Author Topic: Farm Futures  (Read 11642 times)

Online king

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Re: Farm Futures
« Reply #50 on: January 28, 2015, 08:58:25 PM »

Any write ups for bursa stocks?

Thks in advance.

Offline zuolun

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Re: Farm Futures
« Reply #51 on: January 28, 2015, 09:23:26 PM »
Crude Oil: Is The Widening Contango A Precursor To Even Lower Prices?

Jan. 26, 2015


  • Spare storage capacity in the U.S. is quickly shrinking and the short-term contango is widening.
  • The 12-month contango in WTI now stands at over $9 per barrel.
  • The current seasonally strong demand is masking the true magnitude of inventory build.
  • In the absence of significant supply cuts, the 2009 scenario - when the 12-month contango exceeded $20 per barrel - cannot be ruled out.

The shape of crude oil futures curves indicates persistent oversupply and reflects rapidly increasing petroleum inventory levels.

The near-term contango in both WTI and Brent has been steepening at a rapid pace. The following graph shows that the 12-month contango in WTI increased by $5.60 per barrel since mid-December and currently stands at $9.47 per barrel, creating an incentive for marketers and refiners to store crude.

The contango in Brent is even steeper - $10.36 per barrel over the next 12 months - although the change since mid-December is less pronounced than in WTI.

While the current 12-month contango in both WTI and Brent is still far from the $23+ per barrel level seen in early 2009 in the aftermath of the world's financial crisis, the trajectory is worrisome.

A further widening of the contango due to the shrinking spare storage capacity could result in additional pressure on the oil price. As I wrote in another note, the U.S. inventory data indicates a distinct acceleration in oversupply in the U.S. market beginning in December, which likely reflects a similar trend worldwide.

The seasonally strong winter demand is currently masking the magnitude of the oversupply. However, the inventory build may become more apparent with the onset of the shoulder demand season.

Examples of ETFs for which oil price fundamentals may be relevant:

  • United States Oil ETF, LP (NYSEARCA:USO)
  • iPath S&P Crude Oil Total Return Index ETN (NYSEARCA:OIL)
  • Energy Select Sector SPDR ETF (NYSEARCA:XLE)
  • SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA:XOP)
  • Market Vectors Oil Services ETF (NYSEARCA:OIH)
  • SPDR S&P Oil & Gas Equipment & Services ETF (NYSEARCA:XES)

USO Investors — Beware of The Contango!

December 22, 2014

The current low oil prices have raised the interest of some investors to go long on oil in the hopes that prices will eventually recover to their levels recorded in the past couple of years. For those who consider taking a long position on crude oil for a long period of time should take notice of the perils related to the oil ETF United States Oil Fund (USO). Mainly the adverse impact the Contango in the future markets that could result in a lower return on USO compared to the spot oil price. Let’s see why.

In order to make my point clear, let’s consider the time when oil prices were around $40 back at the end of 2008. It took roughly two years for oil prices to bounce back to around $90. The chart below presents the normalized prices (December 1st 2008) of crude oil WTI and USO between December 2008 and December 2010.

As you can see in the chart above, even though the price of WTI oil rose by 82% during this time frame; the price of USO actually declined by 4.5%.  This means, people, who bought USO during those years, wouldn’t have benefited from the recovery of crude oil (assuming they had held on to USO for the entire period).

The main issue that is responsible for this discrepancy is the roll decay related to Contango in the futures markets. You can also see a detailed explanation of this issue in the USO’s prospectus (pg. 17-23).

I have also talked about this issue in detail in a previous segment. Basically, Contango is a situation, in which prices of long-term futures are higher than prices of short-term futures. So when USO rolls over its future contracts (it sells its near future contract and purchases its next month’s future contract in order to maintain its position of near month oil futures), the price of USO tends to decline or at least underperforms crude oil prices.

Currently, the futures market is in Contango after being in Backwardation, a situation in which far term future markets are priced below near term futures, in the past few weeks. The chart below presents the changes in gap between short term and long term prices of oil futures over the past several months.

This shift is expected to result in USO under-performing the price of WTI. In such a scenario, even if oil recovers, USO is likely to underperform oil prices, as presented in the first chart herein.

Keep in mind, investing in USO over a short period of time is likely to follow WTI with little deviation from its price (assuming the Contango in the futures markets isn’t too big). Here is an example of the normalized prices of WTI and USO between January 13th, 2014 and April 14th, 2014. During this time frame WTI rose by nearly 12% from $92 to $104 per bbl.

As you can see, USO actually slightly outperformed WTI as it increased by 13%. This is because the futures markets were mostly in Backwardation. In any case the impact of the Contango/ Backwardation on the performance of USO compared to WTI oil price was very minimal.

The current Contango in the oil futures markets is likely to result in USO under-performing WTI especially over long periods of time. Therefore, investors should take notice of the current situation in the oil future markets before purchasing USO.

Questions for every trader, crashing oil, and global gloom - October 17, 2014

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Offline zuolun

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Re: Farm Futures
« Reply #52 on: January 28, 2015, 09:27:49 PM »
China commodity trade data show winners are scarce

By Clyde Russell
27 Jan 2015

(Reuters) - China's detailed commodity trade figures for 2014 do much to confirm that the trend has changed to higher import volumes being dependent on lower commodity prices, but there are a few notable exceptions.

Major commodities such as crude oil, iron ore and copper all showed increased imports on the back of falling prices, illustrating the changed dynamic in commodity markets whereby supply became the dominant driver of prices.

Taking away the temporary impact of the 2008 global financial crisis on China's commodity demand, the trend for the last 10 years had been demand-led increases in both prices and volumes of imports.

In 2014 that changed as many commodities moved into structural oversupply, meaning prices fell even as Chinese demand increased.

China imported 13.7 percent more refined copper in 2014 from a year earlier, with prices being 8 percent lower in December 2014 than the same month in 2013, according to customs data.

In crude oil, China brought in 9.5 percent more in 2014, and iron ore imports jumped 13.9 percent, with the prices of both these commodities plunging during the year.

Only coal among major commodities saw falling imports amid lower prices, with inbound volumes dropping 14.7 percent in 2014 from a year earlier.

Coal's woes are probably related to China's efforts to clean up pollution and new regulations aimed to improve the quality of imported coal.

However, while there were a few commodities where volumes increased as did prices, and these are the real winners in the story of Chinese demand for natural resources.


After several years in the doldrums, last year was a strong one for the raw materials used to make aluminum, namely bauxite and alumina.

Alumina imports surged 37.7 percent to 5.27 million tonnes in 2014, while the price reported by Chinese customs in December last year was $382.34 a tonne, up from $364.97 in December 2013.

Bauxite imports dropped by 48.3 percent to 36.28 million tonnes, but this has to be viewed in the context of the massive 78.7 percent jump in 2013 as Chinese aluminum smelters stocked up ahead of Indonesia's ban on exports, instituted in January 2014.

The price paid for bauxite in December 2014 was $58.57 a tonne, up from $55.32 in the same month a year earlier.

What alumina and bauxite also show is that the relative winners in the commodity space can also shift quite quickly.

The major beneficiary from Indonesia's decision to ban the export of raw ores would appear to be Australia, which boosted exports of bauxite to China by 9.5 percent to become China's top supplier.

For nickel ore, another commodity affected by the Indonesian ban, the big winner was the Philippines, which overtook its Southeast Asian rival as China's biggest supplier, boosting its exports by 22.7 percent, while also receiving higher prices.

Another winning commodity was coffee, with Chinese imports growing by 36.5 percent in 2014 from 2013, and the price paid in December last year jumping almost 15 percent from the same month a year earlier.

The strong gain in imports came despite China's domestic coffee output also rising, although much is exported to Europe for use in blending.

While coffee prices may decline this year on improved crops from major producers such as Brazil, the outlook for Chinese demand remains robust as the beverage becomes more popular in the traditionally tea nation, and as the emerging middle class seeks better quality coffee.

Coffee, along with bauxite, alumina and nickel show that the place to be in meeting China's commodity needs is where there is strong demand growth coupled with constrained supply.

This is a better position than most of the major commodities are in, where demand remains robust, but only because prices are low.

If crude oil suddenly jumped from its current levels around $48 a barrel for Brent to closer to $80, then it's likely that Chinese imports would soften, as much of the current demand is heading into storage tanks.

It's the same story for iron ore, any significant rise in price will bring about a concomitant drop in Chinese demand.

While bauxite's and alumina's strong run of 2014 may be repeated again, the trick will be to find the next commodities where Chinese demand will increase, even if prices go up as well.

Offline zuolun

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Re: Farm Futures
« Reply #53 on: January 28, 2015, 09:36:35 PM »
Newsmakers 2014: Tycoons hit by crude's tumble, IPO issues

By Siow Chen Ming
January 22, 2015

Local tycoons remained relatively quiet this year without any major corporate exercises or manoeuvres, probably sensing the rising uncertainty ahead in the domestic as well as global economies. Nevertheless, tycoons being tycoons, they created some interesting news that grabbed the headlines.

T Ananda Krishnan
Major shareholder of Maxis, Astro All Asia Networks, Bumi Armada

The year has not turned out so well for Ananda, who faced graft charges in India and saw the market value of Bumi Armada Bhd, an oil and gas service provider that is majority-owned by him, more than halved as a result of the recent tumble in global oil prices.

According to foreign news reports, Ananda — along with South Indian politician Dayanidhi Maran (India’s telecommunications minister between 2004 and 2007) and Dayanidhi’s brother Kalanithi Maran — was charged in August with alleged corruption in helping the Maxis group take control of Aircel Ltd in 2006.

According to The Edge Review, executives of Maxis Communications and Astro All Asia Networks Ltd — which Ananda owns — claim the tycoon and his corporate entities have “fallen on the wrong side” of Indian politics. It was also reported that Ananda and his associates intend to fight any attempt to extradite them.

Meanwhile, as global oil prices plunged, Bumi Armada, in which Ananda holds a 42.26% stake, saw its market capitalisation fall 59% from the beginning of the year to RM6.2 billion as at Dec 15. Bumi Armada’s CEO Hassan Basma has also tendered his resignation effective Jan 1, 2015.

Tan Sri Syed Mokhtar Albukhary
Major shareholder of MMC Corp, DRB-Hicom

In a surprise move, Syed Mokhtar’s DRB-Hicom Bhd in May appointed former prime minister Tun Dr Mahathir Mohamad as the chairman of its unit Proton Holdings Bhd.

That sparked murmurs in the automotive sector that the tycoon and Mahathir would seek more concessions from the government to help Proton, which is struggling to regain market share. News of the national carmaker seeking huge amounts in R&D grants from the government also grabbed the headlines.

The year has not seen major corporate or M&A exercises by Syed Mokhtar while the planned listing of independent power producer Malakoff Corp Bhd, which is controlled by his flagship MMC Corp Bhd, has seen delays.

Nevertheless, MMC’s purchase of MISC Bhd’s 15.73% stake in port operator NCB Holdings Bhd for RM221.9 million is deemed significant as it is said that NCB could become the listed port vehicle for MMC’s Port of Tanjung Pelepas as well.

Syed Mokhtar’s Tradewinds group also tied up with prominent Middle-Eastern businessman Ali Rashed Alabbar this year to develop properties in Malaysia.

Tan Sri Vincent Tan
Chief of Berjaya Group

It has been a busy year for Tan, who made the headlines not only in the local media but also in the UK and the US.

Most recently, he was in the news when  the share price of his company MOL Global Inc — in which the sultan of Johor Sultan Ibrahim Ismail is an investor — tumbled after its Oct 9 listing on the US’ Nasdaq. Triggered by reports of a sharp fall in earnings, the stock plunged to US$1.69 on Dec 1 from its initial public offering (IPO) price of US$12.50, wiping out US$729.7 million in market capitalisation.

Tan then issued a statement to express confidence in MOL Global’s prospects and its management. The stock had rebounded to US$2.64 by Dec 16, but that is still far below its IPO price.

Tan also listed 7-Eleven Malaysia Holdings Bhd this year. It performed well initially but was dragged down by the overall bearish mood on Bursa Malaysia.

The businessman, who owns English football club Cardiff City, also drew media attention in the UK for supposed run-ins with the fans and the club’s manager. Tan has said he will consider selling the club after it makes it back to the Premier League.

Tan Sri Quek Leng Chan
Chief of Hong Leong Group

While Quek is known as an avid stock picker, it would appear that he chose the wrong time to enter the oil and gas industry, whose prospects have been dimmed by falling oil prices.

The tycoon bought a 9% stake in TH Heavy Engineering Bhd (THHE) in 2013 at 45 sen per share and briefly enjoyed good gains as the stock surged to RM1.04 in February this year. But then the market turned, sending THHE tumbling to only 29.5 sen as at Dec 15.

In April this year, Quek and his former lieutenant Paul Poh bought a 15.5% stake in Alam Maritim Resources Bhd at RM1.35 a share. The stock had dropped to 54 sen as at Dec 15.

Quek’s Hong Leong Capital Bhd (HL Cap) was also in the news after repeatedly failing to meet the required 25% public shareholding spread, which led to its recent appeal to Bursa Malaysia to keep the spread at 18.67%.

HL Cap’s tight public spread is a result of Quek’s failed bid to privatise the company, which was blocked by substantial shareholder Datuk Dr Yu Kuan Chon.

Tan Sri Lee Shin Cheng
Chief of IOI Group

Lee’s IOI Properties Group Bhd (IOIPG) earned worldwide attention after it recently signed a deal to buy a 37.17% stake in Taipei Financial Centre Corp, which owns skyscraper Taipei 101, for RM2.74 billion.

The deal, inked with vendor Ting Hsin International Group, which was in financial distress due to a major tainted cooking oil scandal, provoked uproar in Taiwan’s political and corporate circles, considering the importance of Taipei 101 as a symbolic landmark.

In a statement, IOIPG assured that it was sincere about the proposed acquisition and that it would abide by Taiwanese laws in all respects if the said proposal goes through. “IOI Properties is apolitical and has no hidden political agenda behind the proposed acquisition,” it said.

IOIPG was relisted in January this year.

This is not the first time Lee has shown a penchant for iconic buildings. His IOI group had made a bid for the HSBC Tower in London in 2009, reportedly for about 800 million. The deal did not materialise.

In 2008, the group won a bid to acquire Menara Citibank in Kuala Lumpur, but then pulled out just as the US subprime mortgage crisis began to unfold.

Offline zuolun

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Re: Farm Futures
« Reply #54 on: January 28, 2015, 09:41:50 PM »

1MDB Said to Seek Loan Extension Before $3 Billion Energy IPO - 27 Jan 2015


Khairuddin: What’s Jho Low to 1MDB? - 26 Jan 2015

Offline zuolun

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Re: Farm Futures
« Reply #55 on: January 28, 2015, 09:46:53 PM »
Ready for $20 Oil? - 21 Dec 2014
The reason oil could drop as low as $20 per barrel - 19 Dec 2014

Expect the longterm horizontal support at US$40 to be broken b4 a V-shaped technical rebound to US$75 forming a higher low, prior to the formation of a lower low at US$20.

Why oil prices keep falling — and throwing the world into turmoil - 23 Jan 2015

Offline zuolun

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Re: Farm Futures
« Reply #56 on: January 28, 2015, 11:25:47 PM »
Crude at $49: The New Reality for Big Oil Companies

By Joe Carroll
28 Jan 2015

The world’s biggest oil producers, historically resilient with their mix of energy exploration, refining and chemical manufacturing, are about to reveal how they are weathering the great oil crash.

Financial results will start trickling in Thursday for Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., Total SA and BP Plc from a fourth quarter that saw the price of oil drop from $115 a barrel in June to below $50 a barrel.

This could be the oil bust that breaks the pattern that integration always leaves you with one or two legs to stand on.

“The issue for this group of companies is they don’t have bulletproof business models,” said Brian Hennessey, who helps manage $1.4 billion at Alpine Woods Capital Investors LLC in Purchase, New York. A 57 percent plunge in the price of oil since June “really tests your convictions.”

The industry’s stark change in fortune set off panic from corporate board rooms to drill-rig floors as companies that pump almost one-tenth of the world’s crude scramble to tighten budgets and preserve cash for dividends, buybacks and capital projects too far along to abandon.

BP froze wages, Chevron delayed its 2015 drilling budget and Shell canceled a $6.5 billion Persian Gulf investment; layoffs industrywide have topped 30,000, enough to fill almost every seat in Madison Square Garden twice.

In an early peek at what’s to come, New York-based Hess Corp., which sold its refineries and gasoline stations to focus on oil production, today reported a fourth-quarter net loss of $8 million because of lower crude prices. Adjusted earnings fell 5 cents a share short of analysts’ estimates.

Searching Clues

Investors will be sifting the data from the fourth quarter for clues to how long the current slump will last. Momentum from high oil prices during the first half of last year helped carry producers through the quarter, when the price of Brent, the benchmark used by most of the world, averaged $77.07 -- well above the current price of $49.

The effects of lower prices will still take their toll as all except Shell are forecast to report earnings declines compared with the fourth quarter of 2013. Shell’s profit is expected to rise compared with unusually ugly results the year before.

Worldwide crude supplies appear likely to exceed demand for the rest of the year and beyond, even as the lowest oil prices since 2009 discourage new developments in high-cost regions such as Canada’s oil sands, said Paul Sankey, an analyst at Wolfe Research in New York. That would postpone any rebound in share prices of the five biggest oil majors, which have tumbled by an average of 8.1 percent since crude prices began to slide in June.

‘Dangerous’ Equities

That compares with a 28 percent decline in a Standard & Poor’s index of 18 smaller U.S. oil and gas producers.

“Buying oil equities here would be dangerous,” Sankey said in a Jan. 27 note to clients. “Our research suggests that the consensus view that oil markets will recover by the second half of 2015 may well be optimistic.”

The price collapse hobbles a segment of the industry that had already been struggling with years of soaring construction costs, project delays, missed output targets and depressed returns from refining crude into fuels, said Anish Kapadia, an analyst at Tudor Pickering Holt & Co. Aside from steady dividend payouts, the biggest oil companies offer no compelling reason to invest, he said.

“We see little to differentiate between the supermajors as no-growth yield plays,” Kapadia said in a note to clients.

Shell Increase

Shell kicks off the earnings season for the biggest oil companies on Jan. 29. The Hague-based company is expected to report profit, excluding special items and inventory changes, of $4.18 billion, based on the average of seven analysts’ estimates. That would be a 44 percent increase from a year earlier, when faltering production from wells and escalating costs trimmed earnings to a four-year low.

Chevron on Jan. 30 is expected to post fourth-quarter net income, excluding one-time gains and losses, of $3.17 billion, based on the average of nine analysts’ estimates. That would be a 36 percent year-over-year decline.

Exxon is next up when it reports results on Feb. 2. The Irving, Texas-based producer probably reaped $5.85 billion in net income, excluding one-time items, according to the average of 11 estimates. That would be a 30 percent decline from a year earlier.

BP is expected to report profit of $1.98 billion, excluding one-time items and inventory changes, when it posts results on Feb. 3. That would compare with $2.81 billion during the final three months of 2013.

Price Sensitive

Total will round out the season on Feb. 12, when the French oil giant is expected to report an 11 percent decline in fourth-quarter net income to 2.19 billion euros ($2.49 billion).

As cash flows shrink this year, dividend protection will take precedence over finding new oil fields or repurchasing shares. The supermajors are exquisitely sensitive to price fluctuations; for example, every $10 decline in the oil price slashes $2.84 billion from Exxon’s annual cash flow, according to Barclays Plc. For Chevron, which is more dependent on crude than its larger U.S. rival, the cut is $3.85 billion.

The supermajors “are going to hunker down to protect the dividend,” Iain Reid, an analyst at BMO Capital Markets, said in a telephone interview. “The dividend will stay safe for two years.”

Offline zuolun

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Re: Farm Futures
« Reply #57 on: January 28, 2015, 11:36:03 PM »
Goldman Sees Commodities as Worst Pick Before Year-End Rally

By Millie Munshi and Jasmine Ng
27 Jan 2015

Commodities will lag behind equities, bonds and credit markets over the next three months before a rebound in oil sparks a recovery, according to Goldman Sachs Group Inc.

The bank cut its near-term outlook for raw materials to “underweight”, predicting losses of 10 percent, compared with a 0.4 percent return for stocks, its top pick. Commodities will leapfrog equities as the best performing asset class over 12 months, returning 10 percent, according to a Jan. 27 report.

The Bloomberg Commodity Index slid to a 12-year low this week, with crude, hogs and copper leading losses in 2015. Inventories are rising after a decade-long bull market spurred farmers, miners and drillers to increase production. A strengthening dollar and falling energy prices are threatening to prolong the rout as they make it cheaper to produce more.

“Despite the large declines in commodity prices, we see risks as still skewed to the downside over the near term,” Goldman strategists and analysts including Jeffrey Currie, Christian Mueller-Glissmann and Peter Oppenheimer wrote in the research report. “Lower oil prices are also driving cost deflation across the broader commodity complex.”

There’s a risk that oil, gold and copper may drop further, according to the bank, which predicts West Texas Intermediate oil will remain near $40 a barrel for most of the first half of 2015. The U.S. benchmark crude slid almost 60 percent since a peak in June last year and was at $45.55 a barrel on the New York Mercantile Exchange today.

Roll Yield

As oil’s drop and a stronger dollar leads to shrinking costs for producers, inventories are also weighing on immediate commodity prices relative to longer-dated contracts, creating a market structure known as contango. When near-term futures expire, investors who want to keep their oil holdings need to sell the cheaper contracts and buy the more expensive, later-dated ones. That creates what’s called as a negative roll yield and further erodes returns, according to Goldman.

Slowing supply growth and more normal levels of inventories by 2016 means oil prices will move toward the marginal cost of production by the end of the year, or about $65 a barrel for WTI and $70 for London’s Brent crude, according to the bank. The European benchmark was at $49.05 today.

Goldman’s prediction that oil prices will remain depressed this year before a rebound in 2016 is echoed by other banks including UBS Group AG and Barclays Plc, which both cut price estimates on Wednesday. WTI will average $49 a barrel in 2015, down from a previous projection of $64.75, according to UBS. It will recover to $62.50 in 2016 as demand improves and supply growth slows, the bank forecasts. Barclays see prices averaging $42 in 2015 and $57 next year.

China Growth

“For our constructive 12-month view, we would need to see roll yields improving (in particular, a slowdown in oil inventory builds), over the coming months,” the analysts wrote. They recommend buying palladium, nickel and zinc while selling copper, amid slowing Chinese growth, and gold.

China’s economy expanded 7.4 percent last year, the slowest pace since 1990, data from the statistics bureau show. The country is the world’s biggest metals and energy consumer.

Cost deflation already prompted Goldman to cut its estimates for metals and mined raw materials including copper and iron ore over the next three years by about 10 to 20 percent. Copper will average $5,542 a metric ton this year, down from a previous projection of $6,400, according to an e-mailed report on Friday. Iron ore will be $66 a ton, compared with $80 previously, the bank predicted.

The Bloomberg Commodity Index tracking 22 raw materials was at 100.95 on Wednesday, down 3.2 percent this month. The gauge touched 99.91 on Monday, the lowest level since 2002.

The bank sees five-year corporate bonds returning 0.5 percent over the next three months, dropping to a 0.4 percent loss in a year. Cash investments will return 0.1 percent in the near-term and 0.2 percent in 12 months. The loss on 10-year government bonds will increase from 3.4 percent over three months to 7.9 percent in a year, according to the bank.

After the supply re-balancing, commodities will offer better diversification benefits while protecting against a potential pick-up in inflation, the analysts said.

Offline zuolun

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Re: Farm Futures
« Reply #58 on: January 29, 2015, 07:10:58 AM »
Oil tumbles; US crude prices near 6-year low on record stockpiles

By Barani Krishnan
29 Jan 2015

(Reuters) - Oil slumped on Wednesday, with U.S. crude prices at near six-year lows, after the government reported record-high inventories in the United States that raised anxieties about the global oil glut that had pressured the market since last summer.

The U.S. Energy Information Administration (EIA) said domestic crude oil stocks rose by almost 9 million barrels last week to reach nearly 407 million, their highest since the government began keeping records in 1982.

A Reuters poll on Tuesday had forecast a build of just above 4 million barrels for the week to Jan. 23. The American Petroleum Institute, an industry group, had estimated a far bigger growth of nearly 13 million barrels.

Oil prices, lifted by a weaker dollar in the previous session, tumbled anew on the stockpile data.

U.S. crude's front-month contract settled down $1.78, or almost 4 percent, at $44.45 a barrel. It sank to as low as $44.08 before the close, marking a bottom since April 2009. Open interest in the front-month remained near record highs for a fifth straight day, according to Reuters data.

Benchmark Brent crude closed down $1.13, or 2.3 percent, at $48.47, after a session low at $48.29.

The spread between the two crude oils was its largest in a month, with Brent fetching a premium of about $4 a barrel due to the weaker fundamentals in U.S. crude.

Traders expected oil prices to come under further pressure in coming days despite the EIA report citing positives like a near 3 million barrel drop in gasoline stocks and almost 4 million barrel decline in diesel and heating oil inventories.

"The sub-90 percent refinery utilization is causing oil supplies to back up, and the downward pressure on prices should continue," said John Kilduff, a partner in New York energy hedge fund Again Capital.

"Refined product demand continues to be the sole source of strength for the market, but it is not enough to overcome the tidal wave of crude oil supplies for now."

Fast-growing U.S. shale output has pushed oil prices almost 60 percent lower since June, with losses accelerating after the Organization of the Petroleum Exporting Countries said it would not cut production in a bid to preserve its market share.

Goldman Sachs analysts said in a Tuesday note that they expected U.S. crude, also known as WTI, to remain near $40 a barrel in the first half of this year.

Hedge Funds Bet Oil Will Fall Further

By Mark Shenk
Jan 27, 2015

Hedge funds boosted bearish wagers on oil to a four-year high as U.S. supplies grew the most since 2001.

Money managers increased short positions in West Texas Intermediate crude to the highest level since September 2010 in the week ended Jan. 20, U.S. Commodity Futures Trading Commission data show. Net-long positions slipped for the first time in three weeks.

U.S. crude supplies rose by 10.1 million barrels to 397.9 million in the week ended Jan. 16 and the country will pump the most oil since 1972 this year, the Energy Information Administration says. Saudi Arabia’s King Salman, the new ruler of the world’s biggest oil exporter, said he will maintain the production policy of his predecessor despite a 58 percent drop in prices since June.

“There’s been a rush to call a bottom,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone Jan. 23. “The fundamentals are still stacked against a rebound.”

WTI rose 50 cents, or 1.1 percent, to $46.39 a barrel on the New York Mercantile Exchange during the CFTC report period. The U.S. benchmark fell 44 cents, or 1 percent, to $45.15, the lowest settlement since March 11, 2009. Brent slipped 63 cents, or 1.3 percent, to end the session at $48.16.

Salman Bin Abdulaziz Al Saud ascended to the throne after King Abdullah died last week. The kingdom pumped 9.5 million barrels a day in December as members of the Organization of Petroleum Exporting Countries exceeded their 30 million-barrel daily target for a seventh month.

U.S. Production

“I don’t see any major catalyst from either the supply or demand side that will send prices higher this year,” Stewart Glickman, an equity analyst at S&P Capital IQ in New York, said by phone Jan 23. “It looks like $50 crude is the new reality that we’ll have to get used to.”

Production in the U.S. will be slow to decline as improvements in drilling technology boost well output even as companies drill less. Oil production per rig from new wells in the Bakken in February will be double what it was three years ago, the EIA said Jan. 12.

The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked supplies from shale formations including the Eagle Ford and Permian in Texas and the Bakken in North Dakota.

Drillers idled 49 U.S. oil rigs last week, bringing the total to 1,317, the lowest level in two years, Baker Hughes Inc. (BHI) said on its website Jan. 23. It was the seventh weekly decline.

Short Options

“The fundamentals are terrible,” Mike Wittner, head of oil research at Societe Generale SA in New York, said by phone Jan. 23. “The drop in the rig count will have a limited impact. We’re going to see huge builds during the first quarter worldwide.”

Short positions in WTI increased by 6,262 contracts to 94,203 futures and options in the week ended Jan. 20, CFTC data show. Long positions dropped 0.3 percent. Net-long positions fell 3.3 percent to 216,704. Producers increased net-short positions by 7,623 to 132,143 contracts, the most since December 2011.

In other markets, bullish bets on gasoline advanced 5.8 percent to 39,418 contracts, the first gain in five weeks. Futures increased 3.5 percent to $1.3128 a gallon on Nymex in the reporting period.

Pump Prices

Retail gasoline, averaged nationwide, slid to $2.033 a gallon Jan. 25, the lowest since March 2009, according to Heathrow, Florida-based AAA, the largest U.S. motoring group.

Bearish wagers on U.S. ultra low sulfur diesel increased 2.3 percent to 29,943 contracts, the most since the period ended Nov. 4. The fuel slipped 0.4 percent to $1.6266 a gallon in the report week.

Net-short wagers on U.S. natural gas decreased 32 percent to 11,967 lots. The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract.

Nymex natural gas dropped 3.8 percent to $2.831 per million British thermal units during the report week.

“We’ve been here before,” said Wittner. “There have been points when it looked like it was stabilizing only to then take another leg lower.”

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Re: Farm Futures
« Reply #59 on: January 29, 2015, 07:36:05 AM »
Oil and gas in 2015 will be survival of the richest - 16 Dec 2014
Tycoons see their O&G investment value cut by almost half - 2 Dec 2014

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Re: Farm Futures
« Reply #60 on: January 29, 2015, 08:22:19 AM »
Collapse of oil prices and the Russian Ruble - 28 Jan 2015
Global economic outlook Q1-2015: Russia teetering on the edge of recession - 20 Jan 2015

Oil and natural gas sales accounted for 68% of Russia's export


California county declares fiscal emergency due to oil price plunge

By Tim Reid
29 Jan 2015

LOS ANGELES (Reuters) - Plunging oil prices led California's Kern County to declare a fiscal emergency on Tuesday, a move that allows officials to tap into a reserve fund as tax revenue faces a big decline due to the lower oil prices.

A roughly 50 percent drop in crude prices since the summer is hitting budgets in U.S. oil regions. Kern County, in central California, is at the heart of the state's oil production.

Officials in Kern County, with a population of about 900,000, say the plunge in oil prices has cut projected property tax revenue for the 2015/16 fiscal year budget by $61 million.

Oil companies account for about 30 percent of the county's property tax revenues, said Lee Smith, an assistant county assessor. Roughly two-thirds of the county's revenue is gleaned from property tax.

Overall, the projected drop in property tax revenues, combined with rising pension costs, will cause a $44 million hit to the county's general fund in 2015/15, said Nancy Lawson, the county budget director.

The general fund is currently $781 million and in surplus. But by 2015/16, officials predict a $27 million general fund deficit, Lawson said.

By declaring a fiscal emergency, which the Kern County Board of Supervisors voted for on Tuesday, officials have the legal authority to tap into a $40 million reserve fund to shore up the budget. It also gives them greater power to cut staffing levels in the county fire department.

Lawson said if low oil prices persist, the price drop will have ripple effects in other parts of the economy. The area is braced for significant layoffs in the oil and gas sector, which will lead to diminished sales and use taxes, further denting the budget, Lawson said.

The county budget is also under increasing strain because of pension costs. Kern County does not pay into the California Public Employees' Retirement System, or Calpers, which administers most public pensions in California.

Most of Kern's pensions are administered under a separate system established in the late 1930s for a group of California counties.

Those pension costs are rising. Estimated pension costs for fiscal year 2015/16 are $231 million. The county also has $213 million in outstanding pension obligation bonds the county issued in 2003 to shore up its pension fund. They begin to mature in 2022.

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Re: Farm Futures
« Reply #61 on: January 29, 2015, 08:27:42 AM »
Malaysia's energy industry is a critical sector of growth for the entire economy, and it makes up almost 20% of the total gross domestic product

Ringgit's plunge likely linked to oil prices

By Melissa Tan
8 Jan 2015

The Malaysian ringgit tumbled to fresh historic lows yesterday as crude oil prices fell below the psychologically significant threshold of US$50 per barrel.

One Singapore dollar could buy about 2.68 ringgit yesterday, up from 2.67 ringgit the day before, according to data from Bloomberg.

This is the weakest the ringgit has been against the Singdollar since at least 1981 - the Bloomberg figures go back only that far.

Even in the depths of the Asian financial crisis, the weakest the ringgit ever became was 2.45 ringgit to one Singdollar in June 1998.

Analysts said the ringgit is likely to take its cue from oil prices.

Malaysia, a major oil exporter, is heavily dependent on oil revenues, so a plunge in oil prices means that its government may fail to meet its budget deficit target this year. "The falling oil prices seem to come at the worst possible time for Malaysia," said Phillip Futures analyst Daniel Ang, who noted the country's high debt already made investors uneasy.

The price of benchmark Brent crude oil traded in London sank to US$49.81 per barrel yesterday.

Though the weaker ringgit may benefit Singaporeans who shop in Malaysia, economists say it may also hurt Singapore indirectly. Malaysia is one of Singapore's largest trading partners, with total trade between the two countries coming in at S$113.6 billion ($84.94 billion) in 2013, going by official data.

Here are three things analysts have to say.

Windfall for Singaporean shoppers and importers

"The weaker ringgit is good for Singaporeans who shop and eat in Malaysia," said OCBC economist Selena Ling. Lower prices there will also boost tourism to the country, she added.

Manufacturers and other businesses that import raw materials from Malaysia to Singapore will also pay less in Singdollar terms, Ling said. Imports from Malaysia to Singapore were worth about S$51.1 billion in 2013, according to official data.

Softer ringgit signals weakening Malaysian economy

On the flip side, a weaker ringgit reflects slower growth in Malaysia's economy, which is closely linked to Singapore's, said Bank of America Merrill Lynch economist Chua Hak Bin.

"Malaysia is the trouble spot in Southeast Asia by virtue of being heavily dependent on oil revenue... the drop in oil prices will be a big blow."

Petronas, Malaysia's state oil company, is reportedly planning to slash operating expenses, which Dr Chua noted may possibly lead to job cuts.

He said that if crude oil prices continue to fall, Petronas could slip into the red. "With such a sudden price collapse, its margins could be wiped out altogether."

Businesses and investors in Malaysia may be hurt

The close Malaysia-Singapore economic ties mean that a weaker Malaysian economy could affect Singapore businesses with operations there, Ms Ling said.

"What people like is predictability. The sudden plunge will throw businesses' forecasting into disarray," she said.

Dr Chua said Singaporeans with property in Malaysia will see the value of their properties fall.

The Singdollar may also weaken as the ringgit is one of the major currencies that the Singdollar is influenced by, he said.

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Re: Farm Futures
« Reply #62 on: January 29, 2015, 09:20:00 AM »
Malaysia's energy industry is a critical sector of growth for the entire economy, and it makes up almost 20% of the total gross domestic product

thanks for the info zuolun... :thumbsup: :handshake:

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Re: Farm Futures
« Reply #63 on: January 29, 2015, 09:59:10 AM »
thanks for the info zuolun... :thumbsup: :handshake:
The real problem for commodity nations is currency, not prices - Sep 15, 2014
Monetary Policy Statement - 28 Jan 2015

Bank Negara's reserves @ RM405.5b = USD116.0b - 31 Dec 2014

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Re: Farm Futures
« Reply #64 on: January 29, 2015, 04:13:32 PM »
List of banks in Malaysia
Weak earnings prospects, moderate loan growth for banks next year - 11 Dec 2014
Heavy Metals Weigh On Banks - 27 Nov 2014

CIMB's 3rd qtr earnings that profit from its Indonesian business had fallen 28% Y-O-Y in part due to weak commodity prices.

Local bank, Maybank kena 1MDB loan exposure at RM5.5bil

MayBank - Bearish Gartley Pattern

MayBank (weekly) - Double Top

Maybank's loan exposure at RM5.5bil is negative news, its share price is likely to retest the last low at RM8.25 and hit lower low to RM7.90, after the bearish gartley pattern is done.

Local bank, CIMB is worse then Maybank. :(

CIMB - Head and Shoulder pattern; should a bearish breakout materialise, target price at RM 4.12 


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Re: Farm Futures
« Reply #65 on: January 30, 2015, 07:10:28 AM »
Why crude won't rebound any time soon

By Lawrence Lewitinn
January 28, 2015

Oil prices have fallen and they won’t be getting up for a long time, according to two major banks.

A recent report by UBS says it will take at least five years before crude oil returns to $90 per barrel, where it traded as recently as last summer. Meanwhile, in a note released Tuesday, Goldman Sachs said it expected oil to stabilize around the $40 per barrel level and then head toward $65 to $70 per barrel by the end of the year.

West Texas Intermediate crude oil contracts settled at $44.45 on Wednesday, its lowest price since March 2009.

According to one trader, Goldman Sachs and UBS have it right. “We’re in a bottoming process,” said David Seaburg, head of sales trading at Cowen and Co. For oil prices to move higher, “it’s going to take significant time.”

Despite a reduction in capital expenditures by oil companies, supply is still projected to go up, said Seaburg. In fact, the U.S. Energy Information Agency reported that American stockpiles are at 407 million barrels, the highest since 1982, when such statistics began being compiled.

“We need to see either OPEC making some sort of decision or some of these companies coming out and making a specific announcement about deep, deep cuts for things to change,” said Seaburg. “Or we need the demand picture to pick up in an incredible way, which is probably not in the near-term horizon.”

Nonetheless, he anticipates more volatility ahead in the oil markets based on his discussions with an oil trader at his firm regarding the industry’s capital expenditure cuts.

“He’s going to be the slowest trader on the desk for the first three months of this year,” said Seaburg. “For the balance of the year, he’s going to be the busiest trader because he expects things to really pick up after all of these cuts take hold and oil begins to climb higher.”

But the technicals show even lower prices ahead, based on the chart work of Todd Gordon, founder of He notes that the recent collapse in oil prices is now in its 32nd week, which is about the same duration as the huge drop in oil during the 2008 credit crisis.

Though Gordon doesn’t read too much into the time relationship of the two collapses, he says it’s a sign that the oil market should be on the lookout for a significant event.

And that even may have occurred recently when crude broke below $46 per barrel. Gordon sees that as technically important because it broke through a support line extending from the lows of 2002 and 2009. The next stop down, according to his chart, is at $33.20 per barrel, near the 2009 lows.

“I’ve actually just gone short crude this morning with clients,” Gordon said. “We have a put spread on in the USO, the ETF that tracks oil. We think it goes down to the $33 range…. It had every opportunity to rally. It couldn’t. So the path of least resistance is lower.”

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Re: Farm Futures
« Reply #66 on: January 30, 2015, 07:16:46 AM »

Cheers to ron95 below 2 till 2020.

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Re: Farm Futures
« Reply #67 on: January 30, 2015, 08:11:03 AM »
Say NO to Corporate Kings - 4 Oct 2013
The Edge Economic Forum 2014 Datuk Tong Kooi Ong - 11 Mar 2014
Rogue betting against ringgit - 28 Jan 2015
How Tong Kooi Ong is attempting to break Bank Negara and crash the RM - 28 Jan 2015

Where there's reed, there's heat.
Loan Deadline for 1MDB Adds to Focus on Other Borrowings

Cost of Servicing Dollar Debts Increases as Oil, Ringgit Fall

Jan. 29, 2015 10:53 a.m. ET

A looming deadline to make a $560 million loan repayment is piling pressure on a heavily indebted Malaysian state investment fund and focusing markets’ attention on how it will handle its other, much larger liabilities.

1Malaysia Development Bhd., or 1MDB as it is known, has until midnight Saturday to make the payment to two local banks. People familiar with the matter say the negotiations with Malayan Banking Bhd. and RHB Bank Bhd. are complicated by the fact that the loan is guaranteed by the investment arm of businessman Ananda Krishnan , who they said is aiming to acquire a stake in unit of a power company he previously sold to 1MDB in 2012.

1MDB views Mr. Krishnan as a potential strategic partner, one person said. Mr. Krishnan couldn’t immediately be reached for comment.

The currency grace period may be extended beyond Jan. 31, a person familiar with the talks said. A Dec. 31 deadline for repayment had already been extended,

The loan, denominated in ringgit, is a relatively small slice of 1MDB’s total liabilities of 41.9 billion ringgit, or $11.5 billion, as of March 31, the latest date for which figures are available. But it is focusing attention on how 1MDB will handle its $7.4 billion in dollar-denominated debt while oil prices, and Malaysia’s currency, remain weak.

Malaysia is one of Asia’s few oil exporters, and the cost of servicing 1MDB’s dollar obligations has risen as Malaysia’s ringgit slumps. The currency has lost around 12% in the past six months alone, adding to criticism of the government-linked fund.

Opposition politician Tony Pua has described 1MDB’s borrowing program as reckless. Financing costs were recorded at 2.40 billion ringgit, or $660 million at current rates, in 1MDB’s most recent financial statements, dated March 31 last year.

The precarious state of 1MDB points to how some emerging economies are being hit hard by the decline in oil prices. Russia, Venezuela, Brazil and Nigeria have all suffered declines in government revenue due to the roughly 50% drop in oil prices since the middle of last year.

In Malaysia, the financial stress has exposed some weaknesses in 1MDB’s aggressive strategy, and created a political storm. While officials at 1MDB say its assets, valued at 51.4 billion ringgit at the end of March, or $14.1 billion in today’s dollars, outweigh its liabilities, the fund’s financing crunch is proving to be an embarrassment for Malaysia’s government, and for Prime Minister Najib Razak in particular. 1MDB was launched after he became premier in 2009 and he serves as head of its advisory board.

The biggest problem is that many of 1MDB’s investments aren’t generating much in the way of cash. Its business generated net cash of 69 million ringgit in the year ended March 31. Many of its assets are in the form of land; one lot in downtown Kuala Lumpur is being developed as a new financial hub to be named after Mr. Najib’s father, Abdul Razak Hussein, Malaysia’s second prime minister.

Another part of its holdings takes the form of a raft of power generators. 1MDB planned to spin off the power-generation plants in a $3 billion initial public offering early this year, but people familiar with the matter say the offering has been delayed. Mr. Najib appeared on Malaysian television Jan. 21 to say that the IPO is scheduled to be launched in the second quarter.

With opposition politicians and Mr. Najib’s rivals in the ruling United Malays National Organization both criticizing the way 1MDB is run, some analysts say the fund is operating on borrowed time. James Chin, the Kuala Lumpur-based director of the Asia Institute at Australia’s Tasmania University, says that if 1MDB manages to spin off its assets, the government will ultimately choose to wind it down. “It has attracted such a stink it’s going to rub off on whoever touches it,” he said.

Both government and 1MDB officials privately say its investments are solid and will ultimately come good. But the fund’s immediate problems are a painful reality check for Malaysia.

Opposition politicians argue oil money helped create a lax financial culture in which government-linked funds weren’t subject to sufficient scrutiny. As oil falls, damaging the economy and adding to 1MDB’s woes, concern about Malaysia’s ability to make good on its obligations is growing

Fitch Ratings recently cautioned that 1MDB’s financial position has become “a source of uncertainty” because of the nature of its operations, leadership and explicit government guarantees of some of its borrowings.

And the yield on Malaysian government 10-year bonds, at 3.86%, is significantly higher than the 2.75% yield on comparable Thai securities, despite Malaysia’s better sovereign credit rating.

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Re: Farm Futures
« Reply #68 on: January 30, 2015, 08:15:55 AM »


Offline zuolun

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Re: Farm Futures
« Reply #69 on: January 30, 2015, 08:46:46 AM »
Ananda Krishnan to lend 1MDB up to RM2 billion to settle debts - 30 Jan 2015
The danger that is The Edge and The Malaysia Insider - 1 Nov 2014

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Re: Farm Futures
« Reply #70 on: January 30, 2015, 08:47:02 AM »

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Re: Farm Futures
« Reply #71 on: January 30, 2015, 08:47:21 AM »

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Re: Farm Futures
« Reply #72 on: January 30, 2015, 11:38:37 AM »
Oil crash: 'Drill, baby, drill' loses momentum - 29 Jan 2015
Oil crash may kill the Texas housing boom - 23 Jan 2015

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Re: Farm Futures
« Reply #73 on: January 30, 2015, 01:48:18 PM »
Malaysia's Khazanah selling Tenaga stake worth up to $454 mln-term sheet

January 28, 2015

KUALA LUMPUR: Malaysian state investor Khazanah Nasional Bhd is selling 112 million shares worth up to $454 million in Malaysia's largest power group Tenaga Nasional Bhd ( Financial Dashboard), according to a term sheet seen by Reuters on Wednesday.

The shares are being priced at between 14.40 and 14.60 ringgit per share, according to the sheet, which is equivalent to a discount of about 1.35 to 2.7 percent to the closing price of Tenaga's shares on Wednesday.

The sale will reduce Khazanah's stake in the country's largest company by market value to 29.64 percent from 31.64 percent now, according to Thomson Reuters data.

Officials at Tenaga and Khazanah were not immediately available to comment.

Tenaga on Jan. 22 reported a 34.3 percent jump in net profit for the first quarter ended November to 2.35 billion ringgit ($649.80 million), mainly on higher charges and sales of electricity.

CIMB Group Holdings Bhd ( Financial Dashboard) and Credit Suisse are the joint bookrunners on the sale, the sheet showed.

(US$1 = 3.6165 ringgit)

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Re: Farm Futures
« Reply #74 on: January 30, 2015, 04:57:53 PM »

As Oil Prices Fall, Alaska’s New Governor Faces a Novel Goal, Frugality - 25 Jan 2015

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Re: Farm Futures
« Reply #75 on: January 30, 2015, 05:20:55 PM »
The Importance of Gold to Nations and Individuals - 27 Aug 2014

China's change of heart to Chiang Kai-shek's gold - 27 Apr 2011

How Chiang spirited China's gold away from the Reds

As the PLA closed in on Shanghai, the KMT leader shipped millions in gold and silver out of the mainland in an operation only now coming to light

By Mark O’Neill
6 Jun 2010

In the early hours of December 2, 1948, a British journalist looked out of his window at the Peace Hotel in Shanghai. In the dark outside, he saw men with long poles carrying heavy boxes from the Bank of China across the Bund and loading them onto a customs vessel at the quay.

Soldiers had sealed off the Bund and stood with loaded rifles at every corner. What George Vine saw – and reported to his paper in London that night – was the start of a critical episode of the country’s civil war: Chiang Kai-shek’s transfer of the country’s gold, silver and foreign exchange from the mainland to Taiwan.

Over the next 12 months, Chiang moved by sea and air millions of taels of gold, a treasure trove that became the reserves for the New Taiwan dollar and made possible the island’s recovery from war and high inflation and its remarkable economic success in the decades to follow.

For Beijing, it was an unforgivable theft of assets that belonged to the nation. For the Kuomintang, it was a legitimate decision by the national president to save them from falling into the hands of a rebel army. Without the money, the Nationalist government would probably have not survived in Taiwan.

A new book, The Archives of Gold, has provided a rare, detailed account of the operation. The author is Dr Wu Sing-yung, a professor of radiological sciences and medicine at the University of California at Irvine and the son of the man who masterminded the operation.

His father, lieutenant general Wu Song-ching, head of the finance and budget department of the KMT government, was entrusted by Chiang with moving the gold; he was in charge of the military budget for 15 years. From 1946 until a week before his death in 1991, he kept a daily diary.

He did not speak about his work to his family. After his death, his wife gave the diary to their son, who discovered for the first time the critical role his father had played in saving the Nationalist government.

That first shipment went on a customs vessel, the Hai Xing, which sailed to Keelung in north Taiwan, escorted by a naval vessel, the Mei Cheng. In April 1949, the captain took the Mei Cheng to the Communist side, one of 90 Nationalist naval ships to defect during the year.

This highlighted to Chiang the risks of moving such a precious cargo; those carrying it might join the Communist side or keep it for themselves. He could entrust the operation only to his most loyal allies.

The second shipment, consisting of 151 boxes containing 900,000 taels of gold and a large quantity of silver, was loaded onto two naval vessels at the Bund in the early hours of January 20, 1949. As with the first, the military sealed off the area and guarded it with loaded weapons.

The two ships went to Xiamen, where the goods were stored in an underground vault of the Bank of China on the island of Gulangyu. In August, when the People’s Liberation Army was attacking Fuzhou, naval ships carried it to Taipei, where it was put in the vaults of the Taiwan Finance Bureau in Hsinyi Road.

On February 7, a civilian plane carried 120,000 taels of gold from the central bank in Nanjing to Taipei. The news was leaked to a Hong Kong newspaper, making Chiang fear that his rivals in the government would block the shipments. So he ordered his personal pilot to fly the remaining 480,000 taels within the next two days.

Angry over the transfer, a senior inspector within the central bank began to collect material on it and plan a strike within the bank to stop further shipments. On May 12, he was arrested by Nationalist agents in the bank’s office on the Bund. Five days later, just a week before the People’s Liberation Army captured Shanghai, he was strangled.

The city was in chaos as the PLA approached. Wu was ordered to move most of the remaining money from Shanghai. From May 18, nearly 200,000 taels of gold and 1.2 million silver dollars were loaded onto a ship. An uprising at a port on the route meant the journey to Taiwan took two weeks, instead of two days. In August, two further shipments to Taiwan were made, totalling 200,000 taels of gold.

Chiang wanted to keep the movement of the gold and money secret, not only from the Communists but people within his own government. “The movement of the gold was entirely controlled by one person, Chiang Kai-shek,” Wu said. “Even the finance minister had no power to transfer it. Chiang conveyed his orders verbally, leaving no written record. Only he and my father knew about the movements.”

Chiang wanted the money not only from Shanghai and Nanjing but other major cities. On November 29, Wu and the deputy defence minister were given the responsibility of moving 600,000 silver dollars from Chongqing to Chengdu. It was a perilous assignment: the PLA was close to the city and the roads were blocked with thousands of refugees.

They set off with eight large trucks at 1am on November 30, with the sound of gunfire ringing in their ears. En route, some of the trucks disappeared – taken by a local warlord who needed money to pay his troops. After a journey of five days, Wu and the rest of the trucks finally reached Chengdu airport, where Chiang was waiting.

December 7 was Wu’s final day on the mainland; the plane was so crowded that he could take no luggage. He had to leave 50,000 taels of gold behind; who took them is unclear. For one more week, the air force transported from Taiwan gold and silver to troops in Hainan and other islands still held by the Nationalists. Then the war was finally lost.

The importance of the money soon became clear. On June 15, 1949, the Bank of Taiwan issued the New Taiwan dollar, to replace the old Taiwan dollar at a ratio of one to 40,000. The reserve that backed the first issue of NT$200 million was 800,000 taels of gold and US$10 million brought from Shanghai.

The stability of the new currency ended the severe inflation that had plagued the island ever since Japanese forces handed it back to China in 1945. The gold, silver and foreign exchange were vital for the first few years after Chiang and his government arrived on the island.

The 3.5 million taels of gold left after the end of the civil war were equivalent to US$50 for every one of Taiwan’s eight million inhabitants at that time. They helped Chiang resettle the more than 1.5 million soldiers and civilians who arrived with him, the vast majority bringing only the clothes they wore and the luggage they could carry.

Chiang Ching-kuo, son of Chiang Kai-shek and president after his death, wrote in his diary: “if we have not had this gold in the early period of moving the government to Taiwan, it is unimaginable what would have happened. How would we have the stability of today?”

In January 1950, US president Harry Truman announced that the United States would not become involved in a war in the Taiwan Strait; the US stopped giving aid to the Nationalist government.

But Truman reversed this position after the Korean war broke out in June 1950 and sent the Seventh Fleet into the straits to protect Taiwan, to contain the threat of communism in Asia.

From 1950 to 1965, the US provided US$1.5 billion in economic aid and US$2.4 billion in military aid to Taiwan. The aid included consumer goods and industrial raw materials, which the government could sell to raise revenue. In 1952, the wholesale price index rose by only 3.4 per cent and the threat of hyperinflation was over.

By 1965, Taiwan had established a solid economic base, on its way to becoming an “Asian tiger”.

With so much secrecy and lack of written records, it is hard to know the exact amount of treasure shipped to Taiwan. Wu estimates the amount of gold taken in 1949 at four million taels. Whatever the figure, it was critical to the survival of Chiang Kai-shek’s government and its future prosperity – and, for Beijing, the theft of the century.

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Re: Farm Futures
« Reply #76 on: January 30, 2015, 05:44:29 PM »
Russia’s central bank purchased 152 tonnes of gold worth $6.1bn at today’s prices — an increase of 123 per cent compared with the previous year — in the first 11 months of 2014, according to GFMS estimates.

Russia buys record amounts of gold

By Henry Sanderson
29 Jan 2015

Russia accounted for about one-third of central banks’ gold purchases last year as the country spent more on the metal than at any time since the break-up of the Soviet Union amid escalating tensions with the west and a collapse in the value of the rouble.

Central banks around the world bought a net 461 tonnes of gold in 2014 — 13 per cent higher than the previous year and the second-highest level since the collapse of the gold standard in 1971 — as they continued to diversify their currency reserves following the financial crisis. They have added 1,800 tonnes to their holdings in the past six years.

Moscow’s shopping spree of the yellow metal was driven by a desire to shift away from a dependency on the dollar and provide support to the beleaguered rouble. Russia’s currency has lost half its value against the dollar in the past year on the back of the plunging oil price as well as western sanctions. The central bank’s foreign currency reserves, mainly US and European government bonds, have also fallen.

“There is no attraction for the Russians to be doing anything which is helpful to the US and Europe,” said Ross Strachan of GFMS, a metals research group at Thomson Reuters, which compiled the figures. “Given the sanctions . . . gold is one asset which it can purchase which doesn’t do that.”

Russia’s central bank purchased 152 tonnes of gold worth $6.1bn at today’s prices — an increase of 123 per cent compared with the previous year — in the first 11 months of 2014, according to GFMS estimates.

Analysts also said Russia’s purchases might have been due to the buying of domestically produced gold that could not be easily sold overseas due to sanctions.

“This is a clear positive for the gold price,” said Matthew Turner, analyst at Macquarie. “If central banks had not purchased that gold it would have been bought by private investors or jewellery consumers, and this would likely have required a lower gold price.”

While Russia was a strong buyer this year, analysts say purchases could slow and the country could become a seller if it continues to liquidate its reserves to support the domestic currency.

During Russia’s last financial crisis in 1998, the central bank’s gold reserves fell by 118 tonnes, as the country’s foreign exchange holdings dropped below $10bn. Russia’s total international reserves amounted to $385bn at the end of December, compared with more than $500bn a year earlier.

“We are still a long way off Russia needing to sell gold,” Mr Turner said.

The Thomson Reuters survey is based on data provided to the International Monetary Fund as well as its own estimates on central banks that do not provide data.

Interest was also strong from central Asian states. Kazakhstan bought 46 tonnes through 2014 and Azerbaijan 10 tonnes, according to the survey. Iraq also acquired 48 tonnes in the first half of the year.

Gold has rallied more than 7 per cent this year due to renewed demand for a safe haven asset amid turmoil in the eurozone and weaker global growth.

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“While official sector purchases are forecast to continue, it appears unlikely, given low international oil prices and growing deficits in many purchasing nations, that buying will accelerate,” the Thomson Reuters report said.

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Re: Farm Futures
« Reply #77 on: January 31, 2015, 05:54:22 PM »
Cheap Oil Burns $390 Billion Hole in Investors' Pockets

By Asjylyn LoderElizabeth Dexheimer
30 Jan 2015

Investors have a message for suffering U.S. oil drillers: We feel your pain.

They’ve pumped more than $1.4 trillion into the oil and gas industry the past five years as oil prices averaged more than $91 a barrel. The cash infusion helped push U.S. crude production to the highest in more than 30 years, according to data compiled by Bloomberg.

Now that oil prices have fallen below $46, any euphoria over cheaper energy will be tempered by losses that are starting to show up in investment funds, retirement accounts and bank balance sheets. The bear market has wiped out a total of $393 billion since June -- $353 billion from the shares of 76 companies in the Bloomberg Intelligence North America Exploration & Production index, and almost $40 billion from high-yield energy bonds, issued by many shale drillers, according to a Bloomberg index.

“The only thing people are noticing now is that gas prices are dropping,” said Sean Wheeler, the Houston-based co-chairman of the oil and gas industry team for law firm Latham & Watkins LLP. “People haven’t noticed yet that it’s also hitting their portfolios.”

The money flowing into oil and gas companies around the world in the last five years came from a variety of sources. The industry completed $286 billion in joint ventures, investments and spinoffs, raised $353 billion in initial public offerings and follow-on share sales, and borrowed $786 billion in bonds and loans.

50 Cents

The crash caught investors and lenders by surprise. Eight months ago, Houston-based oil producer Energy XXI Ltd. sold $650 million in bonds. Demand was so high that the company more than doubled the size of the offering, company records show. The debt is now trading for less than 50 cents on the dollar, and the stock has declined 88 percent.

Energy XXI, which has more than $3.8 billion in debt, is one of more than 80 oil and gas companies whose bonds have fallen to distressed levels, meaning their yields are more than 10 percentage points above Treasury debt, as investors bet the obligations won’t be repaid, according to data compiled by Bloomberg.

The stocks and bonds of Energy XXI and other struggling energy firms have been bought up by pension funds, insurance companies and savings plans that are the mainstays of Americans’ retirement accounts. Institutional investors had more than $963 billion tied up in energy stocks as of the end of September, according to Peter Laurelli, a New York-based vice president of research with eVestment, an analytics firm in Marietta, Georgia, that gathers data on about $22 trillion of institutional strategies.

Bank Lenders

Energy XXI’s second-largest reported shareholder is a group of funds managed by Vanguard Group Inc., the biggest U.S. mutual-fund firm, according to data compiled by Bloomberg. The top reported owner of the bonds Energy XXI issued in May is Franklin Resources Inc. in San Mateo, California, also known as Franklin Templeton Investments, which manages multiple funds that bought Energy XXI’s debt, according to data compiled by Bloomberg.

Energy XXI didn’t return calls and e-mails seeking comment. The company has “plenty of liquidity,” Greg Smith, a spokesman, said in a December interview.

A reckoning may also be in store for Energy XXI’s bank lenders. The company, which drills in the Gulf of Mexico, has tapped $974 million of a $1.5 billion credit line extended by a group of banks including Gulfport, Mississippi-based Hancock Holding Co.’s Whitney Bank; Amegy Bank of Texas, a subsidiary of Salt Lake City-based Zions Bancorporation; and Comerica Inc. in Dallas, according to data compiled by Bloomberg. Energy XXI has also borrowed money from banks in the U.K., Australia, Canada, Spain and Japan.

Struggling Drillers

The three U.S. banks are also among the lenders to other struggling drillers. The loans are backed by oil reserves that are worth less at today’s prices than they were when banks last performed scheduled revaluations of the collateral.

Representatives of Amegy, Comerica and Hancock declined to comment on the performance of specific loans. Shares of Zions have declined 15 percent this month. Comerica is down 9.8 percent, and Hancock slid 15 percent.

“This is a big deal for banks in states like Texas where oil is one of the most prominent businesses,” said Brady Gailey, an Atlanta-based analyst at Stifel Financial Corp.’s KBW unit. “There are going to be loan losses and it’s going to hit multiple banks that have exposure to that credit. It will slow economic growth, it could ding real estate values, banks will lose money and their stock will get slammed.”

Regional Lender

One regional lender with energy exposure is Lafayette, Louisiana-based MidSouth Bancorp Inc., with 21 percent of its $1.25 billion of lending tied to oil and gas, according to regulatory filings.

Rusty Cloutier, MidSouth’s chief executive officer, said he’s not worried about the oil decline hurting his business because the bank’s portfolio consists of experienced oil and gas companies.

“There will be some players that get hurt, but the real players in the energy market aren’t going anywhere,” Cloutier said. “Companies who are leveraged very highly and got into the business not long ago, those are the ones that are going to get hurt.”

Hundreds of smaller banks in states such as Texas, Colorado, Oklahoma and North Dakota have also plunged into energy lending during the oil boom.

‘Very Concerned’

Gil Barker, the Office of the U.S. Comptroller of the Currency’s top overseer of community banks in states including Texas and Oklahoma, said he has confidence that the smaller lenders were doing what they should, though circumstances might change.

“We’re very concerned about the banks located in these oil-producing areas,” he said. “A prolonged time of low oil prices is really going to cause banks significant problems.”

More people will be affected than realize it, said Michael Shaoul, who helps oversee about $9 billion as CEO of Marketfield Asset Management LLC in New York. “So much of this has ended up in 401(k)s and in pension funds and in mutual funds, and that’s where the bulk of the pain is going to be felt.”

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The Oil Price Shock: Primary, Secondary and Collateral Effects - 22 Dec 2014