Deflation Fears Gaining Ground in Europe

The following article in the London Telegraph is definitely worth a read. It confirms what I have been thinking for a while now that the primary fear facing the markets and thus the Central Banks as far as the Western economies go, is NOT inflation, but rather deflation. Try as they can, the ECB and the BOJ in particular, cannot seem to get the kind of growth they are hoping for, and more particularly, an inflation rate of 2% annually.

Dam breaks in Europe as deflation fears wash over ECB rhetoric

'We are reaching the end game in Europe. If they don’t launch real QE soon, the consequences are too awful to contemplate,' warns RBS

http://www.telegraph.co.uk/finance/economics/11154553/Dam-breaks-in-Europe-as-deflation-fears-wash-over-ECB-rhetoric.html



We have been following the Euro here in detail ever since ECB head Draghi first began attempts to talk the currency down when it reached the 1.400 level in May of this year. Quite frankly, with the problems that the Eurozone was having economically, the last thing desired in those quarters was a strong currency.

This was accomplished primarily by first raising the specter of additional monetary easing by lowering rates. Secondly it was then further reinforced by successive steps taken by the ECB which were seen as stimulative in nature by investors. I will not go into detail here as those have been covered previously here on this site.

Let me make one additional point here to refute the idea that the Euro fell primarily as a result of the sanctions imposed by the West on Russia. There is no doubt that those sanctions might have shaved some potential growth off of the Eurozone but frankly, the Eurozone has been in trouble long before those sanctions were announced or implemented.

There seem to be some who are so intent on preaching the demise of the US Dollar that they are blinded to the severe economic problems affecting the other major Western industrialized nations. The Dollar certainly has its own set of woes to contend with, but let's face it, right now the US is certainly more attractive of foreign capital flows than is the Eurozone or Japan for that matter.

Also, consider the fact that with global economic growth slowing and not rising, those nations whose currencies we have dubbed, "Commodity currencies", are having their own difficulties as well.

The Canadian Dollar, for example has fallen from 1.06 to its current .89 over the last three years. That is a decline of some 15.5%.

The Australian Dollar has declined nearly 22% in value against the US Dollar over that same three period with the currency being especially hit hard over the last month as it has plummeted some 8.5% alone!

I view the Aussie as a "Growth Currency" meaning that I look at it to try to get a sense of how the world at large sees the potential for commodity usage and thus, as a byproduct, overall world growth. Australia's close proximity to China, and its large trade in raw materials that are used in industrialized nations, infers that it is particularly vulnerable to any slowdown in growth from that corner of Asia.

Here is the currency chart:

That does not look like a currency chart showing a strong, vibrant, commodity-based economy now does it? It reflects what I and many others have been saying for a while now, that growth is slowing and deflationary headwinds are building. Those who keep with their incessant, inflation this and inflation that, are simply barking up the wrong tree.

Could we experience a currency crisis here in the US at some point? Sure we could. One never knows when the sentiment shifts in a market and suddenly something that was of seemingly little to no concern erupts into a full blown panic. Take the European Sovereign Debt crisis as an example.

It was no NEW news to the market that Greece or Spain or Portugal or even Italy had huge amounts of debt for the size of their overall GDP. The market knew that for a long time. Yet, something triggered a sudden shift in sentiment towards those nations' debt one day and on came the crisis.

What I am trying to say here is that one must deal with the present realities in the market to be successful as a trader or even an investor. Those who are handling real money and placing real trades or making real investments do not have the LUXURY of postulating theory after theory, many or even most of which will not turn out to be true. Instead they must understand the thinking or sentiment of the market. If it worries the market; it worries the trader. If the market could care less; the trader could care less. That sounds blasé but it is axiomatic due to the nature of money flows.

Standing in front of a tidal wave of money moving against you is a surefire method to be financially destroyed and left as "road pizza" ( one of my favorite analogies ) on the floor of the trading pits.

Let me shift gears here slightly and note the chart of gold priced in terms of the Euro. Eurogold has been holding much better than US Dollar priced gold on the chart, which is of course due to the sharp fall in the Euro.

Some have asked me what the repercussions to the Euro might be were the ECB to actually engage in their own version of QE to try reversing the deflationary pressures that are relentless in the Eurozone. I honestly do not know. I can make a case for a move higher and make one for a move lower.

The case for the lower Euro would be simple - the ECB creates more supply of the currency which tends to undercut the unit and thus knocks its lower. I am sure that is what they would hope the currency would do as they would thus bank on the weaker currency stimulating exports and serving to help generate some inflationary pressures.

The reverse could happen however. What if the market views the QE as sufficiently large enough in size to actually make a big impact on the economy and thus decides that the Eurozone will actually begin to grow? Could they decide that the Euro is now low enough and will move higher as the economy improves?

I don't know. The truth is I am not sure if anyone really knows. The reasons is because of something I have said many times here - we are in an era in which a monetary experiment of this size and of this nature has never been previously attempted. No one has thus ever lived through or been familiar with its eventual outcome. We are all trying to use our experience and wisdom gained over the years in deciphering the enigma presently before us. That is why I caution my readers against those who confidently ( hubristically in my opinion) proclaim with absolute certainty that "this market has bottomed" or "this market has topped" or "this event will now follow as sure as the sun rises in the East"., etc.

Let me draw some on my Texan roots and say that is pure "Bullsh*t!". They no more know the outcome or path of events that is going to transpire that the proverbial man in the moon. My advice is to ignore the wild screamers and theorist over at websites that are constantly regaling us with one sensational, dogmatic prediction after another and try to maintain a sort of quiet calm while you study developments and price action as you try to get a sense of how the markets are going to respond.

Lastly - Compare the Eurogold chart above to the weekly chart pattern of gold priced in US Dollar terms.

As you can see, that is quite a difference! This one looks abysmal compared to Eurogold. I am noting however that this week's wild swings in price have produced a Bullish Engulfing pattern on the weekly chart. That pattern has appeared at the previous double bottom level near $1180. My view on triple bottoms is well known by now - they rarely hold. But "rarely" is the key word. This one just might hold. Again, I honestly do not know. A technical chart pattern like this tends to be fairly reliable but all it could mean this time around is a halt in the ongoing downtrend, a sort of pause while the market consolidates before beginning a new leg lower. The reason for the uncertainty in my mind is that I did not see anything similar in the gold mining shares as evidenced by the HUI or GDXJ, both of which produced lousy weekly closes this week.

With the GLD disgorging the metal and with the TIPS spread continuing to fall, and with the commodity indices all dropping lower, will gold be able to withstand the headwinds coming from those negative fundamentals? Will those holding the metal ( big speculative interests ) decide to sell their gold to meet margin calls in equity markets exactly as happened back in 2008 when the crash began across nearly all asset classes except bonds? Again, I do not know. I am watching and observing however so let's do that together and see what comes next.

Fear?

So much for stock market complacency.. the VIX - Volatility Index - or as I prefer to call it, the Complacency Index, hit a 10 month high today. The bulls have pretty much had a one way market for as long as we can seemingly remember. Looks like that has changed some! We have gone from confidence to uncertainty to concern. We have not reached fear however.

By the way, further confirmation that those who have been preaching hyperinflation and currency induced cost push and whatever for so many years have been utterly confounded. The yield on the Ten Year Treasury hit a 16 MONTH LOW today!

The US Dollar managed to bounce right off of chart support near 85 and ended the week just below 86. It is essentially halfway between resistance at 87 on the top and support at 85 on the bottom. A push through 87 sets it up for a run to near 89.  Should it fall below 85, there is a band of support near 84 and with better support near the Fibonacci retracement level just below 83.

I have some further bad news for gold bulls unfortunately - GLD, that big gold ETF has been disgorging gold all week long even as the price has moved up from below the $1200 level. Simply put - investors/traders are moving money out of GLD and out of equities and putting that into bonds during this risk aversion period. Rallies in GLD are thus being viewed as selling opportunities. This is NOT what gold bulls want to see.

For this year, 2014, reported gold holdings are down over 38 tons from the start of the year ( 38.78 to be exact ) to 759.44 tons.  This is the lowest level in GLD since December 2008! That is NEARLY SIX YEARS AGO. Western-origin gold investment demand continues to disappoint.

USDA Supply and Demand Reports

As promised - though admittedly quite late - here are some observations on today's (Friday) USDA grain reports, which resulted in some very big moves across the complex.

Let's start with the corn first -

The trade was expecting a reduction in the ACREAGE PLANTED and that is what it received. Specifically, the number was lowered to 90.9 million acres from last month's 91.6 million. Harvested acreage was also reduced slightly to 83.1 million from last month's 83.8 million.

What the trade seemed focused on however was the increase in yield from 171.7 bushels to 174.2. They also boosted beginning stocks to 1.236 billion bushels from last month's 1.181 billion. Total production for this year came in at 14.475 billion bushels up from the September estimate at 14.395 billion.

USDA found another 50 million bushels for feed usage from the September estimate mainly because the WASDE report showed an increase in beef, pork, and poultry production next year from the previous month. Those critters need to be fed.

By the time they did the numbers, they gave us a carryover of 2.081 billion bushels compared to what they estimated last month would be a 2.002 billion bushel carryover.

To provide a bit of perspective, the 2013-2014 marketing year carryover ended at 1.236 billion. We are essentially going to end up with nearly 70% more corn left over next year.

It is interesting to see how the trade responded to the number when it first hit. Expectations were that USDA would kick the yield number higher than they did and some came in to buy on that, but most of us who have followed these reports for many years know that USDA tends to be very conservative preferring to err on the low side and then come in the following month with an upward revision during big crop years.

With private analytical firms generally reaching a yield consensus higher than today's number, traders used the short rally to sell as expectations are that USDA will give us that higher number next month. Besides, with a carryover of this size and with a record, bin-busting crop, buying a market to take it higher on data like this was rather ill-advised to say the least.

One thing I also noticed was the extent to which those corn/wheat spreads were battered today. Yesterday, the wheat market sharp drop lower on rotten export numbers fueled some big selling in wheat. Harvest delays in corn were used to bull up the market ( strangely I might add ahead of a major USDA report ). The spread shot up in favor of corn by some 16 cents or so. Today, with the lowered than expected wheat number, that entire gain was wiped out in a single day with the spread dropping 16 cents. Talk about whipsawing! And to think that spread trading is supposed to be less risky and less volatile. HA! You have got to be kidding me. When one leg of a spread goes one way and other goes the other way, and both of them are going the wrong way as far as someone in the spread is concerned, you end up LOSING EVEN MORE MONEY than a plain old outright position would have cost you. That HURTS, BIG TIME!

What I am going to be very interested in seeing now is how this spread performs as we move forward. The reason is simple - the large specs have been and remain net longs in the corn market even though the primary trend has been down for many weeks. They have been able to do this because they have been in those spreads mentioned and short wheat while maintaining a long corn leg.

My concern has been what happens if those big specs decide to unwind those spreads or even reverse them? Corn could get clobbered as they exit the long side of that trade.

I am saying that this is going to happen and I certainly cannot advise anyone who does not know what they are doing in the grains to become a spread trader ( remember if you are a novice you could end up losing money on both sides and get hurt even more badly than an outright futures position ) but I will say that the potential exists for wheat to gain on corn.

Then again, from what I can see, there is not exactly a shortage of wheat out there either. Exports completely shut off last week when wheat was above $5.00 and here we see the trade push the price right back up over $5.00 today on the USDA numbers although it did settle below that level by the time the closing bell rang.

With the Dollar bouncing back off of support near 85, US origin commodities become less competitive on the global market meaning a rally in wheat, along with a rallying Dollar is not going to make it any cheaper for our export customers and they have LOTS of options to choose from out there as the US is not the only wheat game in town.

Briefly on the beans ( it has been a very long day ) - USDA cut the planted acreage to 84.2 million from last month's 84.8. They also dropped harvested acreage to 83.4 million from 84.1. Apparently there were some additional acres that were washed out earlier this year and not planted plus some that were planted and then washed out and not replanted.

They did however raise the yield to 47.1 bushels from 46.6. I and others believe that they are too low on this number and that it will be revised higher next month and in December as well.

They did cut the old carryover number even further to 92 million bushels from last month's 130 million reflecting the rather strong demand from end users as they waited for new crop supplies to hit the pipeline.

Total production for this year was bumped up to 3.927 billion bushels from last month's 3.913. The resultant carryover for the new crop came in at 450 million bushels, down from last month's estimate of 475 million but obviously nearly 5X the amount of the 2103-2014 crop year.

Traders looking at the numbers were inclined to view that reduction in the carryover as  a reason to buy and that is what happened initially. My view is that there were some big guns itching to flush the small spec stops on the upside. However, they could not reach them as these mysterious buyers had already run prices up on Monday this week and proceeded to gun them even higher ahead of the report day. Simply put, there was no reason to chase beans at those levels because in spite of the slight reduction in carryover, we are still looking at a record crop.

Traders also felt that USDA yield numbers were too conservative ( so do I based on what I am seeing from the private firms ) and used the rally, just like they did with corn, to sell.

The result is that both corn and beans go into Sunday night with some potential to see additional selling take hold, especially if the weather window next week for harvesting looks favorable.

I will try to get some charts up tomorrow.

I should also note that the Goldman Sachs Commodity Index closed at a 49 month low today!

Russell 2000 a Harbinger to come?

Yesterday I was able to post a chart of the Russell 2000 noting that today's close was going to be a big deal in regards to its overall technical condition. Would the index be able to find enough willing and able buyers near the support zone that has served to hold it for over a year now or would the bears finally be able to break the back of the bulls.

I guess that questioned was answered today.

Take a look at the extremely poor WEEKLY close on the chart. Note that it fell well below the support zone and in the process confirmed a DOUBLE TOP on the chart.

The question is now what? Here is my read on this. The bulls must immediately, before the end of trading next Friday recapture the broken support zone near and just above 1080 or the bears will have them.

Downside - there is some light support near 1040 that might spark some short covering but stronger support does not show up on this chart until closer to the 1000 mark, which I might add is a big psychological number. It also happens to correspond to the 25% Fibonacci retracement level of the entire move off the 2009 low and a band of horizontal support that comes in closer to 1012-1008.

Suffice it to say that the close today does not bode well for early next week. The mantra of buying the dip in equities looks like it is going to be tested.

One quick thing and I am done for just now as this has been one of the busiest days I have experienced in some time what with a MAJOR USDA Supply and Demand report for the Grains, ( and the livestock markets I might add), as well as some wild swings in wheat, etc. I will get some stuff up about these later on as my schedule permits.

For now, I am also noting that once again, gold was saved by its safe haven status as the metal began recovering from its worst levels by the swooning equity markets and the bonds which once again SOARED higher as money went rushing into US Treasuries. Also, right on time, as if clockwork, the Yen scooted higher as more of the risk trades were taken off and that particular carry trade was unwound.

The Euro however did not fare so well as once again it was "let's beat the snot out of the Euro" trade resumed. As said yesterday, FOMC (Central Banks) can only talk up currencies so much or talk them down before fundamentals take over. All the Fed did was give those who were looking for a lower level at which to buy the Dollar or a higher level at which to sell the Euro a huge gift to do just that.

Sadly for the bullish cause for gold however, the HUI and the GDXJ continue to go "Kerplunk!" along with the rest of the equity markets. The latter actually held up a bit better than the HUI did as it was down only 1.22% today compared to a loss of 2.44% in the HUI. Both charts are not especially promising; however, at least they remain above the lows made on the FOMC day this week ( Wednesday). Bulls might take some consolation in that but a mere 5 points off a multi-year low is not exactly a lot to crow about right now. That level is going to take on a lot of significance as we move forward. If it fails, another leg lower is coming. Let's hope for the long-suffering bulls that is not the case but with deflationary concerns rapidly rising, it is certainly possible that those lows will not hold.

Also, while crude oil was able to bounce somewhat off its overnight lows, near 83.50, it still looks iffy. Gasoline was trounced and beaten with an ugly stick today as it made yet another fresh 4 year low in price. I am quite happy with that to be honest.

Cattle rebounded when news of firm cash hit the market which saved the complex from the beating it took earlier but USDA also showed an increase in red meat production for next year and for poultry, something which I have been saying for some time now.

What that tells me is that red meat prices are coming down for sure. I had expected beef prices to start coming down by the 4th quarter as well as pork. Beef is holding better than I expected thus far but pork looks like it is beginning to weaken. There  is going to be too much competition from pork and poultry in 2015 for it to stay up here in the stratosphere.

With the combination of cheaper gasoline and falling red meat prices, it looks like more Bar-b-Q is on the menu at my household once more. Then again, the way things are looking with this cursed Ebola virus, maybe all of us will be scared to death to even venture out of the door so cheap gasoline will not matter much!

I will get the grain stuff up later as there is a lot to cover....\

A Little Fun

You gotta love this hawk - a true lover of liberty! Score 1 for the Raptor!

http://fox5sandiego.com/2014/10/08/angry-bird-hawk-knocks-drone-out-of-the-sky/

Two Charts

The charts speak for themselves...

Did the Last Bull Standing Finally Give up the Ghost?

By that I am referring to the cattle markets which, as the regular readers have no doubt noticed, I have been watching carefully to see if they are going to go the way of the rest of the commodity world, namely down.

As noted in an earlier post from today, cattle are one of the very few commodity markets in which hedge funds have been overwhelmingly big longs. They have pushed and shoved, and pushed and shoved on this market for nearly two months now, even as the rest of the complex ( the GSCI) has been plummeting lower.

In my mind, it was thus just a matter of time before they gave up the ghost. While the longs have been reaping huge profits, the hapless bears have been handed their heads and then some. Margin clerks have been extremely busy phoning small specs on the short side of this market and telling them to either pony up some more cash or close out their badly losing positions.

Today, maybe, possibly, we have seen this complex top out. For me it comes back to the demand side of the equation. High priced beef in an economy that is not growing all that rapidly and in which wages are stagnant/flat will price itself out of the demand chain. While falling gasoline prices have freed up a bit more disposable income for consumers, it is hardly enough to justify the kinds of prices we have seen at the grocery counters.

I want to see how these things close out the week tomorrow but for now, it could be another commodity futures market is succumbing to the general downward price trend, albeit from extremely lofty levels.

One reason I am hesitant to get too bearish on these things is because of what they did back in early August. The beef got too expensive, it moved lower and down went the moo-moo's only to have uncovered strong demand at the wholesale level at those lower prices. That sent the cattle market right back up again, this time to make all-time record highs.

As far as a longer term top in this market, I would need to see this contract fall below the September low before being more confident that this is merely the beginning of a correction in an ongoing bull.

Incidentally, since this morning's early post, I am noting that the HUI has dropped even further as it is moving with the broader equity markets and essentially following the S&P 500. However, the latter is down 1.86% as I type these comments while the HUI is now down 4.8%.

The GDXJ is being savaged even worse as it is off nearly 6% today.

Switching briefly to the broader markets - here is the Russell 2000. Talk about something that looks potentially devastating. The close tomorrow to end the week will be extremely important from a TA standpoint. The index has fallen below the key support level noted, a level which I should add that has held the market on the downside for over a year now. Currently the index is off its peak nearly 12%. A correction is usually, for TA purposes, defined as a 10% fall off the top. Bear market territory begins, again for TA purposes, at 20% off the peak. Thus we are in the nether-realm ( Mortal Kombat fans) between the two.

King Dollar has not been Dethroned Just Yet

Trying to get a read on these markets during the times that the Fed is either announcing policy changes or releasing minutes can be incredibly difficult. The sheer ferocity of the moves in price can confound even the most astute and dedicated chart watchers.

It would appear at this point ( don't hold your breath however as who knows what will happen in the next hour much less the next day in these markets anymore) that the Dollar found eager buyers at the key breakout level near 85.00 on the USDX chart.

Note that the Dollar fell back to that former resistance level which is now serving as downside support and that support did hold. That it did so, in spite of the Fed's concerns over its strength, is rather telling. It shows that the fundamentals supporting the Dollar are just too strong right now, Fed protestations notwithstanding.

it all comes back down to interest rate differentials. Traders are of the view that economic data releases that are forthcoming are going to show continued improvement ( albeit gradual) and that compared to other major currency regions, that strength is noteworthy.

Look at the Euro for Pete's sake - it is down over 55 points as I type this with forex guys wasting no time in selling into its rally.


When it comes to gold - just like yesterday when we had to give respect to the big rally in the mining shares, so today we must give respect to the fact that the miners are sinking once more. The HUI is off over 4% with the junior-laden GDXJ getting pummeled once more as it is off more than 5.5% as I type up these comments.
Also, as one of our regular posters noted ( we are all watching that now) the big gold ETF, GLD, actually LOST gold yesterday - almost 5.5 tons to be precise. Apparently those in that vehicle used the big rally yesterday to get out. The ETF is now down 36.14 tons since the beginning of the year. For those who are bullish on gold, that is not an encouraging sign. One wants to see the reported holdings climbing on rallies, not shrinking.

I am noticing that silver is having trouble holding its gains above the key chart resistance level near $17.50. It managed to push past that level earlier in the session ( failing to make it as far as more formidable overhead resistance near $18.00) but has since fallen back. Copper is continuing to hold above $3.00 which is helping silver but with the Goldman Sachs Commodity Index continuing to swoon, one has to be skeptical about the extent of any upward moves in these metals continuing much further.

The bulls will have to prove their mettle ( a little play on words here).

Here is the most recent GSCI.

The index is one point above a 27 month low. If it drops more than a point, it will be at levels last seen FOUR YEARS ago!

Crude oil and the products continue to weaken - I noted that yesterday this sector failed to respond to the big sell off in the Dollar - that was a sign that the fundamentals are just too poor which makes me even more concerned about deflationary pressures. Crude has dropped $22.50 / barrel in 3 1/2 months time. That is why I keep telling those who are stuck on inflation that they need to check their ideology at the door and look at the chart. It is going down, not up.

Personally, as a consumer, I LOVE it.

Depending on the outcome of the USDA report tomorrow, we might just get a break of that 27 month low level. Heck, if crude keeps falling today it might do that today! (NOTE - Before I could finish typing this post the GSCI just fell BELOW that 27 month low - it hit a FRESH FOUR YEAR LOW TODAY).

Again, at the risk of beating a dead horse, this is the reason that I remain skeptical about any SUSTAINED moves higher in both gold and silver. What we witnessed on Monday of this week and yesterday were what happens when the Dollar weakens. My viewpoint is that the Dollar has been and will remain the key for many of our commodity markets.

The sheer magnitude of these leveraged carry trades overwhelms anything fundamentally driven for a time but if the general trend is one of lower commodity prices due to slowing global growth, it is hard to see how a few words from the Fed can significantly alter that trend WITHOUT some sort of action. Remember - Central Bankers are very good at moving their currencies by talking them down or talking them up, but IF the movement is AGAINST the primary trend, which is driven by fundamentals, the countertrend move will not have any staying power. It takes a shift in the fundamentals and that means a shift in policies.

I keep watching the cattle market in awe wondering at what point the fun and games for the bulls are going to come to an end. Funds have been big longs in this market and it is one of the very few that have been bucking the trend in the commodity sector in general so they are pushing it for all their worth. Funds LOVE DRIVING BULL MARKETS HIGHER. They always overdo things however. The trick for a trader is trying to read the market to figure out when they have done just that. As of now there is still no sign of a top in these markets ( both fats and feeders).

My own view is that cattle are living on borrowed time but I am not dumb enough to get in front of a fund-driven freight train at the moment.


Corn could be setting itself up for a big fall ahead of tomorrow's USDA report. Some players have been trying to squeeze out the shorts based on harvest delays but from what I can tell, private forecasting firms are all upping their yield estimates. It will take a rather bullish report from USDA tomorrow to keep prices at these elevated levels. If the USDA increases the number of unplanted acres but kicks up the yields, traders who have bid prices up ahead of the report might well be left high and dry. Many in the industry continue to marvel at the yields from some areas that have been harvested.

There has been some chatter that more acres will go to beans down in S. America in lieu of the very high bean prices in relation to corn and that is the reason being given for buying in the corn pit but that seems to be quite a bit of a stretch at this point given the massive crop that is coming our way. That will probably be the case, as well as here in the US for the next planting season - but we are talking about a huge carryover for this year.

Yes, harvest is being delayed in some areas due to the rains but one thing that many traders continue to underestimate is the speed at which US farmers can both run those planters and harvest their crops when they do get an open window. The days of 4-6 row tractors are over for the average farmer.

I love witnessing the wheat harvest up here my way as I am just awestruck by the size of those combines. They are IMMENSE and can really chew their way through a field quite rapidly.

Harvest delays are just that - "Delays" - that is one thing. Crop quality deterioration is altogether another thing. So far there are no reports that I am seeing of quality issues in regards to the rains and the crop.

Remember that big recent rally in wheat that some in the trade were attributing to wheat having fallen far enough in price to bring some increase in export buying. Today's export numbers sure as heck obliterated that argument. Down went wheat as apparently wheat above $5.00 is not conducive to exports so pushing it up even more doesn't make a helluva lot of sense if you are trying to garner some business. Looks like it is going to have to retreat once more to see if it really can move low enough to get competitive with the rest of the global supplies out there.