Posted on 09/16/2008 7:46:32 AM PDT by TigerLikesRooster
Commodities ravaged as traders flee risk
Leo Lewis, Asia business correspondent
Surging fears of Armageddon in the global financial system ravaged a wide selection of commodities across Asia as groups ranging from hedge funds to day traders spent the day in a headlong flight from risk.
The shock waves from the bankruptcy of Lehman Brothers reverberated through markets for vegetable oil, soy beans, rubber and industrial metals as confidence in the financial system faltered, global growth prospects dimmed and cash became king.
Broad baskets of commodities — once seen by speculators as a sure-fire bet because of China and India’s apparently unstoppable growth — were sold, with food and metals tracking the sharp declines in crude oil.
Dealing floors in Asia descended into mayhem as analysts forecast a period where commodity markets were effectively “frozen” by a sudden drought of fresh capital.
A rising panic of defaults on futures positions and deferments of contracts sliced through all previous levels of commodity support: Chinese and Indian buyers have already cancelled around 800,000 tons of palm oil imports and the number appears likely to rise. In Kuala Lumpur, palm oil futures took a 5 per cent nose dive to hit a 17-month low and appeared likely to fall by their daily limit.
(Excerpt) Read more at business.timesonline.co.uk ...
Ping!
Hmmmmm.
They’ve been blaming commodities speculators for excessively high crude prices.
Is this necessarily a bad thing?
Goldman Sachs has been consistenly bullish on oil this year, and Lehman has been bearish, at least in their published commentary. I work in finance and have access to the institutional web sites of both firms. Here is the beginning of a report from the Lehman site:
At what cost?
Sep 12, 2008
Beginning in the fall of 2007, oil prices began overshooting beyond the levels predicted by fundamental cost indicators. Despite the recent drop in oil prices and substantial cost inflation, our analysis still indicates deferred prices should be in double digits, suggesting room for further declines in the price of oil.
Lehman’s proprietary traders do not necessarily have positions corresponding to the “house view”. That said, I’d expect the demise of a firm that is bearish on oil to be marginally bullish for oil futures.
Might even help put the metal thieves out of work :)
Cash? Don't they mean worthless fiat paper?
I remember earlier this decade, during the stock market crash, being told how only tangible things had value.
Consumers could have a breather. For now.
I've felt the same thing myself. And the the Fed and the FTC let it happen to try and help keep the brokerages propped up. But that was a very stupid policy, because it slowed down the economy and drove more people on the margin into default on their mortgages. And in the end made the inevitable worse.
Time to re-impose position limits for commodities on investment banks.
It’s not so much fun when you’re playing with your own money, is it?.............
I’m not savvy in financial affairs, but isn’t it this Commodities market and trading in it’s futures where people have lost their shirt? Sort of like legal gambling? Betting on corn or wheat or soybeans or pork prices?
SEND IT HERE! Biodiesel!!!!!............
Substantial risk is involved. You can lose more than your original investment. Batteries not included. Your mileage may vary........
However you can as a pure speculator, just get in and out, sell long and short as you please.
Right now, prices are falling, so buyers are on the sidelines waiting for tomorrows lower price. So, there are not too many customers.
By and large the producers of the commodities need to sell, and are really getting hammered. Arab, Moscow, Iran, Venezuela in the oil markets must beginning to really get desperate. One of these clowns would love for the other oil producers to go off production.
Only Marxist theory holds with ‘fixed’ values notions. Free market, there is no ‘fixed’ value over time.
In a way, so-called ‘goldbugs’ are Marxists, or vice versa.
Don’t forget “with approved credit.” Pretty important now.
Karl Marx was a gold bug. Jude Wanniski made himself look like a flake because he praised Marx for it.
Everything I know about commodities trading, I learned from ‘Trading Places’:
We are commodities brokers, William.
Now, what are commodities?
Commodities are agricultural products. Like coffee, that you had for breakfast. Wheat, which is used to make bread. Pork bellies, which is used to make bacon, which you might find in a bacon, lettuce and tomato sandwich.
Then there are other commodities like...frozen orange juice...and gold.
Though, of course, gold doesn’t grow on trees like oranges.
- Clear so far?
- Yeah.
Good, William.
Now, some of our clients are speculating that the price of gold will rise in the future. We have other clients who are speculating that the price of gold is going to fall. They’ve placed their orders with us and we buy or sell their gold for them.
Tell him the good part.
The good part is that no matter whether
our clients make money, or lose money, Duke & Duke get the commissions.
Well, what do you think, Valentine?
Sounds to me like you guys are a couple of bookies.
I told you he’d understand.
Results are not typical. Your situation may be different. Please consult physician before starting any exercise plan.....
So what if oil drops to $10 gallon. If I'm still paying $3 a gal for gas, who cares. I know about refining; but my point about the “price” of oil stands.
Base metals can fall to pennies. But I'm still paying a fortune for metal posts and copper.
Food commodities can free fall. I still see bread, meat, chicken, milk, etc at high prices.
Theater for the masses and financial wizards/titans?
I can't buy silver anywhere near the “spot commodity” price. Games; but what can you do?
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