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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Gold price falls to two-year low

Category : Business

Gold falls to its lowest level in two years, as wider commodity prices and US shares also decline following disappointing Chinese economic data.

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Heineken Selects Triple Point Strategic Planning and Procurement Solution to Manage Commodity Price Volatility

Category : World News

Europe’s Largest Brewer Standardizing on Triple Point to Support Global Commodity Procurement

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Triple Point Launches Strategic Planning and Procurement Solution for Commodities

Category : Stocks, World News

Only Procurement Solution Delivering Real-Time, Market-Based Commodity Risk Management

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Anglo American falls to 2012 loss

Category : Business

Mining group Anglo American reports a $239m pre-tax loss in 2012, hit by lower commodity prices and a writedown on a key iron ore project.

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Treating food like stocks and shares is a recipe for disaster

Category : Business

Allowing financiers to gamble with food commodities distorts the market and is a real threat to the world’s poor

Droughts, storms, floods – after this year’s washout of a summer, it is hardly a surprise that farmers are warning of rising food prices on supermarket shelves.

The price of wheat is 16% higher than this time last year; corn costs are up 7%; and there is an increasingly fierce battle about how to make the best use of agricultural land.

But don’t be fooled into thinking this is a simple tale of supply and demand – crops keeling over in the baking midwest sunshine and hungry mouths to feed thousands of miles away. The world market for food includes not just farmers and shoppers, but hundreds of millions of dollars of complex financial bets.

Wall Street’s geniuses are forever looking for new products to package and sell. Over the past decade, helped by a convincing pitch about hungry Chinese factory workers and harvests ravaged by climate change, they have persuaded investors, including ordinary pension funds, to plough billions of dollars into commodities, including food.

The Institute of International Finance has estimated that by the middle of last year, $450bn of financial assets was invested in commodities – or derivatives, betting on future price movements.

In principle, there would be nothing wrong with financiers moving into the food market if it directed billions of dollars of investment towards expanding production, bringing new land into cultivation and developing new technologies to boost yields.

But – as the thoroughly mad market for mortgage-backed securities in the run-up to the credit crisis, and the resulting building boom across the US, illustrated very clearly – the price signals emerging from the stampeding herds of Wall street can be deeply misleading.

In a recent paper, provocatively titled “Don’t Blame the Physical Markets,” the UN’s trade and development arm, Unctad, argued that the wall of money flooding into commodities has badly distorted the price signals a well-functioning market should send to producers and consumers.

“It is not commonly recognised that demand from financial investors in the commodity markets has become overwhelming during the last decade,” Unctad says.

It uses a striking pair of charts to show that over the past 10 years, the prices of food, and of commodities more generally, have moved closely into synch with other financial assets, such as stocks and shares.

In 2002, west Texas oil prices, and an index of other commodities, shifted up and down largely independently of European equities – due to fluctuating supply and demand in those markets. But by the early part of this year, the three indices were moving in lockstep; and responding dramatically to each twist and turn of the ongoing eurozone crisis. “Eurozone events and market sentiment determine commodity prices, regardless of trade logistics issues, war, drought and other ongoing supply shocks,” Unctad says.

In other words, the financialisation of the market for basic foodstuffs has led to prices drifting far away from the fundamentals of supply and demand, as investors treat betting on the future price of food as just another asset for their portfolio, bringing uncertainty and volatility, and masking the true balance between supply and demand.

When the sub-prime bubble burst, it wrecked the livelihoods of millions of Americans who had battled hard to afford their own home. But in this case, it is the very lives of poor consumers that are at stake, as the price of food zig-zags about because of all-but-irrelevant events in Brussels or Berlin.

Unctad urges the world’s regulators to take a series of measures to check speculation. One of the steps it recommends, a financial transaction tax, now looks almost certain to be adopted by a coalition of at least 11 willing European countries, though it seems most likely that trading will simply shift to other jurisdictions – including the UK.

Any tougher crackdown – forcing greater transparency about who is betting on what, with whom, for example – looks highly likely to be scuppered by the same kind of concerted lobbying that sank proposals for regulating other derivatives markets in the years before the crisis.

In the US, for example, the Commodity Futures Trading Commission is facing a legal battle over its attempts to impose “position limits”, constraining the share of the market single investors can hold in a number of commodities, including corn and cocoa. The proposal was struck down by a court in Washington, in a case brought by several financial sector trade bodies – though the CFTC has not given up on introducing position limits in some form.

As the world struggles to adapt to a changing climate, and a rapidly expanding population with shifting nutritional needs, it is as important as it has ever been to ensure that farmers, policymakers and consumers are receiving the right signals about supply and demand.

But as we should now have learned repeatedly, allowing the financiers to pile in en masse brings not the hard-nosed judgement of the market, but uncertainty, chaos and confusion.

D’oh! Dissident Xstrata shareholders resist Glasenberg’s reverse psychology

Category : Business

The Glencore chief is among the shrewdest commodity traders on earth – who’s gullible enough to fall for his latest ruse?

“Don’t you get it? You’ve gotta use reverse psychology,” Homer Simpson’s brain says to its owner during one episode of The Simpsons. Homer resists his inner voice’s argument, causing it to retort: “OK, don’t use reverse psychology”. “All right,” Homer fires back, “I will.”

It’s a clever joke to illustrate an occasionally crude psychological negotiating tactic, but after all the talk that Glencore chief executive Ivan Glasenberg is among the shrewdest commodity traders on earth, even he’s been forced to give the old ruse a try.

His longed-for tie-up with the mining group Xstrata is no longer a “must-do” deal, he has claimed, although you’d have to be more gullible than any cartoon character to believe that he’s suddenly insouciant about the whole thing.

To recap, acquiring the 66% of Xstrata that Glencore does not already own was one of Glasenberg’s key motivations for floating his commodity trading firm last year. The two companies then announced a merger in February (with Glencore offering 2.8 of its shares for every one in Xstrata) only for Qatari shareholders to up their Xstrata stake to 12% and demand better terms.

So with slightly more than two weeks to go before shareholders will be asked to decide, Glasenberg has changed tack. He now increasingly emphasises how Glencore’s trading business insulates its shareholders from the vagaries of the commodity market and downplays acquisitions – whereas a year ago he was more coy about performance and puffed up the potential of deals.

While he may have a point that Glencore’s latest numbers make his offer more attractive (and there are no other Xstrata bidders) the bravado means he can’t suddenly offer better terms without looking rather weak. For their part, the Qataris and other dissident shareholders seem to be more resilient to reverse psychology patter than Homer. The merger may no longer be a “must-do” but, at least for the next few months, it increasingly looks like a “can’t do”.

China is buying less coal but more mining groups

Category : Business

Cash-rich companies in China are able to snap up mining assets driven into retrenchment by slowdown in Chinese demand for coal

It is ironic indeed that China is in talks about a $2bn (£1.3bn) purchase of a gold producer, African Barrick, whose value has been hammered down at least in part by the lack of confidence surrounding the Chinese economy.

Cash-rich companies from the People’s Republic are in a perfect position to snap up mining assets around the world that are being driven into retrenchment by a slowdown in Chinese demand for all kinds of coal, ore and minerals.

Some of this slowdown results from deliberate policies by the government in Beijing, but it would take a heroic conspiracy theorist to believe these were being pursued so that more commodity firms can be hoovered up by China on the cheap.

Certainly in the case of African Barrick Gold, the share price is down well below its 2010 float on the London stock market. But demand for gold in China is still growing – partly as a hedge against falls in other investments.

There is no doubt that China’s first-half GDP growth of 7.8% – its lowest level in three years – is causing a huge slump in the price of most commodities, and severe pain for the miners who benefited so much from China’s previously soaring demand.

Some coal prices recently hit a two-year low and BHP Billiton said on Thursday that increasing costs and falling prices meant “clearly there may be some impact on jobs in some areas” of its Australian coal operations.

The company, which is expected to unveil its first profit fall in three years next week, has abandoned an $80bn five-year spending plan that it unveiled less than a year ago when commodity prices were still flying high.

Last week Rio Tinto said it would be closing the Blair Athol coal mine in Queensland before the end of the year with the loss of 140 jobs, and reported a 22% slump in first half-profits to $5bn compared with the same period last year. And this week Eurasian Natural Resources Corporation (ENRC) – a FTSE 100 company – said it would be cutting its spending this year by $300m and reviewing its long-term investments of $8.8bn as earnings plunged 40%.

ENRC’s chief executive, Felix Vulis, talked about a “volatile market environment and pricing uncertainty” that has come just after the Kazakh-focused iron ore miner has spent $5bn on acquisitions.

ANZ Bank has recently cut its overall commodity price forecasts by 4% for this year and 3.4% for next. Now is a good time to buy – that is, if you have $3.2

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US slashes corn production forecast as drought raises crisis fears

Category : Business

Severe drought affecting midwest adds to fears of global food crisis and sends some commodity prices to record levels

The US government slashed its forecast for drought-hit corn production by 17% on Friday, raising fears of a new global food crisis and sending some commodity prices to record levels.

The US department of agriculture said corn output would only reach 10.8bn bushels for 2012-13, while yields were likely to be 123.4 bushels per acre – the lowest return for 17 years.

Predicted soybean production has also been slashed from 3.05bn bushels four weeks ago to 2.7bn on Friday as farmers see crops devastated by the country’s worst drought in more than half a century.

The latest reduction in estimates propelled corn futures on the Chicago commodity exchange to $8.30 a bushel and accelerated a 60% increase in prices over the last two months.

The US is the biggest producer of corn, soybeans and wheat in the world and a poor harvest means prices will rise and stockpiles will remain depleted.

The key midwest growing area has been hit by the worst drought in 56 years. The department of agriculture earlier this week said that half of the nation’s corn crop was rated poor to very poor while the latest US drought monitor map showed conditions continuing to worsen.

The National Oceanic and Atmospheric Administration reported on Wednesday that the first seven months of 2012 were the warmest on record for the nation; temperatures in July broke a record high that was set in the Dust Bowl of the 1930s.

Some fear that growing signs of shortages will prompt some countries to impose export bans or make panic purchases, as they did in 2008, during the last dramatic price spike.

“Several urgent actions must be taken to address the current situation to prevent a potential global food price crisis,” said Shenggen Fan, head of the International Food Policy Research Institute, an agricultural think tank funded by the World Bank.

He said countries should reduce the amount of grain used for biofuels, reigniting the “food not fuel” debate about whether valuable land should be devoted to growing corn for use as ethanol on the forecourt at a time of rising food costs.

José Graziano da Silva, director general of the Food and Agriculture Organisation (FAO) at the United Nations, said he wanted to see a halt in US government-backed production of ethanol, which is mixed with petrol to make “greener” fuel.

“An immediate, temporary suspension of that [US government] mandate would give some respite to the market and allow more of the crop to be channelled towards food and feed uses,” he said.

The FAO’s food price index, which measures monthly cost changes for a food basket of cereals, oilseeds and others, has hit 213 points, up six points on a month ago.

Senior economists at the agency warned there was the potential for the situation to develop like the food crisis seen in 2007 and 2008, when there were violent protests against the price of food in countries such as Egypt and Haiti.

There are further concerns about agricultural yields, with warnings from Japan of more bad weather emanating from a recurrence of the El Niño storm patterns.

The rise in corn and soybean prices has also brought back a debate over the role of financial speculators in the commodity markets, with reports that Commerzbank and two of its peers are withdrawing from certain food-related investments.

“Climbing prices are creating reputational risk for banks,” Alexis Dawance, a former manager of the agricultural-focused Global Agricap Fund, told Reuters. “The big grain traders probably have much more impact in food and commodity trading, but this is part of the bigger picture, with all the fat cat-bashing that has been going on… if food prices continue to rise you will see this happening more and more.”

Responding to the surge in food prices, the British-based charity Oxfam warned that the developing world would be hit hardest. “This is not some gentle wake-up call – it’s the same global alarm that’s been screaming at us since 2008,” said Hannah Stoddart, Oxfam’s head of economic justice policy.

“The combination of rising prices and forecast low reserves means the world is facing a double danger. As usual, it will be people in developing countries who will be hit the hardest, with millions who are currently ‘just getting by’ starting to go hungry as a result.”

Weak prices hit Rio Tinto profits

Category : World News

The world’s second-biggest mining group, Rio Tinto, blames weaker commodity prices for a 22% drop in half-year net profits.

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Weak prices hit Xstrata profits

Category : Business, World News

Anglo-Swiss miner Xstrata, which is in the midst of a takeover bid by Glencore, says falling commodity prices hit its profits in the first half of the year.

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