Reuters report 27 Jun 2007 see reference to Jatropha LONDON,...

Reuters report 27 Jun 2007 see reference to Jatropha


LONDON, June 27 (Reuters) - Commodities are seen as a safe
investment in times of rising security concerns, and investment
bank Lehman Brothers believes the market for biodiesel is one
for the future, a senior executive said on Wednesday.
"In times of global terror or severe market stress
commodities is one of few asset classes that spikes," the firm's
senior vice-president of commodity investor sales, Matt
O'Connor, told a conference in London.
Equities and other assets were seen as less resilient.
"In this uncertain world that we live in... you can get a
little bit of protection for your portfolio," O'Connor told the
Commodity Investment Summit.
He said customers were looking at customised indices to get
exposure to commodities and one area of special interest was
energy.
"We at Lehmans are not necessarily huge buyers of ethanol,
we are much bigger believers in the biodiesel story -- mostly
because the energy content is far superior to that of ethanol,"
O'Connor said.
The bank had created a biodiesel index that is a combination
of rapeseed, soybeans and palm oil.
"These three commodities happen to be the most likely to be
used now (for biodiesel) but the index itself will change over
time depending on what will come," O'Connor said.
Some expect non-food crops such as jatropha to emerge as
important feedstocks for biodiesel plants in the future.
The bank was also very bullish on Brent crude oil .
"We sort of feel that the market is underestimating what
Brent will do versus WTI throughout 2008, we just revised
our forecast on Friday of last week...to $75 a barrel on average
for 2008," O'Connor said.
Brent crude futures were at $70.6 at 1527 GMT.
He believed investments in commodities, mainly due to a rise
in pension fund interest in 2005, had risen to more than $110
billion and that the inflow would continue.
"We are just scratching the surface, most of the people that
we speak to tend to have less than 5 percent in commodities," he
said, adding that he expected that portfolio percentage to
increase.
O'Connor said the trend of investors choosing to actively
manage their investments would persist, with people broadening
their interest from the more traditional indices like the S&P
Goldman Sachs Commodity Index <.SPGSCI>.
((Reporting by Anna Stablum, editing by Bernard Halloran;
[email protected]; Reuters Messaging:
[email protected]; +44 (0)20 7542 7928
Keywords: COMMODITIES LEHMAN