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Telegraph – A single investor – thought to be a hedge fund – is sitting on thousands of tonnes of tin in warehouses across London. According to traders almost the entire stocks of tin on the London Metals Exchange (LME) was bought up by a single, mysterious investor, last week.
One fund has warrants for more than 90pc of all physical tin stocks because the market rules dictate that above this threshold, the buyer must lend out the commodity, if asked, at the cash price with no premium.
Industrial buyers are furious that they are paying up to $730 per tonne for immediate delivery more than it would cost them to buy three-month futures contracts, arguing this stranglehold on the market should not be allowed to happen.
Bloomberg – The steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide.
The so-called forward curve of futures contracts traded on the New York Mercantile Exchange suggests oil will rise 30 percent to $60.29 a barrel by December. The curve looks almost the same as 10 years ago, after Russia’s default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns that a global economic slowdown would reduce energy demand. Crude prices fell 25 percent in the final quarter of 1998, the steepest drop in seven years.
Fort Wayne Journal Gazette – During the first six months of 2008, commodities looked to be the savior of investors who were losing money in the stock market. In the second half, particularly for those who had invested in oil, futures contracts were their undoing.
At the start of 2009, commodities have little appeal. Most analysts expect prices to remain under pressure as worldwide demand continues to wane for basic materials of all kinds.
“For commodities to do well, they need demand and they need present demand,” said Matt Zeman, head trader at LaSalle Futures in Chicago. “Until we see the physical demand picking up, we’re going to have a hard time moving forward.”
Chicago Tribune – Strong returns are a mixed blessing this year for investment funds that specialize in trading futures contracts.
While the stock market plunged about 35 percent, managed futures funds posted annual returns of about 16 percent, according to the Credit Suisse Tremont Hedge Fund Index.
That makes them one of the few havens for investors at a time when pensions, retirement savings and even prominent local hedge funds such as Citadel Investment Group and Magnetar Capital LLC have recorded big losses.
But the success of managed futures has also left them vulnerable to client withdrawals. Because market turmoil froze the assets in many portfolios, some institutional and individual investors are pulling money from managed futures.
