Tuesday, September 29, 2009

Commodities | Natural Gas Correction Coming

Commodities: Natural Gas

There is about to be a major correction the the North American natural gas market, as the large number of natural gas producers in America and Canade won't be able to continue on, as there are too many of them in operation today.

What to watch for are those companies high operations costs and low margins, who aren't able to compete with lower prices, which will determine the winners and losers in the coming shakeout in the natural gas industry.

Not that natural gas prices have hit a seven-year low recently, selling at $2.50 per thousand cubic feet. The problem is no natural gas producer is blinking an cutting back on production, evidently thinking they're in it too big to make that decision.

Of course the market will make that decision for them, whether they want to or not, and a market-driven supply and demand response will be the result.

If you're an investor in natural gas, you must face the fall in prices (even though there has been some recent increase in prices in natural gas), and realize that the existing prices of natural gas companies can't continue on without a major correction. Demand is low and supply is high; that will eventually bring down the price of natural gas company stocks, and you don't want to be in them when they plunge.

Either the lack of extra storage of natural gas or a price drop will bring things back to reality. Either way, you need to change your way of thinking if you believe natural gas stocks can hold these prices in the midst of the current natural gas reality.

Commodities: Natural Gas

Friday, September 25, 2009

Wheat Plunges, Oil and Copper Up

Wheat prices plunged by five percent, as global supplies keep the prices down. Other concerns are Australia may cancel its wheat export licenses at three of the large grain companies in the nation.

Another potential obstacle viewed by wheat investors was the possibility of increasing storage fees for wheat, which could effectively drive speculators out of the market.

Good weather for winter wheat has also brought fears that there will continue to be far too much wheat on the market to sustain a higher price of the months ahead. The December wheat contract dropped to $4.49-3/4 a bushel on the Chicago Board of Trade.

For crude oil, it gained 13 cents a barrel in New York, after it fell 8 percent over the last couple of days. It finished at $66.02 a barrel on the New York Mercantile Exchange.

Copper futures in the U.S. enjoyed a 1 percent gain, after a couple of rough sessions over the last couple of days, losing about five percent of its value during that time. December contracts finished at $2.7405 a pound, an increase of 3.10 cents on the COMEX metals division of NYMEX.

Copper on the London Metal Exchange rose by $40 to end the day at $5,990 a ton. Most of that increase came from a drop in inventory at the LME warhouses by 175 tons over the day before.

Tuesday, September 22, 2009

Copper Prices Rise on Dollar Weakness

Copper prices

Copper prices have been going back and forth, along with the strength of the U.S. dollar, which has reached major one-year lows on the U.S. dollar Index, which measures the greenback against a basket of six other currencies.

Even so, with China cutting back on copper imports and copper stockpiles rising, it's not expected to sustain price increases until later in the fourth quarter and into 2010.

That means that copper, for now, will probably rise and fall in conjunction with the movement of the U.S. dollar, and will swing a lot until long-term and predictable demand kicks in.

Copper prices

China Investment Corp Invests in Noble Group

China Investment Corp

China's sovereign wealth fund, the China Investment Corp., has invested in the Hong Kong-based commodities corporation Noble Group. Noble is listed on the Singapore exchange.

According to the Noble website, it will sell a total of 573 million shares to CIC for $850 million, at $1.5 a share, bringing its overall stake in Noble to 14.9 percent.

Noble holds a number of positions in agricultural and other raw materials like iron ore and coal. Its agricultural holdings are especially targeted to Latin American countries like Argentina, Uruguay, and Brazil, also operating five ports across South America.

China Investment Corp

Commodities Rise As Dollar Falls

Commodity Prices Rising

As the U.S. dollar continues to decline, commodity prices will continue to rise, and that's the way it will go for some time, although there will of course be fluctuations along the way.

After several days of commodity prices falling, they're rebounding again, with gold and silver prices rising, along with oil prices going above the $71 a barrel mark.

The U.S. dollar index on the other hand dropped a full one percent, which now stands at its yearly low.

The misguided bailouts and government spending, along with commodity demand will continue to drive up commodity prices, and lower the value of the U.S. dollar for along time to come.

Commodity Prices Rising

Monday, September 21, 2009

Jim Rogers: Investing in Commodities

Investing in Commodities

We talk a lot about the ongoing bull market in commodities, which will no doubt resume as the economic crisis winds down. Recently Jim Rogers confirmed what he mostly reiterates all the time, and that is the best way to buy commodities is to buy them direct.

Unless somone has the time to research and understands the variable connected to successfully picking a stock, it's far better to invest in commodities directly than any other way, and studies confirm this will produce the best results.

what's simple about investing in commodities this way is you then have to only identify supply and demand to make a profit one way or the other, and that vastly simplifies the process and narrows things down for you.

Investing in Commodities

Jim Rogers: Commodities and Inflation

Commodity Prices Rising

Talking about the historical pattern that arises when governments print money, Jim Roges said that there's no doubt that commodity prices will continue to rise as a consequence of those ongoing practices.

Not only is America printing money, Rogers notes, but the whole world is, and that will fuel commodity price increases for some time into the future.

Another factor will be the locked up credit markets which disallow farmers from getting loans, as well as other commodity-related sectors like mining companies.

So even if none of that was happening, Rogers has asserted in the past that the emerging markets in China primarily, and secondarily the other BRIC countries, would have driven up commodity prices on their own. Now with these other factors added in, it looks like this will have an even more dramatic impact on commodity prices rising.

Saturday, September 19, 2009

CME Offers Commodity Speculation Recommendation

In an effort to curb the influence of speculation in the commodity markets, CME Group offered up some of its own recommendations, among which is a stronger role for the Commodity Futures Trading Commission in reference to energy products in hard singel exchange positions, specifically those at exchanges that are regulated.

"We recognize that misperceptions can undermine confidence in well-functioning markets, which is why we support the CFTC's mission to provide regulatory certainty and to ensure that the energy markets can operate efficiently," said Terry Duffy, CME Group executive chairman. "Regulatory parity, however, must be given to all markets under the CFTC's jurisdiction."

But as CME's Donohue states, a number of studies have disproven the idea that commodity speculators have been the force behind driving commodity prices and energy prices up, and rather it's the supply and demand factors which drive prices, and not commodity speculators.

Donohue also, probably rightly, added, that if there are limits imposed on index funds, that will more than likely simply move the funds to invest in markets that are unregulated.

The government needs to simply stay out of attempting to be the central planner for the economy, it hasn't worked anywhere in the past, and it won't work now or in the future. Supply and demand drives commodity prices, not speculators.