Skip to main content

Short opium futures

Well, as far as I can tell there is no futures market in opium, aside from a few such references cropping up in the results of a Google search. I must say though, that the post title's jesting tone belies the seriousness of the topic: Afghanistan's opium production and its link to the international drug trade.

Recent efforts to move Afghanistan's economy away from opium production have faltered, according to recent reports. A March 20 Financial Times article says farmers opium growing provinces were promised aid and compensation for not growing opium, but that delivery of funds and assistance has so far been limited. By all indications, farmers have scrapped compliance with the stated goal of eradicating opium crops and are instead increasing production.

"Afghanistan saw a 20 per cent drop in the area used to grow poppies in 2005, but a recent survey by the United Nations Office of Drugs and Crimes indicates that the crop is likely to surge this year. Diplomats say the areas used to grow opium may rise as much as 40 per cent nationwide."

Opium production dropped by nearly 50 percent in one Afghan province, after officials assured farmers they would benefit from aid for not growing. Many farmers have had to sell land and animals to repay debts to drug dealers who lend money using the next years crop as collateral. Public anger is evident; one public official admits it would have been better if nothing had been promised and villagers were simply told that growing opium is against the law.

I have to wonder how this will affect opium prices. Although acreage devoted to opium crop production decreased in 2005, total output (4,100 tons) remained virtually constant. The average farm gate price for a kilo of opium was $102 in 2005, according to this report.

Popular posts from this blog

Nasdaq credit rating junked.

S&P cut Nasdaq's credit rating to junk status citing debt burdens and its questionable strategy to buy a controlling interest in the London Stock Exchange. Financial Times reported that the exchange's counterparty credit & bank loan rating were lowered fromm BBB- (lowest investment grade rating) to BB+. The change will increase Nasdaq's borrowing costs should it wish to pursue aquisition targets. For an earlier look at the exchange consolidation trend that brought about Nasdaq's push for a stake in the LSE, please see "Exchange fever" .

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean ...

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and...