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CRB Commodity 2009 Yearbook: A Must Read For Commodity Traders

1 Comment August 21, 2009 – 10:58 am |   | Permalink |  Print This Post |

Our order for the latest CRB Commodity 2009 Yearbook finally arrived in the mail after 3 weeks (Remember to select the express post option - its worth the surcharge if you are as impatient as we are). We were planning to bring our copy to Bali and do some serious research by the beach or pool.

The first chapter we read was on “Natural Gas”. After analyzing the numbers, we are still convinced that this selloff in Natural Gas is excessive. Yes, reserves and production is up thanks to better technology and/or alternative sources (shale gas), with some countries (Russia, US) showing huge growths in production. However the small increase in net global production does not justify the huge fall in gas prices. Not when everything else is starting to recover, and especially when the current price is below the cost of production. It is not a question of IF but WHEN will prices recover. The Oil: Gas ratio now exceeds 24 - the first ever based on a limited Google literature review. The media is trying to explain this fall using every trick in the book: milder summer, huge reserves, decrease consumption etc… This is indeed one of the biggest opportunities to profit. If there was a spot price for gas with no expiry, we would be willing to put most of our eggs in the Natural Gas basket. And then we sit and wait. At 2.89, this presents an excellent long term investment. However you look at it, bear or bull equity markets, the economics of natural gas will improve as production stalls with falling prices. As we have said before, the only cure to low price IS low price. Just make sure you do not over-leverage!

For those who have not heard about the CRB Commodity Yearbook, and are serious about trading in commodities, make sure you get a copy. It comes with a free CD, and is worth every cent. Instead of wasting precious time searching for historical charts on individual commodities online, this book comes with charts dating back to 1910s for most commodities, and annual figures for production and consumption in the last 10 years. It was referenced (and highly recommended) by Jim Rogers in his book: Hot Commodities.