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February 6th, 2012
Commodity Investing – Speculators raised bullish bets on commodities to a 12-week high on signs that global growth will boost demand at a time when shortages are forecast for everything from copper to palladium to cocoa.
Money managers expanded their combined net-long position across 18 U.S. futures and options by 11 percent to 823,917 contracts in the week ended Jan. 31, Commodity Futures Trading Commission data show. That’s the highest since Nov. 8. Gold wagers surged the most since September 2009, silver holdings rose for a fifth week and cattle bets climbed to a 10-week high.
The U.S. jobless rate fell to the lowest in three years in January as payrolls rose more than forecast, the government said Feb. 3. Reports last week showed that manufacturing is expanding in India, the U.S. and China, the world’s biggest energy and metals consumer. Investments (.CMDOI) in commodities are expanding at the quickest pace in six years after prices rebounded 16 percent from a 10-month low in October.
“Growth is back in vogue,” said John Stephenson, who helps manage $2.7 billion of assets at First Asset Investment Management Inc. in Toronto. “It definitely helps commodities that we’re seeing strong economic numbers, especially the payrolls in the U.S. That’s a very welcome sign.”
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January 31st, 2012
Orange Juice Futures: With almost an entire month in the books, 2012 is shaping up to be a strong year for commodities, as a number of these investments have produced handsome gains. Futures for gold, cocoa, and silver have garnered a fair amount of attention, delivering eye popping gains in a relatively short period of time. But for those looking for a truly hot commodity, no product has been able to outdo orange juice. While these futures are certainly more obscure than something like gold or oil, their gains for the year are impossible to ignore [see also 50 Ways To Invest In Agriculture].
The Juicy Details
Thus far, orange juice futures have jumped by nearly 26% for the year. These gains have gone largely unnoticed due to the relatively low popularity as well as limited access that this commodity offers to investors. Still, the impressive rally is not without its reason, as there is a lot going on behind the scenes of this favorite fruit. The Food and Drug Administration has very strict policies on imports, and orange juice is no exception. Each import of orange juice needs to be tested for certain chemicals, and a recent shipment from Brazil tested positive for fungicide. Fungicide are chemical compounds used to kill fungi, but they are toxic to humans when consumed in certain quantities. The FDA “said 11 of 80 shipments sampled from Brazil and Canada contained carbendazim [a common fungicide] at concentrations of 10 parts per billion or higher” writes Marving G. Perez.
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January 27th, 2012
Commodity Investing – The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 0.3 percent to close at 666.64 at 5 p.m. in New York as gasoline and natural gas climbed.
The UBS Bloomberg CMCI index of 26 prices was little changed at 1,606.01.
OIL PRODUCTS
Gasoline surged to the highest level since August as refinery outages, scheduled maintenance and plant closures in North America and Europe tighten supplies of the motor fuel.
Futures rose 2.8 percent as ConocoPhillips planned to shut the fluid catalytic cracker at its Bayway refinery in New Jersey. Two unprofitable refineries in Pennsylvania have shut down, one owned by Sunoco Inc. and one owned by ConocoPhillips. Hovensa LLC plans to shut its 350,000-barrel-a-day St. Croix plant in the U.S. Virgin Islands next month.
On the New York Mercantile Exchange, gasoline for February delivery rose 8.02 cents to $2.9268 a gallon, the highest settlement since Aug. 31. It gained 5.1 percent for the week. The crack spread, or the premium of gasoline over crude oil, widened $3.19, or 16 percent, to $23.22 a barrel, the highest level since October.
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January 26th, 2012
Commodity Brokers – MF Global (MFGLQ) Holding Ltd.’s clients may be the losers no matter who wins a $700 million dispute between bankruptcy administrators in London and New York that threatens the return of money locked in customer accounts.
The trustee of MF Global Inc., the New York brokerage unit, is seeking the return of money used as margin for American customers trading in Europe. It wants U.K. administrators KPMG LLP to tap into $1.2 billion it had set aside for customers with segregated accounts, which are supposed to be protected.
MF Global Inc. trustee James Giddens “is prepared to use all legal avenues available to him in recovering the customer funds, including litigation,” Kent Jarrell, a spokesman for Giddens, said in an e-mailed statement.
If successful, the trustee’s claim would significantly reduce KPMG’s client money pool and lower returns for U.K. customers, said two people with knowledge of the discussions who declined to be identified because they are confidential. Should KPMG win, U.S. customers will be treated as unsecured creditors and face a lengthy wait for any payout.
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January 12th, 2012
Commodity Brokers – One of the hottest debates raging from Wall Street to the farm belt is destined to stretch into next month, as the trustee overseeing the bankruptcy of broker MF Global Inc collects the final claims by customers who are missing some $1.2 billion – or, maybe, only half as much.
Once a Jan 31 deadline for customer claims comes and goes, trustee James Giddens plans to “sharpen” his longstanding estimate of a $1.2 billion “hole” in customer money. It’s an estimate that has been challenged, publicly or privately, by other agencies involved in the investigation who say the gap may be only half as large.
Some say the discrepancy is technical: Giddens’ estimate includes foreign funds, while others only include U.S. collateral, for instance. Other bankruptcy lawyers and advisors say it may be a case of Giddens, who is responsible for liquidating the brokerage and returning money to customers, managing expectations, hoping to keep anxious traders at bay until he can recover more funds.
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December 24th, 2011
President Barack Obama’s re-election campaign returned campaign contributions from Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., according to a Democratic official.
Obama for America and the Democratic National Committee refunded the money from the former New Jersey governor out of an abundance of caution, said the official, who requested anonymity. Republicans have criticized the president for keeping contributions from the head of a firm that collapsed and filed for bankruptcy.
Corzine, 64, and his wife, Sharon Elghanayan, each contributed $30,800 to the Democratic National Committee and $5,000 to Obama’s campaign, the maximum amounts that individuals are allowed to give, said the official. Corzine, who testified before a congressional panel about MF Global’s bankruptcy and $1.2 billion in missing customer funds, has been one of Obama’s top fundraisers this election cycle. In April, Corzine hosted a fundraiser for Obama at his Manhattan home.
Corzine was one of 41 donors who bundled more than $500,000 this year for Obama’s re-election effort, according to documents released by the campaign Oct. 14. So-called bundlers arrange for contributions from other people and funnel the money to campaigns.
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December 27th, 2011
Hedge funds reduced bets on higher commodity prices to the lowest level since 2009 just as raw materials headed for their biggest weekly rally in two months.
Money managers cut their combined net-long position across 18 U.S. futures and options by 15 percent to 454,512 contracts in the week ended Dec. 20, the lowest since March 2009, data from the Commodity Futures Trading Commission show. The Standard & Poor’s GSCI gauge of 24 commodities climbed 4.5 percent last week, erasing this year’s declines and pushing the index toward its third consecutive annual advance.
While the S&P GSCI is 15 percent below the 32-month high reached in April, prices gained last week on signs the U.S. economy is proving resilient. Durable-goods orders rose in November by the most in four months, and jobless claims unexpectedly fell to the lowest in more than three years. Concern that shortages will emerge in commodities from copper to crude oil spurred Goldman Sachs Group Inc. to stick with a bullish outlook this month even as funds cut their holdings.
“Commodities are in the process of bottoming,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $340 billion of assets. “You’re going to find out that the U.S. economy is going to continue to grow much faster than people thought. You’re going to see people coming back to commodities.”
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December 9th, 2011
An HSBC Holdings Plc (HSBA) unit sued the MF Global Inc. brokerage trustee to establish whether he or another person is the rightful owner of gold bars worth about $850,000 and silver bars underlying contracts between the brokerage and a client.
Five gold bars and 15 silver bars underlie eight Comex contracts between the brokerage and its client Jason Fane of Ithaca, New York, the unit of London-based HSBC said in a court filing yesterday. Both parties have asserted claims to the bars, creating difficulties for HSBC, which is storing them, the bank said. HSBC asked a judge to decide who the rightful owner is.
“HSBC has received conflicting instructions regarding ownership and disposition of the property,” it said. “Accordingly, HSBC is exposed to multiple liabilities with respect to the disposition of the properties.” The unit is HSBC Bank USA National Association.
Bullion is selling for about $1,717 an ounce on the Comex in New York, up about 21 percent this year, as investors bought the metal to protect their wealth from Europe’s escalating debt crisis, and reached a record $1,923.70 in September. Treasuries returned 9.3 percent, a Bank of America Corp. index shows.
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December 8th, 2011
James Giddens, the trustee overseeing the MF Global Inc. brokerage liquidation, defended a planned transfer of $2.1 billion to U.S. commodity customers after receiving 18 formal objections and 43 letters querying the move.
In the transfer, Giddens would pay out from 80 percent to 85 percent of all assets remaining in his control, keeping $800 million in reserve, according to his court filing yesterday. Two previous payouts to commodity customers totaled about $2 billion.
To deal with many of the objections, which “raise common concerns,” Giddens said he “made some language changes” in a proposed order he will ask the judge to sign approving the transfer. To satisfy administrators of MF Global’s U.K. and other foreign affiliates who objected that the transfer might deplete funds available to pay them, he would make future transfers based on available assets and not ask the judge to let him simply use his own discretion, he said in the filing.
“The trustee believes it would be more prudent, relieve uncertainty, and better inform the expectations of customers to make further bulk transfers, if any, only upon further motion and order of the court based on facts and circumstances and availability of property,” he said.
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