Commodities

Campaign against commodities speculators misses mark

10 Sep 2008

Some US lawmakers are taking aim at commodity prices by attempting to eliminate index speculation. Their case remains speculative at best. Investors sad experience of falling prices is already killing the bubble quite effectively.

$100 oil isn’t cheap

3 Sep 2008

Oil prices are sinking towards $100 a barrel. But robust global demand suggests the price may not decline much more. Even at $100, the black stuff is still 50% more expensive than in 2007 and still enriching oilproducing countries to the detriment of economic growth elsewhere.

ExxonMobil squeezes out a record profit

31 Jul 2008

It s hardly astounding with the oil price peaking above $140 a barrel in the second quarter. But if crude prices hold lower, the $11.7bn profit could be the oil giant s best results for some time and its falling production and rising costs could become a more obvious challenge.

US campaign against oil speculators needs refining

23 Jul 2008

Legislation that determines who can trade oil futures is gaining steam. But even the futures regulator says speculators aren t driving prices. Yes, the watchdog could use sharper teeth. But with oil well off its recent highs, the new law could do more harm than good.

US energy plans should embrace consumption cuts

15 Jul 2008

President Bush and oilman T. Boone Pickens want to tackle America's reliance on imported oil by trying to increase domestic supplies or substitute other energy sources. It may be politically tough, but they shouldn't forget the demand side of the equation.

Cnooc pays up for strategic growth

7 Jul 2008

The Chinese oil group s purchase of Norwegian oil services outfit Awilco Offshore looks pricey. But it fits with China s strategy of expanding its presence across the global oil market to lock up supplies. It also suggests Cnooc expects the oil market to remain tight.

Oil and commodity spikes are danger to US economy

3 Jul 2008

Their apparent costs may seem recoverable through loose monetary policy. But they make planning impossible, heightening the threat to companies like GM. Even ignoring the inflationary impact, commodity price spikes make Bernanke's low US interest rates counterproductive.

Brazil oil-bubble darling faces challenges ahead

2 Jul 2008

Billionaire Eike Batista's oil driller OGX scooped up offshore exploration rights and a $22bn valuation in under a year. But its true test will come once new tax laws are set and prized parcel permits come to market, attracting the oil majors who held off in the last round.

Ore wars signal protectionist stand-off

24 Jun 2008

China s steel industry has effectively agreed to pay twice last year s price for its iron ore. It can afford to. But China will emerge more determined to hit the acquisition trail in an attempt to secure supply. Ugly protectionism is the likely result.

All-stock deals make unwelcome return

23 Jun 2008

Companies with overpriced stocks are often tempted to use it to buy cheaper competitors. Take Bunge s $4.4bn purchase of US agriculture group Corn Products. The deal looks slightly value destructive. So why do it? Well, Bunge s stock is up 50% over the past year.

Indonesia’s OPEC exit reflects market choices

28 May 2008

The country s departure from the oil cartel makes sense it s a big net loser from higher oil prices and the government is cutting consumer petrol subsidies. This reflects Indonesia s increased market orientation and integration with the global private sector.

Personal view: Shock therapy needed to quell commodity prices

21 May 2008

Oil prices are up 59% since September. That is unjustified by the fundamentals and damaging to global growth. The Fed should raise rates sharply, indicating its determination to bring prices down and squeeze speculators funding costs, says Martin Hutchinson.

Paraguay’s free energy offer is neat marketing

24 Apr 2008

The country's presidentelect, Fernando Lugo, is offering free electricity to foreign investors. That makes sense economically and suggests he welcomes the outside world. With energy prices high, it's also a clever marketing pitch to take to potential investors.

Growing autarky threatens future oil supplies

15 Apr 2008

Russian oil production has declined after several years of rapid growth. That s not surprising; an oil industry involving capitalism, foreign partners and technology has given way to autarky and state control. This is the principal threat to world oil supplies globally.

Stark monetary choice between food and housing

14 Apr 2008

Further monetary expansion might help the US housing market. Yet it would force up commodity and energy prices, particularly hurting food supplies to poor countries. US homeowners may have to suffer to quell global inflation, feed the poor and restabilise the world economy.

IMF staffers are becoming trust fund kids

9 Apr 2008

The multilateral lender is selling $11bn of gold and investing the proceeds in a trust fund, the income from which will pay staff, since its revenues from lending have dried up. It would be better if the IMF set a definite date by which it must either become useful or close.

False dawn

2 Apr 2008

Is the worst over? For the subprime crisis, the answer is probably yes. For the real economy, the troubles have barely begun. Banks may be over the hump, but it would be foolish to count on it, argue Hugo Dixon and Edward Hadas.

Ospraie gets physical with ConAgra unit

27 Mar 2008

One of the $9bn fund group s funds is buying the food company s trading operations. The investment aside, the unit s physical commodities activities should inform Ospraie s trading. If that adds a lot of value, it ll be interesting when it s time to exit the investment.

Commodity bubble could be next to burst

18 Mar 2008

Until now, most commodity prices have defied or even benefited from the liquidity squeeze. That could now be changing.

Market’s CME/Nymex doubts may be overblown

17 Mar 2008

The stocks of both exchanges weakened after the deal terms were agreed, as shareholders fled all financial sector shares. But the Nymex fell more than the CME, showing the market s doubts about their merger. The hurdles are significant. But Nymex shareholders look too worried.