Search Results for: commodities

How Large Commodity companies use Finance to gain Advantage

David Gustin - September 3, 2014 3:14 AM - Available @ Trade Financing Matters

Big Commodity companies like Cargill, Bunge, Trafigura and Vitol all run very complex financing operations.   For example, Cargill runs an internal Hedge Fund to provide competitive advantage vis a vis competitors. Many of these companies will have internal Trade & Structured Finance groups that focus on a variety of things Manage local currency exposures in emerging market currencies, especially ones which have strict FX Controls. This includes balancing the needs of repatriatiating capital versus the need for local currency to finance growing and harvesting in the currency. During the offseason, when cash is in surplus, the group must find ways […]

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Commodity finance being done by Trading Houses

David Gustin - July 29, 2014 2:30 AM - Available @ Trade Financing Matters

A story recently in Reuters talked about how the biggest trading houses are filling the traditional banks (and mostly European banks role) of funding traders. This got particular attention, especially in light of the Obama administrations sanctions on Rosneft and other big Russian commodity producers. If you look at the big trading houses, do they really want to take over the role of banks (who have access to historically cheap deposits?). Or is it really a question of providing these large trading houses with huge credit lines to further provide upstream finance to their smaller counterparties?   The authors Dmitry Zhdanniko […]

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The Butterfly Effect (And How It Relates to Commodities)

Guest Contributor - February 10, 2014 2:37 PM

Time and again we find a strong relationship between seemingly entirely unconnected commodities. However, often as we begin to delve deeper into the relationship between those commodities, the connection becomes apparent. For example, historically, there has been a very strong correlation between crude oil and edible oil prices. This relationship was in existence long before the introduction of biofuels and, therefore, is not solely due to the recent substitutability for fuel.

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The More Toppings, The Batter: Pancake Ingredients

Guest-Post - February 18, 2013 4:02 PM

Spend Matters welcomes a guest post from Sam Parry of Mintec. First an article covering chicken wings and the Super Bowl and then one on pre-ordering for Valentine’s Day, so now to cover an event that fell between the two. February 12, 2013 marked the day for pancake lovers across the globe to run down to the stores and buy ingredients that they may only use once or twice a year. The standard American pancake recipe involves; plain flour, eggs, milk, baking powder and sugar.  The classic pancake batter can have many interesting twists; whilst thick, fluffy pancakes are a […]

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Commodity Trade Finance – Still the Banks’ Domain

David Gustin - May 26, 2014 6:52 AM - Available @ Trade Financing Matters

Commodity trade finance is not something we actively write about, but it is such a key part of world trade that it’s important for readers to understand a bit about how this form of goods flow gets financed. In a study done by the Bank for International Settlement (“BIS”) examining bank trade finance lending, commodity trade finance is a market dominated by the banks, and at that, very few global banks. Commodity Trade Finance Characteristics It is natural for commodity transactions to remain in the bank domain for several reasons. They are big – buying oil shipments or wheat is […]

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2012 Commodity Review: Maize, Oil, Sugar, Coffee, Dairy, Plastic, and Coal

Guest-Post - January 14, 2013 12:01 PM

Spend Matters welcomes a guest post from James Hutchings, at Mintec Ltd. Whilst the European economy appears to be successfully resisting any and all efforts at recovery, the US has had more promising signs with a continuing rise in consumer confidence and an improvement in the US labor market. China has continued to power global growth, and has for the most part completed its once-every-10-years handover of power to the next generation of political leaders. Below we summarize how 2012 shaped up for several different areas, world-wide. Global maize and wheat prices are up significantly over the past 12 months […]

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Ethanol vs. Corn: Weathering Hot Conditions

Guest-Post - January 21, 2013 12:01 PM

Spend Matters welcomes a guest post from Nick Peksa, at Mintec Ltd. On the December 3, 2012, the New York Mercantile Exchange, Inc. (NYMEX or Exchange) delisted 59 energy products. There was no open interest in these contracts. One of these was the New York Harbor Ethanol Futures – New York Harbor is a key hub for the import, storage and distribution of ethanol on the East Coast. So this reflects a physical market for delivery on a 36-month forward-rolling contract. “The biofuel industry was pleased that Congress in the hard-fought fiscal cliff legislation approved several measures to support biofuels. […]

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Fewer Anchovies Lead to More Expensive Salmon

Guest-Post - January 28, 2013 2:49 PM

Spend Matters welcomes a guest post from Mark Kozlowski, at Mintec. When it comes to seafood consumption, the US is second only to China, consuming over 2 million metric tons of seafood per year, with approximately 90% of all seafood consumed in the US being imported. Half of that is produced through aquaculture. Workers fatten farmed fish on a high-protein diet of fishmeal in an attempt to replicate their natural diet. Fishmeal is produced from whole small fish such as anchovies, which are considered less desirable for mass human consumption. Another major fishmeal component comes from whatever products are left over […]

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US and Chinese Comparative PVC Price

Guest-Post - January 7, 2013 12:01 PM

Spend Matters welcomes a guest post from Mark Kozlowski, at Mintec Ltd. The prices of PVC from the US and China usually track each other fairly closely, but they diverged significantly during 2012. Prices in the US rose in the second half of 2012 as a limitation in domestic supply due to plant closures coupled with an increase in domestic demand as the US housing market improved and Hurricane Sandy led to an increase in PVC demand for reconstruction. PVC prices in China were kept stable by a low level of domestic demand and a high level of production overcapacity. […]

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2013 Commodity Forecasting: Cost and Supply Management Intersections

Jason Busch - January 3, 2013 7:01 AM

Last week, Spend Matters featured a recap of metals-focused commodity management strategies for 2012 (here and here), including offering a forward look into what companies should be considering and forecasting for 2013. Yet what should we make of general commodity management and related trends going into next year? A recent Bloomberg summary captures a number of salient concepts we should take under careful consideration as we plan our overall commodity management strategies going into next year. For one, it’s important to keep in mind that “investors almost doubled purchases of commodities” in 2013. While there are various schools of thought […]

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Sugar Cost Management: Prices Falling Steadily

Guest-Post - December 3, 2012 12:12 PM

Spend Matters welcomes a guest post from James Hutchings, at Mintec Ltd. Despite the rise in use of corn syrup over the last 40 years, sugar remains the world’s most commonly used sweetener. It is produced from sugar beet and sugar cane, with beet grown in temperate climates like those found in large parts of the US and EU, whilst cane is grown in tropical climates, including Florida and Hawaii (but predominately Brazil, India and Thailand). World sugar prices have fallen steadily since the last spike in prices seen in summer 2011. World production in 2012/13 has been revised down […]

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Almonds: Rising Demand, Rising Consumption, Rising Prices

Guest-Post - December 17, 2012 12:12 PM

Spend Matters welcomes a guest post from Abigail Green, at Mintec Ltd. With Christmas only a week away, many of us have probably heard the classic lyrics ‘chestnuts roasting on an open fire‘ in the past weeks, but chestnuts are not the only nut that many of us buy and use in the run up to Christmas. Having looked at hazelnuts three weeks ago, it is now a good time to look at almonds, and see if they can help to sweeten Christmas this year. The US is by far the world’s largest producer of almonds, responsible for approximately 80% […]

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Commodities and Risk? Now There’s a Personality Quiz For That!

Sydney Lazarus - August 28, 2013 10:19 AM

Sometime last week, Taras Berezowsky of MetalMiner put on a suit and set up what looked like an enormous green blanket—and made a highly entertaining video that doubles as a useful personality quiz. For example, is your worst work-related nightmare Gilbert Gottfried yelling "You should have hedged that buy!" or having to fly to Fujian province again to check on your suppliers? What's your go-to drink after a long day of conferences?

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Holiday Spend Management: Dried Grapes

Guest-Post - December 10, 2012 12:12 PM

Spend Matters welcomes a guest post from Abigail Green, at Mintec Ltd. As the Christmas season gets underway and festive foods such as Christmas puddings and traditional mince pies (little pastries filled with a mix of dried grapes, spices and sugar) return to our diet, it is a good time to examine the dried grape market, and look at what has been happening to raisins, sultanas and currants, key ingredients in some festive favourites. Dried grapes are dried across the globe. The US, specifically California, is the largest producer of raisins, while Turkey is the largest producer of sultanas and […]

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Rubber: Both Natural and Synthetic Prices Falling

Guest-Post - November 19, 2012 12:11 PM

Spend Matters welcomes a guest post from James Hutchings, at Mintec Ltd. Back in July, we specifically looked at rubber used for tire manufacture, but let’s take a more general look at the rubber marketplace. The world’s rubber is sourced from two very different origins. 40-45% is still produced naturally (in the form of latex from the sap of the rubber tree), mostly from Southeast Asia, but the majority is now produced from crude oil derivatives such as styrene and butadiene. Tires, as mentioned in our earlier post, are the primary use for both natural (80%) and synthetic (55%) rubber. […]

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Gelatin: Rising Prices; Growing Asian/South American Demand

Guest-Post - November 12, 2012 12:11 PM

Spend Matters welcomes a guest post from James Hutchings, at Mintec Ltd. Gelatin, when mixed with water, provides texture and thickens as it forms a gel around five-to-ten times its original weight. It’s mostly produced as a by-product from the meat and leather industries, as it is derived from collagen, a protein manufactured from pig skins, cattle hide and bones. A small proportion is also obtained from the skin of deep water fish such as cod, haddock and pollock; this is partly for religious reasons. Annual production is currently slightly more than 0.33m tonnes and is projected to grow at […]

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Rare (Or Not So Rare?) Earths

Guest-Post - November 5, 2012 12:11 PM

Spend Matters welcomes a guest post from Vajid Idrees, at Mintec Ltd. Have you ever wondered how energy saving light bulbs shine, the permanent magnetics in consumer electronics attract and repel or how catalysts, catalyse? Well I haven’t either, but I know that without rare earth metals the chances are that these applications products would not work as well as they do. Rare earth metals (REMs) are a group of 17 elements, consisting of the 15 lanthanides (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium) plus scandium and yttrium. The name suggests […]

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Peanuts: A Snapshot of World Commodity Markets and Pricing in a Nutshell

Guest-Post - October 22, 2012 12:10 PM

Spend Matters welcomes a guest post from Nick Peksa, at Mintec Ltd. US peanut prices have fallen in recent months due to improved output from the US and Argentina. At 6.11bn lbs, the US crop is estimated to have been 67% larger than the 3.66bn lbs seen last year, in part because of an expansion in the planted area to a four-year high of 560,000 hectares. On 14th October 2012, 48% of the US crop was reported to have been harvested, with 77% in good to excellent condition, compared to only 40% in the previous year. Argentina is expected to […]

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Rising Lumber Prices: US Housing Starts Optimistic

Guest-Post - October 29, 2012 1:10 PM

Spend Matters welcomes a guest post from James Hutchings, at Mintec Ltd. Earlier this year, we wrote about the prospective movements on the price of lumber, and the good news is that prices have continued to rise. We commented that trends in lumber are often seen as a good indicator of a US potential prospect for economic growth, so the latest activity might be a cause for optimism. US housing starts rose by 15% in September to the highest level since July 2008, equivalent to an annualised rate of 872,000 homes. Starts reached a pre-recession peak of 2.1 million in […]

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Will Commodity Price Indexes Die a Bureaucratic Death in the EU?

Jason Busch - March 10, 2014 6:23 AM

My colleague and business partner, Stuart Burns, also co-founder of MetalMiner, recently wrote a piece on our sister site with broad applicability for all procurement organizations in the manufacturing sector: EU May Quash Platts, Other Commodity Price Benchmarkers: Good or Bad? Stuart’s reporting and observations are based on a recent article from The Economist. The article highlighted how EU regulators are moving to reduce corporate dependence on third-party price points for contracting.

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