POINTERS: War is ON "currency war" & its impact on commodities in 2016

By: Ali Muhammad Lakdawala

Ali Muhammad Lakdawala : Procurement in charge for Edible Oils & Fats at India’s premier FMCG conglomerate, ITC Ltd, India.

Prior to joining ITC Ltd, he worked as a Senior Commodity Research Analyst and Trader at Anand Rathi Commodities Ltd, India the only analyst given the opportunity to operate with three different commodity verticals (Energy Market, Edible Oil & Oilseeds and Spices). Previous work experience also includes as Research Analyst with renowned organization, Unit Trust of India (UTI) Commodities.

This culminated in numerous international report publications, being quoted in various business press (Bloomberg, Dowjones, Reuters, Economic Times, Platts, etc), and invited as a Guest Speaker for Commodity Markets & Commodity Risk Management at various National & International Conferences and a Visiting lecturer at Mumbai University India.

An invited Member of : - Solvent Extractors Association of India (SEA of India) - Imported Vegetable Oil Processors Council - Indian Vegetable oil Producers Association (IVPA) - Steering Committee

Paper presented at various national & international forum on Commodities that specialises "looking beyond fundamentals for price direction”.

Education - A Commerce Graduate with Masters in Management Studies (Specialization in Finance: Rank Holder in Economics) from Mumbai University (India) and Diploma holder in Supply Chain Management - from the Confederation of Indian Industry (CII).

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This paper is in continuation to paper published & presented in November 2015 at PORAM Annual Forum, Malaysia. Titled "Future of Palm Oil : During the time of War (Currency War)". Wherein, paper discussed How countries used & still using Monetary Tools as one of the war tactics in battlefield which is not pre-defined to protect its self interest in turn creating ripple effect in global economies, Relationship between currency and its impact on commodities specifically to Palm Oil. Further to that it listed out Nine factors which will be key determinants in 2016 for markets and finally concluding with ECG for monitoring the health of Edible Oil & Oilseeds (ie)EL Nino , China & Greece.

Economist John Maynard Keynes stated "When the facts change, I change my mind"

Post paper presented in November 2015 there has not been major change in global market dynamics, in fact market has just moved in the way it was expected and the WAR has got more intensified as more players has entered the battlefield. Adhering with Mr. Keynes statement looks like we need not change our mind yet as current markets are in sync with prognosis presented in earlier paper.

Current paper would validate the status of on-going WAR by looking in the performance of key currencies, its impact on commodities post which it would revisit Nine factors listed in previous paper & evaluate its standing in current market scenario. Finally concluding with events to be watchful about and analysing the market structure of palm oil thereafter estimating the price forecasts for commodities & key currencies for current year.

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Questions & Answers (5) :

te chin chen

8 years ago

Very informative and gradually different perspective view with the other analyst.Based on fundamental view,is it possible there will be a last rallying for the global stock market before a 10-20% correction coming very soon ?(I mean 2-3 months time.) .Market are overvalued. Bubbles everywhere and things get worse off as FED、BOJ、ECB are intefering markets with more QEs. And then how will commodity market perform when stock markets start to correct ? Thank you.

Ali Muhammad Lakdawala:
Interesting Question with a ray of optimism. Myself would like to see things in a positive way but scenario shaping up for global economy seems to be more pessimistic than ever before. Just to narrate : Initially people were reluctant to accept Chinese Growth Rate & now they want to accept its correction. Currencies are trading like stocks (too much volatility). Global growth is & will be concern and with sliding commodity prices it has worsen commodity export dependent nations. Making them more vulnerable in fact both Brz & Rus would be facing recessionary trend. Quick to follow could be African nations & emerging economies across globe. US is still trying to find a growth formula along with NEW LEADERSHIP & EU well they yet to resolve PIGS issue & now Britain wants exit. In such scenario all the asset classes will be vulnerable including commodities except for GOLD. Surely Agri Commodities (which are well supplied as of now) has its own roll to play in on the back of weather conditions.
8 years ago

Mohamad Raid Majzoub

8 years ago

Dear Mr. Ali Muhammad Lakdawala, Thank you for the useful presentation, all clear, i just have very simple question where do you see the MYR/USD until end of 2016? Thank you.

Ali Muhammad Lakdawala:
Dear Mohamad, Thanks for your question. If you were to go through the outlook slide wherein its been mentioned that view very bearish on MYR basis gloom scenarion in China & its own structural issues (Depreciating MYR will make Palm Prices cheaper for importing centres : target shared in Nov\'15 for MYR was declining further towards initial 5.10 & worse case 5.45 against USD due to China & its own internal issue. At present risk still looms for the same)
8 years ago

Ali Muhammad Lakdawala

8 years ago

Key Takeaways : events to be watchful going forward (.i.e) The return of \"Laden\" , The Japanese Way, The Limping Dragon, The Geopolitical Risk to Intensify, The Trade Flows & The Weather Risk

Sufyan

8 years ago

Thank You, Ali Muhammad Lakdawala for such an informative report. As you have mentioned that during time of war its only gold which people perceive as safe heaven and gold prices have spiked as well recently, so going ahead where you see gold moving?

Ali Muhammad Lakdawala:
Well during time of uncertainty it\'s only GOLD which will rockstar, as investors would ditch all other asset classes. From current levels of 1230$/t oz we can expect upsurge towards 1500
8 years ago

LIM TECK CHAII

8 years ago

TQ for sharing the information you have. On the aspect of machine and trading, internet has alter the way prices are formed, information disseminated etc. , etc.,etc. I would like to know whether this modern business platform has made palm oil emerge stronger in the global oils and fats complex. What is your view?

Ali Muhammad Lakdawala:
Well the same has only resulted in better \"transparency\"
8 years ago