Commodity Price Entanglement And Market Opportunism Catharsis

International Research

In the first half of 2011, the trend of commodity prices in the international market has also surged forward, but many of the successful results achieved in the early years are many, but in the end, these "winning results" were generously handed to the empty side.

By the end of June 30, 2011, the authoritative Dow Jones commodity price spot price index increased by 5.2% over the six months before December 30, 2010, while the Dow Jones commodity price futures index was only "symbolic" six months ago.

On the one hand, the "down" of some commodities is more ferocious than that of "first inflation". For example, the price of rice has dropped by 6.5% in the past six months, the price of wheat has dropped by 26.4%, the price of soybeans has dropped by 6.3%, copper prices have dropped by 4.5%, tin prices have dropped 2.3%, zinc prices have fallen 4.8%, nickel prices have dropped by 7.4%, and natural rubber prices in Singapore have fallen by 9.3%.

On the other hand, another part of the commodity's "back down" is more gentle than the "first rise". For example, New York crude oil prices rose 4.4% in the international market for half a year, gold prices in New York rose 5.7%, silver prices rose 12.6%, aluminum prices rose 2%, lead prices Rose 1.4%, cotton flower prices rose 10.3%.

In addition, the commodity price of corn on the Chicago futures exchange in June 30th was $629 per bushel of corn, compared with December 30, 2010, half a year ago.

The trend of commodity prices in the international market is very important, and even considered as a barometer of the world economic development.

Although Kahn, the former president of the International Monetary Fund, was once regarded as a "hooligan" because of the well-known events, it did not hamper the authority of the international organization's view of the world economy.

So far, the International Monetary Fund has made two forecasts for the world economic growth rate in 2011.

At the beginning, the International Monetary Fund predicted in its world economic outlook that the world economic growth rate in 2011 was 4.2%, and then the forecast value was raised to 4.5%.

In principle, the above prediction is basically a more optimistic forecast.

In fact, the "first rising" trend of international market commodity prices in the first half of 2011 has fully reflected the market's recognition of this optimistic forecast.

In particular, fresh memories of Shell oil's output after being hit by the oil pipeline in Nigeria were the first time in April 21st that the closing price of international oil prices exceeded $117 for the first time, closing at $117.48 a barrel. However, the trend of commodity prices in the international market immediately entered the seemingly irrational "down" market, which is precisely the entanglement of the trend of commodity prices in the international market in the first half of 2011.

It should be noted that the first rise of commodity prices in the international market in the first half of 2011 is largely in line with the good expectations of the world economy.

It is precisely in this relatively optimistic and good expectation that the international speculative capital sees the opportunity to hype the commodities in the international market, so it can be helped by various financial derivatives.

It is not hard to see that the "opportunity" caught by international speculative capital is also full of various economic bubbles, so it is most appropriate to wear it as a market opportunist hat.

In the process of analyzing market behavior, we sometimes see the use of opportunism.

How to see the first rise and fall of commodity prices in the international market in the first half of 2010?

In the first half of 2011, the "first rising" trend of commodity prices in the international market was full of opportunism in the market, and "post fall" is also a classic of market opportunism.

In fact, with the improvement of the "short sale" mechanism and relying on various financial derivatives, the international speculative capital can also make a big profit if it "smashed" commodity prices at the right opportunity.

From the first half of 2011, the international market commodity prices trend of more empty, it is easy to see that the opportunistic behavior of international speculative capital is basically reflected in the rise and fall, and at the very beginning, it made money by selling high commodity prices, and then relied on lowering commodity prices to gain money.

Having understood this principle, the "first rise and fall" of commodity prices in the international market will not be so entangled.

It should be noted that the trend of commodity prices in the international market largely depends on the four dimensional coordinates of fundamentals, capital, technology and news.

First of all, the prospect of the world economy is only a component of the trend of commodity price movements in the international market, and this basic role in supporting commodity prices is more reflected in the long-term investment and does not impede short-term decline.

Moreover, the European Union and the International Monetary Fund and other international institutions have barely reached a consensus on rescuing Greece. But it is not good to say whether the European debt crisis will continue to ferment.

Secondly, with regard to the recent trend of commodity prices,

Thirdly, there is a demand for more and more commodity prices.

According to the statistics released by the International Monetary Fund, the world's primary commodity price index in 2010 has been 26.1% higher than that of the previous year. Therefore, the rise in the first part of 2011 is naturally on the basis of the rise, and the cumulative increase is huge. Some commodity prices, such as gold, copper and natural rubber, even hit a record high.

In addition, from the point of view of news, in order to guard against financial risks, some large exchanges in the world have also raised the margin of trading margin to varying degrees. For example, since the end of last year, the New York commodity exchange has raised the trading margin of commodities such as natural gas, gold, silver, crude oil and so on. Although this largely inhibited the speculative capital making use of high leverage in the international market to create an extreme "tight" market for commodity prices, it should be a wise choice for opportunism in the market.

Having seen the above four aspects of fundamentals, capital, technology and news, and facing the short and medium term trend of commodity prices in the international market, there is much more natural in mind than before. Many strange things that are not well understood before are naturally easier to understand.

On the one hand, in the middle of April, before Goldman issued a bearish report on the international market commodity prices, there were two strange moves in the international market.

The first weird move was that after the bombing of Tripoli, the capital of the United States, led by the multinational air force led by the United States, the commodity price of the international market represented by oil was only "meaning", and soon returned to its original trend.

It is obvious that more political turmoil in the Middle East and North Africa has started since the end of last year. There have been political turmoil in tunnisi, Egypt, menus and Syria. International oil prices have already fully reflected the series of turbulence. As one of the largest oil producing countries in Africa, the impact of multinational forces bombing Libya on international oil prices has also been fully digested in the early stage, and market opportunism will not be foolish enough to make use of such a subject that has been fully digested. Instead, it tends to take advantage of this good momentum to make a follow-up test.

Second bizarre movements, as the world's major importing countries, after the three catastrophes of earthquakes, tsunamis and nuclear radiation in Japan, are reasonably clear about the oil demand in the international market, but the international oil price quickly retaliated after a brief plunge, indicating that market opportunism has not yet formed a consensus on the excessive turnover of commodity prices at that time and did not break down the price of commodities in the international market.

On the other hand, in the middle of April, Goldman Sachs issued a bearish report on commodity prices in the international market, and there were some strange movements in the commodity prices in the international market.

It should be noted that in May 1st this year, the US army killed Laden, a leader of the Al Qaeda group in a private suburb of the capital of Pakistan. It should be said that it should help eliminate the operational risks of the world economy, especially the US economy, and it should be an undoubted good for the trend of commodity prices in the international market.

However, this time the shipping opportunity was not wasted by market opportunism. Instead, it realized the desire to make good use of the goods and realized that the commodity prices in the international market did not rise or fall, which was a typical combination between market opportunism and bear market thinking.

In the early May, the price of West Texas crude listed on the New York Mercantile Exchange fell to $97 a barrel in a short period of time from 117 US dollars per barrel, or even more than 7% on a single day.

It should be noted that in today's international commodity market, market opportunism against commodity price movements should be realized not only by means of the leverage mechanism of financial derivatives, but also by the "short selling" mechanism of financial derivatives.

In the preceding period, the international speculative capital arbitrarily magnified the commodity price of the international market by means of financial leverage. This kind of exaggeration of market favorable behavior is indeed a manifestation of market opportunism.

However, the supply and demand situation of bulk commodities in the international market is also changing at this stage.

It is far from enough to evaluate the market opportunism with the moral scale.

Opportunistic behavior refers to the fact that people do not fully disclose all information and engage in other behaviors that are harmful to others' interests under asymmetric information.

In view of this, the reason why the speculative capital in today's international market can be linked to market opportunism depends largely on the discovery of "machine".

That is to say, we must have the ability to be aware of the foresight.

In fact, the price of bulk commodities in the international market is so high that most of them rely on high leverage. Therefore, a slight fluctuation in the market will easily blow up the warehouse or be forced to stop.

The biggest difference between the "outsiders" and the "outsiders" is that these speculative capital often know earlier when they are under the "dangerous wall" of speculation, so they are more able to borrow goods in good time in the international market.

In fact, at the beginning of the year, speculators tried to ship goods in the Middle East political situation, but the Japanese earthquake caused the price of crude oil and many other commodities to fall, and did not go smoothly.

Speculators want to borrow the news of Laden's death. They are very determined. Otherwise, wait until the end of the second round of quantitative easing in June.

When people curse the opportunism of the market, we also have to admire the recognition ability of market opportunism.

It is undeniable that in today's international market, the judgement of speculative capital on the trend of commodity prices does not depend entirely on the preemptive occupation of asymmetric information commanding heights.

The actual situation is that many opportunistic behaviors in the international market against commodity price trends are based on information sharing. Only speculative capital has done more work than us all in refining and digesting information. This is also my perception of the trend of commodity prices in the international market in the first half of 2011.