RSS feedcommodities
’Chinese New Year and the BDI
Should you be worried about the Baltic Dry Index’s recent sharp selloff? Or should you be more worried about developments in China?
We bring this up because there is apparently somewhat of an après-Chinese New Year effect when it comes to the Baltic Dry Index.
A picture tells a thousand words, Chinese steel edition
Presenting, just another Wednesday working afternoon at a Chinese 5,800 cubic metre blast furnace factory:
Note the empty car park.
That picture comes to us courtesy of Nicholas Zhu of ANZ Bank via Simon Hunt,
A heretical glimpse into the ghost of copper future
Simon Hunt Strategic Services — the eponymous market analysis vehicle of copper market veteran Simon Hunt – has just published its 2012 outlook.
Be warned, though, it carries the following disclaimer:
The Saudi production puzzle
Last week it transpired that Saudi Arabian oil production had hit its highest level in three years.
As Bloomberg reported at the time:
Saudi Arabia, the world’s biggest crude exporter, boosted output last month to the most in more than three decades to meet customer demand.
Citi’s high carbs diet
It seems like more or less anything can be deemed an asset class these days.
Here’s the latest one from Citigroup analysts: ‘Carbs’. No that’s not McDonalds and Coca Cola, but Canada, Australia,
Money managers and commodities, the case against
Here’s an interesting chart from the EDHEC-Risk Institute’s latest report on long-short commodity investing:
For those who believe that a build-up in long positions by money managers was responsible for fuelling the 2008 record rally in commodities,
The power of the dark inventory
FT Alphaville is reading Robert Harris’ The Fear Index at the moment, and would like to take this opportunity to recommend it as required reading for anyone who enjoys a good Jason Bourne style adventure,
Commodities become more… benign
As these graphs illustrate, although it’s 2008 all over again in equities, history is not repeating itself in the commodities markets:
The charts are from a note by BarCap looking at why commodities are no longer a safe haven in these volatile times.
Commodities and currencies won’t save you(r earnings)
It requires a bit of head-tilting, but this chart from UBS is worth a look given the advent of third quarter earnings season in the US:
According to the estimates UBS has pieced together, roughly two-thirds of revenue growth for companies in the S&P 500 in the second quarter was down to commodities price swings and a combination of the weaker dollar and non-US sales growth.
A name and shame policy from the CFTC? [Updated]
(* Please see comment at end of post.)
The Wall Street Journal is out with a very interesting commodities story on Thursday.
And it’s interesting on two fronts.
First, due to the information it carries and second,
Canaries and mines
Nothing has been harder hit in the current market swoon (in London at least) than the mining sector.
Which begs the question of what’s now being priced in?
As luck would have it, Citigroup has run some numbers and concludes:
[Paul Donovan] The 21st century is when everything changes
With government finances still dealing with the aftershocks that are rippling out of the epicentre of the financial credit crunch, the world economy could do with a period of calm in which to heal.
Unfortunately,
Willem Buiter thinks water will be bigger than oil
The folks at Citigroup are a thirsty bunch.
In a 37-page note on Thursday, the bank’s global strategists recommend investors play the urbanisation trend by buying into water companies (these ones to be specific),
Goldman Sachs is hot for soybeans
The latest ‘Commodity Watch’ note from Goldman Sachs continues to paint a bullish picture for most of the commodities complex in 2011 and 2012.
The usual Goldman arguments about how global growth, fueled by Asia,
Goldman’s history lesson on oil releases
Exchange or sale?
That’s the question the Goldman Sachs commodities research group is waiting for the US to answer before making a call on how today’s IEA announcement will ultimately affect oil prices through next year.
Copper’s inventory inconsistency, charted
There’s a bitter divide amongst the copper market commentariat at the moment.
In one camp are the “inventory realists”, mostly independent analysts, who claim prices are too high based on where global inventories stand.
Glencore, an overvalued Japanese throughput manager
“World’s biggest IPO”. “Unquantifably unique”. “No natural like-for-like”. “A trading house like no other”.
Whatever.
Analysts at MF Global are not buying the PR spin.
Glencore might be the emperor of the commodity world,
A tale of two UK inflations
Here’s something to throw the Bank of England’s will to withstand high UK inflation (and low interest rates) in surprising, sharp relief.
It’s a new finding by the Institute for Fiscal Studies, connected to a study of inflationary effects on low-income households over the long term:
Dynamic indexing — a contradiction in terms?
Clive Capital is jumping on board the dynamic commodity indexing bus alongside Goldman Sachs.
As the FT reported on Monday:
Goldman Sachs, the bank that popularised commodities investing among pension funds and other conservative money managers,
Who’s been trading natgas futures on the curve?
The natgas mystery continues!
Let’s start first with the following flashes from the CME via Reuters on Friday:
NYMEX PRELIMINARY DATA SHOWS NATGAS FUTURES OPEN INTEREST HIT RECORD HIGH ON JUNE 9–CME WEBSITE
PRELIMINARY DATA ALSO SHOWS NYMEX NATGAS FUTURES VOLUME SET NEW RECORD HIGH THURSDAY–CME WEBSITE
Which means the day after the mysterious mini-flash someone or some people,
Coal, real interest rates and FX
The commodities rout confused a lot of people because it didn’t seem to have an obvious cause.
Analysts at Bank of America Merrill Lynch, however, are getting mystified about another element related to the slide.
The euro is tracking commodities
Kathleen Brooks, FX research director at Forex.com, has spotted something of curiosity regarding the euro.
It seems to have detached itself from interest rates and its own fundamentals.
Instead, it is now tracking commodities.
And now Goldman says the commodities correction is over [updated]
Having been proven right about their prediction of a rather substantial correction in commodities earlier this month, Goldman Sachs is now out with a new view.
A bullish view.
As Jeffrey Currie and team wrote on Tuesday:
Beware the ‘Splash Crash’
Introducing ‘the splash crash’.
Like the flash crash but worse because it involves the “flash” spreading cross-asset class to everything from forex to commodities.
The idea springs from John Bates,
Silver and short covering – a theory
John Kemp at Reuters has already written about how it wasn’t necessarily the froth in the market that caused the parabolic rise in silver over April:
Now, on Friday, Pragmatic Capitalism has a post explaining why the CFTC’s committment of traders report possibly proves it was indeed short covering which was responsible for the rise,
The ‘Asia connection’ to the commodity rout
Our colleagues on the paper-side drew attention last week to the fact that silver trading in Asian hours experienced a clear pickup into the lead up to the commodity rout.
Jack Farchy wrote, citing Edel Tully,
It wasn’t the ‘froth’ that caused the commodities rout
Contrary to popular belief, analysis of the latest CFTC position data is beginning to show that it wasn’t so much the ‘froth’ in the market that was responsible for this month’s run-up and subsequent commodity price collapse,
The 2001 shift
Kevin Gaynor at Nomura — long-standing side-kick to Bob ‘The Bear’ Janjuah — has had an epiphany.
The crisis didn’t begin in the subprime fuelled mid-naughties.
It began in 2001, when the world experienced a structural shift like none other.
ETF investors mistimed the commodity correction (again)
Here’s an interesting observation regarding this month’s commodity sell-off.
It comes from short-selling data firm, Data Explorers, and it concerns commodities ETFs:
The other theme running through this week has been further drama in some of the commodity markets,