By Chanyaporn Chanjaroen - Dec 13, 2010 Hedge funds and large speculators increased their bets on a commodity rally to the highest level since at least 2006 as copper and gold gained to records.
An index tracking speculative positions in 20 commodity futures in the U.S. advanced 8.4 percent from the week before to 1.54 million contracts as of Dec. 7, the highest level since at least February 2006, Commodity Futures Trading Commission data show. The gauge, compiled by Bloomberg, is derived by taking short positions, or bets on lower prices, from long positions.
Commodities tracked by the Thomson Reuters/Jefferies CRB Index advanced 11 percent this year, extending a 23 percent gain in 2009, on demand led by China and as investors bought raw materials as a store of value. Cotton soared 85 percent, silver 73 percent and arabica coffee 54 percent. Hedge funds and institutional investors will put more money in commodities next year as the world economy recovers, Barclays Capital said.
“The current economic environment is clearly positive for risk assets like commodities,” Yingxi Yu, an analyst at Barclays Capital in Singapore, said today by phone. “Talk of a double-dip or a recession seems to be fading away.”
About 76 percent of respondents surveyed at a Barclays’s conference last week in New York predicted a bigger inflow into direct commodity investments next year. New investments this year were $50 billion, the London-based bank said.
“We see most commodity prices moving higher in 2011 as global economic growth, at an above-trend 4.2 percent, bolsters demand,” Morgan Stanley analysts led by New York-based Hussein Allidina said in a report dated Dec. 10. The bank is “most constructive” on crude oil, copper, gold, corn and soy, it said.
Near-zero interest rates in the U.S. and increasing money supply in leading world economies have attracted investors to commodities, said Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., by phone today from Melbourne. U.S. Treasuries returned 5.6 percent this year, according to Merrill Lynch & Co., and the MSCI World Index of equities gained 7.6 percent.
“The key driver is cheap money that’s parked in high- returning assets like commodities,” he said. “A tipping point would be when the Fed starts raising the rates. That’s when we will start to see big correction.”
Speculative long positions in New York-traded copper outnumbered shorts by 26,432 contracts in the week ended Dec. 7, a 25 percent increase from the week before, CFTC data show. Wheat speculators repositioned for a price increase, holding 8,488 net long positions, a reversal from 19,372 lots of net shorts a week before, the data show.
NEWS - Commodites, Agriculture, Green Investment - NEWS
12/03/2010
Commodities to Get Boost From New Regulation Effort, Arrowhawk's Fan Says
By Asjylyn Loder - Dec 2, 2010 The most sweeping rewrite of Wall Street rules since the 1930s will encourage traders to invest in physical commodities, potentially keeping supply off the market and affecting prices, said Jennifer Fan, a partner and senior portfolio manager with Arrowhawk Commodity Strategies, a hedge fund in Darien, Connecticut.
The Commodity Futures Trading Commission is trying to limit the impact traders have on the prices for raw materials, Fan said. Reining in futures trading won’t be effective because it will drive traders to the physical markets, she said.
“It’s driving people to invest in physical commodities and actually taking commodities that we produce and holding them off the market, not using them and just keeping them for investment purposes, and I think that’s pretty clear that that affects the price of commodities,” Fan said today at the Bloomberg Link Hedge Fund and Investor Briefing in New York during a panel titled Timing the Peak of the Global Commodities Rush.
The Dodd-Frank financial overhaul, which became law in July, gave the CFTC a year to establish rules governing the $615 trillion over-the-counter derivatives market. The commission has until January to impose limits on the number of contracts a single trader can hold for commodities including oil, natural gas and gasoline. It has until April to impose limits on agricultural products.
Chilton Reaction
“Folks are always going to try and find a way around the law, rules or regulations,” said CFTC Commissioner Bart Chilton in an e-mail. “Sometimes that is sort of like pushing on a balloon. You may make a difference in one place, but it comes out another.”
The law also includes the so-called Volcker rule barring banks from trading on their own accounts, as well as rules designed to push the over-the-counter market onto regulated clearinghouses and exchanges -- two issues that have garnered much attention from Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp., according to meetings posted on the Web sites of the federal regulators.
The CFTC, along with the Securities and Exchange Commission, must also determine which companies will be categorized as swap dealers or major swap participants. Those are designations that entail higher capital requirements and increased scrutiny.
Dodd-Frank
The law is named for its primary authors, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and House Financial Services Chairman Barney Frank, a Massachusetts Democrat. It aims to stem systemic risk by requiring most interest-rate, credit-default and other swaps be processed by clearinghouses after being traded on exchanges or swap-execution facilities.
Congress took aim at the industry after soured trades on mortgage and credit derivatives tipped the U.S. economy into the deepest recession since the 1930s.
The panel included Richard Robb, an economics professor at Columbia University and chief executive officer of Christofferson, Robb and Co., a New York- and London-based investment management firm; Mari Kooi, chief executive officer of Santa Fe, New Mexico-based Wolf Asset Management International LLC; and Tim Flannery, founder and chief investment officer of Copia Capital LLC, a Chicago-based hedge fund.
The Commodity Futures Trading Commission is trying to limit the impact traders have on the prices for raw materials, Fan said. Reining in futures trading won’t be effective because it will drive traders to the physical markets, she said.
“It’s driving people to invest in physical commodities and actually taking commodities that we produce and holding them off the market, not using them and just keeping them for investment purposes, and I think that’s pretty clear that that affects the price of commodities,” Fan said today at the Bloomberg Link Hedge Fund and Investor Briefing in New York during a panel titled Timing the Peak of the Global Commodities Rush.
The Dodd-Frank financial overhaul, which became law in July, gave the CFTC a year to establish rules governing the $615 trillion over-the-counter derivatives market. The commission has until January to impose limits on the number of contracts a single trader can hold for commodities including oil, natural gas and gasoline. It has until April to impose limits on agricultural products.
Chilton Reaction
“Folks are always going to try and find a way around the law, rules or regulations,” said CFTC Commissioner Bart Chilton in an e-mail. “Sometimes that is sort of like pushing on a balloon. You may make a difference in one place, but it comes out another.”
The law also includes the so-called Volcker rule barring banks from trading on their own accounts, as well as rules designed to push the over-the-counter market onto regulated clearinghouses and exchanges -- two issues that have garnered much attention from Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp., according to meetings posted on the Web sites of the federal regulators.
The CFTC, along with the Securities and Exchange Commission, must also determine which companies will be categorized as swap dealers or major swap participants. Those are designations that entail higher capital requirements and increased scrutiny.
Dodd-Frank
The law is named for its primary authors, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and House Financial Services Chairman Barney Frank, a Massachusetts Democrat. It aims to stem systemic risk by requiring most interest-rate, credit-default and other swaps be processed by clearinghouses after being traded on exchanges or swap-execution facilities.
Congress took aim at the industry after soured trades on mortgage and credit derivatives tipped the U.S. economy into the deepest recession since the 1930s.
The panel included Richard Robb, an economics professor at Columbia University and chief executive officer of Christofferson, Robb and Co., a New York- and London-based investment management firm; Mari Kooi, chief executive officer of Santa Fe, New Mexico-based Wolf Asset Management International LLC; and Tim Flannery, founder and chief investment officer of Copia Capital LLC, a Chicago-based hedge fund.
12/02/2010
Saudi investors facing obstacles in Argentina
The Saudi Gazette | 30 Nov 2010
By HAZEM AL-MUTTARI
RIYADH: Dr. Fahad Balghunaim, Saudi Minister of Agriculture, said the exponentially high price of fodder is chiefly responsible for the rise in prices of imported and locally produced chickens.
He said the feed price increase is estimated at 40 percent, and noted that Saudi poultry producers have flooded the Ministry with appeals to subsidize the fodder.
“We are considering these applications,” he said.
Dr. Balghunaim commented on the matter during the visit Monday by Argentina’s Agriculture Minister Julian Dominguez and his accompanying delegation to King Abdul Aziz Center for Genuine Arab Horses in Riyadh.
He said one of the major efforts in the field of economic exchange is to translate the initiative of King Abdullah, Custodian of the Two Holy Mosques, of investing in agriculture in foreign countries into practical measures.
The King is determined to secure a stable, reasonably priced food supply for the Kingdom and the Ministry of Health has tasked the private sector with implementing this initiative, Dr. Balghunaim said.
The private sector has responded positively by entering into partnerships with multinational companies investing in agriculture and investing in countries that are rich in agricultural resources, he said.
He said a Saudi business delegation visited Argentina to explore areas of economic exchange and discovered three obstacles to investment there.
There are concerns about tax exemptions, an investment protection pact and a tax on foreign investors, but an official said efforts are underway to address them.
Argentina’s agricultural minister said “we are making intensive contacts with the Foreign Ministry in Argentina to resolve these three issues.”
There are no restrictions for Saudi investors to possess lands in his country, he said.
There are some restrictions on the purchase and lease of some projects, but they have not been implemented, he added.
In a related matter, Saad Al-Meqbl, director general of Agricultural Affairs in the Eastern Province, has announced that 12 poultry projects have been shut down because their owners failed to follow regulations.
The projects, which he described as outdated, were in the urban zone.
He said his administration gave the owners a grace period so they could rectify the shortcomings, but they took no substantive action.
Al-Meqbl said a committee of officials from the ministries of Agriculture and Municipal and Rural Affairs have been effective in conducting surprise inspection tours of unlicensed shops selling live chicken.
The inspectors have confiscated more than 15,000 live chicken and the instruments used to slaughter them, he said.
Al-Meqbl further said owners of the poultry farms who violated the regulations were fined more than SR393,000 and that one of them was fined SR184,000 for unlicensed slaughtering of chicken.
Fines will be increased to SR1 million to further deter people, he added.
--------------------------------------------------------------------------------
By HAZEM AL-MUTTARI
RIYADH: Dr. Fahad Balghunaim, Saudi Minister of Agriculture, said the exponentially high price of fodder is chiefly responsible for the rise in prices of imported and locally produced chickens.
He said the feed price increase is estimated at 40 percent, and noted that Saudi poultry producers have flooded the Ministry with appeals to subsidize the fodder.
“We are considering these applications,” he said.
Dr. Balghunaim commented on the matter during the visit Monday by Argentina’s Agriculture Minister Julian Dominguez and his accompanying delegation to King Abdul Aziz Center for Genuine Arab Horses in Riyadh.
He said one of the major efforts in the field of economic exchange is to translate the initiative of King Abdullah, Custodian of the Two Holy Mosques, of investing in agriculture in foreign countries into practical measures.
The King is determined to secure a stable, reasonably priced food supply for the Kingdom and the Ministry of Health has tasked the private sector with implementing this initiative, Dr. Balghunaim said.
The private sector has responded positively by entering into partnerships with multinational companies investing in agriculture and investing in countries that are rich in agricultural resources, he said.
He said a Saudi business delegation visited Argentina to explore areas of economic exchange and discovered three obstacles to investment there.
There are concerns about tax exemptions, an investment protection pact and a tax on foreign investors, but an official said efforts are underway to address them.
Argentina’s agricultural minister said “we are making intensive contacts with the Foreign Ministry in Argentina to resolve these three issues.”
There are no restrictions for Saudi investors to possess lands in his country, he said.
There are some restrictions on the purchase and lease of some projects, but they have not been implemented, he added.
In a related matter, Saad Al-Meqbl, director general of Agricultural Affairs in the Eastern Province, has announced that 12 poultry projects have been shut down because their owners failed to follow regulations.
The projects, which he described as outdated, were in the urban zone.
He said his administration gave the owners a grace period so they could rectify the shortcomings, but they took no substantive action.
Al-Meqbl said a committee of officials from the ministries of Agriculture and Municipal and Rural Affairs have been effective in conducting surprise inspection tours of unlicensed shops selling live chicken.
The inspectors have confiscated more than 15,000 live chicken and the instruments used to slaughter them, he said.
Al-Meqbl further said owners of the poultry farms who violated the regulations were fined more than SR393,000 and that one of them was fined SR184,000 for unlicensed slaughtering of chicken.
Fines will be increased to SR1 million to further deter people, he added.
--------------------------------------------------------------------------------
African Agriculture Fund first closing at USD135m
AAF | 29 November 2010
The African Agriculture Fund (AAF), a private equity fund designed to respond to the food crisis that severely impacted the continent in 2008 in the wake of escalating food prices, reached its first closing at USD135m in November 2010.
AAF investment thesis primarily lies in food production, processing and distribution in cereals, livestock farming, dairy, fruit and vegetables, crop protection, logistics, fertilizers, seeds, edible oils, smallholders and agri services. To achieve optimal diversification within the sector, the fund will invest across the value chain from primary production to processing and tertiary services and across the continent. The Fund will make investments of up to USD20m per portfolio company, targeting entities with robust management and growth prospects. The fund aims to support private sector companies that implement strategies to enhance and diversify food production and distribution in Africa by providing equity funding including strengthening the management and modernisation of the agricultural sector on the continent.
To enhance its impact on development, the fund has deployed two powerful instruments: a dedicated SME sub fund of a target size of USD60m (initially USD30m) and a Technical Assistance Facility (TAF) of EUR10m, to support outgrower schemes in large companies and business development services in SMEs.
The support to AAF, whose total target size is USD300m, is part of a coordinated response of a pool of European DFIs, with the Agence Française de Développement (AFD), the Spanish Agency for International Development Cooperation (AECID), Promotion et Participation pour la Coopération économique (Proparco) and International Fund for Agricultural Development (IFAD), and a number of African DFIs, including the African Development Bank (AfDB), the Development Bank of Southern Africa (DBSA), the West African Development Bank (BOAD) and the ECOWAS Bank of Investment and Development (EBID), as limited liability partner investors. The International Fund for Agricultural Development (IFAD) will manage the Technical Assistance Facility for which core funding has been committed by the European Commission with the contribution of the Alliance for a Green Revolution in Africa (AGRA) and the Italian Cooperation.
To fight African agribusiness and agriculture’s chronic undercapitalisation, the fund is equipped with an innovative mechanism designed to attract private sector capital. Lead investors such as AFD and AECID together with BOAD and EBID have pooled their shares into a first loss risk taking mechanism that will provide private investors into AAF with an accelerated return.
Fund managers Phatisa have a team of seasoned professionals with a depth of experience in private equity, fund management and the agricultural sector across Africa. Phatisa is led by Duncan Owen and Stuart Bradley, with Valentine Chitalu as its Chairman. The group has offices in Mauritius, Zambia, Kenya, South Africa and is in the process of establishing a presence in West Africa.
The fund will operate according to a Socially Responsible Investment (SRI) Manual that features an environmental and social risk management system, guidelines for an optimal use of the technical assistance facility and, for the first time in agribusiness private equity, a Code of Conduct for Land Acquisition and Land Use in agricultural and agribusiness projects to prevent unsustainable practices.
“With food security such a crucial issue across Africa, the AAF will make equity finance available for African agricultural companies,” says Valentine Chitalu, Chairman of Phatisa Group. “We welcome all the investors’ significant contributions to Africa’s economic development and long-term prosperity.”
During the first closing procedures, Duncan stressed that “the commercial success of this new African food fund is critical for both the fund’s international investors and for the future of agriculture as a whole in Africa.”
AAF Promoters were advised by a legal team led by Gide Loyrette Nouel, Stéphane Puel, partner, and Julien Vandenbussche, comprising Africa Legal, Lance Roderick, partner and Louise Campion, and Muhammad Uteem Chambers
The African Agriculture Fund (AAF), a private equity fund designed to respond to the food crisis that severely impacted the continent in 2008 in the wake of escalating food prices, reached its first closing at USD135m in November 2010.
AAF investment thesis primarily lies in food production, processing and distribution in cereals, livestock farming, dairy, fruit and vegetables, crop protection, logistics, fertilizers, seeds, edible oils, smallholders and agri services. To achieve optimal diversification within the sector, the fund will invest across the value chain from primary production to processing and tertiary services and across the continent. The Fund will make investments of up to USD20m per portfolio company, targeting entities with robust management and growth prospects. The fund aims to support private sector companies that implement strategies to enhance and diversify food production and distribution in Africa by providing equity funding including strengthening the management and modernisation of the agricultural sector on the continent.
To enhance its impact on development, the fund has deployed two powerful instruments: a dedicated SME sub fund of a target size of USD60m (initially USD30m) and a Technical Assistance Facility (TAF) of EUR10m, to support outgrower schemes in large companies and business development services in SMEs.
The support to AAF, whose total target size is USD300m, is part of a coordinated response of a pool of European DFIs, with the Agence Française de Développement (AFD), the Spanish Agency for International Development Cooperation (AECID), Promotion et Participation pour la Coopération économique (Proparco) and International Fund for Agricultural Development (IFAD), and a number of African DFIs, including the African Development Bank (AfDB), the Development Bank of Southern Africa (DBSA), the West African Development Bank (BOAD) and the ECOWAS Bank of Investment and Development (EBID), as limited liability partner investors. The International Fund for Agricultural Development (IFAD) will manage the Technical Assistance Facility for which core funding has been committed by the European Commission with the contribution of the Alliance for a Green Revolution in Africa (AGRA) and the Italian Cooperation.
To fight African agribusiness and agriculture’s chronic undercapitalisation, the fund is equipped with an innovative mechanism designed to attract private sector capital. Lead investors such as AFD and AECID together with BOAD and EBID have pooled their shares into a first loss risk taking mechanism that will provide private investors into AAF with an accelerated return.
Fund managers Phatisa have a team of seasoned professionals with a depth of experience in private equity, fund management and the agricultural sector across Africa. Phatisa is led by Duncan Owen and Stuart Bradley, with Valentine Chitalu as its Chairman. The group has offices in Mauritius, Zambia, Kenya, South Africa and is in the process of establishing a presence in West Africa.
The fund will operate according to a Socially Responsible Investment (SRI) Manual that features an environmental and social risk management system, guidelines for an optimal use of the technical assistance facility and, for the first time in agribusiness private equity, a Code of Conduct for Land Acquisition and Land Use in agricultural and agribusiness projects to prevent unsustainable practices.
“With food security such a crucial issue across Africa, the AAF will make equity finance available for African agricultural companies,” says Valentine Chitalu, Chairman of Phatisa Group. “We welcome all the investors’ significant contributions to Africa’s economic development and long-term prosperity.”
During the first closing procedures, Duncan stressed that “the commercial success of this new African food fund is critical for both the fund’s international investors and for the future of agriculture as a whole in Africa.”
AAF Promoters were advised by a legal team led by Gide Loyrette Nouel, Stéphane Puel, partner, and Julien Vandenbussche, comprising Africa Legal, Lance Roderick, partner and Louise Campion, and Muhammad Uteem Chambers
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