MUMBAI: In possibly the biggest single day fall for a stock, Satyam Computer Services lost 77 per cent to end at Rs 40.25 on NSE. The stock’s woes began in December after the company’s promoters made a $1.6-billion bid for Maytas Properties and Maytas Infrastructure promoted by Chairman B. Ramalinga Raju's son.
However, adverse market reaction, which saw the company’s ADR take a knock of 54.5% to $5.70, made the company call off the proposed acquisition. At the time, Chairman Raju evinced surprise saying he was “surprised by the market reaction to this decision even though we were quite positive about the merits of the acquisition.”
Raju, in fact, today (Jan 7, 2009) took the stock market and the business community by surprise, after he tendered his resignation and admitted in a letter to the board that Satyam’s balance sheet was cash and bank balances as on Sep 30, 2008 was inflated to the extent of Rs 5,040 crore (as against Rs 5,361 reflected in the books).
Further, Satyam’s balance sheet carries an accrued interest of Rs 376 crore which is non-existent, an understated liability of Rs 1,230 crore on account of funds arranged by Raju, and an over stated debtors position of Rs 490 crore (against Rs 2,651 crore in the books)
The letter goes on to state that Satyam reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24% of revenues) for the second quarter ended Sep 30, 2008, as against the actual revenues of Rs 2,112 crore and actual OPM of Rs 61 crore (3% of revenues). This resulted in artificial cash and bank balances going up by Rs 588 crore in the second quarter alone.
If one goes by the actual revenue and OPM figures, taking others as true, Satyam would have posted a loss instead of the reported profit after tax of Rs 537 crore for the September quarter. If one deducts the financial expenses and depreciation/amortization from the actual OPM of Rs 61 crore, it gives you a loss of Rs 5.87 crore, which translates to a negative EPS of Rs 0.08.
Investment bank CLSA has said that the value of Satyam stock in current conditions is about Rs 25-30. However, some analysts feel the stock is worthless as the scale of fraud is not yet known.
“The real value of the company can’t be determined at this point of time as what other figures are inflated should be known. Also, given the bleak economic conditions I don’t expect anybody will be interested acquiring the company. Hence, it is better one should exit or stay away,” said Ramesh Kumar, senior analyst at Global One.
In October of 2008, Satyam saw a high of Rs 325 and a low of Rs 220 and its market capitalization was Rs 20,534 crore. The MCap eroded significantly to Rs 11,465 crore by end December after Satyam announced the twin Maytas acquisition.
“It is one of the worst days for Indian investors. It has shaken investor confidence--both domestic and global. The biggest dent that this Satyam episode could create is the ‘trust’ of investors towards companies, auditors, and reported numbers by companies,” said Hitesh Agrawal- Head -Research -Angel Broking.
“We have discontinued coverage on the stock with immediate effect and would advise current investors to exit the stock and nonexistent investors to stay away,” he added.
Wednesday, January 7, 2009
Satyam Revelation Rocks Indian Markets
Company's chair resigns, confessing to having falsified the company's accounts for several years in order to forestall a takeover.
B. Ramalinga Raju, chairman of the scandal-plagued Indian outsourcing specialist Satyam Computer Services, has resigned, confessing that he had conspired to cook the firm’s books for several years.
In a letter to Satyam’s board, which was released Wednesday morning to the stock exchanges and market regulator, the Securities and Exchange Board of India, Raju owned up to inflating the firm’s cash and bank balances by $1 billion and fudging the firm’s revenues and operating margin in the quarter that ended in September 2008. The actual operating margin was 3% ($12.5 million), on revenues of $434 million, as against the incorrectly reported operating margin of 24% ($133 million), on $554 million in revenues. Debts were overstated by $100 million, and liabilities understated by $253 million.
Admitting that the gap in the firm’s balance sheet was caused by inflated profits over several years, Raju stated that he was afraid Satyam’s poor performance would result in a takeover, which would expose the gap. “It was like riding a tiger, not knowing how to get off without being eaten,” his letter read, adding that neither the board nor any of the firm’s executives were party to the wrongdoing. He characterized an aborted deal to buy two construction companies controlled by his relatives, which had riled investors in December, as a last-ditch attempt to substitute fictitious assets with real ones.
The confession sent the stock of Satyam Computer Services (nyse: SAY - news - people ) plunging by 138.70 rupees ($2.84), or 77.5%, to 40.25 rupees (82 cents), and pulled down the BSE Sensex 30 index by 749.05 points, or 7.25%, Wednesday. SEBI Chairman C. B. Bhave termed the development one of “horrifying magnitude,” reported the Press Trust of India. He went on to say that the regulator would take legal action after conferring with the government. The New York Stock Exchange-listed Satyam could face action from the U.S. Securities and Exchange Commission as well.
Revelation of the accounting fraud has produced shock waves across India’s corporate world. “This is beyond the realms of my imagination. It’s a real shocker,“ said Rakesh Jhunjhunwala, chairman of the Mumbai investment firm Rare Enterprises. (Jhunjhunwala has no exposure to Satyam.)
“I just can’t believe this. It’s very difficult to digest,” acknowledged Shailesh Haribhakti, executive chairman of audit and consulting firm BDO Haribhakti in Mumbai.
Ganesh Natarajan, chairman of the software industry association Nasscom, sought to allay fears that the Satyam fiasco would further damage India’s export-oriented software sector, which has already been dented by the financial meltdown and recession in the United States, its biggest market. “ This is a firm-level issue and won’t affect the entire IT sector,” he said. “ But it does mean that corporate governance standards overall need to be relooked at with a microscope.”
According to Haribhakti, the biggest challenge emerging from the sorry saga is protecting the interests of Satyam’s minority shareholders and its 53,000 employees: “The credibility of Indian business is at stake.”
Jhunjhunwala felt that putting the rest of corporate India in the same league as Satyam would be unfair. “Satyam should be merged with either Infosys or Wipro which are companies that can be trusted,” he remarked.
B. Ramalinga Raju, chairman of the scandal-plagued Indian outsourcing specialist Satyam Computer Services, has resigned, confessing that he had conspired to cook the firm’s books for several years.
In a letter to Satyam’s board, which was released Wednesday morning to the stock exchanges and market regulator, the Securities and Exchange Board of India, Raju owned up to inflating the firm’s cash and bank balances by $1 billion and fudging the firm’s revenues and operating margin in the quarter that ended in September 2008. The actual operating margin was 3% ($12.5 million), on revenues of $434 million, as against the incorrectly reported operating margin of 24% ($133 million), on $554 million in revenues. Debts were overstated by $100 million, and liabilities understated by $253 million.
Admitting that the gap in the firm’s balance sheet was caused by inflated profits over several years, Raju stated that he was afraid Satyam’s poor performance would result in a takeover, which would expose the gap. “It was like riding a tiger, not knowing how to get off without being eaten,” his letter read, adding that neither the board nor any of the firm’s executives were party to the wrongdoing. He characterized an aborted deal to buy two construction companies controlled by his relatives, which had riled investors in December, as a last-ditch attempt to substitute fictitious assets with real ones.
The confession sent the stock of Satyam Computer Services (nyse: SAY - news - people ) plunging by 138.70 rupees ($2.84), or 77.5%, to 40.25 rupees (82 cents), and pulled down the BSE Sensex 30 index by 749.05 points, or 7.25%, Wednesday. SEBI Chairman C. B. Bhave termed the development one of “horrifying magnitude,” reported the Press Trust of India. He went on to say that the regulator would take legal action after conferring with the government. The New York Stock Exchange-listed Satyam could face action from the U.S. Securities and Exchange Commission as well.
Revelation of the accounting fraud has produced shock waves across India’s corporate world. “This is beyond the realms of my imagination. It’s a real shocker,“ said Rakesh Jhunjhunwala, chairman of the Mumbai investment firm Rare Enterprises. (Jhunjhunwala has no exposure to Satyam.)
“I just can’t believe this. It’s very difficult to digest,” acknowledged Shailesh Haribhakti, executive chairman of audit and consulting firm BDO Haribhakti in Mumbai.
Ganesh Natarajan, chairman of the software industry association Nasscom, sought to allay fears that the Satyam fiasco would further damage India’s export-oriented software sector, which has already been dented by the financial meltdown and recession in the United States, its biggest market. “ This is a firm-level issue and won’t affect the entire IT sector,” he said. “ But it does mean that corporate governance standards overall need to be relooked at with a microscope.”
According to Haribhakti, the biggest challenge emerging from the sorry saga is protecting the interests of Satyam’s minority shareholders and its 53,000 employees: “The credibility of Indian business is at stake.”
Jhunjhunwala felt that putting the rest of corporate India in the same league as Satyam would be unfair. “Satyam should be merged with either Infosys or Wipro which are companies that can be trusted,” he remarked.
Tuesday, January 6, 2009
2008 slump wipes out $17 tn in stock value: S&P
The nightmarish stock market performance in 2008 erased some 17 trillion dollars in share value worldwide, a Standard & Poor's report said on Tuesday.
S&P's estimate is based the value of its Global Broad Market Indices, comprised of 46 major stock indexes around the world. Emerging market indexes fell 54.72 percent and developed markets dropped 42.72 percent for the year, according to S&P.
The losses, coming in a year that was the worst in many countries since the Great Depression, were moderated somewhat by a modest rebound in December, with 19 of the 21 emerging markets and 22 of the 25 developed markets posting gains during the month.
A glimmer of hope, that is how we can define December," says Howard Silverblatt, analyst at Standard & Poor's and author of the report. "As central banks race to reduce rates, add liquidity and shore up their local economy, markets remain cautiously optimistic as we move into 2009. However, as evident by the huge stockpiles of cash still on the sidelines, many world markets are taking a wait-and-see approach. The result is a continuance of extreme market volatility."
Among the worst performers in 2008 were the "BRIC" countries: Brazil (down 57.35 percent), Russia (73.67 percent), India (64.51 percent), and China (53.21 percent), according to S&P.
Morocco was the best performer among emerging market countries, limiting its loss to 15.85 percent. The second-best performer was Israel, with a loss of 34.68 percent.
In developed markets, Ireland was the worst with a loss of 69.94 percent, followed by Greece (66.50 percent) and Norway (66.07 percent).
S&P said its Japan index was the best among developed nations with a loss of 29.22 percent, followed by Switzerland (30.60 percent) and the United States (38.68 percent). The US market was the third "best" performer among developed markets and fifth best among all global equity markets.
Among various sectors, financials lost 53.77 percent and materials lost 52.9, representing the two worst industries
. The energy sector plunged 44.5 percent.
S&P's estimate is based the value of its Global Broad Market Indices, comprised of 46 major stock indexes around the world. Emerging market indexes fell 54.72 percent and developed markets dropped 42.72 percent for the year, according to S&P.
The losses, coming in a year that was the worst in many countries since the Great Depression, were moderated somewhat by a modest rebound in December, with 19 of the 21 emerging markets and 22 of the 25 developed markets posting gains during the month.
A glimmer of hope, that is how we can define December," says Howard Silverblatt, analyst at Standard & Poor's and author of the report. "As central banks race to reduce rates, add liquidity and shore up their local economy, markets remain cautiously optimistic as we move into 2009. However, as evident by the huge stockpiles of cash still on the sidelines, many world markets are taking a wait-and-see approach. The result is a continuance of extreme market volatility."
Among the worst performers in 2008 were the "BRIC" countries: Brazil (down 57.35 percent), Russia (73.67 percent), India (64.51 percent), and China (53.21 percent), according to S&P.
Morocco was the best performer among emerging market countries, limiting its loss to 15.85 percent. The second-best performer was Israel, with a loss of 34.68 percent.
In developed markets, Ireland was the worst with a loss of 69.94 percent, followed by Greece (66.50 percent) and Norway (66.07 percent).
S&P said its Japan index was the best among developed nations with a loss of 29.22 percent, followed by Switzerland (30.60 percent) and the United States (38.68 percent). The US market was the third "best" performer among developed markets and fifth best among all global equity markets.
Among various sectors, financials lost 53.77 percent and materials lost 52.9, representing the two worst industries
. The energy sector plunged 44.5 percent.
Friday, January 2, 2009
2008: Bad year for billionaires
LONDON: The financial crisis caught up with Kirk Kerkorian, Robert Tchenguiz and Adolf Merckle in the last days of 2008, denting their reputations for being among the world's savviest, not merely richest, investors.
Ultra-wealthy people such as the three men -- a 91-year old US billionaire, a jet-setting London property tycoon and a media-shy German industrialist -- are often thought to be at the vanguard of financial innovation, private bankers say.
"They're losing big money and their wealth is disappearing quickly," said David Giampaolo, Chief Executive of Pi Capital, a London-based private equity investment boutique.
Rich investors often held large positions in specific companies or stocks, he said, and they had also often borrowed large amounts of money to boost returns. "At the time it didn't look irresponsible (but) now they've had double, triple whammy problems," he said.
Hedge funds, still dominated by private investors, are among the players worst hit by the credit crunch, with some analysts predicting their assets will shrink by as much as 80 percent. And the scandal around US financier Bernard Madoff -- accused of defrauding rich clients and charities of $50 billion -- is another example of how the very wealthy are not immune to the financial turmoil.
Kerkorian, best known for his ties to the ailing U.S. car industry, this week said he had sold off his remaining shares in Ford Motor Co, completing a retreat that cost him hundreds of millions of dollars.
Since October, the activist investor has been cutting his losses on a $1 billion investment in Ford that had lost most of its value, capping a two-year period during which he was involved with all three Detroit-based car companies.
Forbes magazine, which tracks the world's richest people, puts Kerkorian's worth at $11.2 billion from investments in casinos and other businesses. His losses made him one of the poorest performers on this year's list, it said. Iranian-born Tchenguiz draws most attention through newspapers citing his jet-set lifestyle, including an expensive house in an upmarket London district and a sumptuous Louis XIV-style party he is reported to have thrown for his 40th birthday. His Globe Tenanted Pub Co Ltd, which runs 424 leased pubs across the United Kingdom, said this week it would appoint an external adviser, after narrowly breaching its debt covenants -- early warning signs of financial trouble. And business publication The Estates Gazette in October said Tchenguiz had dropped off its list of the 500 wealthiest people in UK property after losing 1 billion pounds ($1.45 billion) when Icelandic bank Kaupthing collapsed.
Germany's Merckle, ranked by Forbes among the world's 100 richest people, was caught out by wrong-way bets on shares in Volkswagen AG (VOWG.DE), incurring massive losses. His investment vehicle VEM Vermoegensverwaltung said on Wednesday it would sign an agreement to obtain a bridge loan from banks as it worked on refinancing the group. Banking sources have told media that Merckle's losses were estimated at 400 million euros, forcing Merckle to hold talks on state guarantees from regional governments, although he ultimately opted out of such financing.
But Sebastian Dovey, whose company advises private banks as well as wealthy individuals, still sees a glimmer of hope. "There is a certain ghoulish interest in covering savage drops in fortunes among other billionaires," said Dovey, a partner at consultancy Scorpio Partnership. "Time will tell if these individuals have the skill for wealth re-creation. Most, we suspect, will," he said.
See also:
BIGGEST BILLIONAIRE LOSER in 2008(SLIDE SHOW)
UK TOP LOSERS
USA TOP LOSERS (in Pictures)
Ultra-wealthy people such as the three men -- a 91-year old US billionaire, a jet-setting London property tycoon and a media-shy German industrialist -- are often thought to be at the vanguard of financial innovation, private bankers say.
"They're losing big money and their wealth is disappearing quickly," said David Giampaolo, Chief Executive of Pi Capital, a London-based private equity investment boutique.
Rich investors often held large positions in specific companies or stocks, he said, and they had also often borrowed large amounts of money to boost returns. "At the time it didn't look irresponsible (but) now they've had double, triple whammy problems," he said.
Hedge funds, still dominated by private investors, are among the players worst hit by the credit crunch, with some analysts predicting their assets will shrink by as much as 80 percent. And the scandal around US financier Bernard Madoff -- accused of defrauding rich clients and charities of $50 billion -- is another example of how the very wealthy are not immune to the financial turmoil.
Kerkorian, best known for his ties to the ailing U.S. car industry, this week said he had sold off his remaining shares in Ford Motor Co, completing a retreat that cost him hundreds of millions of dollars.
Since October, the activist investor has been cutting his losses on a $1 billion investment in Ford that had lost most of its value, capping a two-year period during which he was involved with all three Detroit-based car companies.
Forbes magazine, which tracks the world's richest people, puts Kerkorian's worth at $11.2 billion from investments in casinos and other businesses. His losses made him one of the poorest performers on this year's list, it said. Iranian-born Tchenguiz draws most attention through newspapers citing his jet-set lifestyle, including an expensive house in an upmarket London district and a sumptuous Louis XIV-style party he is reported to have thrown for his 40th birthday. His Globe Tenanted Pub Co Ltd, which runs 424 leased pubs across the United Kingdom, said this week it would appoint an external adviser, after narrowly breaching its debt covenants -- early warning signs of financial trouble. And business publication The Estates Gazette in October said Tchenguiz had dropped off its list of the 500 wealthiest people in UK property after losing 1 billion pounds ($1.45 billion) when Icelandic bank Kaupthing collapsed.
Germany's Merckle, ranked by Forbes among the world's 100 richest people, was caught out by wrong-way bets on shares in Volkswagen AG (VOWG.DE), incurring massive losses. His investment vehicle VEM Vermoegensverwaltung said on Wednesday it would sign an agreement to obtain a bridge loan from banks as it worked on refinancing the group. Banking sources have told media that Merckle's losses were estimated at 400 million euros, forcing Merckle to hold talks on state guarantees from regional governments, although he ultimately opted out of such financing.
But Sebastian Dovey, whose company advises private banks as well as wealthy individuals, still sees a glimmer of hope. "There is a certain ghoulish interest in covering savage drops in fortunes among other billionaires," said Dovey, a partner at consultancy Scorpio Partnership. "Time will tell if these individuals have the skill for wealth re-creation. Most, we suspect, will," he said.
See also:
BIGGEST BILLIONAIRE LOSER in 2008(SLIDE SHOW)
UK TOP LOSERS
USA TOP LOSERS (in Pictures)
Thursday, January 1, 2009
Rise and fall of commodities gives hints for 2009
- Just a year ago the debate about grain prices was simple: how high was high?
Huge global demand for grains, governments hoarding food, climate fears amid droughts, storms and floods -- basically every bullish factor one could imagine hit the markets.
The psychology of short supplies carried over to other commodities as well, especially industrial metals as China and India drew in a rapidly rising share of materials as their economies raced to modernize and transform.
The final element for the "perfect storm" sending commodities to stratospheric heights was the tsunami of Wall Street and other speculative money that, frustrated by stagnant stocks and bonds, finally bought into the commodities story.
The benchmark Reuters-Jefferies-CRB index .CRB of 19 commodity futures was at 358.71 on December 31, 2007, up 17 percent for the year. It jumped another 32 percent to hit record high of 473.97 on July 3, 2008.
Then, as investors blinked, it was over. The index started sliding and by early December fell to a 6-1/2-year low of 208.58 -- down 56 percent from the midsummer highs.
The global economic crisis tied to dried-up bank credit -- the lifeblood of all markets -- rocked Wall Street but also rolled over commodities, bursting bubbles right and left.
"A great start and an unexpected finish," said Rich Feltes, director of MF Global Research in Chicago.
Gold had soared past $1,000 an ounce. U.S. wheat prices had gone past $25 a bushel -- the previous record was $7.50 -- amid a 60-year low in U.S. wheat stocks. Midwest floods and a biofuels boom pushed corn above $7 a bushel, triple the average price for decades. In July, crude oil neared $150 a barrel.
"The main negative for all of these commodities is the demand side of the equation with the economic malaise," said Bill O'Neill, managing partner of Logic Advisors LLC and former head of commodities research at Merrill Lynch.
The question for the coming year? How low is low?
"As we head into 2009 I think an important question to ask is will that fund money come back?" MF Global's Feltes said.
"Commodities are not going to be a lead indicator," he said, pointing to gross domestic product instead. "The economy has to turn around first. There has to be fundamental justification for higher GDPs for improving commodity demand before investors feel comfortable coming back to commodities."
LIMPING ALONG - BUT KEEP AN EYE ON GRAINS?
In U.S. commodity markets, weekly data from the Commodity Futures Trading Commission has told the story of shell-shocked investors fleeing commodities or cashing out to secure funds.
Open interest in the CBOT's largest ag contract, corn, for example, had grown to 1.4 million contracts by spring. Today, the total is 800,000 contracts as commodity funds downsized to meet the global margin call that came as economies collapsed.
The credit contagion shows no signs of being solved any time soon, with the hopes of most investors pinned to the new policies and measures a Barack Obama administration says it will aggressively put in place starting in January.
How quickly that might spur economic growth and investor confidence is an open question. But among commodities, one place to keep an eye on may be grains. Several factors might make food and biofuels a trigger for a commodities recovery.
For one thing, the single biggest demand force in the recent commodities craze -- China -- is not going away. Neither is food or biofuels demand, although the latter may cool down.
"The theme we've had in the last half of this year was all about demand destruction," said Dan Basse, president of Chicago-based consultancy AgResources. "We're concerned about supply destruction starting mid to late winter and having a bull market in agriculture the last half of 2009."
Basse said supply destruction -- referring to lower global grain plantings -- was a key to watch. But so are biofuels.
Obama, from a top corn and soybean state, has promoted biofuels. But using food crops to produce them has been increasingly attacked by food inflation watchers and even environmentalists, saying it does little for global warming.
"Ethanol has been one of the big drivers of the bull market," Basse said.
Another factor that will have a huge influence over whether commodity prices recover is the value of the dollar. A weak dollar makes U.S. grain exports cheaper, for example.
"The U.S. dollar will continue at least early in the year to drive all commodity markets," said Bill Lapp, president of consultancy Advanced Economic Solutions.
Huge global demand for grains, governments hoarding food, climate fears amid droughts, storms and floods -- basically every bullish factor one could imagine hit the markets.
The psychology of short supplies carried over to other commodities as well, especially industrial metals as China and India drew in a rapidly rising share of materials as their economies raced to modernize and transform.
The final element for the "perfect storm" sending commodities to stratospheric heights was the tsunami of Wall Street and other speculative money that, frustrated by stagnant stocks and bonds, finally bought into the commodities story.
The benchmark Reuters-Jefferies-CRB index .CRB of 19 commodity futures was at 358.71 on December 31, 2007, up 17 percent for the year. It jumped another 32 percent to hit record high of 473.97 on July 3, 2008.
Then, as investors blinked, it was over. The index started sliding and by early December fell to a 6-1/2-year low of 208.58 -- down 56 percent from the midsummer highs.
The global economic crisis tied to dried-up bank credit -- the lifeblood of all markets -- rocked Wall Street but also rolled over commodities, bursting bubbles right and left.
"A great start and an unexpected finish," said Rich Feltes, director of MF Global Research in Chicago.
Gold had soared past $1,000 an ounce. U.S. wheat prices had gone past $25 a bushel -- the previous record was $7.50 -- amid a 60-year low in U.S. wheat stocks. Midwest floods and a biofuels boom pushed corn above $7 a bushel, triple the average price for decades. In July, crude oil neared $150 a barrel.
"The main negative for all of these commodities is the demand side of the equation with the economic malaise," said Bill O'Neill, managing partner of Logic Advisors LLC and former head of commodities research at Merrill Lynch.
The question for the coming year? How low is low?
"As we head into 2009 I think an important question to ask is will that fund money come back?" MF Global's Feltes said.
"Commodities are not going to be a lead indicator," he said, pointing to gross domestic product instead. "The economy has to turn around first. There has to be fundamental justification for higher GDPs for improving commodity demand before investors feel comfortable coming back to commodities."
LIMPING ALONG - BUT KEEP AN EYE ON GRAINS?
In U.S. commodity markets, weekly data from the Commodity Futures Trading Commission has told the story of shell-shocked investors fleeing commodities or cashing out to secure funds.
Open interest in the CBOT's largest ag contract, corn, for example, had grown to 1.4 million contracts by spring. Today, the total is 800,000 contracts as commodity funds downsized to meet the global margin call that came as economies collapsed.
The credit contagion shows no signs of being solved any time soon, with the hopes of most investors pinned to the new policies and measures a Barack Obama administration says it will aggressively put in place starting in January.
How quickly that might spur economic growth and investor confidence is an open question. But among commodities, one place to keep an eye on may be grains. Several factors might make food and biofuels a trigger for a commodities recovery.
For one thing, the single biggest demand force in the recent commodities craze -- China -- is not going away. Neither is food or biofuels demand, although the latter may cool down.
"The theme we've had in the last half of this year was all about demand destruction," said Dan Basse, president of Chicago-based consultancy AgResources. "We're concerned about supply destruction starting mid to late winter and having a bull market in agriculture the last half of 2009."
Basse said supply destruction -- referring to lower global grain plantings -- was a key to watch. But so are biofuels.
Obama, from a top corn and soybean state, has promoted biofuels. But using food crops to produce them has been increasingly attacked by food inflation watchers and even environmentalists, saying it does little for global warming.
"Ethanol has been one of the big drivers of the bull market," Basse said.
Another factor that will have a huge influence over whether commodity prices recover is the value of the dollar. A weak dollar makes U.S. grain exports cheaper, for example.
"The U.S. dollar will continue at least early in the year to drive all commodity markets," said Bill Lapp, president of consultancy Advanced Economic Solutions.
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