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

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance , I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart. So here's what a real stock market bubble looks like.  Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ $BCOR pic.twitter.com/xjsMk433H7 — David Shvartsman (@FinanceTrends) February 24, 2015   For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan , turned to rubble. As detailed in our post, " Round trip stocks: Momentum booms and busts ", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months.  In a pattern common to many parabolic shooting stars, the s

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

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .