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CFOZone Experts
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Tag >> commodities
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Posted by dbedell in volatility, supply chain, Nicolas Sarkozy, hedging, exports, energy, currency volatility, Commodity Futures Trading Commission, commodities, Christine Lagarde, agriculture
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With French president Nicolas Sarkozy set to take over the G-20 leadership in November, he and French Finance Minister Christine Lagarde are clearly focused on an overhaul of commodities speculation practices in major developed economies. On Monday, Lagarde reiterated this message in an interview on Europe 1 radio, calling on G-20 leaders to coordinate efforts to reduce speculation on commodities and currencies in order to better manage the extreme volatility seen in recent months—and indeed to reduce the wave of highs and lows that often drive these markets.
Canadian fertilizer company PotashCorp has rejected a $38.49 billion bid from BHP Billiton, of Australia, to purchase the company. The fertilizer market worldwide has been a hotbed of M&A activity for the past few months and BHP Billiton’s bid for PotashCorp of Saskatchewan is just the latest in a line of deals that have been making the headlines. On Tuesday PotashCorp said that its board had rejected the offer from BHP—saying that it undervalued the company. At $130 a share, the bid put a 16 percent premium on the company’s Monday closing share price. On news of the offer, the Canadian firm’s shares soared to $145.
Russian president Vladimir Putin’s announcement on Thursday of a temporary ban on grain exports led to the latest in a series of runs on grain prices on global commodities exchanges over the past few weeks. Wheat prices on the CME in Chicago have risen almost 80 percent over the past month. For companies in the food production industry, the question is what impact it will have on hedging programs.
Chocfinger has struck the cocoa market--buying up and taking delivery of 241,000 tons of cocoa last week at a value of £658 million ($1 billion). The purchases were made by hedge fund Armajaro under the direction of fund co-founder Anthony Ward—called Chocfinger after Goldfinger of James Bond fame—the legendary super villain who attempted to corner the gold market in the movie of the same name. The purchase accounts for about 15 percent of global cocoa supplies and 25 percent of European cocoa supplies, according to the International Cocoa Organisation, and is the largest physical delivery of cocoa on the Liffe in 14 years.
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