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Commodities Briefing 03.Oct 2008

Commodity prices, credit crisis pin drove many agriculture stocks
UBS to close energy and soft commodities-traders
Canadian commodities firms face uncertainty as stock markets toughen growth
Oil leads commodities lower
Investors mull commodity diversification
Trade and climate policies must be linked post-2012
Dollar poised for biggest weekly gain in 16 years
CFTC and FSA to lead commodities task force
Impala to buy Northam for $2.47bn
Carbon trading could become one of world's largest markets
Coal has been one hot commodity lately
Investors fly to safety of gold ETF
Gold hit by dollar, platinum at near-3 year low
Were the Platinum Group Metals afloat on an Ocean of Asian liquidity?
CMS lumber futures sharply lower in fund liquidation
Commodities prices dive as dollar surges vs. euro
Slide in agricultural stocks doesn't reflect fundamentals
New zinc mining combine proposal for top Australian producers
Green energy boom in bailout bill
Call to to improve the proposal on EU-ETS revision
Canada's funds among worst performers in Sept
Latam currencies, stocks plunge on crisis fears
Difficult trend for U.S. cotton
SuperDerivatives expands Nordic Network of its multi-asset derivatives front office system
BHP, Incitec Lead commodity stocks lower on recession concern
Australian dollar falls after commodity prices slide
Constellation Energy seeks support for $2 billion loan
Platinum extends losses to 5 pct as precious metals slip
Iceland's Krona slumps on rating downgrades
NSE mulls web-based application for trading
How do I pick the right ETF
Copper, gold slide in broad commodities sell-off
Credit crunch, commodity turmoil slam Deere
Dollar makes 15-month highs, gold suffers again

Posted on 03 October 2008 by VRS |  Email |Print

From Chicagotribune.com: Falling commodity prices, combined with new fears that the credit crisis will hurt U.S. farmers, drove many agriculture-related stocks including those of Chicago-area companies –sharply lower.

Soaring grain prices sent the shares of seed-makers, agricultural-chemical producers, farm-equipment manufacturers and other ag-related companies sharply higher in the first half of 2008. But the once-sky high price for corn and other grains has weakened dramatically since peaking in July. Now, as investors are fretting that farmers may find it difficult to obtain crucial loans, the sector could be hit hard next spring…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Reuters: Swiss bank UBS AG is set to announce the closure of its energy and soft commodity trading desks, trading sources said on Thursday. UBS Metals group, including precious and industrial metals, is not believed to be included in the job cuts. UBS is a major player in the gold market.

UBS declined comment. Among banks trading commodities, UBS ranks in a second tier group behind top players Goldman Sachs and Morgan Stanley. The company exited some continental European power and gas markets earlier this year but maintained power and gas operations elsewhere in northwest Europe, UK and North America. It also continued to trade in crude and refined products….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Canadianpress.com: Crumbling international stock markets are putting a damper on Canadian companies’ ability to shore themselves up with new capital, while merger and acquisition deals that once seemed certain are being tossed by the wayside.

The failure of a U.S. bailout plan has stoked already widespread economic anxiety and knocked the wind out of international stock indexes - the TSX was down almost 600 points at midday Thursday. That has made funding increasingly difficult to find…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From FT: Oil, metals and grains retreated on Thursday amid growing concerns about the impact of the credit crisis on global economic activity. Oil prices remained under pressure following the release on Wednesday of US data showing a substantial weakening in consumption.

Total product demand in the US averaged 19.02m b/d over the past four weeks, down 7.1 per cent compared with the same period a year ago. Nymex November West Texas Intermediate sank $4.56 to close at $93.97 a barrel, having reached $100.37. ICE November Brent fell $4.77 to $90.56 a barrel….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Financial News: Institutional investors in the UK are increasingly interested in commodities investments, according to Lyxor Asset Management, which has surveyed 20 of the top 100 pension funds in the country.

Lyxor’s finding - that six of its respondents, or 30%, want to increase allocations to raw materials like oil, metals and food products in the next five years - chimes with calls from schemes’ investment consultants for greater diversification of assets. The consultancy Mercer’s annual asset allocation survey, which looks at 849 UK funds with total assets of €379bn ($532bn) also found increased appetite for commodities last year…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Scidev.net: China is now the world’s biggest emitter of carbon dioxide, decades earlier than many predicted. Chinese emissions are often viewed as a Chinese production problem, but the role of spiraling consumption in rich nations should not be underestimated. One third of China’s territorial emissions come from producing exports.

A closer look at China’s emissions from 2002–2005 shows that half their growth was due to export production. A further third of the growth came from capital investments, with a significant share of this in export industries. Indeed, only 15 per cent of the emissions growth from 2002–2005 was due to household and government consumption….. Full Article: Source

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From Reuters: The dollar hovered near a one-year peak against a basket of major currencies on Friday as banks and financial institutions have scrambled to buy the U.S. currency on the open market after being locked out of frozen money markets.

The dollar extended gains versus the euro scored the previous day after European Central Bank President Jean-Claude Trichet said inflation risks have eased, bolstering expectations the ECB will follow other major central banks in cutting rates. So far on the week, the dollar has soared 4.2 percent against a basket of six major currencies — poised for its biggest weekly rise in 16 years….. Full Article: Source

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From Finextra.com: The US Commodity Futures Trading Commission (CFTC) and the UK’s Financial Services Authority (FSA) will head up a task force - established by the technical committee of the International Organisation of Securities Commission (IOSCO) - that will examine regulation of the commodities markets.

IOSCO says the decision to establish a task force follows discussions amongst its members focusing on concerns around increases and volatility in commodity futures markets. The committee will examine the changing nature of commodities futures markets, considering issues such as technological development, globalisation, product innovation and increasing participation of new types of investors…… Full Article: Source

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From Mineweb.com: Impala Platinum, the world’s No 2 miner of platinum group metals (PGMs), is to offer ZAR 21bn (US$2.47 bn) to acquire all of Tier II PGM miner Northam, 62% held by Mvelaphanda Resources, “to create a South African controlled platinum champion”.

Impala is also bidding to acquire the balance of Mvelaphanda Resources. The deal values Northam at just over ZAR 51 a share; the stock closed at ZAR 43.50 on Thursday. Impala is proposing to settle 70% of the purchase of Northam in new Impala shares, and the 30% balance in cash. Upon completion, Northam shareholders would receive 24.50 Impala shares for every 100 Northam shares held, and the cash equivalent of 10.50 Impala shares….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Engineeringnews.co.za: The carbon economy was receiving a lot of political support worldwide, especially from the US, with carbon trading set to become one of the largest markets in the world in future, Macquarie Capital Funds director Andrew Johnstone commented during a cogeneration conference in September.

He added that many people believed it was possible that a carbon central bank would eventually be set up for this purpose. Johnstone explained that carbon trading could lead to a value of about $500-billion a year….. Full Article: Source

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From Mineweb.com: Standard & Poor’s declared that “coal has been one hot commodity lately,” but does see risks to the sustainability of currently high prices. S&P Primary Credit Analyst Sherwin Brandford and Secondary Credit Analysts Michael Scerbo and Marie Shmaruk discussed four specific threats to coal prices: regional dynamics, a stronger U.S. dollar, increased exports from outside the U.S., and supply from China.

Nevertheless, despite what the analysts called “meaningful price volatility,” they advised that “we think over the next two years industry fundamentals will remain positive because coal will continue to be a vital energy source for countries throughout the world.”…. Full Article: Source

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From Marketwatch.com: The value of an exchange-traded fund tracking gold prices rose by about $4 billion in September as investors scurried for cover amid the worsening credit tempest and uncertainty over a potential bailout package.

At the end of August, SPDR Gold Shares had $17.4 billion in its coffers, which was backed by 651.4 metric tons of the precious metal. However, the ETF’s assets surged by more than $4 billion during September as some of the nation’s largest and most-respected financial institutions went up in smoke, were taken over by the government or gobbled up by rivals.. …. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Reuters: Gold bounced on Friday but held within sight of a two-week low as the U.S. dollar hovered near a one-year peak against other currencies, while platinum was at its weakest in almost three years on demand fears.

Platinum, mainly used in autocatalysts to clean exhaust pipes, has lost more than 50 percent in value since spiking to a lifetime high at $2,290 an ounce in March, on profit taking and recently on poor car sales and a slowing U.S. economy. Platinum was also hit by falling gold prices after the dollar gained on hopes the U.S. Congress would pass a $700 billion bailout plan. In theory, a rising dollar reduces gold’s appeal as an alternative investment to currencies, stocks and bonds….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Resource Investor: During the summer I wrote here of the strong anecdotal case being made in Detroit that linked the sharp reduction, then underway, in the price of rhodium, as well as a more gradual decline, at the same time, in the price of platinum.

It was due to an unwise and undisciplined inventory reduction by a major car company in the midst of its own ‘liquidity’ crisis. After the article came out it was pointed out to me by a prominent industrial, but non-automotive, buyer of rhodium that the rapid fall might have also have been due in part, or even all, to the collapse of the hedge fund run by Ospraie Management, which had a history of taking outsized positions and even physical possession of platinum group metals. ….. Full Article: Source

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From Fxstreet.com: Chicago Mercantile Exchange lumber futures prices Thursday closed sharply lower on pressure from commodity fund-style liquidation, brokers said. New contract lows were hit in all contract months.

At one point, the lead four contracts touched the $10-per-1,000-board-feet limit before bouncing into the close, they said. The nearby November contract ended $2.80, 1.41%, lower at $196.40. The January contract fell $8.60, or 3.95%, to close at $209.30, and March settled at $230.10, $4.80, or 2.04%, lower. Commercial buying tended to support the market at its lows, one broker said. They were willing to own 2×4 lumber at a level below $200, and the lower the better, he said…… Full Article: Source

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From Sfgate.com: Commodities prices plunged Thursday as a rapidly strengthening dollar and more gloomy readings on the economy compelled investors to dump positions in gold, grains and energy.

The dollar climbed to a one-year high against the 15-nation euro after the Senate overwhelmingly voted to approve a revised $700 billion financial bailout plan late Wednesday, sending the measure to the House for an expected vote Friday. Commodities prices surged to record highs earlier this year as a weak U.S. currency, record oil prices and global economic uncertainty sent investors scrambling to buy hard assets as a safe, alternative investment….. Full Article: Source

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From Resource Investor: Salman Partners analyst Raymond Goldie said the sell-off of Potash Corp. of Saskatchewan (POT) and Agrium Inc. (AGU) are due to a disappointing quarterly report from an American peer.

But Goldie said the lacklustre results released Wednesday night by Mosaic Co. (MOS), a Minnesota-based fertilizer producer, were due to problems specific to the company, not the industry. Another analyst also downplayed fears that a U.S. economic slowdown would have a severe impact on U.S. corn production — a major use of fertilizer — because of government subsidies…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Mineweb.com: Australian zinc miner CBH Resources Ltd (CBH.AX) made another offer to buy rival Perilya Ltd (PEM.AX) on Thursday, worth as much as A$60 million ($47 million), seeking to link up their nearby mines.

CBH said it would offer 2.8 of its shares for each Perilya share if Perilya completes the sale of a copper asset in Australia, or 4.2 of its shares per Perilya share if the sale does not go through. In June, CBH had offered 3.5 of its shares for each Perilya share, which Perilya rejected as inadequate, but left the door open for more talks…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Forbes: Renewable energy providers will reap an immediate benefit from the raft of new incentives in Washington’s financial rescue package. Better late than never. John Berger, chief executive of Standard Renewable Energy, was holding his breath this week.

“If it passes, this would complete the mainstreaming of solar energy in the U.S.,” says Berger, who generates 85% of Standard’s $20 million in annual revenues from solar installations. He figures the new tax credits could quintuple his solar business in a year. The old set of federal incentives for energy investments in wind, solar, biomass and geothermal expire at the end of this year. The industry thought Congress was about to pass the bill back in May but squabbling over how to pay for the estimated $17 billion cost over eight years derailed negotiations….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Commodities-now.com: This joint statement is an initiative of the social partners EMF and EUROFER in the Sectoral Social Dialogue Committee on Steel. EMF, the European Metalworkers’ Federation, represents the interests of 5.5 million metalworkers in Europe

EMF is a member of the ETUC; EUROFER, the European Confederation of Iron and Steel Industries, represents the European steel industry with a turnover of EUR 140 billion and direct employment of 370 thousand people, producing more than 200 million tons of steel per year. EMF and EUROFER call upon the decision makers in the European Parliament, the Council and the Commission to improve the proposal on the revision of the EU-ETS so to ensure a fair balance between climate change measures on the one side and the competitiveness of the European industry, sustainable investment and high quality jobs on the other…… Full Article: Source

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From CBC: Even as Canadian financial institutions have been relatively sheltered from the credit meltdown in the United States, this country’s mutual funds performed more poorly than their American counterparts, according to Morningstar Canada Thursday.

Morningstar, which follows the mutual fund industry, said 41 of the 43 indices which it tracks lost money in September, and Canadian funds on those indices performed more poorly than U.S. stocks. “Our markets are a lot more focused on the two sectors — natural resources and financials,” said Al Kellett, a Morningstar analyst…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Guardian: Latin America’s major currencies tumbled on Thursday to their weakest in at least a year and stocks plunged as investors worried about a snowballing credit crisis and prospects of slower global growth.

Brazil, the region’s largest economy, watched its currency slide almost 5 percent and its stock market dive nearly 8 percent, while Mexican stocks also dropped more than 4 percent. Investors were focused on a vote expected in the U.S. House of Representatives on Friday over a $700 billion bailout plan of the U.S. financial sector.
But doubts that the rescue plan will be enough to thaw frozen credit markets heightened concerns the crisis could drag on the global economy….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Deltafarmpress.com: Tom Scott, president and CEO of Informa Economics, Memphis, Tenn., in detailing to the Cotton Board what he believes is the outlook for U.S. cotton, sounded more like an apologetic Darth Vader.

Scott, head of the business formerly known as Sparks Companies, Inc., told directors of the Cotton Board that U.S. cotton prices will continue to decline in the near term (six to nine months); U.S. acreage will fall to just 6 million acres in seven years; and that America’s portion of the world cotton market will drop from the current 12 percent to just 8 percent in that same time frame. That would put the United States a distant third place behind China and India, which he projects combined will account for more than 60 percent of world cotton production by 2015…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

SuperDerivatives has been selected by a majority of the Nordic region’s leading banks and blue-chip companies to strengthen and expand their capacity to manage their derivatives portfolios and execute derivatives on-line.

Nordea, Danske Bank, SEB, Handelsbanken, DnBNOR, Carnegie, FIH Erhevsbank, Glitnir, Landsbanki, A.P. Moller Maersk, Western Bulk Carriers and many more have become part of SuperDerivatives’ network of global counterparties and derivatives execution. These institutions use a range of SuperDerivatives’ systems and solutions including real-time multi-asset pricing and analytics, risk management systems, portfolio revaluation services, and mark-to-market data portal for pricing derivatives….. Full Press Release: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Bloomberg: BHP Billiton Ltd., the world’s biggest mining company, and Incitec Pivot Ltd. led declines in commodity stocks on concern a U.S. recession will further reduce prices and demand for raw materials.

BHP slipped as much as 5.6 percent to the lowest in 18 months and Incitec Pivot slumped to the lowest since July 2003 on the Australian Stock Exchange. Commodities are heading for the biggest weekly decline in more than 50 years on concern the spreading financial crisis may slash demand….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: The Australian dollar has fallen sharply on fears about the global economy and after a broad sell-off in commodity markets. The local currency fell as much as 3 per cent from its peak to its trough in overnight trade.

“The Australian dollar has been sold heavily overnight as the US dollar surged and commodity prices continued to weaken,” ANZ analyst Patricia Gacis said in a report. The Aussie dollar was at US77.66c by early afternoon, down from US78.67c in late domestic trade yesterday, Overnight, it ranged from US79.44c to US77.02c…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Reuters: The Royal Bank of Scotland and UBS have begun syndicating a critical $2 billion liquidity facility for Constellation Energy Group.

Constellation Energy is currently subject of a takeover play by Warren Buffett’s MidAmerican Energy Holdings and a potential joint bid by KKR and French utility EDF. The loan is one of the few deals testing bank appetite in a generally frozen loan market. Constellation, which is under capital and financing pressure due to commodity and counterparty risk, is offering rich premiums to entice banks to support its facility, sources added….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Ninemsn.com.au: Platinum extended losses to more than 5 percent on Thursday, tracking a decline in other precious metals, as a strengthening dollar added to the negative impact of fears over falling demand.

The white metal shed 3 percent in early trade after lower-than-expected U.S. car sales fuelled fears over falling demand. A firmer dollar has since knocked gold 4 percent lower and silver down 12 percent, and is also pressuring platinum. Spot platinum was quoted at a session low of $966.00/986.00 an ounce at 1500 GMT, against $1,020 an ounce in late New York trade on Wednesday….. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Bloomberg: Iceland’s krona tumbled to the lowest level against the dollar since at least 1992 as bank bailouts and debt-rating downgrades this week by Standard & Poor’s and Fitch Ratings spurred investors to dump the currency.

The krona plunged 22 percent this week after the island nation’s government said Sept. 29 it will purchase a 75 percent stake in 104-year-old Glitnir Bank hf after the firm’s short-term funding dried up. The currency fell for a sixth day versus the dollar, its longest run of declines since June 16. …. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Business-standard.com: The National Stock Exchange (NSE) is planning to launch its web-based application for brokers — called the National Exchange for Automated Trading on Web (NOW) — to provide a single front-end platform for trading members to access NSE cash, futures and options segments, currency derivatives and NCDEX commodity derivatives on the same trading terminal.

Of 1,000 members, 500 have signed up for NOW. The exchange first introduced this application during the launch of currency derivatives in August and plans to introduce other products on this application in the future…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Istockanalyst.com: Given the bewildering number of ETF choices that investors now have to contend with, it would be appropriate to consider the following factors when selecting an ETF:

1. Level of Assets: To be considered a viable investment choice, an ETF should have a minimum level of assets, a common threshold being at least $10 million. An ETF with assets below this threshold is likely to have a limited degree of investor interest. As with a stock, limited investor interest translates into poor liquidity and wide spreads…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: Copper slipped nearly 6 per cent on economic woes while a sell-off in gold was sparked by US dollar gains and a need to raise cash. Copper futures extended their year-and-a-half lows as worsening sentiment on the global economy painted an increasingly dismal picture of demand for the red metal.

Comex December copper contract fell US16.2c, or 5.8 per cent, to settle at $US2.6275 a pound. “The whole economic malaise is indicative of declining demand for commodities,” said Bill O’Neill, a principal with Logic Advisors. “Copper also is an economic commodity, a reflection of the economy.” …. Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Guardian: This was supposed to be a banner year for Deere & Co , the world’s largest maker of farm equipment. With worldwide biofuel development, growing food demand in the developing world, and grain prices at record levels, the biggest challenge facing Deere at the start of 2008 seemed to be keeping up with the orders for its tractors and combines.

Instead, the Moline, Illinois-based company has spent much of the year on the defensive and watched more than half its market capitalization — about $23 billion in all — disappear along with the positive sentiment that once surrounded its outlook…… Full Article: Source

Posted on 03 October 2008 by VRS |  Email |Print

From Mineweb.com: Defying its reputation as a safe haven asset, gold bullion plunged by up to 5% at points on Thursday, trading between intraday highs around USD 876.15 and lows around USD 831.55 an ounce, as the dollar index, the trade weighted value of the greenback, moved to 15-month highs.

The moves in the dollar and gold captured the increasingly dark mood of another dreadful day in markets, with the dollar increasingly assuming the role of safe haven asset. Worries over global credit markets intensified all over again. Bleak economic reports from the US, where Congress was due to vote on a USD 700bn package to bail out toxic debt in the world’s biggest economy, saw investors taking the least line of resistance in stocks generally, and commodities, as fears grew over the extent of the rate of slow down in the global economy….. Full Article: Source

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