Breaking for New Lows!

The US Dollar fell again today and (as predicted earlier this month) have tested the 1.50 level... Yesterday at 1.50 , that is, and today at 1.51!

Let's see where that new low point will be... The Fed is still worried about Liquidity and the Recession... But Inflation is rearing its head now (as all of us knew it would) and the Fed appears content to ignore that detail for now.

Back to the Future? We'll see!

When Costs Rise, Watch Quality Fall

Subtitle: When a price savings is not a savings at all!

It is reported in Supermarket News
that when prices get higher, some purchasing people are ready to sacrifice quality for a few pennies.

There are several problems that this creates. The biggest one is that even the purchasing agents rarely know the specifications involved to alter quality. Let's use Queen Olives as an example:

The buyer may ask for savings by lower drained weights. He goes from 84 oz dr wt gallons to 80 oz. He saves about 1/2 % off the cost.

But what he may not know is that the Raw Material also was changed. From true Queens to another variety.

Does this matter?

You bet. Because the savings to the producer if that change takes place is 5 to 10% or more depending on quality and if the Buyer is not aware, he has had his pocket picked rather effectively.

Buyers generally do not have the time to know the full specifications of what they buy. And while they may have a "Spec Sheet" they have nobody to show them the difference or to advise them when something is Off Spec.

Then there is the Buyer who may want to be fooled.

There is a company to whom we showed that they were buying aduterated Saffron (the box was full of colored straw. We were a solid 15 % of the price in our offer of Standard Saffron. We took their product for analysis. We discovered this which really meant that they were OVERPAYING bigtime at only a 15% savings over the real thing.

Their buyers stopped taking our calls once we advised them of all this.

We leave it to your estimation & level of cynicism to understand the reasoning of this large chain of store's buying staff.

SOS Cuetara Reports

Reading between the lines it seems that Demand is not growing as fast as Supply according to the Chairman of this large player in the Olive Oil Business.

And if I remember classes well, that is the scenario for soft prices.

Currency Update

Today we see below 1.45...We all hate dramatic changes... I stand by the earlier ranges... but we shall see in time...

Olives and the Economic Gloom

Sorry for the long delay in new posts. But with so many things happening to split my attention, I was kept from putting anything coherent up. No guarantees on what follows, either.

We do have it confirmed, with accepted deals flying, Queen Olive prices are really high and supplies are very short as predicted. It remains to be seen if there is or will be a corresponding fall of demand that may result in supplies showing up later this year. Blue Planet Foods has sold off most of the options we had remaining.

My bet is come summer, there will be no Queens left to acquire except at horrific qualities.

Meanwhile, on the economic front…
It is pretty clear that things are not going well in the near term. Most everyone I talk to is telling me that their business in January vs. last January is way off.

How’s your business?

The economy is shuddering under the speed of changes in recent weeks. While markets (and people in general) like smooth clear directions and logical transitions, all we have these days is an uncertain political landscape with polarized electorates, a $10 Billion-a-month Iraq War bills (not to add in the moral costs), topped off with news like the fiasco at Société Générale in Paris to the news yesterday of the Service Sector index dropping to levels only seen after 9/11.

Money rates have seen a ¾ % cut January 22nd in the Federal Reserve’s Interest Rate target followed by another ½ % cut on the 31st! Shades of Japan and negative growth for 10 years? Or, on the other side of the pessimist’s crystal ball, inflation is coming!

You can see that it is easy to get carried away.

Recession? To be announced, as always, in the rearview mirror.

The view looking through the front window? The Dollar will hover at current ranges (1.46 to 1.48) and test 1.50 over the next weeks. Barring any calamities, I think we are in the trough now through next quarter. In Summer, it will have bottomed (peaked if contrarian!). The economic markets will not reflect quickly but the dollar may.

I of course am only making an educated guess. With the Queen Olives… that one is pretty clear!