indeed in a complex, interlocking chain of structural challenges. The idea that the imbalances in the global economy can be "cured" with permanently high levels of borrowing and spending and continued intervention to prop up equity markets is absurd.

by Andrewj | 14th Jan 11, 8:53am 1294948381

Denninger is even talking about it

http://market-ticker.org/akcs-www?post=177209

Yeah - not only do we have a 12-month change of 4% (but I thought "inflation" was non-existent?) we also have a one month crude goods increase of 4% on the back of a 4.3% and 0.6% increase. This data is noisy on a monthly basis, but the trend definitely is in the wrong direction, as is the spread - intermediate goods are showing margin compression over crude goods.

Here's the 12-month Crude and Intermediate goods table, which shows the problem - insane price ramps:

Yeah, there's no problem here....... 15.5% annualized with the entire last year well into double-digit territory on crude goods?

by Andrewj | 14th Jan 11, 8:57am 1294948639

heck im the only sicko left on the site, must have been the Rapture and Im the only bad guy left, thats me and the dogs and a couple of kids, be a nice place without so many people.

by r.james | 14th Jan 11, 9:24am 1294950275

cant afford a house now i cant afford to eat either

by Casual Observer | 14th Jan 11, 9:59am 1294952350

Agflation anyone?

The price of key agriculture commodities jumped in the second half of 2010, sparking fears of a repeat of the global food crisis that struck two years ago, triggering political and economic instability in a string of developing countries.

The catalyst of this sudden jump in prices is still up for debate, however the consequences are far from ambiguous: elevated soft commodity prices combined with the growth of the world’s population, climate change and a shift in bio fuel consumption will ultimately drive up food inflation, experts believe.

While this would hurt the already hard-pressed consumer it would, however, support equity values.

Moreover, the pressures exerted by the growth in the world’s population and changing consumption patterns in China, Brazil and India – where the affluent middle class are consuming more protein than traditional staples – are pushing up demand for global commodities. Changes in fuel consumption are also having an effect, and the expanding bio-fuels industry is set to add further strain to annual harvests as economies rein in their dependence on oil.

Wood-Smith explaned: ‘The worldwide population is growing, with urbanisation, climate change, bio fuel and consumption patterns all influencing future food supply and demand. It will be a very slow process, but we believe we are entering a period of underlying change within the global food industry.

'As a consequence, we anticipate that the days of relatively low food inflation are nearing an end, and that the longer term outlook for food prices will be a rising , if very gradual, upward trend.’

Much like the Williams de Broe expert, commodities guru Jim Rogers also believes the spike in commodity values could once again cause widespread unrest.

During the second half of 2010, agri commodity values climbed to a two-year high and if the trend continues, Rogers expects governments to be called upon to cool prices.

That said, however, he also feels investors should continue to back commodities rather than draw profits from the asset class, as without continued renewed investment the food supply chain will eventually dry up.

Elsewhere, Deutsche Bank experts are closely monitoring corn and soybeans. In its commodity trades report for 2011, Deutsche Bank recommends going long on corn and soybeans, as rising Chinese imports should lead to bullish developments in both markets.

http://www.citywire.co.uk/wealth-manager/why-the-world-is-teetering-on-…

by Andrewj | 14th Jan 11, 10:26am 1294953961

Andrew in Finland

>>>Officially by regulation, a bank cannot borrow money and speculate or invest it to trade with the money on its own account. Same goes for QE.

Asked one who knows, he said" banks can do what they like", they employ armies of traders and have Proprietary companies as well who can trade on their behalf.

I see our government just borrowed 950 million.

by Andrewj | 14th Jan 11, 10:31am 1294954309

CO, its all about the oil. How can you support equity values if disposable incomes collapse, looks too much like wishful thinking to me. Pleased im stocked up with ewes, someone said yesterday that Im the only one around with any sheep on. I purchased ewe lambs whose teeth had come through from a guy down the road, he needed some cash flow, they are looking great and only $102.

I see that there is a large RTS up north(rotating tropical cyclone) could be as big as bola, lets hope it goes east, should be with us early next week so we will find out soon.

by Casual Observer | 14th Jan 11, 11:25am 1294957532

Funny, Ken Ring predicted just such a cyclone. I'm going camping up Coromandel today for a few days, so hope it stays away for a while. :-)

I will happily take the higher food commodity prices while they last- for dairy it is really all about China and the Middle East and at the moment it looks ok, even if a bit fragile in some areas. We who make our living off the land have an advantage over urbanites re self sufficiency I guess.

A young friend is looking to buy a dairy herd. Has a limit of what he will pay. Sellers (Sth Island) still seem to have their heads in the sand due to a few herds selling for >2000/hd earlier. Nothing is moving as it's a mexican standoff. Stupid thing is some sellars are listing at 2100/hd but some are now accepting deals as low as 1800. My friend has seen a few quality herds but the price is too high. Got phoned up by an agent last night to revisit one of them and 'ignore the asking price, just make an offer, if you like them'. There would be no problem selling herds if they set their price closer to the banks security limit of $14/1500/hd.

I have a son working in Europe at a farily exclusive ski resort - he said the place was humming.

by Kunst | 14th Jan 11, 1:22pm 1294964570

CO - I cannot see any NZweather warnings from the Met Service so far - even not a forecast !!!!!!! - although the tropical low has the potential of a cyclone heading our way. Keep an eye on it - in 15 -20 hours from now we know a lot more.

http://www.bom.gov.au/cyclone/

by Andrewj | 14th Jan 11, 1:42pm 1294965750

The grapes guys have just texted a warning. East coast rain, Tuesday -Thursday,Tuesday 10ml, 30 ml Wed another 30ml Thursday. Thats HB will be worse further north.

by Kunst | 14th Jan 11, 1:56pm 1294966599

Andrew here the latest - obviously the potential for - nooo - something bigger. I rather think Monday / Tuesday - even earlier !!

http://www.newstalkzb.co.nz/newsdetail1.asp?storyID=188907

by Kunst | 14th Jan 11, 12:07pm 1294960037

Andrew/ CO, what I see is increasing stock in most parts of the country (world). Two practical questions:

1) Under the consequences of especially Climate Change, petrol prices, but also other worldwide events, isn’t that risky business ?

2) Why are NZfarmers not commit them selves for niche markets with more diversity/ flexibility adopting better to upcoming events ?

-----

I’m just worried that prices of mass- production (incl. stock and property loss) over time becomes too high - with a world, which increasingly cannot pay for it.

In general -why is the NZfarming community not adding more value to their products and why not cut the middlemen and organise more weekly/ daily NZfarmers - Markets ?

by Andrewj | 14th Jan 11, 12:14pm 1294960469

Walter, answer to number 1 is ,the drought has ravaged sheep and traditional beef herds, hence the works need to secure dairy beef contracts like Riverlands punt on 30,000 head of bulls with Capehorn farming company, which just sunk a few red faces and a lot of money gone south. You dont see the stock around here and these high prices are at a bad time, we need to rebuilt herds but, at what price? When the banks are tightening lending criteria and you need a 100 beef cows which isa going to cost 100k +,its better to just go to the beach and worry about it next year.

I always work out a 'worse case senario' ALWAYS. I bet CO takes a lifejacket to the beach. Risk is always part of our business, the best dog gets run over, best bull breaks its leg, flood in the middle of lambing, drought all summer. Mind you it all pales into insignificance if the wife shoots through and takes half. I have an eye on that cyclone as I have stock on the river, I like to buy well, I pretty much get what everyone gets when they sell, I also try and own good winter country as I think the most valuable grass grows in the winter.

Niche markets hardly ever materialise, people love the idea but hate the price. I rather invest my profits off farm and diversify. Part of what happens if it goes belly up thinking, say a foot and mouth senario, if its all in the farm then its not going to be pretty

by Andrewj | 14th Jan 11, 12:29pm 1294961391

Walter, on Global warming,

http://www.nature.com/news/2010/101006/full/news.2010.519.html

And on Brisbane floods

The one of 1974 was 5.7m and the one of 1841 was 8.7m. the present flood reached around 5.2m. Big deal?

by Kunst | 14th Jan 11, 12:35pm 1294961707

Andrew/ CO - many farmers see and are told the potential to feed the world, before they see and are told the potential of bankruptcy. Sheep Shagger is a classical – but that’s entirely my personal opinion.

The world is changing, fast and forever.

by Casual Observer | 14th Jan 11, 12:31pm 1294961465

Personally Walter, I agree, that too many farmers are overstocked for sustainable farming. I was talking to a dairy farming friend the other day and they said they are feeding lots of meal. They are milking 18hourly as there is an area wide problem with rye grass staggers and their milking regime seems to help with that. They also said that by feeding meal, due to a grass shortage, their cows are in good condition and are milking well. With the higher payout it is covering the cost of meal. My question was - what happens when payout comes down? It would be more sustainable for them to have dropped cow numbers. As they have almost no mortgage they are in an ideal situation to have done so.

As to climate change - farmers are always living at the behest of nature. Some things you can plan for, some you can't, such as the floods in Qld and earthquakes. Those who will do best will be those who can adapt. After 30years of farming there is still nothing we would rather be doing. We have had high highs, and low lows.

There may well come a time when a significant percent of the world's population who currently are, are not able to afford to buy our food products - but selling commodities rather than niche products may well be the right thing to be in.

With regards to dairy and niche products, given the amount of product just Fonterra produces it is not possible to make it in to solely niche products. They do make niche products, largely in the nutricuetical/pharmaceutical fields. A lot of it is aimed at industry players rather than the consumer. Did you know that Fonterra sell Soy Milk? They also produce Stolle milk.. Fonterra worked out a while ago it was better for it to be the supplier of choice for ingredients rather than take on the like of Kraft and Nestle in the global consumer business.

Check out what they make here:

http://www.fonterra.com/wps/wcm/connect/fonterracom/fonterra.com/Our+Pr…

by Kunst | 14th Jan 11, 1:09pm 1294963756

CO, Andrew - I think in the current and upcoming scenario, most people in business are seeking rather visionary ideas. We are all sitting in the same boat - having to adapt to fast changing situations.

What worries me most, is the accumulation and acceleration of events and it’s correlation - and people and especially the government, not adopting fast enough to that.

by Kate | 14th Jan 11, 10:44am 1294955095

http://www.zerohedge.com/article/chart-day-great-regime-change

I like the guy who comments that it's time to invest in inflation.

And further comment on the commodity subject;

http://www.zerohedge.com/article/mike-krieger-deconstructs-commodity-inflation-you-aint-seen-nothing-yet

by Andrewj | 14th Jan 11, 11:02am 1294956144

Hi Kate, some weekend reading for you

http://libertarianpapers.org/articles/2010/lp-2-43.pdf

by Andrewj | 14th Jan 11, 10:49am 1294955362

"When they buy euros, the euro becomes stronger and their currency a little bit weaker. That is not neutral in regard to their competitive position. But I go no further in this topic. It could be too delicate," he said.

http://www.telegraph.co.uk/finance/china-business/8258348/Europe-fears-…

some of the bloggers

jolivesey

"The EU authorities fear that China's purpose in buying eurozone debt may be double-edged, intended to push up the euro exchange rate against the yuan and gain advantage for exports."

Wow, nothing gets past these giant intellects, does it? Minds like steel traps.

So it turns out that Trichet is a crafty old fox, doesn't it? With three Bond auctions lined up, E1.5bn for Portugal, E3bn for Spain and E6bn for Italy, he rigs the first one.

I have to admire that. He rigs the auction that is going to cost him the least, by buying in all the Portuguese Bonds, after which the Spanish and Italian Bonds go out OK, but of course with steadily rising interest rates that will kill them in the end. But Trichet doesn't care what happens in the end; he only wants to keep the market from collapsing right now.

And as an encore, he muses aloud about maybe raising interest rates, and voila! he has a rising Euro to go along with his "successful" Bond auctions.

Now, on the one hand, you have to give it to the guy. This was as neat a bit of market rigging as I have ever seen. On the other hand, you have to wonder about a Central Bank that is reduced to such rather sordid tactics.

"I deeply respect the independence of our Irish friends and we have done everything to help them. But they cannot continue to ask us to come and help them while keeping a tax on company profits that is half (what other countries have),"

Sarkozy to Reuters, today.

by Andrew in Finland | 14th Jan 11, 11:04am 1294956272

Andrewj

Of course the banks employ an army of traders but the issue is can they do what the want or can they only play with their own capital? A banker talk me they are restrained in what they can do by regulation. Banks by their very nature are rich corporations so naturally they can have large trading positions.

by Andrewj | 14th Jan 11, 11:48am 1294958937

He said they can do what they want

by Andrew in Finland | 14th Jan 11, 8:55pm 1294991739

Andrewj

I am interested in what he 'knows'. For example a bank cannot legally use QE for bonuses. It has to earn the bonus money. The nature of this crisis is that the banks did whatever they wanted to because they avoided regulation. But can they do that legally or as they are supposed to operate? If your person knows then maybe he can point to something that shows he knows please.

by Alex Tarrant | 14th Jan 11, 11:51am 1294959102

Hi guys, I think the big issue here is volumes. Stats NZ figures (and the ANZ comments above) basically show export volumes are not rising.

This is supposed to be an export-led recovery, but the only thing that has recovered is prices. What happens if prices fall? Is there a plan B?

Cheers

Alex

by Gummy Bear Hero | 14th Jan 11, 12:01pm 1294959674

........ Doesn't having a plan B suggest that you have at least got a plan A infront of it .......... So we have an A plan then ?

by Colin Riden | 14th Jan 11, 8:51pm 1294991507

Plan A was, and I think still is, to borrow to keep up entitlements.

Plan B, if there is one, is being kept under wraps until after the election.

by Colin Riden | 14th Jan 11, 8:12pm 1294989148

Alex,

I think you will find that the ANZ Commodity Price Index is not based on actual receipts and may include spinning of how the ANZ would like commodity prices to be perceived.

If you look at NZ's latest export statistics (November 2010) for our main export - dairy products - you will find that average prices received (NZD) have been falling for some months. For November 2010 butter was at its lowest NZD export price since January 2010 as was cheese, while milk powders were at their lowest since February 2010. From their peaks in the middle of 2010 butter is down 9%, cheese down 13% and milk powders 17%.

by Andrewj | 14th Jan 11, 8:40pm 1294990824

Heck Colin, they must have the machine on spin, spin ,spin. This means that we are being mislead, why, who benefits? What are your predictions for next years payout based on these figures? No wonder the govt had to borrow 950 mil this week. I think from memory the Nat bank has about 19 billion exposed to dairy, maybe they want to see farms sold at high prices for just a little longer, little longer. It interested me as two weeks ago the USA dairy report was telling us the markets were weakening while Fonterra were announcing increased prices, I think I'll listen to the Yanks next time.

by Colin Riden | 14th Jan 11, 9:02pm 1294992132

This means that we are being mislead, why, who benefits?

Why do you think banks have their 'star' economists in the media all the time? If you choose to take notice of them you will often be misled.

by Andrew in Finland | 14th Jan 11, 9:41pm 1294994469

If you look at the online december ANZ report you can see that all groups apart from meat are recently lower. For that month they said commodity prices were a record.

http://www.anz.co.nz/resources/a/f/af131400452944f796e5beab6c2532f8/CPI-20100112.pdf

So if they are are hiding what they are doing they are not doing a very good job about it. They are clearly showing that Dairy is lower. Horticulture is way down. Presumably there is an explanation??

If you look at the NZ dollar sub index graph beginning in 2000 you can see that dairy prices have almost doubled - even though they have majorly fallen back. Many groups were weaker since 2000. Meat is now about 50% or more higher and other groups have returned to their 2000 values or lower. It sort of makes sense as many people such as Rogers and Faber are saying food commodity prices are historically weak and or stocks of food are at multi decade lows. The data is showing weak prices for the last 10 years.

The higher index is just showing how weak it has been for many years?

by Colin Riden | 14th Jan 11, 10:51pm 1294998661

I thought I had offerred one explanation, but I am open to others. The ball is in ANZ's court on that. It would help their credibility if the ANZ included clear information on how their index is derived and its sources of data.

The article leads with something similar to what Alex quotes.
"The ANZ Commodity Price Index lifted a further 4.5 percent in November, taking the series to a new all-time high. Prices were higher for ten of the commodities we measure, while two commodities recorded price declines and three were unchanged."

Few people go past that message, and it is misleading.

The ANZ then add this:
"Last month it was the price of wool that surged. This month it is the price of pelts, which jumped 32 percent on the previous month. After being in the doldrums for all of 2009, the series has now leapt ten-fold to sit at a 13-year high. Additional strong rises were noted in the price of logs and lamb, both up 6 percent. Wool prices lifted a further 3 percent, and the price of beef, wood pulp and dairy products all lifted 1 percent."

To me that looks like spinning the message (with some arse covering) despite the facts. This instance of the ANZ Commodity Price Index being misleading is not an aberration - it has happened before.

by Colin Riden | 14th Jan 11, 10:49pm 1294998540

I think you have edited your comment since I set out to reply - as above.

There are two things that I think should be noted:

1. Headline prices (quoted spot, Fonterra's auctions, etc.) differ from those that exist in other channels. You can maintain tight supply in the former and keep those prices up - while you dump the surpluses resulting from the lower demand elsewhere.

2. Few appear to have yet questioned where the additional production (money) is coming from to pay for those higher commodity prices. Without a good answer it must be that higher commodity prices are only being supported by additional government borrowing or money printing.

I would be very interested in the analysis behind what Rogers and Faber are saying, and in knowing who they are working for.

by Andrew in Finland | 14th Jan 11, 11:03pm 1294999431

Most commodities were showing a huge run up in prices from 2003 to 2007 and then a collapse after lehmans failed and now a strong rise but still well below the peaks. Prior to 2007 the story was one of demand from the BRICS and very easy credit. We now have government spending and very low interest rates. China obliged the banks there to lend a massive amount of money to keep things going there. Wages have doubled there and so forth. Amount of money in the world is probably the same as it was in 2007 when prices were surging due to demand from newly enriched people who were previously very poor. The majority of people in the world probably have far more money to spend because of low interest rates. My European mortgage is only 2.1%. Big rates rises appear very unlikely without big inflation. So rather than asking where the money is coming from now i think you have to ask what was happening to create the large rises prior to 2007. And simplistically the case for billions of people getting richer affording more stuff would appear to be an easy explanation, Russians for example have returned to being a wealthy people and have gone from desparate food queues to something else in the space of a few years. China has been transformed. Something is going on in Brazil and south america also. No news there. India too has high inflation.

Rogers and Faber appear to be independants and they are undoubtedly commoditity touts/spruikers but even so can be seen to have been more or less correct so far on rising prices and wrong on US dollar doom.

by Colin Riden | 14th Jan 11, 11:30pm 1295001040

Good comments, this in particular:

"So rather than asking where the money is coming from now i think you have to ask what was happening to create the large rises prior to 2007."

That question is where I started years ago, but the answer makes current animal protein commodity prices look even more tenuous.

More richer people is plausible, but underlying that was a credit expansion cycle. A reversal of that cycle and food commodity prices revert to long term norms, but that will probably be preceded by a price undershoot. Neither will be a good time to be a high cost producer of low feed conversion rate ruminant proteins.

by Sheep Shagger | 15th Jan 11, 12:02am 1295002960

Colin, you're assuming that animal commodity prices are infact a speculative bubble as opposed to reflecting genuine demand. A moot point and debated at length here already although at this point the markets believe you are wrong.

Secondly, if you are right our dollar would drop like a stone, insulating producers from the full impact of the drop just as it has stopped us reaping the full rewards on the way up.

by Colin Riden | 15th Jan 11, 12:59am 1295006393

I believe the demand is genuine - although speculation likely has an influence on prices. The demand while genuine is though based on expanding money/credit. You are right in that the markets are highly speculative but like to believe they are genuine reflections of supply and demand.

I think you will find that our currency has bigger players controlling it than commodity traders, but commodity prices do have an influence.

If as a producer you need a collapse in our exchange rate to cover export commodity price declines you are probably not as financially secure as you might believe.

by Andrew in Finland | 15th Jan 11, 12:05am 1295003108

But the credit cycled indebted the west and credited the east who are richer and demanding more protein? In the west we have to pay what they are paying. Which then in turn enriches those parts of the western economy which produces what they want, and might reduce their savings and our debt.

by Colin Riden | 15th Jan 11, 12:57am 1295006263

"But the credit cycled indebted the west and credited the east who are richer and demanding more protein?"

I don't think it is as simple as that. Credit expansion cycle(s) have been running for centuries though they became increasingly dominate last century and even more so the last three decades. In that context China is a relatively new player.

I can't get accurate data on export prices to individual countries but there are reasonable correlations between increasing volumes of dairy products into China and lower average NZ export prices. Yes, the East will take more dairy proteins but not to a great extent at the prices the West still pays.

At lower than Western prices there is considerable demand from the East but demand from the East does not yet set top end prices in the West.

by Andrew in Finland | 15th Jan 11, 1:24am 1295007846

We can make this overly complicated. I will welcome cheaper food when it comes but unless many high population areas of the world become poorer i dont expect to see it soon.

by Kunst | 15th Jan 11, 7:38am 1295030302

Andrew - I think this is a typically response of a well educated person, earning good money in a stable position, but who doesn’t have answers to accelerating and accumulating negative events and the consequences in correlation. We are on many fronts literally running out of money. Reality is, under those scenarios, western agriculture production cannot keep up unless dropping their prices substantially. That means for the majority of NZfarmers more suffering or even worse bankruptcy. I see the only chance to compete in world markets, in top range products and niche markets only.

Smaller nations need to think smaller, but with bigger ideas branding for a “100%NZpure Economy”.

Don’t just sell products sell solutions.

by Colin Riden | 15th Jan 11, 8:26am 1295033173

Andrew, I start from a perspective where much of the wealth generation of the last 30 years has not been real so I do expect large populations to have their disposable incomes shrink.

In terms of food consumption that will see demand shift to relatively cheaper products. In terms of animal proteins that will mean to lower energy input per unit output products. That was happening anyway with consumption shifting from beef to poultry.

There remains great scope for productivity gains in NZ animal production. We could for instance produce 20% more milk from our current feed inputs if we increased our poor and currently declining milk production per cow - mostly by reducing cow numbers while similtaneously improving mangement. In time expect higher milk production from the same level of inputs.

I don't expect any of the above to be smooth or well understood transitions. I do expect 'markets' to make that worse and contribute to high price volatility.

by Andrewj | 14th Jan 11, 11:54am 1294959296

No plan B but we can default to plan d, which is default.

by Andrewj | 14th Jan 11, 12:23pm 1294961034

CO, my sailor friend told me yesterday morning that the cyclone was going to be a big one and finally it gets to the NZ media, maybe they troll hickey's site.

http://www.stuff.co.nz/world/south-pacific/4541079/Cyclone-batters-Paci…

Alex its bloody dry again too, however that could suddenly change.

by Hamish | 14th Jan 11, 4:25pm 1294975540

Here you go....I find these are pretty good for getting a reasonable heads up on what's on the horizon. Pays to check daily though as these models are constantly updating on data that's sourced from I don't know where. Also helps to learn local nuances. For example, long range rain forecasts are quite often overstated and as you get closer to forecast events, the amount of precipitation forecast diminishes. But that's just a generalisation.

http://www.windguru.cz/int/index.php?sc=54045

http://www.metvuw.co.nz/forecast/

http://www.bom.gov.au/cyclone/

by Sheep Shagger | 14th Jan 11, 1:10pm 1294963832

Great thread

Havent got time to fully reply.

CO, top link at 9.54am which encapsulates the position of soft commodities ie in a long term bull market.

Walter, re niche markets. We are acutually a niche insofar as we do the grassfed thing and we do get premiums in alot of cases. Value add means extra costs which are often not returned in extra profit. Interestingly Fonterra seems to be specialiseing in ingredients as opposed to financing consumer brands against the big boys like Nesle. They see being the best ingredients supplier as their niche.

by Andrewj | 14th Jan 11, 1:36pm 1294965367

Shags sheep, you can't go around looking for articles that support your present investment position all the time.( well you can but you shouldn't) Im into land but im also into bubbles,deflation and bullshit, all of which would hurt my position. Im just pointing out that we have found ourselves in an unusual position and whats up is down and what should be down is up.

I can find arguments all day to support the fact that circumcised men have better sex than un-circumcised men and have less chance of contracting aids, however Im not about to give it a try.

by Sheep Shagger | 14th Jan 11, 10:12pm 1294996325

Aj, point taken. As I think ive confessed to you in the past I play abit of devils advocate on occassion to balance up the head for the hills with tinned food and bullets brigade. You,ll be pleased to know that in real life my Scottish Presbyterian background dictates a cautious approach!

Interestingly, such was my fear of a eurozone meltdown last winter after having read one too many Ambrose articles,I feared the effect of a plummeting Euro/sterling on farmgate sheep returns. I culled back my sheep numbers significantly and correspondingly lifted my beefy's which as you will realise is a USD play. As its turned out probably a net zero sum gain as both options have been sound. Just to let you know im not being cavalair even though Im pretty positive about our prospects.

by Andrewj | 14th Jan 11, 2:16pm 1294967793

"Just when everyone thought that Mr Trichet would spend little time in discussing monetary policy ... he proceeds to drop a rate bombshell," said Marc Ostwald, a strategist at Monument Securities.

http://www.telegraph.co.uk/finance/economics/interestrates/8258019/Euro…

Drjonathanwilson Now what would you do if you feared a run on the Euro as the underlying insolvency of Spain and Italy comes into focus?

The cheap and cheerful response is to pretend to raise the interest rate which is what Trichet has done.

Unfortunately for him and his national socialist and Marxist backers it cannot work as there is no economic power on earth more powerful than compound insolvency at destroying the best laid schemes of mice and men.

Nevertheless expect Trichet to make more rate increase noises in the future as a short run palliative that merely adds to the already long run compound insolvency of the PIIGS.

When the Euro goes it will happen within hours.

I wonder how many EMU central banks have their contingency plans in place for such a scenario.

by Wolly | 14th Jan 11, 2:33pm 1294968816

ECB going for the BS policy long term AJ...Obama kowtowing to Hu....Bernanke planning QE3 and 4...Bolly will do nothing...cheaper for longer...recession is stronger....gotta get with the thrift and be prudent...years to go....debasement running at 3%pa....savings being stolen every day...poodle media swamped with their own BS and spin...banker surveys by the score...all point to recovery and no more poor.

by Andrewj | 14th Jan 11, 4:06pm 1294974386

Wolly

'Mises explained: There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.' Id bet that the EU is going for a final and total catastrophe of the currency system involved. and we are headed for, sooner as the result of a voluntary abandonment of further credit expansion,

by Wolly | 14th Jan 11, 4:34pm 1294976046

True enough...current policy here is delay and pray...fat lot of good that will do...my money is on the swine in the loop setting up their escape routes before pulling the pin and running for the doors...keep your savings short and be ready to push the buggers out of the way.

Best option now is cash and fx movement to protect your nest egg. Property is as dead as, unless cheap as chips and top end. Expect a repeat of the 08 market drop and a run on bonds. Pimco has run out of clean underwear!

Be nice to your chooks and talk to your veg.

by Wolly | 15th Jan 11, 11:12am 1295043125

Don't look at this...it will keep you awake at night

http://www.marketoracle.co.uk/Article25545.html

by Nicholas Arrand | 15th Jan 11, 11:27am 1295044057

I'll enjoy my snooze time....

"If the entire US economy depended upon the housing boom ( wasn't ours, in NZ?) to expand from 2003 to 2007, then it will be capable of collapsing the same structures given the extreme vulnerability to debt."

But I guess ' we're different...'

by muzza | 15th Jan 11, 8:01pm 1295074870

Well our housing set up is different from that in USA , thank goodness.

No sub-prime loan drama in NZ and our law makes a mortgage holder take responsibilty for their loan, unlike the shenanigans in America.

by Nicholas Arrand | 15th Jan 11, 8:19pm 1295075972

Really? Why, if borrowers were held responsible, did the Finance Companies go down? Answers: The borrowers walked away from their debts; one way or another ~ you can't get blood out of a stone.

by LOL | 15th Jan 11, 8:26pm 1295076362

Well our housing set up is different from that in USA

"It's alright everyone, we're different!"

But how come then that when the US housing market was lifting off like a rocket all you property goons here in NZ were joyfully howling about how we were the same?

Are you saying we're the same when things in the USA are going good, but we're not the same when things over there are going badly?

by KW John | 15th Jan 11, 1:21pm 1295050894

Great article - A refreshing dose of honesty...

by muzza | 15th Jan 11, 9:51pm 1295081460

NA , think you will find people who default in NZ will be in bankruptcy, not the case in America.

Lol, yer that's about right, we do have a different situation with the banks in NZ, whereas too many banks in USA were operating like finance companies. Are you a goon?

by speckles | 15th Jan 11, 10:33pm 1295084011

I'm with Muzza on this one, the US loan system is on an entirly different level of dysfunction.

We have all heard of the liar loans which were set up for the upfront commission and place people in properties that they could not afford. However the rorts have gone both ways.

- Non recourse loans on residential make a entire difference, less sticky prices, allow strategic defaults, you can walk away. Just to highlight a couple of examples:

- Forclosure process fraud often occurs via colusion between parties i.e the listing agent, orginal party and friendly third party. You get you mate to buy via kickback to an agent at a high discount.

- People have also taken advantage of different laws per state. I know of a few people who maxed a loan in one state and utilised the funds via a company to utimately buy in another state a property...then stragically defaulted on the orginal property.

-Bank legal records and settlement process broken down via the on-selling of mortages and bank failures, it is not efficient like our systrem. I know of several instances banks appear to have lost loan details and the whole process has fallen in a hole.

I know of one example that a person payment was cancelled by one bank advising of their new payer details, new payers details were incorrect and they waited for further details to discover they have dropped out of the system. They have not made a payment in 4 years...

A lot of smart operators have made a lot of money while others appered to have been gifted property at the tax payers expense.

It is no wonder the US system is a mess.

by Andrewj | 16th Jan 11, 9:30am 1295123449

Its been an interesting debate, I keep ending back where I started.

I took my youngest two to a pony club event yesterday bit late because the dog threw up in the ute. Country event, in a paddock a few jumps mys horses are old and cunning. Soon some big trucks arrived some smart cars and very well dressed ladies, I felt a bit 'out of the loop'. Talked to some friends, the farmer who inherited the large farm with minimal debt doing fine others with debt struggling, some with family trusts in mess, others making good money out of bulls. The whole spectrum was there.

On the way home I thought about some of the owners of those big horse trucks and they all had one thing in common, they used leverage. As an example If I had a million and a sheep and beef farm, farmed it well and made a living improving it a little every year, then I was doing the normal thing. My dairy farmer friend on the other hand leveraged his million into a 3 million dairy farm, his return after debt servicing was no better than mine( may have been worse) but he new about Capital gain and it being tax free. The next year farm values were up %30 I had an extra 300k but my mate had gone from 3mill to 4 mill he had doubled hi investment in one year. Over the next 3 years farm prices went crazy my sheep farm became worth 2 mill and my friends dairy farm 12 mill. His 1 million investment was now worth 10mil he had made an ROE of 10x while I made a return of 2x. He was in the money and I was still making the same income as ever. His leveraged position payed off and leverage became the name of the game. He made a killing and has one of those big horse trucks for his wife and a boat and the other trappings of wealth. The banks loved him he created a vehicle for them to create loans, but now they all have egg on their faces and interest rates are artificially low wait till the rate rise on that leverage.

Now values are falling and the magic is working in reverse his wealth is being destroyed, the farm was a vehicle to create wealth he wouldn't have cared what it was it could have been housing, its leverage that got us here and as it unwinds there is going to be hell to pay.

Bernake QE'd 80 billion into existence last week and look at commodities go,by leveraging the banks and other masters of our world are making a killing, Im happy with my little farm and a modest income but if the leverage guy's blow my world up Im going to be pissed.

Meanwhile all the wealth is owned by the rest of the world, I read this week that the wealthiest sovereign wealth funds are all middle east or India/ China, Alaska is the fist of the western worlds at number 39.

by Kate | 16th Jan 11, 12:49pm 1295135381

....if the leverage guy's blow my world up Im going to be pissed.

I think they already have and so I'm thinking forget being pissed and think about being prepared. In particular, what I can trade through the difficult times of worldwide deleveraging. First I was thinking firewood - folks will have to keep warm. But then I need petrol to harvest the trees AND (perhaps even more importantly) I have to get the goods to a market. And I thought, anything that needs to be transported is a major stumbling block. Think of what this will mean for dairy.

I'm thinking we will push ahead with mini hydro - as long as the generators will take our excess. Once that's up and running - we'll look at wind.

by Andrewj | 16th Jan 11, 2:34pm 1295141651

Kate, maybe a still, you could run a chainsaw on it, I think a 80/20 mix with 91. Maybe just self sufficient in power would be enough as a coppiced wood lot would be of small diameter and a saw bench would be the answer. I've planted Robinia which grows like stink and is good ground durable timber,trialling Chestnut.I've a friend in the Uk who has made a solar system out of old car radiators, four in a row under glass they are very efficient, up with the expensive ones you buy. Im looking at a boiler for my hot water. Im thinking that resources will get a lot more expensive before they run out and we will have time to adapt. When I was young, a passenger train went by every 20 minutes now there is none. Its the value of money thats perplexing me I think its going up as debt gets destroyed and living standards fall. The problem is the wealth is held by those BRICK and oil producing nations not by us in the west and yet we love to spend. Ive a great book called 'growing your own food bearing plants' its written by Selby Gouldstone. Its out of print but worth finding. He talks about plants like the Ceylon Spinach plant which is a very productive vine and 100's of others. You can always borrow my copy.

by Kate | 16th Jan 11, 3:50pm 1295146258

We've got 50 acres in 9yo pine - so don't need anymore firewood species for personal consumption. Would be very interested in wind hearty food bearing perennials for around the house and near paddocks... does the book discuss the plants suited to various environmental conditions - as we're just below the windfarm on the Manawatu side of the ranges; so no opportunity for any "cottage garden" type plants here :-) hahaha. But the views are unbeatable!

by Andrewj | 16th Jan 11, 4:49pm 1295149753

Sounds like a perfect site for a short stocky person, and some scottish blackface sheep. It does tell you if the trees are hardy but in your site most trees would need a shelter belt established first, do you get frosts Id imagine it hardly ever stops blowing. Quinces are very hardy and can even be used as a shelter hedge. Id look around any old houses in the district and see what they grew, they got it right way back then.

did you read this article I posted for you last week

http://libertarianpapers.org/articles/2010/lp-2-43.pdf

by Kate | 16th Jan 11, 5:53pm 1295153600

No frosts to speak of but we have heard of dustings of snow in the past. Wind is interesting; we're calm as whenever the rest of the Manawatu is and windy as when they are. The gusts are just a bit stronger up here. Had lots of practice with the nor'wester on the beachfront at Kapiti :-). Have been delighted here at how the veggie garden thrives despite the gusts.

Yep, read that article. Not quite so sure that the monetary/financial powers-that-be in the West will be at all successful with the path of "controlled deflation" - controlled being the operative word. In other words, I'm sure we'll get asset deflation big time, but there won't be any "control" about it.

Meantime I expect commodities to the end purchaser will inflate rapidly perhaps initially as a response to speculation - but this market manipulation will cause real shortages when the growers simply can't afford the input/operational costs. I think we're already seeing that in a number of ag production sectors. Who controls oil/energy is what matters for the next decade or so.... monetary policy in the greater scheme of what matters will take a back seat. It's pretty much impotent already IMHO - the market manipulators/financial institutions rule presently - next it will be the energy barons, I think. But.... just a wild guess. :-)

So I'm thinking hyperinflation of the things the common man needs to survive - and hyperdeflation of the assets the common man presently owns.

by Andrewj | 16th Jan 11, 2:38pm 1295141892

Doubled up

by Nicholas Arrand | 16th Jan 11, 4:24pm 1295148298

"Gold and silver are now down hard over the past two days, and the reason may have something to do with the fact that ....JPM(organ and HSBC) would finally be forced to play fair and reduce their outlandish precious metals short positions."

This they have avoided and can keep their position. So: the Boys that 'know', and have control, are....short!

http://www.chrismartenson.com/blog/jp-morgan-wins-cftc-position-limits-do-not-apply-them/50663

by Andrewj | 16th Jan 11, 4:48pm 1295149694

Greg Pytel has 3 new interesting articles

http://gregpytel.blogspot.com/

by Grant A | 16th Jan 11, 5:43pm 1295153024

I don't understand your posting Nicholas. If JP Morgan are about to square the massive short position that we've all been aware existed and was pressuring them, they'll be buyers not sellers....the boys that know (everyone of us who reads, and its silver I understand not gold) should be long. I think the downside in precious metals we've seen (and I'm a sizable holder) is a long over due correction to what has been a massive rally for a long time.

I'll be buying more but the trick will be in trying to work out how big a correction it will be because a couple of hundred dollars wouldn't be a surprise.

by Nicholas Arrand | 16th Jan 11, 5:50pm 1295153426

They don't have to compulsorarily square them, now! ( ie: As I posted, 'This they have avoided ....'). They can stay short and the much anticipated buying doesn't need to occurr. They can run them out, if they choose.

by Grant A | 16th Jan 11, 5:52pm 1295153554

Ok got you. I thought you meant avoided until now but were about to now start squaring up. Yeah risk is that the market is indeed hinking that they will hold firm and are squaring themselves now by selling...eitherway be good to get a correction out of the way even if it days week/month or two

by Nicholas Arrand | 16th Jan 11, 5:56pm 1295153787

Just re-read my original post, Grant. Poorly posted; ambiguous, Nicholas! :). But the Martenson link I thought quite good. Cheers.