Unstructured Finance

Grains insight for the week of Feb. 26

stebbins_2.jpgInflation worries and forecasts for a dry U.S. summer sent shivers through CBOT markets this week, with corn reaching a 10-year high and soybeans at 2-1/2 year top.

Traders expect volatility to keep climbing as we move into the spring planting and summer growing seasons — traditionally the most volatile times of the year.

That volatility is attracting a steady flow of speculative capital into the markets. Funds are especially crazy about corn. Trade data from the Commodity Futures Trading Commission on Friday showed that they expanded their net long position in corn futures/options by nearly 9,000 lots, after the previous week’s big jump. Traders also noted that funds have the most room to build a long position in wheat than any other ag-related commodity.

Fundamental factors traders will be watching next week include — Brazilian weather as rain is delaying the soy harvest in the No. 1 soy state of Mato Grosso, any long-range forecast calling for a La Nina weather pattern to develop this season, and export business.

USDA’s outlook conference supply-and-demand projections released on Friday will also be closely watched and undoubtedly provide price direction.

Watch out eBay — Amazon is coming

amazon.jpgEBay may have the online auctioneering game covered, but it should be looking over its shoulder at competitor Amazon.com, according to a recent consumer report.

Online retailer Amazon.com is doing a better job at customer satisfaction, according to the American Customer Satisfaction Index released on Tuesday by the University of Michigan and ForeSee Results. That should be worrying for eBay as the two leading online businesses increasingly intersect, said the head of ForeSee results, Larry Freed.

The survey gave eBay a score of 80 to Amazon’s 87.

With more third-party sales of used goods on Amazon’s site, and eBay selling many brand-new and direct-from the retailer items, the lines between online auctioneers and retailers have become increasingly blurred, said Freed.

That $50 Fendi purse looks tempting, but what’s its real cost?

   fendi.jpg                                        Admit it, you’d be tempted to buy that fake Louis Vuitton bag.
    But what about fake food? Medicines? How about a Europe trip on an airplane that may be flying on fake parts?
    According to law firm Fulbright & Jaworski LLP, counterfeit goods today extend beyond perfumes and handbags, and are increasingly showing up in daily-use products like food, medicines, household products and even auto and airplane parts.
    So although it may seem harmless when you flaunt that nearly-original-looking handbag, but not as much fun when you end up with a stomach ache after swallowing what you thought was real, FDA-approved medicine.
    The New York-based law firm, which co-sponsored the Third Annual Global Congress on Combating Counterfeiting and Piracy in late January, outlined a few statistics about counterfeit goods at the meeting:
    — The World Health Organization estimates that $35 billion worth of counterfeit pharmaceuticals are sold each year.
    — The U.S. Federal Aviation Administration estimates that 2 percent of the 26 million airline parts installed each year are fake.
    — 5.2 million fake foodstuff, drinks and alcohol are seized at EU borders each year.
    The risk may escalate to a level where in the next five years, one in every five people may be using counterfeit medicine, said Pfizer‘s Senior Vice President Robert Mallett at the meeting held in Geneva, Switzerland.
    “If you think you can avoid these counterfeit and pirated goods simply by avoiding flea markets and other such stores, you’re wrong,”  said Mark Mutterperl, a partner in Fulbright’s New York office.
    As for fake airplane parts – the FAA calls them “suspect unapproved parts” and has set up a special office in Washington D.C. to coordinate its efforts to identify and remove such parts from aircrafts, according to a report on the FAA Web site.
    The U.S. Food and Drug Administration created the Counterfeit Alert Network in February 2004 to warn health professionals and consumer groups about counterfeit drugs and to inform consumers about exposure and recall information.
    Besides just proving bad for trade, counterfeiting also costs people jobs and results in tax and revenue losses and higher spending to fight it, according to Fulbright’s study.
    Besides increasing consumer awareness, other ways to stem counterfeiting include tightening existing laws and devising special ones for free trade zones and for Internet piracy, said Mutterperl. 
    But for those who still really crave that $50 fake Fendi — think beyond the bargain, he says.


Toy makers look to spark sales with MP3-playing toys

Reuters Toy Fair2.jpgAs children increasingly put down traditional toys at earlier ages for flashier, higher-tech gadgets like Apple Inc.‘s iPod, toy makers appear to have reached the following conclusion: If you can’t beat ‘em, join ‘em. 

At the American International Toy Fair in New York, toy makers signaled they’ve adapting to the changing marketplace, with many exhibitors showcasing PC-compatible toys that can play music from an MP3 player.  

“The toy industry manufacturers and the youth product manufacturers really upped the ante in terms of looking at what kids of today are interested in and how to make toy products for that market,” said Reyne Rice, a toy trends specialist at the Toy Industry Association. 

Retail’s Winter Wonderland

That blast of winter that has turned much of the U.S. into Ice Station Zebra proved to be a boon for many U.S. retailers. Most retailers posted January sales that beat expectations, as gift-card wielding consumers, buoyed by lower gas prices, swept up the sweaters and scarves that stayed in store shelves during the unseasonably warm holiday shopping season.

According to Retail Metrics, 59 percent of retailers beat forecast in January, while only 39 percent missed expectations. Even Gap, which had seen same-store sales drop every month for a year, said sales same-store sales were flat in January.:
Notes: The table includes the range of mean estimates* given by analysts polled by Reuters, the average of those means#, and the actual change in same-store sales reported by the companies^.

All figures expressed in percentage change over the same period last year except number of estimates.

Pre-orders rise as Harry prepares to vanish

Book sellers are champing at the bit for the July 21 release of “Harry Potter and the Deathly Hallows,” the seventh and final installment of J.K. Rowling’s wildly successful fantasy series, which has sold 325 million copies worldwide.

And with some industry experts expecting Harry Potter 7 to become the fastest-selling title of all-time, an honor currently held by the sixth installment, “Harry Potter and the Order of the Phoenix,” retailers are looking to capitalize by offering a slew of early discounts for customers pre-ordering the book.

The pre-orders ensure hard-core fans will be able to get the book the day it comes out, helping them to avoid the inevitable disappointment that will ensue in the event book 7 is sold out, said Al Greco, a professor of marketing at Fordham University and an analyst for the Book Industry Study, which produces an annual study of book sales.