Investors push crude oil prices to 2.5-year highs
Washington, DC, United States (AHN) – Traders pushed oil prices to highs not seen in more than two years, in part because the weaker dollar makes oil cheaper for investors using other currencies.
The possibility of a government shutdown has pushed the dollar down to its lowest value in trading against other currencies since 2009.
Oil is priced in and purchased with dollars in global markets.
On the New York Mercantile Exchange, light sweet crude for May delivery rose $1.10, or 1 percent, to $111.40 a barrel.
On the ICE futures exchange, Brent crude rose by $1.84, or 1.5 percent, to $124.50 a barrel.
Both sweet crude and Brent oil in trading earlier in the day reached levels not seen since September 2008. Light sweet crude reached $111.90 per barrel in intraday trading while Brent crude reached $124.84.
Even before crude oil prices reached two-and-a-half-year highs on Friday, International Monetary Fund officials earlier in the week said that high oil prices were here to stay. Oil prices have risen 12.5 percent over the past decade.
High gas prices are pushing down consumer demand in the U.S. and Europe while China is trying to dampen consumer demand there. However, other things are driving oil prices, including scarcity of supply to meet growth in demand from increased automobile ownership in India and China, unrest in the Middle East and investor speculation in global oil markets.
Gas prices for self-serve regular gas are up more than 20 cents from last month. According to the AAA’s Fuel Gauge Survey, the average price was $3.73.9 a gallon on Friday, up from $3.619 a week earlier.
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Australian dollar rises to record highs against US dollar in Asian currency trading
Canberra, Australia (AHN) – Australia’s dollar rose to record highs in Asian currency trading against the U.S. dollar on Wednesday.
The increase in its currency value came from two factors.
One was the rising demand for Australian commodities fueled by fast-growing economies in the developing nations of China and India.
The other was high demand for currency because insurers are paying damage claims for rebuilding and repairing of properties heavily damaged by the December floods in the Queensland region.
Australia’s dollar rose to a 29-year high in value of $1.0318 in currency pair trading. That is the highest since the country allowed its currency to float in value beginning in 1983.
The actual cash rate is now 4.75 percent, which is a good yield.
In addition, Australia’s dollar rose to 85.69 yen against the Japanese yen, up from 75.05 two weeks ago.
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Cotton rally not finished yet despite sowing hopes
Macquarie sees “no collapse” in cotton prices despite Pakistan joining China, India and the US in voicing upbeat planting hopes
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Wheat soars after US stokes talk of China corn buy
US farm officials announce a sizeable corn sale to an unknown importer – who many investors take to be China. Wheat jumps 5% in Paris
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Health Insurers Respond To Reform By Snapping Up Less-Regulated Businesses
United States (KaiserHealth) – Here’s one change few were talking about when the health overhaul law passed: It’s sent insurers – worried the law could stunt profits and growth – looking for new types of business.
Where are they investing? In less-regulated companies that could yield strong profits and make the main business – insurance – more lucrative. The purchases also could increase insurers’ control over more parts of the health system.
Insurers have moved into technology, health-care delivery, physician management, workplace wellness, financial services and overseas ventures in wide-ranging efforts to mitigate the new rules imposed by the law. Since June 2009, seven of the nation’s largest insurers have made 25 major deals, and only six of those acquisitions run health plans, according to an analysis of data collected by FactSet Research Systems, a private company.
At an investors meeting in February, Rick Jelinek, UnitedHealth Group’s top executive for emerging businesses, said the company’s future growth would be in services that are “much less regulated” than insurance plans.
In 2010, UnitedHealth Group bought ChinaGate, which helps bring medical treatments to market in China; Picis, a technology vendor specializing in clinical and financial management systems for hospital emergency departments and intensive care units; the medical screening company Wellness; and six other firms.
In December, Aetna acquired Medicity, a business that helps hospitals share patient information. The federal government will reward hospitals and doctors with more than $30 billion in increased Medicaid and Medicare payments by 2015 for adopting electronic medical records, but only if they can share their data.
Also in December, Humana bought Concentra, a Texas-based urgent- and occupational-care provider with clinics in 40 states. More than one-third of Humana members live within 10 miles of a Concentra clinic, making its services convenient for the insurer’s members. Last year it also bought a health coaching firm that helps employers keep workers healthy, and in February it partnered with a South African company to launch new wellness services in the United States.
Those moves represent only big-ticket buys that require regulatory approval or that companies chose to announce. Insurerscan buy smaller firms or create businesses from scratch without disclosing details.
For instance, OptumHealth, a UnitedHealth subsidiary, has quietly taken control of Memorial Healthcare IPA, a Los Angeles company that manages more than 400 doctors, according to a document filed with the California Secretary of State’s office. OptumHealth declined to discuss details of the deal. A Memorial Healthcare executive, Patty Page LaPenn, said in a statement that relationships with patients and other businesses “will continue as usual.”
The trend shifts
Insurers have been on buying binges before – in the past decade, the seven large firms publicly acquired 137 companies. However- with the exception of UnitedHealth, which has been building its technology arm, Ingenix, since’97 – they focused on acquiringrival health plans and insurance services firms. For instance, 10 of 13 deals Humana struck before 2010 involved health plans.The current trend is largely driven by the health law, said Ana Gupte, an analyst with Sanford C. Bernstein & Co.
The newer ventures will not replace the core business of selling health coverage.
“They’re very synergistic with the health-insurance [product],” Gupte said, giving insurers more tools to control medical costs while potentially increasing earnings.
In the past, buying health plans “was a really good meat-and-potatoes strategy,” said Paul Kusserow, Humana’s chief strategy officer. But the looming threat of new regulations means “that we have to get much more engaged in managing health for our members.”
With its recent acquisitions, Humana is dipping its hand directly into patient care, gaining more control over doctors. That’s what makes acquisitions such as Concentra a “two-for-one deal,” Kusserow said. Concentra will continue to generate “great margins” for the company as a stand-alone business, he said, but also will give Humana a workforce of physician gatekeepers controlling access to costly services.
Doctors’ orders initiate almost all medical spending. If insurers can push physicians to more effectively manage chronic diseases such as diabetes and judiciously prescribe expensive services such as MRIs, they stand to profit.
“The ultimate goal,” Kusserow said, “is going to be to teach these folks at Concentra to deal with risk” by making doctors responsible for the cost and quality of care.
The flurry of acquisitions underscores the pressures facing insurers. Years of rapidly rising prices have made it difficult to raise rates further.
“Companies have to continue to grow, and they can’t keep raising rates at 20 percent a year,” said Eric Coburn, a health-sector investment banker at Shattuck Hammond Partners.
Last year, rates increased 7 percent, on average, for employer-sponsored plans and as much as 20 percent for individuals, according to reports by Hewitt Associates and the Kaiser Family Foundation. (Kaiser Health News is part of the foundation.)
The overhaul’s effect
Now comes the health law. As more people receive insurance under the law, insurers would welcome 15 million new customers, according to the Congressional Budget Office. But the companies worry that the rules requiring most Americans to obtain coverage will prove too weak and allow many to go uncovered, said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.
That could leave insurers with slim gains, even as they face regulations that could limit profits, prohibit the practice of charging sick people higher rates, and funnel individuals and small businesses into government-created exchanges to buy policies.Under the law, insurers must spend at least 80 percent of the premiums they collect on medical care. The final regulation, known as the medical-loss ratio rule, has turned out to be less painful for insurers than initially anticipated, because it will not count taxes and quality improvement as administrative costs.
Still, the medical-loss rules and meteoric growth in health spending make getting a better grip on costs essential for insurers.
“I’ve seen a big trend in getting further down the supply chain towards the point of care,” said Sarah James, an insurance industry analyst at Los Angeles-based Wedbush Securities. “Everybody’s looking to add on staff physicians and clinics” that can help control medical spending.
Analysts view technology investments as another way to control medical costs. Medicity and other technology investments put Aetna “closer to the actual delivery of care,” said Lonny Reisman, Aetna’s chief medical officer.
“Without practicing medicine,” Reisman said, “we are facilitating the relationship between the doctor and the patient with the technology and services,” such as a wealth of information gathered by Medicity and on-the-spot clinical guidance for doctors using ActiveHealth Management, a company Aetna bought in 2005.
Medicity has also opened a new revenue stream for Aetna, with 800 fee-paying hospital clients. Reisman said demand for those services will only increase as the health law threatens hospitals with large Medicare pay cuts if they cannot track and prove that they are providing quality services.
In a sign of Aetna’s interest in future acquisitions, the company hired Charles Saunders, a physician and recent veteran of the private equity firm Warburg Pincus, in January to oversee “strategic diversification.”
Other insurers are pursuing different strategies. Cigna is looking overseas and plans to begin selling comprehensive health insurance plans to individuals in China in hopes of capitalizing on a burgeoning middle class, Bill Atwell, an executive in charge of international operations, told investors March 11. The operation will roll out by the year’s end, Gloria Barone Rosanio, a spokeswoman, said in an e-mail.
At home, though, the options are limited, in part because of the health law. Some analysts do not see much of a future for companies that just stick with the business of selling insurance policies.”If you’re a health plan, you either become a care delivery system or an information services company,” said David Brailer, a former George W. Bush administration health official who now leads an investment firm. “The traditional business is dead.”
– Provided by Kaiser Health News.
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US sowings and China help crops extend price surge
Agricultural commodities end what one analyst called “one of the most volatile weeks in history” on a firm note. Corn and cotton go limit up
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Palm oil to lose out to soyoil in Chinese imports
China’s palm oil imports are to rise far more slowly than soyoil purchases. And the gap would be wider were it not for an instant noodle craze
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Ban calls leaders of Saudi Arabia, Italy on Libya
New York, NY, United States (AHN) – Expressing serious concern over the use of lethal force against innocent people in Libya, the United Nations Secretary General, Ban Ki-moon, on Saturday telephoned the leaders of Saudi Arabia and Italy to discuss the unfolding developments in the North African country.
In a conversation with King Abdullah, Ban briefed the Saudi leader on UN efforts to quell the violence and bloodshed in Libya and to hold those responsible to account, an UN statement said. Ban underscored Saudi Arabia’s key religious and political role in the region, it added.
Earlier, in his call to Prime Minister Silvio Berlusconi of Italy, Ban discussed the options available to handle the crisis and asked for Italy’s continued support and proactive role for decisive action, the UN statement said.
Ban’s outreach to world leaders came a day after he addressed the UN Security Council, urging the powerful 15-member wing of the world body to act urgently to save the lives of hundreds and thousands of people.
The Security Council, for the second day, was holding an emergency meeting on Libya to consider a resolution introduced by Britain and supported by France and the United States that recommends an arms embargo, asset freezes and travel bans for Libyan leader Muammar Gadhafi and his associates.
The resolution also refers Gadhafi to the International Criminal Court for alleged crimes against humanity. There were reports of differences among some of the key members of the Security Council, which among others is believed to include China, on referring Gadhafi to the ICC. Diplomats were hopeful the impasse would be resolved soon.
Briefing the Security Council on Friday, Ban told the body that “fundamental peace and security issues are at stake in Libya,” where more than 1,000 people have been killed as security forces and militias loyal to Gadhafi continued their deadly assault on civilian protesters.
“It is time for the Security Council to consider concrete action,” Ban said.
“These accounts — from the press, from human rights groups and from civilians on the ground – raise grave concerns about the nature and scale of the conflict. They include allegations of indiscriminate killings, arbitrary arrests, shooting of peaceful demonstrators, the detention and torture of the opposition and the use of foreign mercenaries,” he said.
Ban told reporters later he understood that the Security Council is very seriously considering all possible options. “But that is up to the member states of the Security Council — to determine what course of action should be taken at this time,” he noted.
The UN Secretary General, so far, has spoken twice with the Libyan leader, but now feels that he is unlikely to listen to the international community.
“I am not sure, after having spoken extensively with Col. Gadhafi, whether he will yield to the calls of the international community. Of course, whenever it is necessary, I am willing to do anything to protect civilian populations and to stop the violence. But he has been trying to justify and defend his position; I have been trying to talk to all the leaders in the region and I will continue to do that,” he said in response to a question.
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Mideast arms deals in doubt amid spreading turmoil
Jerusalem, Israel Arieh O’Sullivan – The unrest that has brought down two Middle Eastern leaders and threatens a host of others could be bad news for the global arms industry, which regards the region, with its security issues, deep pockets and little domestic manufacturing, as a choice market.
Faced with demands for more political pluralism and economic policies that spread the wealth, governments across the region have stepped up subsidies for basic commodities and promised make-work schemes, all of which will put pressure on their defense budgets. Meanwhile, violent crackdowns in Bahrain and Libya have given European governments cold feet about doing arms deals.
Iraq, which has undertaken such consumer purse-pleasing steps as 1,000 kilowatt-hours of free electricity a month and increased food rations, announced Feb. 14 that it had diverted the money previously allocated for U.S.-made Lockheed Martin F-16 fighter jets to save the $900 million it needs.
“If the internal pressures of civil discontent in Iraq continue and percolate, I can definitely see more of that money going the way it has gone …diverted toward food and relief for the most poverty stricken Iraqi,” Dan Darling, Middle East Defense analyst for Forecast International, told The Media Line.
Arms sales to the Middle East rose nearly 40 percent in the last five years, according to the Stockholm International Peace Research Institute (SIPRI). As late as mid-January, industry analysts predicted that defense spending in the region would continue to grow dramatically. Forecast International said spending on modernization programs would expand 14 percent, with Iraq alone investing an average of $12.5 billion every year through 2015 to bolster internal-security challenges.
But in the space of a month, those forecasts have been dashed. Egypt faces a fiscal squeeze as its economy slows and the government has promised pay raises and other handouts. Jordan has taken similar measures to calm the streets. In Oman, where police shot dead as many as six demonstrators on Sunday, the government ordered a monthly allowance of 150 riyals ($390) for each registered job seeker and announced 50,000 new jobs.
Even countries such as the United Arab Emirates (UAE), which has remained calm so far and has considerable wealth from oil and trade, may be looking to save money by shopping around for cheaper weaponry.
Last week, the UAE announced that it had stopped talks with the Italian firm Aermacchi over a $1.37 billion deal to buy 48 M-346 jet trainers. It is now expected that they will return to talks with South Koreans to purchase the T-50 trainer, a move that manifested a greater readiness to engage in deals with Far East nations. Current annual UAE trade with the U.S. is $13 billion, but it is $25 billion with China, according to Defense News.
Iraq, which faces serious security issues both domestically and on its border, may return to the arms market but look for cheaper tanks, guns and jets. “Iraq is going to have some serious security issues in terms of border security and their position in the Middle East,” Darling said, adding they may seek cheaper alternatives for arms with France or even Russia.
Thousands of weapons dealers were in Abu Dhabi last week for IDEX 2011, the Middle East’s largest arms fair. It drew over 1,060 companies from 53 countries. A spokesperson for IDEX told The Media Line that the arms fair saw a “wealth of deals” and that the UAE armed forces alone said it had signed deals worth about $4 billion.
Despite a hefty public relations campaign, participants told The Media Line that the fair was greatly toned down from previous years, particularly since the delegations from Egypt, Tunisia, Libya and Yemen never showed up. “The opening ceremony was very short and a lot of people left early,” said one, who declined to be named.
As demand falls, arms makers are also being pressured from the supply side, as their host governments clamp down on weapons sales to countries that have used their lethal weapons against protestors. Hundreds were killed in Egypt and Tunisia before their leaders were toppled. The death toll in Libya, where Muammar Gaddafi has used bombers and helicopter gunships against rebels, has probably passed 1,000.
British Prime Minster David Cameron, who visited Egypt and the Gulf last week, to urge on democratic opponents of the regimes, also had a group of arms executive in his entourage, provoking controversy back at home with the mixed message he was sending the region. Britain, which exports some $6.5 billion in arms annually, suspended sales to Libya and revoked 44 licenses to sell arms to Bahrain, where at least seven have been killed.
The U.S. was sending mixed signals, too, after The Wall Street Journal reported that the Obama administration had launched a review of military assistance and prospective weapons sales to countries experiencing popular revolts.
“I don’t think that in the short term we are going to see any interruption in arms trade at least from the U.S. Europe probably will review each country. They are a little more hesitant. They don’t seem to feel they are shaping the Middle East the way the U.S. does,” Forecast International’s Darling said.
Such hesitancy is unlikely to be felt by China and other emerging arms-export powers in Asia. China advertised its ambitions at IDEX 2011, where it set up a large and glitzy pavilion. Besides its heavy arms, the state-owned Chinese companies were also hawking at IDEX their sophisticated avionics and shipbuilding expertise.
“This has been an excellent business opportunity for us,” said Yuan Jun, marketing director for China North Industries, which produces rocket launchers, tanks and artillery. “We will certainly have a presence at every event for the foreseeable future.”
The U.S., by far the world’s largest weapons producer, sells about a third of its arms exports to the Middle East, and a drive by China into the region would be a serious loss, “China is interested in seeing the geopolitical order become more multi-polar and not one of U.S. hegemony,” a senior Israeli official told The Media Line.
The political turmoil is also a headache for Russia’s arm industry as long-time client regimes, like Libya, fall to the opposition, Defense Minister Anatoly Serdyukov admitted this week. “There’s a chance we might lose something,” he said on a visit to Russia’s Pacific port city of Vladivostok. “But I hope that the main weapons and military equipment agreements will be fulfilled.”
Russia stands to lose some $3.8 billion of orders contracted or under negotiation to Libya after the United Nations Security Council declared an embargo on Libya, Russia’s Interfax news agency quoted a military source as saying. Nevertheless, Russia is going ahead with a $300 million deal to sell anti-ship Yakhont cruise missiles to Syria.
But Russia isn’t the only country whose weapons sales are threatened by regime change. Political uncertainty is likely to grip the Middle East for some time, as transition governments struggle to win support and gain legitimacy. Some of them may fall, raising concerns that sophisticated arms could find themselves in the hands of anti-Western governments possibly controlled by Islamic radicals, as happened when the Shah of Iran was overthrown in 1979.
“This is definitely on the minds of a lot of people in Congress, probably some people in the Pentagon and I have no doubt within the administration. I imagine it is a bit of a wait-and-see approach,” Darling of Forecast International said. “Egypt is definitely something to keep an eye on. We sold an awful lot of equipment to them in the past.”
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China wheat woes lift prices of futures and shares
Drought fears send wheat prices up the maximum allowed on the Zhengzhou exchange, and support Western futures. Farm shares jump in Shanghai too
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