To: BUSINESS EDITORS Contact: David Guarino, Communications, Standard & Poor's, New York, +1-212-438-1471, dave_guarino@standardandpoors.com, or Matthew McAdam, Communications, Standard & Poor's, London, (+44) 207 176 3605, matthew_mcadam@standardandpoors.com
WASHINGTON (Reuters) - U.S. regulators this week will finalize their toughest crackdown yet on volatile oil and metal markets, concluding nearly four years of fierce debate over whether limits on speculative trade can tame prices. As Wall Street bemoans the measure as a sop to politicians who have vilified speculators for driving grain and oil prices to painful peaks since 2008, the Commodity Futures Trading Commission will push through a groundbreaking rule to restrict the number of commodity contracts a trader can hold.
THE SMART MONEY IN A commodity play knows that the theme play in the sector is always clear, ie, the sector moves in cycles more comparatively to other asset classes, and when the boom is over, the fall can be very steep as greed changes overnight to fear and panic. With commodity prices all falling steeply this year, the pertinent question to ask is whether the cyclical boom in the sector is finally over. If the answer is in the affirmative, then some analysts say that catching the sector down-cycle at the wrong time would certainly be akin to the cliche of catching a falling knife. To see a perspective of the sector, it's worth noting that the backdrop of commodity prices has been extremely bullish in the past few years. The Reuters-Jefferies Price Index (CRB) (see Chart 1) has climbe...
On January 26, 2011, the Commodity Futures Trading Commission (``Commission'' or ``CFTC'') published in the Federal Register a notice of proposed rulemaking (``proposal'' or ``Proposed Rules''), which establishes a position limits regime for 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are economically equivalent to such contracts. The Commission is adopting the Proposed Rules, with modifications.
... sudden or unreasonable fluctuations in prices. Instead, the Commission must set position limits ...
NEW YORK (Reuters) - Investments betting that commodity futures prices will move higher have drastically diminished over the past two months due to the global credit crisis, according to data released on Monday [Sept. 29]. The amount of so-called long-only money has shrunk by as much as $50 billion, with the sharpest drops in agricultural futures and oil markets.
Finalizing a new rule this week aimed at curbing speculators' unproven but supposed pernicious influence on prices, the Commodity Futures Trading Commission is engaging in dangerous speculation of its own. In essence, it's betting its new regulation won't result in unstable supplies and higher prices for oil, metals and even grain. Spurred by politicians' "Do something!" cries about 2008's oil- price spike, the commission is expected to limit the number of commodity contracts a trader can hold. Besides potentially driving commodity investment activity overseas, where rules aren't as strict, the rule will cripple a mechanism inherent to commodities markets' optimum functioning.
A recent surge in corn futures and other commodity prices has triggered concerns about potential jump in food prices, but grocers and food producers say any such increases likely wouldn't come until after the holiday season, if at all. In the latest commodities-market lurch, corn prices dropped in early October, then soared later in the month, in response to changing assessments by the federal government of grain supplies and coming harvests, according to the New York Times. Experts told the Times that the impact on food prices could be much greater if next year's harvest disappoints and if 2011 grain harvests in the Southern Hemisphere also fall short of the current robust expectations. Corn futures on the Chicago Board of Trade earlier this month reached $5.84 a bushel in trading, abo...
The Journal Record Index gained a healthy 51.96 points, or 4.66 percent, and ended last week at 1,167.19. Advancing issues easily surpassed declining issues at a decisive 29-to-17 count. Devon Energy roared ahead last week after the company said that its production could increase by an average of 13 percent per year through 2011. The estimation was based on commodity futures prices for oil and gas. Devon said it has the potential to double production in its Barnett Shale region in this decade. The company expects to produce 1 billion cubic feet equivalent per day of gas for the second quarter and says it could increase production to range between 1.6 billion to 2 billion cubic feet equivalent per day. Devon gained $8.03, or 8.34 percent, and ended at $104.32. Devon was the top dollar g...
WASHINGTON -- Federal regulators said Tuesday they will place stricter limits on foreign exchanges that trade U.S. oil as concerns continue to grow about the role of speculation in rising fuel prices. The Commodity Futures Trading Commission said it will require the London-based ICE Futures Europe exchange to adopt position limits used in the U.S. for the trading of the West Texas Intermediary crude-oil contract, which is linked to a similar contract on the New York Mercantile Exchange.
WASHINGTON | Federal regulators said Tuesday that they will place stricter limits on foreign exchanges that trade U.S. oil as concerns continue to grow about the role of speculation in rising fuel prices. The Commodity Futures Trading Commission said it will require the London-based ICE Futures Europe exchange to adopt position limits used in the United States for the trading of the West Texas Intermediary crude-oil contract, which is linked to a similar contract on the New York Mercantile Exchange.
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