Where to find value? NATGAS?

We are still finding it very hard to see value in Commodities. The only idea that seem to make sense is that Natural Gas is still undervalued. We would avoid the ETF or Futures for now as the carry costs will make the trade difficult. I am more inclined to look at cheap producers; So I still like Contango Oil & Gas (MCF) and Ultra Petroleum (UPL)..

Fund Manager turned Farmer faces drought

England’s hottest weather in more than three centuries is making Graham Birch, the country’s best natural-resourcesfund manager for a decade, concerned about the state of his spring crop.

The corn and grasses grown for livestock on the 2,300-acre farm in the southwestern county of Dorset are already beset by the heat and lack of water, Birch said by phone on May 18. Rain will be needed soon to keep yields for wheat and rapeseed planted at the end of last year from dropping, he said.

European farmers are contending with the driest growing conditions in more than three decades. The European Union warned this week that soil moisture is now “critical” in at least six countries after some places had their driest March on record. France’s soft-wheat crop, the EU’s largest, will drop 12 percent, and German output will slide 7.2 percent, local forecasters said May 18.

“It’s the spring crops I’m worried about because that’s what’s seeing some severe drought stress,” said Birch. “It’d be nice to have some rain in the next couple of weeks.”

Birch started a sabbatical from BlackRock Inc. (BLK), the world’s biggest money manager, in 2009 and formally left in 2010, when the team was managing $36.3 billion of assets. His BlackRock Gold and General Fund was the top performer among 858 U.K.- domiciled mutual funds over a decade, averaging gains of almost 23 percent a year, data from Morningstar Inc. (MORN) show.

Ruined Crops

The former fund manager left BlackRock in a year in which drought or flooding from Europe toCanada ruined crops and spurred Russia to ban grain exports. Wheat rose as much as 90 percent and corn 87 percent, driving the United Nations Food Price Index to a record and draining global stockpiles.

Weather is threatening crops again this year, from drought in China to temperatures as high as 100 degrees Fahrenheit (38 degrees Celsius) in Kansas. Wheat traded in Chicago rose as much as 7.6 percent on May 18 as European forecasters predicted smaller harvests.

On Birch’s farm, winter wheat and rapeseed were seeded in the fall when the ground was moist and roots could grow deep. Corn and grasses planted this spring in dry conditions didn’t have those same conditions, he said.

http://www.bloomberg.com/news/2011-05-20/blackrock-fund-manager-turned-farmer-birch-contending-with-drought-stress.html

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More on Greece - DEFAULT LIKELY

Please see extract from Bloomberg below- If this scenario plays out, the stock market might be in for a bumpy ride..

Best Trade Idea - PAY OFF SOME OF YOUR OWN DEBT IF YOU HAVE

Fitch Cuts Greece to B+, Says Maturity Extension Is Default (2) 2011-05-20 16:16:35.390 GMT

     (Updates Lagarde quotes in sixth paragraph, swaps in

seventh.)

By Maria Petrakis

     May 20 (Bloomberg) -- Greece’s credit rating was cut three levels by Fitch Ratings, which said that even a voluntary extension of its bond maturities being studied by European Union policy makers would be considered a default.

     Fitch cut its rating to B+, four levels below investment grade, from BB+ and said that the country could face a further reduction in its creditworthiness. The yield on Greek 10-year bonds rose 57 basis points to 16.6 percent, more than twice the level of a year ago when Greece accepted an EU-led bailout.

     “The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery, Fitch said in an e- mailed statement.

     More than a year after Greece received a 110 billion-euro

($156 billion) aid package that aimed to stem the spread of the region’s sovereign crisis, the nation’s debt is rising, borrowing costs are near records and European policy makers are considering additional aid. Ireland and Portugal followed Greece in seeking bailouts as investors shunned the debt of the region’s other high-deficit nations.

     Greece’s two-year bonds yield more than 25 percent, indicating investors are betting Greece won’t be able to return to markets as planned under the bailout next year, when it’s due to sell about 27 billion euros of bonds.

                               

                          Default Risk

     “Greece risks a sovereign default and finance ministers have expressed strong doubts about the sluggish progress,” in controlling its public finances, French Finance Minister Christine Lagarde said in an interview published today in Austrian newspaper Der Standard.

     The cost of insuring Greece debt against default rose 13 basis points to 1,335, down from a record 1,375 on May 9.

     “The B+ rating incorporates Fitch’s expectation that substantial new money will be provided to Greece by the EU and IMF and that Greek sovereign bonds will not be subject to a ‘soft restructuring’ or ‘re-profiling’ that would trigger a ’credit event’ and default rating,” Fitch said.

Greek Ruins

Greek stocks just hit a new 14-year low today, as Greek bond yields remain near all-time highs. The Greek 10-year bond now yields more than 15%. That's a great yield...if you believe you would actually receive it.