Wednesday,15 September 2010, 18:15 registration for 18:30 to 20:00

Podium Floor, at the Central Plaza Executive Club,
Central Plaza, 18 Harbour Road

COMMODITIES: SHORT-TERM RALLY OR LONG-TERM CLIMB?

The year 2010 began on a general downward trend as commodity prices were largely driven by external economic factors rather than supply and demand fundamentals. The strength of the US Dollar against the Euro; monetary tightening in Asia; sovereign risk concerns and a general increase in risk aversion amongst investors contributed to the volatility and price fluctuations suffered throughout the first half of the year. It wasn’t until recently that commodity prices have returned to positive territory, despite fragile sentiment on the broader macro-economy remaining.

The biggest moves within the commodities complex over the past months were seen in softs, as cocoa, coffee, wheat and soybeans made headlines with prices rising to new highs amidst supply concerns. In particular wheat stockpiles, already at critical levels due to the USDA’s lowest reported planted acreage since 1971, were further affected by severe drought in Russia. Hence in July, the agricultural commodities market had one of its best months in decades. Wheat and sugar prices rose by 38% and 22% respectively, marking their biggest monthly gains in over 20 years, while price pressure remains on the upside, as China announced it would import corn for the “foreseeable future”, and Brazil reported a higher-than-expected coffee demand which could keep prices near a 12-year high.

It is clear that some of the recent price gains have been directly caused by extraordinary occurrences such as severe drought and shipping bottlenecks. But more importantly, the longer-term issues around high and rising demand (particularly due to a growing population and changing diets in Asia), low inventory and decreasing production rates are continuing and just creeping to the surface.

Contrary to what many believe, commodities may even become more appealing to investors if global equity markets should continue to feel the effects of an economic slowdown, since commodity prices are subject to very different market dynamics and price drivers than stocks, particularly at times of rising inflation and interest rates.

At our Investment Forum this month our guest speaker will be a commodities expert who has deep knowledge and insight into this sector. It promises to be a very popular event with a longer than normal question and answer session so that you can ask direct questions to the people who are actually at the centre of the commodities story.

The Seminar will be presented in English by Mr. Martin Hennecke, Associate Director, Tyche Group and our guest speaker Mr. Giles Boeree, Managing Director of Castlestone Management LLC Asia.

Our seminars are often oversubscribed, so please register early for you and your friends to avoid disappointment. Please register in any of the following ways:
phone (852) 2525 3639; fax (852) 2525 3679; or e-mail forum@tyche-group.com