Nymex Uranium Futures Survey Results: More Interest, Volatility in Price

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Includes: CCJ, EMU, EXC, NMX, STHJF, SXRZF, URZ
by: James Finch

Earlier last week, Dow Jones MarketWatch reporter Myra Saefong contacted us with some very interesting questions about the NYMEX uranium futures contracts. These contracts will commence trading on May 7th. Previously, we had made inquiries about the viability of this futures market, and realized that a few expert opinions would be insufficient to do this story justice.

Rather than simply respond with our opinion, we decided to poll a cross-section of our readership. While not everyone was surveyed (we randomly emailed only about 1500 subscribers), we did receive an adequate response – nearly 400. We gave those subscribers less than 36 hours to respond by clicking on a hidden web page, which automatically tabulated their responses for us. Because of the service we utilized, their names and email addresses remained anonymous.

We are aware that our emails reached utilities, banks, financial institutions, hedge funds, stockbrokers, and retail investors. We emailed to readers in about 60 countries. More than 60 percent of our readership is in the United States. Other key geographical regions include Japan, Canada, Germany, Israel, France, Spain/Portugal, Scandinavia, United Kingdom, Mexico, and Australia/New Zealand.

Below are the responses to our survey questions. The polling service also provided us with a bar chart to illustrate those responses. We would like to expand our sampling by encouraging anyone reading this article to also vote their opinion on these same questions. The deadline for voting is Noon U.S. Eastern Time on Thursday, May 3rd.

Following these results are two expert opinions about the NYMEX uranium futures contracts. Both experts discussed this new development with various utility executives and fuel managers at the recent World Nuclear Fuel Conference in Budapest, Hungary. We wanted to share their insights with you.

1. Are you currently investing in uranium mining stocks?

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2. Are you currently investing in one or more funds which holds physical uranium?

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3. Over the next twelve months, do you plan on trading the new physical uranium futures, soon to be available on the NYMEX?

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4. Do you believe the NYMEX futures contracts will provide uranium price transparency?

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5. Do you believe the NYMEX futures contracts will attract more interest in uranium?

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6. Do you believe the NYMEX futures contracts will add more volatility to the uranium price?

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7. Which categories do you believe the NYMEX Futures contracts will most benefit? (Choose one or more)

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8. Which direction do you believe the NYMEX futures contracts will cause the uranium price to go?

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Two Expert Opinions

Over the past week, we’ve spoken to several industry experts about the impact of uranium futures on the uranium price. Will it work? Yellowcake Mining (OTC:YCKM) director Dr. Robert Rich, who has spent several decades in every aspect of the nuclear fuel cycle, talked to a number of utility executives at the recent nuclear fuel conference in Budapest. He felt they were pretty excited about the prospects for uranium futures trading. “It may be too early to tell,” Dr. Rich told us, “but I think futures trading shows promise.”

In a prepared response, TradeTech chief executive Gene Clark wrote of those he has talked with, “The most interested parties have been the electric utility company fuel managers, who seem to be willing to try anything new that will give them the power to halt the price run-up.” He also pointed out utility fuel managers have “little, if any, experience in such (futures) markets.”

By contrast, after having discussed futures trading with professional traders, Dr. Clark wrote, “The folks we talked to, who have the most experience in these types of markets, are the most skeptical.” He explained, “They don’t see how such a market could take hold, given (in their words) ‘the lack of the basic elements for such a market to evolve.’” He cited the absence of a ‘liquid spot market and absence of a linkage to the physical market for the commodity.’

Dr. Clark also pointed out an interesting observation, “The NYMEX futures market potentially sets the stage for a very interesting battle between the traditional market participants and a new set of players. The traditional players have no interest in transparency and liquidity. In fact, that’s how they make their money – by making sure it is transparent only to themselves as individual parties.”

Clark’s conclusion, “Utility fuel managers want to use futures trading to hedge their upside price risk, while potential sellers generally expect prices to keep rising precipitously.”

Editor’s Note: Contrary to rumors and gossip, StockInterview.com has no financial relationship with TradeTech. Our news service exchanges research with TradeTech and the consulting service has allowed us to report on changes in the weekly spot uranium price. TradeTech chief executive Gene Clark contributed to our publication, “Investing in the Great Uranium Bull Market,” as did the presidents of other consulting services.

James Finch and Julie Ickes co-authored this story.

Disclosure: none

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