Here's a brief summary of what experts expect for the biggest financial markets in 2012:
Top financial analysts and some big-bankers anticipate an sharp spike in oil prices this year if poor relations between Iran and the west aren't resolved soon.
Perhaps most importantly, we could see a sharp rebound in the gold markets due to lingering fiscal woes in th eurozone.
And we know silver is set to soar to unprecedented levels...
There's also a feasible possibility that natural gas prices may tumble even more dramatically here in the U.S. because of the continuous oversupply issue.
So the safest bet is to get your hands on precious metals and keep your eye on the energy sector to adjust your related holdings accordingly.
But, have you heard about the hottest commodity of 2012? *Hint:* It's a surprisingly small market.
It's not a versatile metal, or an alternative way to heat your home this winter – it's nothing remarkably complex at all really. It's a simple and sweet something that may by a mundane part of your morning routine.
The marvelous thing about this commodity is the money it's raking in right now.
I'm talking about good ole' fashioned orange juice.
That's right. OJ.
As of Tuesday, January 10, 2012, the OJ market closed at the top of its daily trading limit: “there was relatively heavy trading of call options with a $2.30 strike – up 8.5 per cent from Tuesday’s close.”
Sometimes it pays to pay attention to small markets, especially in this particular example. Each day, the notional turnover for orange juice is just around $75m. But, shipments of imported orange juice from all over the world have been halted because traces of a poisonous fungicide had been found in some of the juice.
...when news broke that Brazil, the largest producer of oranges accounting for 38 per cent of global supplies might be temporarily blocked from sales to the US, the price leapt.
On the other hand, charter rates for Capesize ships, the largest type of dry bulk carrier used mainly to transport iron ore from Australia or Brazil to China, have been weighed down by chronic oversupplyfollowing a boom in rates in 2008.
Adding to that, a record 100 ships were waiting to unload outside Chinese ports at the end of 2011. As weather problems fade and Chinese demand begins to tail off ahead of the Lunar New Year, that queue is beginning to ease, increasing availability of ships and so putting downward pressure on rates.
Orange juice futures have seen some serious spikes based on the fungicide fears. The fungicide, banned in the United States, was detected in juice imported from Brazil. The chemical had been previously permitted in some other food uses
Responsively, the FDA has decided to test for further fungicide in all shipments – from Brazil and beyond. They have set up testing for carbendazim and could completely block imorts from Brazil; a huge contributor of orange juice imports into the U.S.
According to CNNMoney, 25% of all orange juice drank here in America is imported. Approximately 11% comes directly from Brazil.
Because of the import dilemmas based on those statisitcs, orange juice futures soared by 10% Tuesday, then retreated a bit into Wednesday.
Until the FDA un-freezes orange juice shipments, prices are expected to remain volatile. Keep your eye on breaking OJ news to take advantage of this window of obscure opportunity...
*Indented excerpts courtesy of Financial Times.
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