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Commodities Briefing 06.Oct 2008

Posted on 06 October 2008 by VRS |  Email |Print

From Theage.com.au: Commodities markets are heading for the biggest annual decline since 2001 as investors exit leveraged bets and slowing economic growth erodes demand for raw materials.

The value of the 19 commodities in the Reuters-Jefferies CRB Index fell $US280.6 billion, or 43%, from its July 3 peak, a loss larger than their total worth two years ago, data compiled by Bloomberg show. UBS AG, the Zurich-based bank that bought Enron Corp.’s energy unit in 2002, plans to exit most commodity trading….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Thehindubusinessline.com: Fears of global economic slowdown are beginning to take a toll on commodity prices. Apprehensions of slowing world growth have combined with appreciation of the dollar (against the euro) to drag commodity prices lower. As is well known, a rising dollar pushes dollar-denominated commodity prices down.

The recent economic data from the world’s largest economy the US (ISM manufacturing index and auto sales) are far from encouraging. The leading indicators for Eurozone and Japan point to a sharp downturn. China too has disappointed many who anticipated a post-Olympics bounce in Chinese economic activity; but growth has been tepid, if any…… Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From FT: Europe’s governments must work together to deliver a “visible and stable” European energy policy or they will fail to attract the investment they need to meet sharply rising demand, according to Pierre Gadonneix, president of the World Energy Council and chairman of French energy group EDF.

“We must be planning a strategy for high energy prices. That is a new factor in the environment and that will require huge investment,” Mr Gadonneix told the Financial Times. “The challenge for energy policy today is to give investors the visibility they must have to provide the very big sums we need. It is very important for all energy operators that Europe makes these statements.”…. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Businessspectator.com.au: Global mining giant BHP Billiton’s $132 billion hostile takeover bid for rival Rio Tinto has come under renewed fire from Beijing, with a Chinese Government advisor urging European regulators to reject the proposed takeover.

Xiaoye Wang, a senior adviser to the Chinese State Council and National People’s Congress told a conference at Melbourne Law School the merger would have an detrimental affect on all Asian economies, which rely heavily on iron ore imports for steel production….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Zawya.com: Fears of a global economic meltdown have overtaken the oil markets. Further contraction is a reality — now looming large on the horizon — and the crude markets could not be far behind in taking the cue.

Prices continued to fall on concerns that even a US bailout of its ailing financial sector would not be enough to restore the declining oil demand. Markets lost nearly 10 percent in New York in response to the dramatic rejection of the $700-billion bailout plan by US legislators last Monday, dropping more than $10 a barrel to slip below $100, and they appear poised to keep falling…… Full Article: Source

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From FT: The price of copper capped a torrid third quarter yesterday with the second largest weekly fall for the benchmark London Metal Exchange three-month contract, 11.8 per cent to $5,977.5 a tonne.

Stephen Briggs, of RBS, says persistent supply disruptions had initially allowed copper “to play Houdini” and escape the price routs afflicting other base metals this year…… Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Thenational.ae: Dubai World would form a three-pronged fund to acquire assets in energy, mining and agriculture in an effort to capitalise on the growing worldwide demand for commodities.

The new company, to be called Dubai Natural Resources World, would invest in a broad range of commodities, from gas and oil to minerals and food crops, and look at both “upstream” sourcing of natural resources, and “downstream” processing facilities like refineries and mills….. Full Article: Source

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From Canberratimes.com.au: The politics of dealing with climate change would be a lot easier for the Rudd government if it had not been so eager to distance itself from the prominent economist, Ross Garnaut, who was originally its main adviser on the subject.

In his final report released last Tuesday, Garnaut argues that cutting greenhouse gases, such as carbon dioxide, could open up tremendous entrepreneurial opportunities, and create exciting new job possibilities, at a cost that is likely to be so low as to be barely noticed by most people and firms. But Kevin Rudd and his senior minister ministers have gone in the opposite direction…… Full Article: Source

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From Mineweb.com: Everything is down; but listed producers of coal, oil, and gold have lost the least in market value; biggest losers include miners of nickel, copper, zinc, platinum and silver.

Given current pricing, many stocks, across all sectors around the world, look like victims of huge vampires: blood sucked out, and living on drips. The global credit markets crisis, which appears to be far from over, has unequivocally swamped through equity markets as well…… Full Article: Source

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From Tradearabia.com: Singapore is a business hub, a hi-tech city with swanky buildings and clean roads. And there’s hardly any agriculture in the State, is the general impression.

But surprisingly it is in Singapore that the largest number of agri-funds get floated. So when the whole world is worried about rising foodgrain prices, several investment funds have found it an opportunity to float agri-funds in Singapore…… Full Article: Source

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From Advisor.ca: Everyone has an opinion on where the global economy is headed, but only a few have the investing experience that Quantum Fund co-founder Jim Rogers does. Speaking at CFA Toronto’s annual dinner, the legendary hedge fund manager told a packed house that commodities are today’s best investment.

“If history is any guide, this bull market on commodities will end sometime around 2020,” he explains. “Eventually there will be hundreds of mutual funds investing in commodities, though that still has a way to go.”….. Full Article: Source

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From Fin24.com: Global gold supply will likely contract as the US financial crisis saps funds away from mining projects, Nick Holland, the chief executive of Gold Fields, said.

The leader of the world’s fourth-largest gold producer, based in SA, was in Peru to inaugurate the company’s Cerro Corona mine. “Some of the juniors and intermediate companies are not going to be able to develop their projects. And I think what this means is that mine supply in gold is probably going to decline more than what people realize,” Holland said…… Full Article: Source

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From Steelmillsoftheworld.com: Four large Chinese steel firms have been in talks to reduce their crude steel output by a total 20 percent, or up to 20 million tonnes, in a bid to cut ore imports and support prices, the official Xinhua agency said late on Friday.

Company officials, who met in the steel producing town of Handan, also discussed “improving the flow of information at a high level”, Xinhua said in a report posted on its website, without quoting a source…… Full Article: Source

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From Asiaone.com: Supply and demand alone will set oil prices in coming months and OPEC will seek to balance the market at its December meeting after recent declines, OPEC President Chakib Khelil said.

Prices had recently fallen from levels created by ‘perverse’ speculative practices, Algerian government newspaper El Moudjahid quoted him as saying. Mr Khelil, who is also Algerian Energy and Mines Minister, also said: ‘In the months to come only supply and demand are going to regulate the market.’….. Full Article: Source

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From Theglobeandmail.com: The number of publicly traded junior mining companies should fall as tight credit conditions and plunging commodity prices force explorers to either find deep-pocketed partners or disappear.

Equity analyst and “Bottom Fish Report” publisher John Kaiser said smaller mining players with proven resources or production have the best chance to survive the recent shift in market conditions…… Full Article: Source

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From Reuters: Gold inched down on Monday as oil dropped on demand fears, while platinum steadied after tumbling to its weakest in nearly three years on economic weakness and dismal car sales.

Gold was trading at $828.00 an ounce, down $6.80 an ounce from New York’s notional close on Friday, when it hit a two-week low at $818.70 after the U.S. House of Representatives voted to pass a $700 billion to bailout the U.S. financial system…… Full Article: Source

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From Bloomberg: The euro slid to a 13-month low against the dollar as a deepening credit crunch forced European governments to pledge bailouts of troubled banks and increase protection for depositors.

The 15-nation currency fell to the lowest in more than two years versus the yen as Germany joined with banks and insurers to bail-out property lender Hypo Real Estate Holding AG and Belgium announced a revised deal to rescue Fortis, the largest Belgian financial-services firm…… Full Article: Source

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From Tradearabia.com: Iran will not stop uranium enrichment even if it is guaranteed supplies of nuclear fuel from abroad, Iranian Foreign Minister Manouchehr Mottaki said.

Iran’s ambassador to the UN nuclear watchdog, Ali Asghar Soltanieh, was quoted as saying on Thursday in Brussels that Iran would consider renouncing enrichment if it was assured of fuel supplies from abroad….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Marketwatch.com: Few places for investors to hide in brutal quarter as markets plunge. It was a quarter to forget for most exchange-traded funds that invest in stocks as the credit storm ripped through financial markets. Meanwhile, commodities were also crushed on economic jitters and a rising U.S. dollar.

The largest exchange-traded funds by assets tell most of the story of the carnage of the past three months. SPDR S&P 500 ETF, which tracks U.S. blue chips, lost about 9% during the third quarter….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Bloomberg: The following events and economic reports may influence trading in Asian currencies today. Exchange rates are from the previous session. Japanese yen: The Bank of Japan will start a two-day monetary policy meeting today.

It will keep the benchmark overnight lending rate unchanged at 0.5 percent when the meeting’s outcome is announced tomorrow, according to a Bloomberg News survey of economists. The yen traded at 104.73 per dollar at 8:25 a.m. in Tokyo…… Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Thestar.com.my: Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives (BMD) plunged to a 19-month low during the three-day trading week. Renewed selling interest emerged following weakness in the Chicago Board of Trade soyoil futures, retracement in crude oil prices and concerns over rising palm oil stocks and declining demand.

Societe Generale de Surveillance (SGS) said exports in September fell 18.8% to 1.209 million from 1.488 million tonnes a month earlier. The export numbers were lower than earlier trade expectations and increased fears of a sharp stock build-up to near the two-million-tonne level at end-September….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Theage.com.au: Crude oil fell for a fourth day in New York on signs slowing global economic growth will reduce demand. World markets are oversupplied and the Organization of Petroleum Exporting Countries may review output levels for the first quarter of 2009, Iranian Oil Minister Gholamhossein Nozari said October 4.

Saudi Aramco, the world’s largest state-owned oil company, yesterday cut its official selling prices for light crude exports to the US in November. Crude oil for November delivery fell as much as $US2.28, or 2.4%, to $US91.60 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $US91.76 in morning trade….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From FT: The slowing economy and financial crisis are testing Europe’s goal of becoming a world leader in greenhouse gas reduction. Industry has seized on the slowdown to lobby for delayed or watered down regulations, arguing that directives set out by the European Commission earlier this year would force them to cut jobs or relocate factories outside the European Union.

Some politicians also acknowledge that the financial crisis could hinder efforts to forge international agreements on reducing emissions….. Full Article: Source

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From Goldseek.com: The charter of the Federal Reserve allows its chairman to make rate cuts of up to 0.5 per cent at his discretion in between official meetings to set rates. Expect such a cut as soon as tomorrow morning.

The paralysis of the banking system is reaching boiling point with inter-bank rates soaring and the true cost of borrowing prohibitive for corporates. This will cause a chain reaction of financial and business failures if it is not quickly dealt with and Fed chairman Ben Bernanke has no illusions about what is at stake…… Full Article: Source

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From Seekingalpha.com: The agriculture sector has come down a long, long way since its recent highs. Leading the way down has been a sharp decline in agriculture commodities.

The price of sugar is down 25%, soybeans are down 30%, corn is off 35%, and wheat is leading the way with a 40% decline since euphoria took the agriculture markets to unsustainable highs last winter. Remember the food riots…the rice trading maven, who took a dozen barges, loaded them with rice, and tried to corner the market…expectations that ethanol production would push an already tight corn market into the stratosphere …the world was running out of food!…. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From FT: The price of precious metals used to make cars, platinum, palladium and rhodium, have plummeted in tandem with sales.

The slowdown in US car sales, which were 23 per cent lower last month than in September 2007, has been dramatic. This year, about 2m fewer light vehicles have been bought compared with 2007. Because platinum and palladium are crucial in the manufacture of autocatalysts, which reduce emissions, demand from carmakers accounted for about half of global consumption of both metals last year….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Mineweb.com: The growth of nuclear power is still marching forward but the aspirations on uranium’s price have dropped back a peg or two, according to the latest quarterly research by Sydney-based Resource Capital Research (RCR).

The industry average long-term uranium price has been downgraded $US15/lb by RCR’s just-released quarterly Equity Research Report from its third quarter report to $US80/lb and saying that in the current quarter it will trade between $US50-65/lb. At the time the report was released the spot uranium price was $US55/lb….. Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Commodityonline.com: The commodity boom that has buoyed Canadian markets until recently and been the driving force behind Western Canada’s torrid economy in recent years is not gone for good, but is just taking a breather, says a commodity strategist.

“What we are seeing is really cyclicality rearing its ugly head again,” said Bart Melek with BMO Capital Markets. “We think there’s a correction, but we don’t think this is the permanent bust.” Canada’s resource-centred economy was able to shield itself from the deepening crisis in the American economy as investors flocked to commodities like oil, grain, fertilizer and metals as safe havens…… Full Article: Source

Posted on 06 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: Base metals are facing another week of price pressure as the global financial crisis grinds on, an anaemic recovery on Friday night failing to change the fact that last week was the worst for commodities since 1956.

Falling oil and farm commodity prices did much of the damage, but metals are reaching levels where producers are facing narrowing margins. The Reuters/Jeffries CRB commodities index fell 10 per cent over the week, the biggest one-week fall in 52 years…… Full Article: Source

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