QUOTE(panasonic88 @ May 28 2009, 02:49 PM)
that's why AdamG advised us to LONG commodities?
which means, crude oil price will surging? will that bring benefits to plantations?
It is a difficult catch right now. We don't know where the economy is heading, and situation of consumers and stimulus effort, recover is intact or not. That's why market is flat and nor moving much and stuck in tight range.which means, crude oil price will surging? will that bring benefits to plantations?
Commodities surging lately is not due to demand picking up (instead demand is still in shrinking or flatting scenario) but due to speculation and hedging of cheap money around.
Ordinary or plantation company will benefit if high price x high amount sales = total revenue.
But you have high price but low amount of sales at the moment, then goodness of high price might not total benefitting the plantation company.
You previously monthly sales is Rm1.00 x 10,000 items = 10K and with cost at 0.90, so profit 1K
Now price become 2.00 but cost become 1.80 (due to oil price rising blar blar) and with loweer item sales of 5K unit, so you still make the same profit of 1K.
So in this kind of scenario, company didn't benefit from the higher price, eventually share price might not move much.
May 28 2009, 03:01 PM
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