Archive for the ‘Comodities’ Category
By Chanyaporn Chanjaroen
Commodity prices are set to surge, driven by a weaker dollar and increased demand, according to Standard Chartered Plc, which plans to boost hiring in metals, agriculture and coal by 10 percent next year as revenue climbs.
“We’re still in a leg up,” Arun Murthy, global head of commodities, said in an interview. “You may have 10 percent, 15 percent retracement in prices, but that would offer a buying opportunity,” said Murthy, who spent 11 years at Goldman Sachs Group Inc.’s commodities team in Singapore and worked at Lehman Brothers Holdings Inc. before joining Standard Chartered.
Commodities as measured by the Thomson Reuters/Jefferies CRB Index have increased 18 percent in the second half as a China-led recovery boosted demand for raw materials. Over the next five years, Asian exchanges will start to set, not follow, commodity prices, Murthy said.
“The level of activity in Asia, Africa and the Middle East is increasing,” said Murthy, who joined the bank in October 2008 as global head of energy trading and later took on his current role. “The trend is set to continue, especially as economic power shifts from West to East.”
London-based Standard Chartered, which generates more than 90 percent of profit from Asia, Africa and the Middle East, reported record first-half net income of $2.15 billion. Revenue from energy, metals and agriculture, up 15 percent in the first 10 months, may gain 20 percent on year by the end of 2010, said Murthy, declining to say how much the commodities unit made.
“We see opportunities in coal, palm oil, the platinum- group metals and rubber, and iron ore,” primarily in derivatives, Murthy said yesterday. The unit may increase headcount by about 10 percent next year from the current 80, he said. The team numbered 35 when Murthy started at the bank.
Packagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies
An inflationary tide is beginning to ripple through America’s supermarkets and restaurants, threatening to end the tamest year of food pricing in nearly two decades.
Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months. And food makers and retailers including McDonald’s Corp., Kellogg Co. and Kroger Co. have begun to signal that they’ll try to make consumers shoulder more of the higher costs for ingredients.
For food executives, how quickly to pass along higher costs presents difficult choices. Missteps could be costly when the economy remains weak. Many Americans, nervous about high unemployment, have pledged allegiance to their pennies and are willing to trade down on brands, switch supermarkets, opt for Burger King over Applebee’s, or stop dining out altogether to save money.
“The big challenge will be, how much can we swallow and how much can we pass along?” said Jack Brown, chief executive of Stater Bros. Markets, a 167-store grocery chain in southern California.
Stater Bros. has seen the prices it pays for cereal rise 5% in recent months. The chain has passed about half the increase on to consumers while making up for the rest by trimming other expenses, such as what it spends on cell phones and delivery truck tires.
Kraft Foods Inc., Sara Lee Corp. and General Mills Inc. already have said they’ll raise prices on certain items. Starbucks Corp. backtracked on an August announcement that it would hold coffee prices steady, saying in September it would boost prices of larger and hard-to-make drinks. This week, cereal maker Kellogg hinted that it will be raising prices, without disclosing specifics.
Grocery chains Safeway Inc. and Kroger have said they’ll pass supplier increases along to consumers.
Domino’s Pizza Inc. is letting consumers decide whether they’re willing to pay more. The company is offering two medium, two-topping pizzas for $5.99 each but has recently offered the option of converting one of them to a premium pizza, with more toppings, for an extra $2—a price increase, in effect.
At BJ’s Restaurants, a casual-dining chain, prices early next year will be 2.5% higher—but only after upgrading its table settings and decor. “In this business, you can’t just raise prices without improving the overall dining experience,” BJ’s Chief Financial Officer Greg Levin said in October.
Costs are being driven by growing demand for meat in China, India and other emerging markets. That’s driven up grain prices, which in turn boost the cost of chicken, steak, bread and pasta. Grain prices also have been nudged higher by drought in Russia, planting problems around the world and speculative trading.
Food prices are rising faster than overall inflation. The consumer price index for all items minus food and energy rose 0.8% over the year to September, the lowest 12-month increase since March 1961, the Bureau of Labor Statistics said. The food index rose 1.4%, however. The U.S. Agricultural Department is predicting overall food inflation of about 2% to 3% next year.
The current pressure is nothing like it was in October 2008, when food prices were rising at an annual rate of 6.3% and some hard lessons were learned when producers passed along those costs: Shoppers switched to private-label products.
Again TCE is holding the old axiom to be true – “Something is worth as much as someone else is willing to pay for it”
How much value are you willing to substitute for a ounce of gold?
A dollar or a thousand dollars – may be $10 000?
A clunker or a Honda – may be a Lamborghini?
A pint of water or 30 gallons – may be a lake?
A handful of earth or a garden – may be a farm?….
As long as there is a demand and a limited supply of something, that is perceived as a worthy “thing”, its price will rise.
It doesn’t matter if it is gold or oil or wheat or pork bellies or Apple’s iphones or PS3 years ago or whatever…
As long as there is a demand there will be a supply…(until government get in the game and screw things up)
Brett Arends on Gold’s Biggest Myths
On the edge with Jim Willie – Billionaires demand physical gold for a delivery at the same time and the gold “paper funds” cannot deliver it, cause they are over leveraged; Bank of America fails over the weekend and is been rescued by the FED quietly…
By: Lorimer Wilson;
This little band of gold enthusiatists started out few in numbers a few years back but has made a parabolic move over the past year or so much like their projections for the future price of gold. They now number an unbelieveable 95 who have stated, with sound reasons in their opinions, why gold could quite possibly go to a parabolic top of at least $2,500 an ounce – to even as much as an unimaginable $15,000 – before the bubble finally pops! In fact, the majority (55) maintain that $5,000 or more for gold is likely. In this article I identify those economists, analysts and financial writers and provide the URLs of their articles so you can ascertain for yourself their logic for such parabolic moves in the years to come.
(Please note: This is a one-of-a-kind article which no doubt will get a great deal of attention and be posted on a large number of other financial sites and blogs. This is encouraged but to avoid copyright infringement the author’s name must be included with a hyperlink to the original article.)
Higher than $10,000
1. Mike Maloney: $15,000;
2. Ben Davies: $10,000 – $15,000;
3. Howard Katz: $14,000;
4. Dr. Jeffrey Lewis: $7,000-$14,000;
5. Jim Rickards: $4,000 – $11,000;
6. Roland Watson: $10,800 (in our lifetime);
$5,000 – $10,000
1. Bob Kirtley: $10,000 (by 2011);
2. Arnold Bock: $10,000 (by 2012);
3. Porter Stansberry: $10,000 (by 2012);
4. Tom Fischer: $10,000;
Read the rest of this entry »
By RICH BLAKE
Those already outraged by the president’s health care legislation now have a new bone of contention — a scarcely noticed tack-on provision to the law that puts gold coin buyers and sellers under closer government scrutiny.
The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics.
Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.
Coin Dealers Flipping
Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.
This provision, intended to mine what the IRS deems a vast reservoir of uncollected income tax, was included in the health care legislation ostensibly as a way to pay for it. The tax code tweak is expected to raise $17 billion over the next 10 years, according to the Joint Committee on Taxation.
Taking an early and vociferous role in opposing the measure is the precious metal and coin industry, according to Diane Piret, industry affairs director for the Industry Council for Tangible Assets. The ICTA, based in Severna Park, Md., is a trade association representing an estimated 5,000 coin and bullion dealers in the United States.
“Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public,” Piret said. “Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale.”
So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.
It is going to be interesting to watch how is that bet going to be played.
Are the governments around the world going to get involved?
Not that the hedge fund had done something illegal…
By Jack Farchy in London
A London hedge fund has swept up a large chunk of the world’s stocks of cocoa beans, helping to drive prices of the basic ingredient of chocolate to their highest level in 33 years.
Traders said that Armajaro, which runs several commodities funds, took delivery on Friday of 240,100 tonnes of cocoa, the biggest delivery from London’s Liffe exchange since 1996 and equal to about 7 per cent of annual global production.
Armajaro’s bold bet on higher prices comes as cocoa prices have risen 150 per cent over the past two-and-a-half years, prompting recession-hit chocolate makers to reduce the size of their bars and increase prices.
Armajaro appears to believe that the market is going to spike significantly higher by September, traditionally the tightest period of the year as chocolatiers ramp up production ahead of Christmas and the main West African crop has not yet come to market.
Although stocks of cocoa exist in warehouses not registered on any exchange, the delivery to Armajaro represents almost all the 270,000 tonnes of available stocks at Liffe-registered warehouses.