Subscribe to Money Morning get daily headlines subscribe now! Money Morning Private Briefing today's private briefing
Category

Commodities

Commodities

Is Bill Ackman's Air Products Helium Bet Full of Hot Air?

Bill Ackman is trying to find a winner. Over the past two weeks, Wall Street kept its eye on one of richest and shrewdest hedge fund managers in the game.

Speculation about his target increased as he informed investors that he was seeking to make another splash in an "undervalued" company. And he certainly did, his biggest splash ever.

Ackman's recent $2.2 billion stake in Air Products & Chemicals Inc. (NYSE: APD) is certainly a buoyant pick. His Pershing Square Capital Management acquired a 9.8% stake in the industrial gas company, which is also the world's largest producer of helium and hydrogen.

It was a lofty bet by Ackman, who had garnered attention for a quiet accumulation of $1 billion in recent weeks. Earlier this month, Ackman told investors that he was specifically targeting a large-capitalization, investment-grade company with a lot of upside.

The purchase of APD could prove to be even shrewder, if Congress is unable to address the looming shortage of helium, a critical industrial gas in the production of MRI machines, semiconductors, aerospace equipment and lasers.

And Ackman can profit as demand continues to surge around the world.

To continue reading, please click here...

Commodities

Commodities 2013 Halftime Report: A Time to Mine for Opportunity?

It was a challenging first half of the year for most commodities, with only two resources we track on our Periodic Table of Commodities Returns rising in value.

Natural gas and oil rose 6.5 percent and 5 percent, respectively, while silver lost a third of its value and gold lost a quarter of its price from the beginning of the year.

At first glance, the correction seems to support naysayers who believe the supercycle in commodities has ended, such as Credit Suisse analysts, who had declared that the "era is over," in its digital magazine, The Financialist.

We disagree. Instead, we see severe price declines as possible buying opportunities during this ongoing commodity supercycle.

Consider the extreme pessimism on gold. As one measure of how bears have ganged up against the yellow metal, take a look at the spike in the level of short positions on the precious metal since the beginning of the year.

To continue reading, please click here…

Trend Watch

How to Invest in the Best Commodity of 2013

It's been hog heaven for commodity traders who have pigged out on pork – the best commodity of 2013.

Indeed, the $12 billion hog-futures market has gained 19% year-to-date, making it the biggest gainer among commodities in the Dow Jones Commodity Index, which fell 9.9% in the period.

Robust consumer demand, tight supplies and favorable prices compared to beef – which hit record retail prices this spring – were behind pork's healthy gains.

From January to April, pork sale volumes rose 4.3% from a year ago at 18,000 retail outlets tracked by market research firm Nielsen Co. In comparison, beef volumes dipped 1.9% and chicken volumes inched up a mere 0.2%.

Pork: Best Commodity of 2013's First Half

Pork trading volumes have also notably risen.

For the first time ever in the hog contract's 50-year history, the number of bets on lean-hog futures held by traders and investors were more than those for live cattle.

Last Thursday, hog futures finished at $1.01, just shy of their nearly two-year high of $1.20 a pound hit on June 14.

With a cache of commodities lagging, from gold – which has lost its luster to coffee and could use some perking up – money managers are poking around the hog market in a hunt for yield.

"Everybody's happy and making money and having fun," Dennis Smith, a Chicago-based broker for Archer Financial Services told The Wall Street Journal. "The U.S. consumer doesn't want beef anymore."

In the U.S., pork has long been regarded as a lesser quality alternative to beef. However, that's not the case in the rest of the world where pork enjoys equal footing with beef.

Hog futures traders were as happy as a pig in mud last month when Smithfield Foods Inc. (NYSE: SFD), the world largest pork processor and hog producer, agreed to be taken over by China's Shuanghui International Holdings Ltd. If approved, the $4.7 billion takeover would be the biggest Chinese takeover of a U.S company.

It's not just increased demand pushing prices higher…

To continue reading, please click here…

Global Economy

G8 Plan to Invest in Africa Agriculture Smacks of Colonial Land Grab

A G8 initiative intended to get corporations to invest in Africa with the goal of alleviating hunger on that continent is – surprise, surprise – not working out as planned.

President Barack Obama launched the "New Alliance for Food Security and Nutrition" in 2012 when the United States held the presidency of the G8 (the Group of Eight, a forum of eight of the world's major economies).

By encouraging partnerships between governments and corporations to invest in Africa, the G8 said it hoped to "lift 50 million people out of poverty in sub-Saharan Africa by 2022."

Energy Investing

How to Profit From Obama's War on Coal

Since President Obama climate change speech at Georgetown University last week, Republicans and critics have accused Obama of engaging in a "War on Coal."

This isn't the first time that the President's statements on coal-fired power plants have raised questions about his energy policies. He even campaigned on higher electricity costs in 2008 when he suggested that costs would "necessarily sky rocket" to prevent the construction of new coal plants.

Obama has repeatedly argued for more spending on green investments in energy, despite multiple scandals involving campaign bundlers and billions of taxpayer dollars wasted on Department of Energy loans to companies like Fisker Automotive, Solyndra, and Beacon Power.

Now, as the President seems eager to double down on the "green" policies of 2009, which couldn't come close to creating the promised five million green jobs, the President wants to spend more of your money and execute new environmental and alternative energy laws and regulations by fiat.

But despite the stark reality that green technologies still haven't caught up with the free market solutions when it comes to bang for your buck, there's good news for investors looking to cash in on the President's War on Coal.

Just follow the money on the biggest trend in energy policy today.

It's All About Energy Efficiency

To continue reading, please click here...

Energy Investing

The Best Investments for the Next Phase of the U.S. Oil Revolution

The U.S. oil industry has been reborn, with oil flowing from new fields like North Dakota's Bakken at rates not dreamed of just a few years ago – and it has created a new crop of best investments for those hunting for energy profits.

U.S. oil production climbed from a low of 5 million barrels a day in 2008 to 7.2 million barrels per day in February of this year.

To continue reading, please click here…

Trend Watch

Watch for Record Rain-Driven Corn Prices

Last year's crippling drought has led to a spike in global corn prices and tightened available supply stocks, as U.S. farmers experienced staggering crop destruction from the sweltering heat.

But this year, Mother Nature seems to be making up for lost time.

Farmers have been inundated with so much rain in the planting season months that just 54% of the Iowa corn crop is rated good or excellent as of last week. The 10-year average of the state crop is 74%, which is raising concerns given that the planting season recently ended.

Nationally conditions are improving following a recent rush by farmers to complete corn planting to beat crop insurance deadlines. As of last week, 65% of the U.S. corn crop is currently rated in good or excellent condition, down 3% from the 10-year average.

Ongoing storms across the Northern Corn Belt have made it increasingly difficult for farmers to get seeds into the ground. The slower-than-normal pace of plantings has fueled concerns that U.S farmers would plant less corn than earlier USDA estimates, reducing the size of this year's crop.

Now, with more unpredictable weather on the horizon, all eyes look to Friday with big announcements by the USDA on planted acreage and the quarterly figures for corn stocks.

To continue reading, please click here…

Energy Investing

How to Invest in Oil in 2013: The New U.S. Profit Plays

The latest annual Statistical Review of World Energy from energy giant BP PLC pointed out how the U.S. energy landscape has changed in just a few short years – which changes how to invest in oil for maximum profits.

In the Review, BP said that the expansion of both oil and natural gas production in the United States was the fastest in the world in 2012.

In fact, U.S. oil production in 2012 grew at the quickest pace since BP began keeping track of the global oil scene in 1965.

The increase of about one million barrels per day was due, of course, to the exploitation of unconventional sources such as shale and tight oil.

Pair the increasing production numbers with where oil prices will be trading in the near term, and we get a clearer picture of how to invest in oil in 2013… here's why.

To continue reading, please click here…

Read More…

Commodities

Now is the Time to Buy the "New Gold"

On May 15, Christie's auction house sold a huge diamond to the Harry Winston firm for $27 million, setting a new record price for a colorless diamond in the process.

And while diamonds have been a girl's best friend long before Marilyn Monroe crooned those words, it's always been tough for investors to get into the game. Diamonds are considered one of those esoteric fields; an area of investing too small, complex, and exclusive to bother with for most.

Let's face it, up to now, there's much more subjectivity in rating diamonds than gold. And that makes it more challenging for investors if they want to hold the physical asset.

But it's worth the effort: Historically, diamonds have proven themselves to be very price stable – with a growth kicker. What's more, technology is making standardization of gemstones easier, making valuations more transparent.

That means diamonds are becoming an increasingly popular store of value.

According to the Financial Times, between 1999 and 2011, three-carat diamonds have risen in value by 145% while five-carat diamonds have risen 171%, as measured by the Rapaport Diamond Trade Index. The thinking is the relative price stability of diamonds is due to the fact that there's little speculative capital in this sector, estimated by some at no more than 1% of the market.

Commodities

As Economy Heats Up, Will Commodities

Thanks to the life support of $12 trillion and 515 rate cuts by the world's central banks since March 2009, the global economy's heart is beginning to beat again.

As the market senses a robust economic recovery is underway, expectations are climbing that this growth will continue. Even the Federal Reserve has hinted that it may taper quantitative easing because of the improved economic situation. As a result, interest rates are increasing.

Europe was the lone wild card, but following Germany's change of heart away from austerity, a positive outlook for growth, and therefore, rates, is rising in that area of the world as well.