All indications are we will continue to see higher food commodities prices in 2011.
The consensus from Global Commodities Forum 2011 in Geneva (a meeting of commodity traders and senior officials) is prices point north.
Five factors driving food commodities prices in 2011
Poor weather - Poor weather in form of la nina and el nino continue to affect parts of Latin America, Africa and Australia. This is constraining supply.
Speculation - This time it is not just traders who are speculating, countries and buying and hoarding.
Geopolitical risks - Political crisis in places such as Ivory Coast will continue to impact on supply.
Rise of China & Other emerging Markets – As this countries economies expand, they have become major buyers pushing demand high.
2011 Global Economic Growth - Growth is good but it is a double edged sword. As global economic growth accelerates in 2011, demand for commodities will push prices higher still.
All indications are we will see new highs in Cocoa, Coffee, tea, wheat, soyabeans, rice & corn
written by Constantine Njeru
\\ tags: Cocoa Coffee, Coffee Tea, Commodities Prices, Commodity Traders, Consensus, Double Edged Sword, Emerging Markets, Food Commodities, Geneva, Global Commodities, Global Economic Growth, Ivory Coast, La Nina, Latin America, New Highs, Political Crisis, Rise Of China, Senior Officials, Speculation, Wheat
With the post election crisis in Ivory Coast, it was only a matter of time before the crisis spilled over into the Cocoa business. On monday, the internationally recognized winner of Ivory Coast’s presidential election, Alassane Ouattara, ordered a halt to cocoa and coffee exports in a bid to choke off funding for his rival Laurent Gbagbo.
Cocoa Jumps After Ivory Coast Bans Cocoa Export
And on Monday, in London trading, the prices of Cocoa jumped 6%.
The uncertainty will likely push prices in the short term. In the long run once the the situation in Ivory Coast normalizes the prices will most likely return back to pre-crisis level.
The way to play Cocoa now is to choose between chasing short term gains by going long or going short in anticipation of eventual stabilisation.
written by Constantine Njeru
\\ tags: Anticipation, Cocoa Price, Coffee Exports, Crisis Level, Election Crisis, Ivory Coast, Laurent Gbagbo, London, Matter Of Time, Presidential Election, Rival, Uncertainity, Uncertainty
If you are thinking of investing in oil in 2011, there are three ways of investing in oil, as a physical commodity, oil ETF or in oil stocks.
Oil Stocks 2011
Buying traditional oil stocks is the easiest method to investing in oil. You can buy stocks of oil giants such as Exxonmobil, Chevron, Shell and BP. One interesting oil stock is BP. The company stock was battered in 2010 due to bad news from the Gulf of Mexico accident. But the cost of the cleanup may be less than feared and the share price has recovered some of the lost ground.
Another good thing about Oil stocks is they are known for paying generous dividend.
Don’t limit yourself to the oil giants. There are many small oil companies operating around the world. If you look far and wide you may find undiscovered gems.
Oil Futures 2011
Oil futures market as been around, for a long time it has been the only way to invest directly in oil. Investing in oil futures is done via commodities market. In places such as London, New York and Chicago. This means you must use a commodities broker to invest in them. You can find commodities brokers online at several websites.
Oil ETF 2011
Now there are ETF, exchange-traded fund. Oil ETFs are traded just like shares but reflect the price of Crude oil price.
Oil ETF investments may not be as simple as they seem. Do consult a stockbroker if you are keen on investing in Oil ETFs.
written by Constantine Njeru
\\ tags: Commodities Brokers, Commodities Market, Commodity Oil, Company Stock, Crude Oil Price, Etf Investments, Exchange Traded Fund, Futures Market, How To Invest In Oil, Investing In Oil, Oil Etf, Oil Futures, Oil Giants, Oil Stock, Oil Stocks, Physical Commodity, Price Of Crude Oil, Price Oil, Traditional Oil, Undiscovered Gems
Copper has soared to a record of $4.2705 per pound on Tuesday December 2010 in New York. Copper was up 28.3% in 2010.
The common knowledge is Copper prices and prices of all other metals have been driven up by the rising demand in China and India. But the truth is another hidden hand is at play here : Some commodity traders have successfully cornered the markets.
Fundamentals for Higher Copper Prices
The wallstreet journal is reporting a single trader has reported it owns 80%-90% of the copper sitting in London Metal Exchange warehouses, equal to about half of the world’s exchange-registered copper stockpile and worth about $3 billion.
If a single player has such a large control of the commodity you can only conclude this has created an artificial shortage.
Copper ETFs
Another hand is the power of ETF. This funds have increased the amount of money flowing into metal prices. They are buying up the metal pushing the prices higher and higher.
When you combine, the rising demand for the commodity in China, the dominant control by one player plus the power of the ETFs you can predict or forecast Copper prices will continue to remain high, atleast for now.
written by Constantine Njeru
\\ tags: Amount Of Money, Atleast, China, Commodity Traders, Common Knowledge, Copper Prices, Dominant Control, Half Of The World, India, London Metal Exchange, Metals, Pound On, Single Player, Stockpile, Truth, Wallstreet Journal, Warehouses
Gold has swung from $328 in 2002 to over $1,400 in 2010. That rise can be attributed to SPDR Gold Trust.
December issue of Businessweek has an article that shows the rise of gold is solely being driven by demand from ETFs.
SPDR Gold trust was created with the sole purpose of drumming up the price of Gold.
“Our primary mission was to find every button we could push to stimulate demand,” Burton, 59, said in an interview in London.
Who Benefits from the rise in Gold Price?
The Gold miners. In early 2000s the World Gold Council(a group of gold miners) were fed up with the falling price of Gold, previous attempt to stimulate demand of Gold as jewellery had failed. They came up with the idea creating a financial instrument that would drive up the price of Gold. They created SPDR Gold Trust.
The fund, SPDR Gold Trust (pronounced Spider), now holds 1,299 metric tons of gold valued at about $57 billion, more than the Swiss central bank.
Other funds have since emerged. The funds buy the physical gold and sell shares to investors.
The money flowing into these funds is what is driving the Gold frenzy.
written by Constantine Njeru
\\ tags: 2000s, Attempt, Burton, Businessweek, Buy Gold, Buy Sell, Control, Financial Instrument, Frenzy, Gold Fund, Gold Jewellery, Gold Miners, Gold Price, Instrumen, Investors, London, Metric Tons, Physical Gold, Price Of Gold, Prom, Sole Purpose, Spider, Trust Fund, Trust Gold, World Gold Council
Goldman Sachs analysts Allison Nathan and Jeffrey Currie forecast in a December. 13 2010 report that gold will rise to $1,690 in 12 months.
From Businessweek / Bloomberg Gold article.
written by Constantine Njeru
\\ tags: 12 Months, Allison, Bloomberg, Businessweek, Gold, Goldman Sachs, Goldman Sachs Analysts
For hungry investors looking at the rising price of Gold, It feels like the good times will never end.In this frenzy it is easy to forget that whatever goes up will one day come down.
Three Signs Gold is in Bubble State
According to the classic book “Manias, Panics, and Crashes: A History of Financial Crises” by Kindelberger and Aliber, past bubbles have occurred during good economic times when interest rates are low, credit is plentiful and easy to obtain, and national optimism is running high.
One major event that has fueled the Gold frenzy is the massive stimulus programs by governments around the world. As governments try to reduce spending that could be the strike that will burst the Gold bubble. The recent Republican take over of the house could just be the beginning of the end.
written by Constantine Njeru
\\ tags: Beginning Of The End, Bubbles, Crashes, Economic Times, Financial Crises, Frenzy, Good Times, Governments, Interest Rates, Investors, Kindelberger, Optimism, Panics, Price Of Gold, Running, Stimulus, Three Signs
According to some analyst, a barrel of oil could top $100 in 2011. A businessweek /bloomberg article gives some compelling arguments.
Four Reasons Why the black gold will hit $100 in 2011.
- The continued falling dollar, there is a link between the dollar and oil. They move in opposite directions. as Dollar goes down, the price of oil goes up.
- The US Fed Bank continues printing dollars. The past few years have shown that the more cheap money in the system, the more money flows into commodities, in particular energy.
- The OPEC will continue protecting their cash cow. The cartel members may seek a higher price by as the depreciation of the greenback erodes the profitability of their dollar-denominated oil export.
- Growth in Emerging markets means demand for oil will remain strong going forward.
written by Constantine Njeru
\\ tags: Barrel Of Oil, Black Gold, Bloomberg, Businessweek, Cartel, Cash Cow, Cheap Money, Commodities, Depreciation, Dollar, Emerging Markets, Greenback, Members, Money Flows, Oil Barrel, Oil Export, Opec, Price Of Oil, Profitability
Commodities are hot! Any investor who has been investing in commodities in the last decade must be a happy investor. Just look every where, Cocoa, Coffee, Gold, Tin name it. All you see are runaway prices. Prices hitting new highs now and then.
Commodities Future Price Trend Report
According to an article in FT, Four Reasons Why Commodity Prices will Continue to Rise. Some traders even predict higher prices. Arguments in the article are
First, Not all commodities have seen price hikes
Second, Price hike have been caused by tight markets.
Third, Bankers say their clients’ approach to commodity markets is a long way from the buying frenzy that typically characterises bubbles.
Fourth, It is real shortage, eg Drought in Russia, that has caused price hikes
written by Constantine Njeru
\\ tags: Asset Allocation Decisions, Barclays Capital, Base Metals, Bubbles, Cocoa Coffee, Commodities Future, Commodities Prices, Commodity Index, Commodity Indices, Commodity Markets, Commodity Prices, Crb Index, Drought, Frenzy, Future Price, Gold Tin, Gsci Index, Investing In Commodities, Investor, Last Decade, New Highs, Norrish, Price Hike, Price Hikes, Price Spikes, Price Trend, Runaway Prices, Russia, Scrap Steel, Thermal Coal, Trend Report
The latest information on Soybeans is that demand continues to out pace supply. For commodity traders interested in Soybeans all indications are Soybeans price trend on a Soybeans price chart show an upswing.
Factors Driving the Rise in Soybeans Prices.
- Demand remains strong, especially from China
- concerns about the future Brazilian harvest, tighter supply.
- Rise in price of corn. farmers are using more land for corn because its more profit. This will further reduce Soybeans supplies
Source businessweek article.
With these factors in mind it is easy to understand why many commodity analysts forecast / predict the price of Soybeans will rise.
written by Constantine Njeru
\\ tags: Businessweek, China, Commodity Price, Commodity Traders, Corn Farmers, Pace, Price Trend, Soybeans, Upswing
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