Posted June 19, 2011 at 11:42 pm
by Whitney McFerron and Jeff Wilson
Even a fifth consecutive year of record global corn harvests will fail to meet demand for food, fuel and livestock feed, reducing world stockpiles to the lowest in two generations.
Consumption will rise 3 percent in the next marketing year, a 16th consecutive annual gain that saw demand jump 66 percent, according to U.S. Department of Agriculture estimates. Inventory will drop to 47 days of use, the fewest since 1974, the data show. Waterlogged fields in the U.S., the largest exporter, will curb yields, Goldman Sachs Group Inc. says. Corn may jump 36 percent to a record $9 a bushel if conditions worsen, Morgan Stanley says.
Corn purchases are accelerating as droughts and floods limit output gains in everything from soybeans to wheat, driving the Standard & Poor’s Agriculture Index of eight commodities 60 percent higher in 12 months. China, the world’s second-biggest consumer after the U.S., will use 47 percent more than a decade ago, adding an amount greater than the entire crop of Brazil, the third-largest producer.
“There is a storm developing in agriculture,” said Jean Bourlot, global head of commodities at UBS AG in London. “If we have the slightest disruption in any part of the world, the effect on the price will be considerable.”
Posted October 4, 2010 at 11:51 pm
Silver, trading at 30-year highs, looks set to continue benefiting from strength in gold prices but is at risk of a correction if a sluggish economic recovery hurts industrial commodities, metals consultancy GFMS said.
Silver has benefited this year from a hefty rise in gold prices, which peaked at a record $1,300 an ounce earlier in the session, and are up some 18 percent this year. Silver hit a peak of $21.61 in an earlier trade, its strongest level since 1980.
As well as riding gold’s coat-tails as an investment metal, silver, which is used in industrial applications such as electronics manufacturing, has benefited this year from…
Posted September 16, 2010 at 11:57 am
(Marin Katusa, interviewed by Louis James, Casey Research)
Marin Katusa, an accomplished investment analyst, is the senior editor of Casey’s Energy Opportunities, Casey’s Energy Confidential, and Casey’s Energy Report. He left a successful teaching career to pursue analyzing and investing in junior resource companies. In addition, he is a regular commentator on BNN and a member of the Vancouver Angel Forum where he and his colleagues evaluate early seed investment opportunities. Marin also manages a portfolio of international real estate projects. Using advanced mathematical skills, he has created a diagnostic resource market tool that analyzes and compares hundreds of investment variables. Through his own investments, Marin has established a network of relationships with many of the key players in the junior resource sector in Vancouver.
L: Today, we turn to one of the more interesting – and colorful – characters on our team, Marin Katusa. Marin’s bio neglects to mention that he is also the lead singer of a rock band called Era Flair. Why should investors listen to a guy who wears leather pants and plays an electric guitar? Because he’s a bloody genius, that’s why – and he’s dialed into these markets like no one else. So, Marin, what’s hot and how do you make money on energy today?
Marin: First, you have to realize that the energy sector is different from the metals and mining you focus on, Louis. Anywhere in the world, the copper you mine is just copper, and the gold you refine is gold. But take coal as an example. It’s not just coal – there are many different types: premium metallurgical coal; semi-hard coking coal; semi-soft coking coal; and even among the thermal coals – the cheap stuff you burn to make electricity – there are different categories that produce different amounts of ash, among other variables.
So, just because you have a coal deposit, that doesn’t mean you have a buyer who can use your coal.
L: Ah. Someone may have a power station nearby, but it’s not designed to burn the specific kind of coal you have… And the power station that can use it is too far away to make it economic to ship the coal there?
Marin: Exactly. Copper costs dollars per pound, but coal costs dollars per ton, so if you don’t have cheap rail nearby, or a user on site, you got nothin’. There are similar constraints on the natural gas business. You can’t just study the commodities, you have to study the markets from top to bottom, and often that means understanding the local users and forecasting their probable demand.
L: Even oil isn’t just one thing, right?
Posted August 7, 2010 at 12:58 am
From Hard Assets Investor:
Adrian Day is one of the true pioneers of global investing. For years, the London native has run a boutique global investing firm (Adrian Day Asset Management) that combines complete independence, a global purview and a long-term value philosophy to bear on the markets.
HardAssetsInvestor.com’s editor in chief Matt Hougan caught up with Adrian recently to discuss his view on gold, platinum, wheat and the broader commodities landscape.
HardAssetsInvestor.com (HAI): We’ve recently had a significant pullback in gold, and there are concerns about a gold bubble. What’s your short-term outlook for the metal?
Adrian Day, CEO, Adrian Day Asset Management (Day): I tend to be more focused on the long term, generally. I’m a long-term value investor who doesn’t mind grinding out the volatility to realize the potential of an investment. But there is…
Posted July 20, 2010 at 3:13 pm
Commodity stocks, specifically crude oil investments and agriculture stocks, are in focus right now. If the global economy is to keep growing, industrial consumers from Shanghai to Shreveport will need to buy raw materials. That means commodity investments could be very profitable in the next few months if economic indicators point upwards. Then again, crude oil prices have withdrawn a bit lately and some are afraid calls of a rebound are overdone – and that we are due for another retest.
So what’s the story with commodity stocks? A few of our top InvestorPlace experts weigh in with their favorite companies in a variety of commodity-related industries from timber to crude oil to agriculture:
Commodity Stock – LINN Energy (LINE)
Recommendation by: Bryan Perry, editor of Cash Machine
The decline in oil prices provoked some selling in the energy MLPs these past couple of weeks. But LINN Energy, LLC (LINE ) has locked in crude prices for 100% of their oil production at $102 per barrel and gas production at $8.30 per mcf for the next two years! That means that even if commodity prices stay soft than this stock will be flying high. So lock in a 9.80% current yield and pick up LINE no matter where crude oil is trading right now.
Commodity Stock – Rayonier (RYN)
Recommendation by: Richard Young, editor of Intelligence Report
Rayonier (RYN ) owns, leases, or manages 2.4 million acres of timberlands in the U.S. and New Zealand. The close proximity of New Zealand to the insatiable appetite for lumber from Japan, China, Singapore, and South Korea is one benefit of Rayonier’s business model. But Rayonier also adds real value to its timber by converting it into performance fibers for products ranging from LCD screens to disposable diapers. This is not your typical timber stock! My relative-strength chart for Rayonier shows its strong outperformance of the S&P 500 since 2007. Buy today.
Commodity Stock – Total (TOT)
Recommendation by: Richard Band, editor of Profitable Investing
Among the multinational oils, Paris-based Total (TOT ) boasts a superior exploration
record and an eye-popping 6.4% yield. Any investor concerned about the long-term outlook for inflation needs an insurance policy written in oil—and this one comes cheap at just 7X this year’s projected earnings. I’m not alone in my enthusiasm for TOT. The stock currently ranks among the 10 largest holdings of American Century Equity Income Fund (TWEIX) a top-performing mutual fund I’ve often recommended for income investors. If you can’t buy TOT stock, buy this fund – but if you’re investing in equities, you’ll find no better commodity stock than Total right now.
Commodity Stock – China National Offshore Oil Corporation (CEO)
Recommended by: Robert Hsu, editor of China Strategy
China National Offshore Oil Corporation (CEO ) continues to benefit from BP’s disaster in the Gulf. Currently, CNOOC is in talks with BP to buy 60% of its shares in Pan American Energy, Argentina’s second-largest oil producer. CEO acquired a 20% stake in Pan American earlier this year from Argentina’s Bridas for $3.1 billion, which values BP’s stake at about $9 billion. BP has said it is looking to sell off about $10 billion in assets over the next year in order to raise cash for expenses related to the Gulf spill. Keep an eye on this deal and expect that it could be fairly bullish for CNOOC if it goes through. No matter what happens to crude, you can be bullish on this commodity stock.
Commodity Stock – Reynolds America (RAI)
Recommended by: Louis Navellier, editor of Blue chip Growth
Reynolds American Inc. (RAI ) is not your typical large-cap commodity stock. First off, RAI stock yields a hefty 6.7% dividend yield. Secondly, as a tobacco company this commodity play is more beholden to regulations than it is to typical agricultural trends such as harvest size and wide swings in demand. Reynolds American’s RJR Tobacco unit boasts five of the 10 best-selling brands of cigarettes in the U.S., namely Camel, Kool, Pall Mall, Doral and Winston. These cash cows provide a reliable income stream more akin to a utility stock than an agricultural play! In the first quarter, the company’s net income was $85 million compared with $8 million during the same period in 2009. This is growth you can bank on regardless of broader market trends.
Commodity Stock – Deere (DE)
Recommendation by: Richard Young, editor of Intelligence Report
As the price of wood pulp continues to rise well above its prerecession highs, you can expect timber companies to add to their tree-harvesting capacity. There is no better tree-felling machine then the Deere & Company (DE ) 959K. The K-Series will be bought by the timber companies that want to get the most for their money. Luxury operators’ cabins on the felling machines allow loggers to stay in the seat longer hours and remain productive – keeping companies output high and balance sheet profitable. And loads of power and easy maintenance make the 959K best in its class. My technical analysis shows a shallow consolidation in Deere shares, giving investors a great buying opportunity.
Commodity Stock – Covenant Transport (CVTI)
Recommendation by: Nancy Zambell, editor of Buried Treasures Under $10
If you want to cash in on commodities, the best way to do that is to cash in on the shipping stocks that tote those goods around. My favorite freight play right now is Covenant Transport Inc. (CVTI ), a young trucking company that’s only been around since 1986, but already it occupies the top 10% of trucking companies nationwide. The company began operations with just 25 trucks and 50 trailers, but by the end of 2009 the company operated 3,113 tractors and 8,005 trailers. The company’s five largest customers are Estes Express Lines, Georgia Pacific, Transplace, UPS (UPS ) and Walmart (WMT ). As the economy improves, I expect more demand for trucking services. I also expect freight rates to gradually increase along with increased demand. That will really bump up CVTI’s bottom line — as well as its share price.
Full disclosure: At the time of publication, each one of these InvestorPlace experts were recommending these stocks in their own respective newsletters.
[ Source: .investorplace.com ]
Posted May 19, 2010 at 7:00 am
by Julie Crawshaw:
The National Inflation Association says the Federal Reserve is wrong about inflation: U.S. food prices are spiraling out of control, jumping 2.4 percent in March, the largest leap in 24 years.
Combined with the highest unemployment in decades, higher food prices have caused huge numbers of Americans to turn to the food stamp program for help.
After the 14th consecutive monthly food price increase, 39.4 million Americans are now enrolled in the program, up 22.4 percent from one year ago.
The U.S. government is now paying out more in entitlement programs than it collects in taxes.
Year-over-year, fresh and dry vegetables are up 56.1 percent, fresh fruits and melons are up 28.8 percent, eggs for fresh use are up 33.6 percent, beef and veal are up 10.7 percent and dairy products are up 9.7 percent.
The group points out that 58 percent of….
Posted March 8, 2010 at 8:53 am
By: Dan Weil
Oil will probably hit $100 a barrel, thanks to economic recovery and shrinking supply from refineries, says John Kilduff, co-chief investment officer of Round Earth Capital.
Oil is now trading at just above $80.
“The move back above $80 will be before us in the next several days, and we’re going to continue higher,” Kilduff told CNBC.
“I think we’re going to see $100 a barrel for crude oil here at some point during even the first half of the year.”
As for demand, “There are signs out there that the global economy is picking up, and that speaks to increasing energy demand,” he said.
Kilduff says supply is limited around the world, especially in terms of refining capacity.
“We have a U.S. refining industry that’s running at only 80 percent of capacity,” he said.
“We’re vulnerable to any shortages.”
The move obviously won’t be positive for the economy, but fortunately it will just be temporary, Kilduff says.
“It will probably coincide with the peak summer gasoline demand here in the United States.”
People tend to drive more during the summer, as they take vacation trips.
Kilduff isn’t the only oil bull. Goldman Sachs analysts see crude rising to a new trading range between $85 and $95, thanks to supply disruptions in the North Sea and Venezuela and the recent strike at a Total refinery, according to OilPrice.com.
© Moneynews. All rights reserved.
Posted January 22, 2010 at 6:08 pm
by Jonathan Hoenig:
Almost two years ago, I wrote about the iPath Livestock ETN (COW: 28.61, -0.10, -0.34%), a unique exchange-traded note which, for the first time, opened up cattle and hog markets to U.S. investors via a simple stock account.
It was an unfortunate time to go hog-wild for pigs…or cattle. Thanks to the credit crisis and recession, prices for most commodities, including livestock, collapsed in 2008 as investors factored in decreased consumer demand.
The environment has changed once again. Retail stocks have rallied, as have many of the food and restaurant stocks profiled this summer. On a 12-month basis, retail sales are up 5.4% since December 2008, indicating that while the consumer is down, he’s certainly not dead.
Nor is he starving. The United States has the third greatest per-capita beef consumption of any country world-wide, behind only cattle-crazy Argentina and Uruguay. From Tennessee to Texas, we love our beef.
Posted January 15, 2010 at 1:33 pm
By Vincent Ferando
Jim Rogers is sounding the alarm — buy agricultural commodities ahead of the riots. The financial crisis has cut off investment in agriculture, with many farmers unable to get loans for fertilizer according to Mr. Rogers. Of course, this means agricultural commodities will make a killing:
CNBC: “Sometimes in the next few years we’re going to have very serious shortages of food everywhere in the world and prices are going to go through the roof.”
Cotton and coffee are good buys because they are very distressed, while sugar, despite the fact that it has gone up a lot, is still down 70 percent from its all-time high, according to Rogers.
“I don’t think that the problems of the world are behind us yet,” he said.
Starting at 1:30 in the video:
Posted January 6, 2010 at 12:46 pm
By Porter Stansberry in the S&A Digest:
What are the big trades for 2010? We have two ideas…
First, we think natural gas bottomed last year and will continue a new bull market this year. Relative to oil, we think natural gas is still cheap (though not as cheap as last year, when we called the bottom). And while vast new quantities of natural gas are coming on line, power companies are switching a large number of coal-fired power plants to natural gas. As demand for electricity rebounds this year, demand for natural gas will grow faster than expected – fast enough to push prices back to more than $10 per thousand cubic feet (mcf).
Editor’s Note: the best way to buy natural gas in via these ETFS.
Powering demand for electricity will be a surprising rebound in global economic growth. This leads to our second main prediction for 2010: much higher interest rates.
We are bullish on the economy for 2010. And we are bearish on government debt of nearly every stripe, but particularly on the fixed-rate, long-dated debt of the world’s largest debtor – the United States of America.
The global economy is going to boom this year, powered by soaring money supply and robust public sector deficit spending. Over the next few years, the world is going to relearn a very painful lesson about paper money and public finance. In short, paper money is inherently unstable because paper systems don’t restrain lending or spending with savings. When reserves can be printed, why bother with the pain of saving money?
Untethered by any market discipline, sooner or later every paper system collapses under the weight of its accumulated debts and the resulting inflation.
Likewise, when a political system (like ours) promises voters more in benefits than it collects in taxes… trouble is only a matter of time. Combining the two systems – a democracy with a heavily progressive income tax and a paper money monetary system – is a recipe for a massive financial collapse. And make no mistake, that’s exactly where we are heading.