Wie alles begann:
DJ Spotlight On Goldman Sachs As Commodities Hearings Begin
By Moming Zhou
Goldman Sachs Group Inc. (GS), under fire for reaping record trading profits
in the teeth of the financial crisis, is now fighting to defend one of its
major sources of revenue - commodities trading - as regulators consider setting
limits on Wall Street speculators.
Goldman and other big investment firms are scheduled to appear at a series of
hearings held by the Commodity Futures Trade Commission starting Tuesday, as
the Obama administration launches its biggest move yet to clamp down on
commodities speculation, which has roiled prices from oil to corn and wheat in
recent years.
At issue for the investment bank is a major exemption it enjoys from limits
on trading of certain types of agricultural commodities. Such an exemption is
usually reserved for traders classified as "hedgers," such as farmers or food
producers that depend on stable prices for their businesses.
Goldman opened the door for investment banks to apply for similar status when
it won the first exemption 17 years ago to help its big institutional clients
in commodity index trading, or investment in a range of commodities by tracking
a major index.
The result, according to some members of Congress, has been a surge in all
commodities speculation in the last few years, pushing oil prices near $150 a
barrel and gold prices over $1,000 an ounce.
Speculators' index trading is "creating price disruptions for producers and
consumers," said U.S. Sen. Carl Levin, D-Mich., late last month after the
release of a 247-page report documenting how index traders have made large
purchases on the wheat futures market in Chicago and have pushed up futures
prices over the past few years.
It's time for regulators to "change course, rein in commodity index traders,
and clamp down on excessive speculation that is disrupting commodity prices,"
he added.
In addition to taking away the special exemption, the CFTC, the U.S. futures
market regulator, is also thinking of adopting position limits on all
commodities, not just in agriculture. The move could curb the growth of some
major commodities exchange-traded funds.
The commission will hold three hearings, including the one Tuesday.
Representatives from Goldman and JPMorgan Chase & Co. (JPM), two biggest
holders of derivative assets, are scheduled to attend the second hearing on
Wednesday.
Goldman argues that any new limits will severely impact liquidity in
commodities markets, hurting both large and small investors by reducing their
access to these markets. The bank derives almost half of its revenue from
trading commodities, currencies and bonds, but it doesn't break out just
commodities.
"Attempts to regulate volatility have rarely - if ever - succeeded," said
Steven Strongin, a Goldman managing director, in testimony delivered last week
to a Senate committee regarding Sen. Levin's wheat report. "Yet they often have
unintended and significant consequences."
Brad Hintz, analyst at Sanford C. Bernstein & Co., estimated that commodities
trading accounts for about 8% to 9% of Goldman's revenue. While the percentage
is not as big as fixed-income trading, it's an important sector for Goldman
because "there are only a handful of major players."
"It's a powerful, powerful piece of the firm," said Hintz.
The CFTC's rule-making process is still in its early stages, and it's not
clear whether the hearings will ultimately lead to the adoption of new rules.
Michael Duvally, a spokesman for Goldman Sachs, declined to comment.
Goldman Started It 17 Years Ago
At the crux of the debate are the so-called commodity index investments, the
total value of which has been estimated by MarketWatch at about $150 billion.
The business started in 1991, when Goldman advised a big pension fund to
invest $100 million in commodities by tracking the widely followed GSCI, as the
Goldman Sachs Commodity Index has come to be known.
The investment was essentially a bet on the index: If the index rose, Goldman
would be required to make payments to the pension fund. In order to protect
itself against the risk, Goldman, through its commodities trading arm, J. Aron
& Co., planned to establish similar buying positions in commodities futures
markets.
If commodity prices rose, Goldman's gain in futures markets would offset the
payments it had to make to the pension fund.
The so-called swap plan had a major obstacle. Federal rules limit the number
of positions a trader can take in some agriculture commodities, such as corn,
wheat and soybeans.
While no limits were set in other commodities, the agricultural limits would
sabotage the whole swap plan, since index investment covers a range of
commodities and a limit in one represents a limit in the whole investment plan.
J. Aron applied for exemption, arguing that the firm should not be treated as
a speculator but as a "bona fide hedger" - a classification usually reserved
for farmers, processors, or food producers that enter the futures market to
hedge their risks in physical commodities trading.
The CFTC, in a letter to J. Aron dated on Oct. 18, 1991, granted J. Aron the
exemption. A copy of the letter was obtained by MarketWatch.
Similar exemptions were granted to other swap dealers, most of them big
investment companies.
With the help of swap dealers, more and more institutional investors have
diversified their portfolios into commodities to hedge against inflation and a
weaker dollar. Their positions have grown so large that legislators and
analysts said the trend was pushing commodity prices to levels that couldn't be
justified by fundamentals.
In a statement released earlier this month, CFTC Chairman Gary Gensler said
the agency is considering "applying position limits consistently across all
markets and participants, including index traders and managers of
exchange-traded funds."
Goldman's Strongin, in testimony before Levin, said passive investment in
commodity markets is "a crucial source" of market liquidity, and it was
"inappropriately characterized as speculators with no real economic interest in
these markets."
Strongin, who had served as a member of the policy committee for the GSCI
index, said index investors "rarely invest based on short-term speculative
market views," and they "aim to earn a reasonable long-run return."
Setting Limits On All Commodities?
While the CFTC is considering withdrawing the exemption, it's also
considering whether to expand speculation limits to cover all commodity
futures, such as oil, metals or natural gas.
Setting limits in all commodities could pose another blow to Goldman, which
makes billions of dollars in direct commodities trading.
Goldman's revenue in fixed income, currency and commodities trading stood at $6.80 billion in the quarter ended June, or nearly 50% of the quarter's total
revenue.
Setting rules on commodities speculation is "certainly not good news for
Goldman," said Jeffery Harte, analyst at Sandler O'Neill. "But the devil is in
the details. How are you going to specifically define speculators? We just
don't know yet."
The impact of expanding speculative limits to all commodities would put in
jeopardy the unlimited access to futures markets that some popular commodity
exchange-traded funds now have. The United States Oil Fund (USO) and the United
States Natural Gas Fund (UNG), the two biggest energy ETFs, hold significant
positions in energy futures.
Setting position limits on energy futures could also hamper the ability of
producers and refiners to hedge their risks. Energy users and retailers
sometimes go to a swap dealer to make customized trades, instead of using a
standardized futures market. The swap dealer will then go to the futures market
to hedge its own risk.
"I will be concerned about artificially limiting the size of positions," said
Jeffrey Mayer, chief executive manager of MXenergy, one of the biggest
independent retailers of natural gas in the U.S.
"The CFTC should make sure all positions are reported and the categories be
broken down more carefully to sort out speculators from commercial hedging
interest," he added.
The CFTC had said it will enhance its weekly Commitments of Traders report to
separate and categorize swap dealers. The improved COT report also will
distinguish professionally managed market positions such as those of hedge
funds.
-Moming Zhou; 415-439-6400;
AskNewswires@dowjones.com Neues zum Thema:
Fehlende Konvergenz zwischen Weizen-Future und Weizen-Cash Preisen
aus:
http://www.spreading.com/hot-trading-news.htmlVariable storage rate next for CBOT wheat -NGFA
CHICAGO, Aug 24 (Reuters) - The largest U.S. grain handlers group on Monday said the next step in fixing the Chicago Board of Trade's "broken" wheat contract will likely mean more changes in storage rates.
The National Grain and Feed Association -- made up of more than 1,000 grain handlers, processors, exporters and other merchants -- has complained for more than two years that the CBOT wheat contract was broken. But NGFA said "variable" storage rates were the next likely first aid that regulators and the CME Group <CME.O> will use on the contract.
"The variable storage rate concept has emerged as the most likely next step to enhance performance of the CBOT wheat contract if convergence does not improve significantly during the expiration of the September contract," the National Grain and Feed Association said in a statement.
"In addition to the ongoing NGFA-CME Group discussions, the CFTC's Subcommittee on Convergence, on which the NGFA has a representative, also has decided to recommend adoption of the variable storage rate to achieve convergence," it said.
Convergence, where cash and futures prices meet at futures contract expiration, has not occurred for more than two years for the CBOT wheat contract, the NGFA said.
Lack of convergence destroys a futures contract value as a risk-offset for traditional market hedgers, who take opposite positions in futures from the cash market and use the transactions as collateral for bank lines of credit.
But market analysts say the structure of the CME's wheat contract, traded on its Chicago Board of Trade subsidiary, is out-moded and needs overhaul. The Commodity Futures Trading Commission has said that if convergence does not improve, changes will be made.
Forward prices for commodities are normally higher than "spot" prices due to added-in costs for storage and insurance.
NGFA said its talks with CME officials on Aug. 19 included fine-tuning the full-carry calculation by which storage-rate adjustments would be triggered, and their size.
CME economist David Lehman told Reuters on July 27 that the variable rate concept was "dynamic" and "would be probably our preference for a next step, if one is needed."
CME for its July wheat delivery put changes in effect that did not have a major impact on convergence, traders said. Those involved higher seasonal storage rates and additional wheat delivery locations. For the September delivery, CME also has already reduced limits for the presence of vomitoxin, a fungal disease that devalues the grain's use for flour makers.
NGFA noted that the CFTC's Subcommittee on Convergence has said more study should be given both to a cash-settled index wheat contract and a "delivery certificate decay" concept, which is an element of cotton and coffee futures contracts and would involve increasing storage rates at delivery warehouses over time as the commodity is held for longer periods.
Es ist ein ganz normales seasonales Verhalten. Die langfristige Tendenz geht auf etwas höhere Carryspreads zu. Obwohl die Zinsen niedrig sind. Der Anstieg bis weit in den August rein, entsteht warscheinlich durch das Rollen von Longpositionen (Long-only-Fonds). Die Logistik der Lagerwirtschaft ist zu träge um dem Trend zu stopen. Spreadtrader die auf eine Backwardtation spekuliert haben erhöhen den Druck. Die wirkliche Preisfindung findet oft erst nach dem FND stadt.
Es ist ja eigentlich noch zu früh, aber ich habe angefangen eine Shortposition aufzubauen. Die Wende erwarte ich erst in 2 Wochen bei Kursen um 34,5.
Heute abend ist für IAB-Kunden Ende für den Spread. Einen Gewinn hat es nicht gegeben. Das realistische Kursniveau wird erst nach dem FND erreicht. Meine Einschätzung das die Getreidemärkte, für reine Timespreads sehr schwierig sind, hat sich wieder bestätigt. Die Kommerziellen beherschen den Markt und lassen sich die Butter nicht vom Brot nehmen.
