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Commodities Briefing - Archive | July, 2008

Commodity speculation fight only just beginning

Posted on 31 July 2008 by VRS  |  Email |Print

From resourceinvestor.com: Although oil prices, the major catalyst for the recent storm of controversy surrounding speculation in commodity markets, have slipped back to around US$120 a barrel at the time of writing, the critics of purely speculative participation in oil and other commodity markets have not fallen silent.

Nor will they; high commodity (particularly oil) prices are still a real threat to economic growth in most of the world, and especially in the engine room of the global economy, the industrialised nations.

Has speculation really increased the prices of some commodities to artificially high levels? Well, it will suffice to say that many column inches in numerous publications have been devoted to both sides of the argument.

However, it would be rash to discount the idea at a time when many commodity prices are relatively strong anyway because of the underlying demand growth/supply constraint picture. Taking oil as an example, supply is constrained by politics and project development bottlenecks, among other things; meanwhile demand has grown, even if it is largely in countries that subsidise prices at the pump……Full Article Source

Commodities boom has room to grow: analyst

Posted on 31 July 2008 by VRS  |  Email |Print

From canada.com: Scotiabank’s commodity price index sprinted to a new record high for the sixth consecutive month in June, and despite recent declines it is far too early to call an end to the cycle, says analyst Patricia Mohr.

“People have been calling an end to the commodities boom for the past three years,” said Ms. Mohr, commodity market specialist at Scotiabank. “I’m not in that camp.”

Oil prices have led July’s commodity decline, falling sharply in recent weeks from its July 3 high of $147.86 U.S. to $121.65 in midday trade Tuesday.

Nevertheless, it was the oil and gas index that led the way up in June, said Ms. Mohr, and while prices may soften in months ahead, tight supplies will keep crude above $100 a barrel….Full Article Source

MSCI Barra launches global currency indices

Posted on 31 July 2008 by VRS  |  Email |Print

From reuters.com: Investment analysis company MSCI Barra said on Wednesday it has launched the MSCI Global Currency Indices that are designed to help investors manage foreign currency exposure in their international equity portfolios.

The indices measure the total investment performance of foreign currencies, capturing return from two sources — currency appreciation/depreciation, and interest earned.

The weights of each currency are set equal to the relevant country weight in the corresponding MSCI equity index.

“This unique approach to weighting the currencies allows creators of index-linked products to construct investment vehicles that can be used as an efficient and convenient way to enhance or hedge currency exposure to an MSCI Equity Index,” the company said in a statement……Full Article Source

Commodities genie out of the bottle?

Posted on 31 July 2008 by VRS  |  Email |Print

From mineweb.com: Commodities take another smashing; crude oil eyes USD 120 a barrel and gold probes below USD 900 an ounce.

The broad global commodities complex took another smashing on Wednesday, driven mainly by a rising dollar, moving on sentiment that competitor currencies could start to weaken as the world’s economic cooling gains further traction. The dollar has been in a protracted bear market since early 2002, also marking the point when the so-called commodities supercycle launched itself into a longer term orbit.

With most commodities priced and traded in dollars, everything from crude oil to wheat started to gain in dollar terms. The broad global expansion kicked its contribution in, and in the case of commodities, a gallop developed as China unofficially announced that its demand for raw materials was increasingly insatiable….Full Article Source

EU rules risk creating soybean shortage

Posted on 31 July 2008 by VRS  |  Email |Print

From wsj.com: Europe’s unease about genetically modified crops is threatening to create continent-wide shortages of soybeans, a crucial source of protein in the diet of Europe’s livestock.

The European Union’s strict regulations on genetically modified crops could prevent the import of millions of metric tons of new biotech soybeans likely to be planted in the U.S., Argentina and Brazil, the world’s main soybean growers.

EU livestock farmers might not be able to get enough soybean for feed in the coming years, because exporters won’t ship to Europe for fear that their cargos could contain unapproved biotech soybeans in the normal……Full Article Source

OPEC production cut not ruled out by Venezuela

Posted on 31 July 2008 by VRS  |  Email |Print

From eluniversal.com: The Venezuelan delegation to the Organization of Petroleum Exporting Countries (OPEC) considers that a recent decline in oil prices “is a proof” that the increase in crude oil prices until June was closely linked to speculation in future markets, rather than supply issues, said Minister of Energy and Oil Rafael Ramírez.

“We have always endorsed the position that there is no need to put more barrels in the market. It would be a mistake to flood the market with oil in order to build up inventories. This would provoke a collapse of prices,” Ramírez insisted.

However, when Ramírez was asked about the possibility of discussing a cut in OPEC production during the meeting of the oil organization next September, the official replied that “this is something we have to examine.” In recent months, the world’s largest oil producers have heightened production……Full Article Source

Crude prices up on Middle East worries

Posted on 31 July 2008 by VRS  |  Email |Print

From investmentmarkets.co.uk: Crude oil prices rose sharply Wednesday after Israeli Prime Minister Ehud Olmert announced that he will resign effective in September, raising concerns that his successor could be more inclined to attack Iranian nuclear facilities.

September contracts for West Texas Intermediate ended the floor trade session on the New York Mercantile Exchange up $4.55 to $126.73 per barrel while Brent crude added $4.70 to $127.41 per barrel on the ICE Futures Europe exchange in London.

There had been gains in prices already before the announcement, after the US Energy Information Administration reported that gasoline inventories declined by 3.5 million barrels in the week ending 25 July against an expected rise of almost half a million barrels, while crude oil stockpiles dropped by 100,000 barrels, less than expected, and distillates in storage added 2.4 million barrels in the week……Full Article Source

Ghana into the claws of China?

Posted on 31 July 2008 by VRS  |  Email |Print

From allafrica.com: More and more, China seems to be taking up any commodity that can be had from Ghana. From copper waste and scrap, timber and natural rubber to aluminium waste and scrap and vegetable products are being exported to the upcoming Asian superpower.

Cocoa is the latest addition to the list. Ghana is to export 6,500 metric tonnes to China this year, says Isaac Osei, chief executive of the Ghana Cocoa Board (COCOBOD).

This uptake of cocoa is meant to pay for the construction of the ongoing hydro-power project at Bui, north-east of the capital Accra. Government sources indicated last year that an arrangement had been entered into where cocoa production would be increased to supply extra cocoa to China……Full Article Source

Russia’s ARMZ has new uranium reach

Posted on 31 July 2008 by VRS  |  Email |Print

From mineweb.com: The structure for managing and -run capitalizing the mining of uranium in Russia, and Russian uranium mining ventures abroad, is now clear. And also large, as Russia has recently moved into the number-3 spot in the world ranking of uranium reserves — number-2 if Russia’s equity stake in Kazakhstan reserves is counted.

After a confusing spell, in which it was preceded for a year by the Uranium Mining Company (UMC), Atomredmetzoloto (ARMZ) has been authorized to take equity and operational control of Russia’s three operating uranium mines; five planned new mines; and joint ventures in Kazakhstan, Namibia, and Canada.

Atomredmetzoloto — literally, “atomic, rare metal and gold” — is a venerable name from the Soviet era of the nuclear industry administration, when it was an enterprise of the atomic energy ministry. In those days, it not only supervised uranium mining, but also gold at the well-known Muruntau deposit in Uzbekistan…….Full Article Source

Sydney should be ‘carbon trading hub’

Posted on 31 July 2008 by VRS  |  Email |Print

From abc.net.au: The State Government says Sydney should be the hub for carbon trading once the emissions trading scheme is up and running.

The Minister for Climate Change and the Environment, Verity Firth, says the state is an ideal base.

“Not a lot of people are aware but the Greenhouse Gas Abatement Scheme, which was introduced in 2003, was one of the world’s first mandatory greenhouse gas emissions trading schemes,” she said.

“It was run in NSW, has been running for the last four or five years and means that we now have a significant cluster of energy companies, financial service providers, law firms.”

Ms Firth says she will be lobbying for NSW to be the base and regulator of the industry.

“We are establishing a taskforce in NSW and we’ll be including representatives of the business community, who have a strong interest in the new carbon economy,” she said……Full Article Source

Dow Jones mid-year commodities outlook

Posted on 31 July 2008 by VRS  |  Email |Print

From investors.com: Oil has peaked, but gold and grain will continue to shine in 2008. That’s according to the mid-year outlook from three commodities experts on the annual Dow Jones Indexes Commodity Outlook conference call this week.

Global economic growth boosted oil prices for the past seven years. But the economic downturn, brought on by financials, spawned the bubble, contends Phil Flynn, vice president and analyst at Alaron Trading.

“When the Fed cut interest rates in September, we bought oil because of systemic risk in the economy,” Flynn said. “We were buying oil as currency of last resort.”…..Full Article Source

Pull the plug on energy, commodities

Posted on 31 July 2008 by VRS  |  Email |Print

The energy and commodities sectors have slipped below their 200-day moving averages and dropped significantly from their highs, putting them squarely in sell territory, says Tom Lydon, editor of ETF Trends and president of Global Trends Investments.

In a radio interview with MarketWatch senior columnist Chuck Jaffe, Lydon — co-author of the book “iMoney: Profitable Exchange-Traded Fund Strategies for Every Investor” — said his system of technical analysis isn’t offering much to buy nowadays, though he does favor iShares Lehman 1-3 Year Treasury Bond , iShares Biotechnology , PowerShares Dynamic Biotech & Genome and Broadband HOLDRs.

Lydon’s system tries to lock in gains before a winner falls too far, typically after an 8% decline from its peak. Nowadays this has him putting sell recommendations on some ETFs that are still trading above their 200-day moving averages, including United States Oil and Energy Select Sector SPDR ……Full Press Release Source

Energy prices are bright sliver in grim economy

Posted on 31 July 2008 by VRS  |  Email |Print

From nytimes.com: The sharp drop in energy prices since the beginning of the month is turning into a rare bright spot in a bleak economic landscape.

For the moment, at least, fears of a prolonged energy shock seem to have subsided a bit.

Oil has fallen more than $23 a barrel, or 16 percent, since peaking on July 3. Gasoline has slipped below $4 a gallon and is dropping fast as Americans drive less. Natural gas prices, which had risen the fastest this year as traders anticipated a hot summer, have fallen 33 percent since the beginning of the month.

Crude oil prices extended their decline on Tuesday, falling 2.5 percent, to $122.19 a barrel, their lowest level since the beginning of May. This helped spur a broad rally in the stock market, with all major indexes rising more than 2 percent. But stock markets still remain close to the lows of earlier this month, when they officially entered bear-market territory……Full Article Source

Weak European housing market dampens metals demand

Posted on 31 July 2008 by VRS  |  Email |Print

From reuters.com: The European construction boom, led by countries such as Spain and the United Kingdom, has come to a halt dampening demand for industrial metals, physical metals traders said on Wednesday.

Traditionally demand for industrial metals is soft during the summer in the Northern Hemisphere, but a sluggish housing market has exaggerated the slowdown in demand.

“Italy and Spain are suffering … and they have consumed a lot of copper so it is very noticeable,” a European copper trader told Reuters.

“In Spain orders are down between 20-25 percent.”

Permits issued for building new houses in Spain plummeted 57 percent for the year to May from a year earlier, the College of Architects said on Tuesday……Full Article Source

White House threatens veto of House Commodity bill

Posted on 31 July 2008 by VRS  |  Email |Print

From cattlenetwork.com: The White House Office of Management and Budget said Wednesday it would recommend to President George W. Bush to veto an anti-speculation Commodity bill that the House will vote on later in the day.

The OMB said the bill would hurt the competitiveness of the U.S. futures markets, instead pushing the Bush administration’s policy calling for expanded oil and natural gas exploration and production.

The House legislation would strengthen the Commodity Futures Trading Commission, giving it more power to rein in speculation that many lawmakers believe is helping to fuel skyrocketing energy and agricultural product prices.

Republicans are expected to block the vote because House Speaker Nancy Pelosi, D-Calif., won’t allow a vote on opening up areas currently closed to exploration on the Outer Continental Shelf……Full Article Source

Uranium prices start to rebound, copper demand increasing as banner year unfolds for potash, sulphur

Posted on 31 July 2008 by VRS  |  Email |Print

From mineweb.com: Scotiabank economist Patricia Mohr Tuesday declared that “a banner year” is unfolding for Western Canadian potash and sulphur producers.

In her analysis, Mohr said that spot uranium prices appear to be rallying from a lower of only US$57 per pound in mid-June. “However, term contract prices (before escalation) fell from US$90 to US$80 in late June. Price retreated earlier this year alongside lower ‘uncovered utility requirements’, though discretionary, off-market buying to take advantage of bargain prices has been substantial.”

Meanwhile, sporadic strikes and the threat of a national strike in Peru discouraged traders from shorting the copper markets “in view of very low exchange stocks,” according to Mohr…….Full Article Source

Listing of HKEx’s first gold ETF set for tomorrow

Posted on 31 July 2008 by VRS  |  Email |Print

From quamnet.com: HKEx announced today the listing of its first gold Exchange Traded Fund (ETF), SPDR Gold Trust (02840) on the Main Board tomorrow.

The gold ETF is one of the largest and most liquid commodity ETFs globally with total net assets of approximately $148 billion.

The listing of the gold ETF on the Stock Exchange will give investors an additional channel to access the international gold market.

Eric Yip, HKEx’s Head of Cash Market, said: “The introduction of the gold ETF complements the already wide range of commodity ETFs and structured products listed on HKEx securities market, covering commodity indices and single asset classes such as gold, silver, platinum, oil and wheat. We will continue to work closely with the Securities and Futures Commission and market participants to promote a more diverse product platform for the Hong Kong securities market.”…..Full ArticleSource

Commodity speculation must be curbed

Posted on 31 July 2008 by VRS  |  Email |Print

From ft.com: The US Senate is now debating legislation aimed at cutting the cost of petrol and heating oil by ending excessive speculation in oil futures that financial-market experts and even oil company executives agree are driving up prices.

Among many proposals, we offered one: the Commodity Speculation Reform Act that directs and empowers the Commodity Futures Trading Commission to police more aggressively excessive speculation among all indexed commodities, including oil and foodstuffs, such as corn, wheat, and soyabeans. Many of its provisions were incorporated into a Senate bill spearheaded by Harry Reid, the majority leader, and which is the chief Senate vehicle.

We must act now to bring these prices down and get a bill to the president before we adjourn in August……Full Article Source

Gold ETFs: ETF Momentum Tracker weighs in on IAU

Posted on 31 July 2008 by VRS  |  Email |Print

The latest edition of ETF Momentum Tracker, released today, offers an in depth look at gold prices, and how iShares’ IAU has responded to the spike. ‘Even though the price of gold fell last week’ Dion said, ‘it’s been locked in the range of $850 to $990 since the July 15 spike-still historically high by almost any standard.’

The price of an ounce of gold fell by $31 last week, yet it was still up more than 11% for the year by Friday. The price of the metal, which peaked in March at $1,033 per ounce after the announcement of the Bear Stearns bailout, closed on July 25 down about 10% from the record and off 6% since July 15.

‘Gold prices are still very strong,’ Dion said, ‘but this shouldn’t come as a surprise.’ Dion cited ongoing volatility in stock market, increasing concerns about inflation, elevated and erratic oil prices, and geopolitical turmoil in the Middle East as reasons that investors continue to flock to ’safe-haven, inflation-hedging gold.’…..Full press release Source

MCX may submit fresh IPO draft

Posted on 31 July 2008 by VRS  |  Email |Print

From indiatimes.com: The Multi Commodity Exchange (MCX) is expected to submit a fresh application to SEBI for its initial public offer as the validity period for its offering is set to end shortly.

“The Sebi approval for the IPO expires on August 11 and if the IPO is not listed then a fresh application has to be filed,” said a source close to the development on the sidelines of a conference.

The source said that the company can re-apply the very next day after the validity period of the earlier approval expires. But the fresh application has to be submitted within the current financial year. In case the company fails to do this, it would have to undertake a fresh audit, which would be a long-drawn process……Full Article Source

Commodities hit as oil dives again

Posted on 31 July 2008 by VRS  |  Email |Print

From smh.com.au: Oil prices tumbled more than $US2 a barrel on Tuesday, finishing at their lowest level in seven weeks as a stronger dollar and beliefs that record prices are eroding the world’s thirst for energy sparked another dramatic sell-off.

The drop - which surpassed $US4 a barrel at one point during the day - was a throwback to oil’s nosedive over the past two weeks and outweighed supply concerns touched off by a militant attack Monday on two Nigerian crude pipelines. It was oil’s seventh decline in the past 10 sessions.

It coincided with a broad fall in commodity prices as a stronger dollar and the sell-off in crude oil dragged down other commodities from gold, silver, copper, soybeans and wheat. Corn futures traded higher……Full Article Source

The International Gold Rush: Bulls may soon be rewarded

Posted on 31 July 2008 by VRS  |  Email |Print

From seekingalpha.com: In a week marked by a furthered short-term collapse of oil and a stronger U.S. dollar, the gold market saw prices drop off by $40 to settle near $925 an ounce. Investors seem quick to point the finger at the commodities market, using any sign of weakness as a cause for a stock market rally, but is the gold rush of late actually winding down?

It’s been a roller coaster ride by all means in the U.S. economy over the first two quarters. With the stock market sent into bear market territory, precious metals like gold and silver have soared to new highs before experiencing a recent correction ranging from 10% to 20%. Since hitting an intraday high at $1,033 an ounce on March 17th after a horrific Bear Stearns bailout, things have been range-bound in the gold market as prices have drifted in the mid-$800 to mid-$900 levels. I believe this trend is bound to break to the upside very soon, and I want to be invested when that inevitably happens……Full Article Source

Teck strikes $14B coal deal

Posted on 31 July 2008 by VRS  |  Email |Print

From thestar.com: As the zinc market continues to tarnish, Vancouver’s Teck Cominco Ltd. is staking a bigger claim in the metallurgical coal business through a friendly $14 billion (U.S.) bid for the Fording Canadian Coal Trust that would make it the top exporter of the steelmaking commodity in North America.

The proposed deal gives Teck – a highly diversified miner with interests in everything from base metals to gold and the oil sands – full control of the world’s second-largest seller of sea-borne metallurgical coal at a time when coal prices are skyrocketing, with heavy demand from steelmakers in Asia, South America and Europe.

Once the world’s largest zinc producer, Teck is trying to cut its exposure to the metal after prices plunged 46 per cent in the past year on excess supply, while coal prices have more than doubled.

“It makes sense for them. They’re basically moving into one of the commodities that has a strong near-term outlook and away from zinc, for which the outlook is not positive,” said mining analyst Haytham Hodaly of Salman Partners in Vancouver……Full Article Source

Oil man Pickens seeks ‘army’ to back energy plan

Posted on 31 July 2008 by VRS  |  Email |Print

From reuters.com: Energy tycoon T. Boone Pickens said on Wednesday he is creating an “army” of business leaders and mainstream Americans to lobby for his plan to revamp U.S. energy policy in favour of wind power and natural gas over imported oil.

Pickens said he hopes to break a political stalemate on U.S. energy policy, calling Wednesday’s move by Republicans in Congress blocking tax incentives for alternative energy “just sad” and an example of the lack of leadership on energy.

“We have to put the pressure on” political leaders, Pickens said in an interview with Reuters. “They are going to have to, one, recognize the magnitude of the problem, and they are going to have to come up with some kind of solution.”

The 80-year-old Republican, who backed the Swiftboat advertising campaign that damaged Democrat John Kerry’s 2004 presidential bid, said he was dissatisfied with both U.S. presidential candidates’ energy proposals……Full Article Source

Yen shows strength versus other major currencies

Posted on 31 July 2008 by VRS  |  Email |Print

From rttnews.com: The Japanese yen gained some ground versus most of its major opponents in early Asian deals on Thursday. The yen traded as the manufacturing activity in Japan recovered modestly in July, but remained in a state of contraction.

The Nomura/JMMA Japan Purchasing Managers Index (PMI) increased by 0.5 points to a seasonally adjusted reading of 47.0 from the June level of 46.5. The June reading was the lowest since February 2002. The July figure was the fifth consecutive reading below the 50.0 mark. Readings below 50.0 suggest contraction in the sector.

The yen was worth 213.95 versus the pound, 168.38 versus the euro and 108.10 against the US dollar around 9:00 pm ET Wednesday. Traders are now likely to focus on Labor Cash Earnings report, one of the driving forces behind economic growth reflecting the spending ability of domestic consumers, to be released at 9:30 pm ET Wednesday……Full Article Source

Asia currencies to drop even with $100 oil, Morgan Stanley says

Posted on 31 July 2008 by VRS  |  Email |Print

From bloomberg.com: Asian currencies have yet to feel the full force of the “oil shock” and will decline even if the price of crude falls to $100 per barrel, Morgan Stanley says.

Record fuel import costs have sent the current-account balances of South Korea, India and Thailand into deficit, posing “tremendous headwinds” for the economies, said Stephen Jen, chief currency economist at Morgan Stanley in London. The impact on inflation and consumer spending has been limited because of fuel subsidies that aren’t sustainable, he said.

“The biggest shock to Asia is not the U.S. housing crisis but the oil shock,” Jen said in an interview. “Asia was not built on $100 per barrel oil. Even if oil prices stabilize at $100, Asia will have a lot of work to do.”

Indonesia’s rupiah, the Philippine peso and India’s rupee will be “first to go” as these countries’ governments are the least able to maintain subsidies, Jen said……Full Article Source

Auction plans revealed for trading emissions

Posted on 31 July 2008 by VRS  |  Email |Print

From greenbang.com: The UK government has slipped out the terms for the controversial auction of European Union emissions trading permits.

The controversy around the EU Emissions Trading System is that traditional big carbon polluters will be able to buy emissions allowances to help them meet emissions reduction targets – with the government claiming this is fine because the net overall emissions target for the country isn’t affected. The auction is being handled by the Department for Environment, Food and Rural Affairs – more details here.

The government is aiming to hold the first auction before the end of the year and reports estimate this emissions trading will bag the Treasury up to £2bn by 2012……Full Article Source

Japan’s ‘Green’ Efforts generate skepticism

Posted on 31 July 2008 by VRS  |  Email |Print

From npr.org: Japan’s government and Japanese companies are touting efforts to make their country one of the most energy-efficient, low-carbon places in the world. But some critics dismiss the publicity as “greenwash” that paints a deceptive picture of Japan’s environmental status.

Prime Minister Yasuo Fukuda’s Cabinet approved a trial plan Wednesday to trade carbon credits in an effort to lower emissions and fight global warming. And at a show at the G-8 summit in Hokkaido this month, plug-in cars, recycled building materials and humanoid robots were among the futuristic products showcased by Honda, Toshiba, Hitachi and other companies.

At the Fujitsu booth, Miwako Morishima showed off one of her company’s latest green gadgets — a wooden laptop computer……Full Article Source

MCX spot arm to go live in August

Posted on 31 July 2008 by VRS  |  Email |Print

From business-standard.com: Financial Technologies-promoted National Spot Exchange (NSEL) is all set to go live by the end of next month with spot trading in a number of agriculture and non-agricultural commodities.

Initially, NSEL would facilitate nationwide trade for goods delivery in Maharashtra, Gujarat and Karnataka, for which the exchange has already obtained licences.
Additionally, the exchange will facilitate delivery in the states of Kerala and Bihar, where the Agriculture Produce Marketing Committee Act does not exist.

The exchange has also entered into a memorandum of understanding with the governments of Rajasthan and Madhya Pradesh to initiate delivery….Full Article Source

National Spot Exchange Ltd (NSEL) commences ‘Mock Trading’

Posted on 31 July 2008 by VRS  |  Email |Print

From mondovisione.com: National Spot Exchange Ltd (NSEL), India’ first online spot trading platform, today commenced mock trading on pan India basis in agriculture commodities. NSEL has received license to commence online trading from the Governments of Maharashtra, Karnataka and Gujarat. Besides, it has entered into MoU with the Governments of Rajasthan and Madhya Pradesh.

As of now, more than 500 entities from across the country have evinced interest in membership of NSEL and 225 of them have already submitted their applications. The launch of NSEL will strengthen the supply chain and provide an efficient procurement mechanism to the corporates.

On the occasion, Mr. Anjani Sinha, MD & CEO NSEL said, “Mock trading is a replica of the systems and procedures used for live trading. Our aim is to ensure that all our members are ready to commence trading on day one and that our systems are robust, effective and efficient. The exchange is planning to launch Arecanut, Black Pepper, Castor seed, Coriander, Cumin seed, Cotton (long and medium) Gold, Rubber, Silver, Tur, Urad and a number of other commodities for trading.”…..Full Article Source

As commodity prices rocket, Rexam still packs a punch

Posted on 31 July 2008 by VRS  |  Email |Print

From timesonline.co.uk: Leslie Van de Walle knows all about oil: before joining Rexam as chief executive, he ran the retail business of Royal Dutch Shell.

That has not stopped shares in the packaging group falling by more than a quarter since May amid fears that surging oil prices will take their toll of full-year profits – especially at Rexam’s recently enlarged plastics business, where oil-based resins are the biggest raw material.

But as yesterday’s first-half figures show, the company – which has been routinely wrongfooted by commodity costs in the past – appears to be coping well with higher energy prices. Pass-through contracts mean that 80 per cent of the cost increase in resins – on which Rexam spent £170 million in the first half – has been borne by customers. Further, last year’s $1.8 billion (£908 million) acquisition of the plastics division of Owens-Illinois has given Rexam increased purchasing power……Full Article Source

Gold slumps towards $900

Posted on 31 July 2008 by VRS  |  Email |Print

From marketoracle.co.uk: The spot price of gold sank to a one-month low early in London on Wednesday, dropping 2% from Tuesday morning before bouncing off $905.25 per ounce.

Crude oil ticked 20¢ higher per barrel, meantime, but base metal prices also fell, dragging the major commodity indexes lower.

World stock markets rose sharply – alongside the US Dollar – pushing the Nikkei 1.6% higher in Tokyo and adding 1.3% to the FTSE100 here in London .

The Euro touched a fresh five-week low of $1.5575 after the European Commission reported sharper-than-expected falls in consumer, industrial and economic confidence.

“The Gold Market is struggling for direction,” Bloomberg News quotes Gerard Burg, an energy & minerals analyst at National Australia Bank in Melbourne .

Lower crude oil prices have dampened the “inflation prospect,” Burg believes, “and this is negative for Gold .” …..Full Article Source

Silver ETFs cross 200 Moz mark

Posted on 31 July 2008 by VRS  |  Email |Print

From commodities-now.com: The iShares Silver Trust exchange-traded fund (ETF) achieved a major milestone- as over 200 million ounces of physical silver are currently held by the trust. Launched in April of 2006, this investment vehicle–trading on the American Stock Exchange under the symbol “SLV”–has proven in just over two years to be one the most successful commodity ETFs on the market. The ETF is managed by Barclays Global Investors (BGI), and the total assets in the trust were $3,514,052,696 as of yesterday.

This exciting investment tool has made investing in silver more convenient because a grantor trust holds the metal on behalf of the investor, thus giving the investor exposure to the market without the necessity of taking physical delivery and thereby having no storage, insurance or assaying costs..”…..Full Article Source

BHP Billiton tries to advance Rio Tinto takeover bid

Posted on 31 July 2008 by VRS  |  Email |Print

From telegraph.co.uk: BHP Billiton chairman Don Argus insisted that it was only his company’s hostile bid for Rio Tinto that was propping up Rio’s share price.

In a letter to Rio shareholders, Mr Argus said the offer of 3.4 BHP shares for every Rio share was a 45pc premium to Rio’s share price.

“This is a substantial premium by any measure, and one that is reflected in the large increase in the market for Rio Tinto shares, relative to BHP Billiton shares, since our proposal became public last November,” he said….Full Article Source

Commodities fall on stronger dollar, oil sell-off

Posted on 30 July 2008 by VRS  |  Email |Print

From washtimes.com: Commodities prices fell broadly as a stronger dollar and a steep sell-off in crude oil encouraged investors to dump hard assets in favor of stocks.

Crude tumbled as much as $4 a barrel during the day, dragging down other commodities from gold, silver, copper, soybeans and wheat. Corn futures traded higher.

The sell-off seemed to confirm analysts’ belief that once frenzied futures markets are beginning to cool, weighed down by concerns that rocketing prices for energy, grains and precious metals rose too high, too fast to sustain demand.

Gold for August delivery dropped $11.20 to settle at $916.50 an ounce on the New York Mercantile Exchange, after earlier falling to $913.10, its lowest level in three weeks……Full Article Source

UK: Green light for carbon credit sale

Posted on 30 July 2008 by VRS  |  Email |Print

From telegraph.co.uk: The Government yesterday unveiled its plans to auction off carbon credits in the first stage of a process that could eventually net the Treasury around £2bn a year.

The first auctions will take place later this year as part of European Union and Government plans to cut carbon emissions. Over the next four years, the Department for Environment, Food and Rural Affairs, through the Debt Management Office will auction some 85m credits, each representing one tonne of carbon.

The auctions represent around 7pc of the credits the Government can allocate and is the second phase of its strategy for dealing with climate change.

Phase one of the scheme began in 2005 and was criticised for issuing too many permits and not offering enough incentives to cut emissions. As a result the number of permits has been tightened up and auctions will be held……Full Article Source

World Trade likely to expand even as WTO tariffs talks sputter

Posted on 30 July 2008 by VRS  |  Email |Print

From bloomberg.com: The collapse of global trade talks for the third time in as many years may be only a bump in the road for world commerce, which continued to expand while negotiations sputtered.

Global markets shrugged off the announcement yesterday that trade ministers at the World Trade Organization in Geneva failed after nine days of talks to agree on a plan to cut agriculture subsidies. The sticking point was a difference between the U.S. and India over how poor nations could opt out of tariff cuts when encountering a surge of imports.

While negotiators and some experts depicted the collapse as a setback for the global economy, others said the decades already spent lowering trade barriers, combined with technological innovations and an explosion of bilateral agreements, suggest such predictions may be overstated.

“In the short and medium term, this won’t have any impact at all on trade volumes,” said Claude Barfield, a scholar at the American Enterprise Institute, a research organization in Washington that supports free markets……Full Article Source

Australian: Doubts grow over commodities

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From businessspectator.com: The conventional wisdom on Australian miners is that because of the Chinese demand for resources, our mining stocks will perform well despite the tough times in Western economies.

Underpinning that belief have been the big negotiated price rises in iron ore and coking coal and the strong marketplace prices for oil and copper. These pillars behind the bullish assumptions for miners are still in place but they are now open to question.

Given all the turmoil on Wall Street, some of the best performing hedge funds have been those that have invested in oil. The rise in the price of black gold might have been caused by a shortage of supply but it has been multiplied by the hedge fund buying. Today in Business Spectator we have a report that some are forecasting that oil will fall below $US100 a barrel. That sort of decline would occur if hedge funds began selling oil either because they thought that there were now better games to play or because they were finding it harder to gain funds because of the squeeze on the banking system……Full Article Source

Liquidity dip triggers commodity swings

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From ft.com: After years of strong growth, liquidity in commodities futures markets, particularly crude oil, is falling abruptly as the credit crunch finally hits leveraging in the sector and contributes to a sharp increase in price volatility.

The number of outstanding contracts - known as open interest in industry jargon - in key US commodities markets has fallen 5.5 per cent since March and is now at its lowest level since January, according to Barclays Capital estimates.

In oil, open interest has fallen to its lowest in more than a year and a half. Analysts and traders say the reduction in liquidity has been brought about by financial institutions deleveraging - particularly among cash-squeezed Wall Street banks - fresh worries about global economic growth that has triggered liquidation of positions, and potential new US legislation in commodities markets……Full Article Source

Taiwan: Business feel the squeeze from rising commodity, energy prices

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From chinapost.com.tw: Taiwan enterprises are facing unprecedented challenges in business operations as most have felt the impact of booming energy costs and soaring commodity prices, as well as the prolonged housing slump and subprime mortgage loan crisis in the U.S., the world’s largest economy.

A survey of the top executives of the 1,000 largest by the CommonWealth Group shows almost half, or 48.4 percent, of the business and industry leaders think the current global economic slowdown is likely to last for one to two years……Full Article Source

Climate mafia has us fooled

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From theaustralian.news.com.au: Vested interests have hijacked the climate debate, and taken Australia’s future hostage. The ransom they demand? Simple agreement or, at the very least, compliance.

Voices of dissent face derision. Legitimate questions are met with ridicule. But with many of the squabbling forces of power in this country now apparently united in their enthusiasm for an emissions trading scheme, it is more important than ever that we go back and examine the basis of their campaigns.

It has been an article of faith for many years that humans are gradually destroying the environment, and are specifically responsible for global warming via man-made carbon emissions. On Monday, The Australian published results of a poll showing 96 per cent of the population believes climate change is wholly or partly caused by humans.

But any detailed scrutiny of scientific data shows that the environment is quite stable. There are even suggestions the world’s temperature has decreased in recent years……Full Article Source

Bank of Nova Scotia commodity price index rises again

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Scotiabank’s Commodity Price Index, which measures price trends in 32 of Canada’s major exports, rose by 1.2 per cent month-over-month in June, rising to a new record high for the sixth consecutive month. The All Items Index is now 212.6 per cent above the cyclical low in October 2001.

The Oil & Gas Index led the way in June, surging five percent month-over-month and 71.7 per cent year-over-year. The strength in energy prices was broad-based, but led by light crude oil and natural gas export prices. West Texas Intermediate (WTI) oil rose from US$125 per barrel in May to US$134 in June and surged to an all-time record high of US$147.90 on July 11 amid tight supplies and Middle East tensions surrounding Iran’s uranium enrichment policy.Full press release Source

Desperate anti-pollution measures mulled in Beijing

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From coloradodaily.com: China has gone to Olympian lengths to try to ensure that its skies are clear for the Summer Games, which formally kick off in 10 days. It has spent $17 billion on antipollution measures in recent years. Last week, it forced more than a million cars off the streets, halted construction in and around the city, and temporarily closed hundreds of factories in surrounding provinces.

But despite these measures, the Chinese capital remains mired in a gray haze, and the government’s pollution readings have exceeded its own safe levels four out of the past eight days.

Now, with the prospect of international embarrassment looming, officials are considering even tougher measures, including shutting more factories. They might also ban as many as 90 percent of Beijing’s private vehicles on especially bad days during the Games, a government adviser said Monday. Special lanes for Olympic VIPs may be abandoned because officials say they’re causing extra congestion and making the air worse……Full Article Source

Outlook for gold, grain prices looks bullish, say analysts

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From cattlenetwork.com: The outlook for gold and grain prices for the remainder of 2008 looks bullish, while energy is expected to fare less favorably due to bearish fundamentals, analysts said.

Grain prices are likely to climb higher on robust demand while gold is set to trend upward on high crude oil prices and a historically weak dollar, analysts said at the Dow Jones Indexes-AIG mid-year commodities outlook panel discussion sponsored by CME Group Inc.

“We still don’t have high enough prices to end the commodity boom,” said David Hightower, president and founder of The Hightower Report and the grains panelist at the event. “High prices have not injured demand.” Still, crude oil prices will drop on significant demand destruction, said panelist Phil Flynn, vice president and senior market analyst at Alaron Trading Corp. in Chicago.Full Article Source

Dow Jones Indexes Mid-Year Commodities Outlook media summary

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The Dow Jones-AIG Commodity Total Return Index is up 12.01% so far this year. Leading commodity analysts provided their market outlook for the rest of 2008 this morning at the seventh annual Dow Jones Indexes Commodity Outlook.

Oil prices may have reached their peak for now “Declining oil prices in recent weeks due in part to weakened U.S. demand and increased global output have provided relief to consumers after the string of record highs we’ve experienced in the first half of 2008. The questions on people’s minds are ‘has the oil bubble finally burst’ and ‘if so, when will we see a return to double-digit prices?’ We should see oil prices reach $99, heating oil at $250 and RBOB close at $220 before the end of the year,” said Phil Flynn, vice president and senior market analyst, Alaron Trading Corporation, Chicago……Full Press Release Source

Rwanda leads in World’s finest coffee brands

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From allafrica.com: “We managed to help Rwandan farmers launch a brand of premium coffee in the UK and we have so far helped them launch the brand in 1,000 stores across the United Kingdom,” explained Sir Tom Hunter, a Scottish philanthropist working to improve the quality of Rwandan coffee during his visit to Rwanda early this month.

Rwanda is set to host the global Cup of Excellence Competition from the 18th - 22nd August; a prestigious coffee competition and online auction of the best specialty coffees in the world. An event that will for the first time take place in Africa, coming after Rwanda’s success at last year’s Golden Cup competition.

Leading coffee producing countries that have previously hosted the event include; Brazil, Colombia, Costa-Rica and the Honduras. Coffee production is the mainstay of Rwanda’s economy, with exports going as far as the United States, China and Japan……Full Article Source

Diamond sales up ten percent despite U.S. slump

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From structuredproductsonline.com: Dawnay Day Quantum (DDQ) has launched its six-year Global Water Portfolio, offering 100% uncapped participation in the S&P Global Water index. The index invests in 47 companies involved in water related businesses and tracks two types of water companies, comprising water utilities and infrastructure, and water equipment and materials.

“Water is an invaluable commodity and everyone can see a global water shortage is staring us in the face,” says Mark Mathias, chief executive of DDQ. “The question is: how do you get exposure to it? There isn’t much in the way of traded water which you can get direct exposure to, so the best opportunity is through water companies.”

Part of the S&P Global Water index is based on the largest providers of water; companies that own the asset water and offer the provision of water to people, which is essentially what drives demand, explains Mathias. “There will be a lot more privatisation of water over the next decade, which will create opportunities for existing players – when other countries are looking to privatise water companies, the big established companies are well placed to take on the provision of water services,” says Mathias. “The other part of the index comprises the companies that are in the infrastructure end of water, which has been underinvested and needs to be developed,” he adds……Full Article Source

JP Morgan cuts platinum price forecast

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From theaureport.com : JPMorgan cut its price forecasts for platinum group metals and targets for producers, due to worsening economic conditions. “We think the party may be over for platinum for now,” a research note from Johannesburg-based analysts Steve Shepherd and Allan Cooke said. “Notwithstanding a wide range of uncertainties, we’re not altering our positive longer-term views.”

The investment bank cut its 2008 price target for platinum to $1,885 an ounce from $2,156 and for 2009 to $1,650 from $1,981. The spot platinum price has slid 13 percent to $1,745 over the past two weeks……Full Article Source

Taiwan FSC may ease listing restrictions on foreign companies

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From forbes.com: The Financial Supervisory Commission (FSC) said it is considering removing some listing restrictions on foreign companies, with an announcement due by the end of August.

The details have yet to be decided, FSC vice chairperson Lee Jih-chu said. She did not elaborate.

The current rules allow foreign companies with 20 pct or lower ownership by mainland-related firms to list on the local bourse, but the government is considering increasing that ceiling……Full Article Source

Are US Cong, Indian Parliament against Futures?

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From commodityonline.com: Like India, the US is caught in a situation where they are still mulling on some steps to rein in the Futures market with legislations. India is also facing the same problem with inflation soaring to new heights.

In a recent report a Parliament committee had recommended a ban on agri commodity Futures trade as this may cause price rise in the country. But, the committee failed to provide any proof of Futures trade causing the price rise. Still it recommended a ban on Futures in agri commodities.

The US is also facing the same situation. And concern is mounting among financial advisers, mutual funds and hedge funds about the legislation being considered in the US Congress that would restrict commodities trading……Full Article Source

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