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Commodities Briefing 20.Oct 2008

Posted on 20 October 2008 by VRS |  Email |Print

From Indiatimes.com: As the dark clouds of an economic slowdown gather over the world, prices of most primary commodities are sliding worldwide. Only a few months ago, prices of many key commodities, like food grains, crude oil and metals had reached dizzy heights. Now, they are in free fall.

Wheat had touched $481.5 per metric tonne (pmt) in March, while rice zoomed to $772 pmt in May this year. These were all-time highs, causing riots to break out in over three dozen countries and a global uproar….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Bloomberg: OPEC, the supplier of more than 40 percent of the world’s oil, plans to cut output for the first time in almost two years as the worst financial crisis since the 1930s sends crude toward $50 a barrel.

Options contracts to sell oil at $50 by December soared 28- fold in the past two weeks on the New York Mercantile Exchange. Goldman Sachs Group Inc. and Merrill Lynch & Co. analysts say crude, which fell more than 50 percent from a record high in July to a 14-month low last week, may drop another 44 percent should the world economy slip into a recession….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Farmonline.com.au: World wheat stocks have been tight for some time and decreased production around the globe last year made them even tighter. But many have said a rebound in world wheat production was needed this year and it looks like it is happening.

The Russian Agricultural Ministry has reported that wheat harvest and exports were significantly higher at this time than they were in 2007. The Ukraine also reported excellent grain harvests of 70pc more than a year ago….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Marketoracle.co.uk: Silver may be classed as a “Precious Metal” but it has certainly not received any special treatment these past few months, during which it has been sold down heavily along with most other commodities, in marked contrast to gold, which has held up well.

The main conclusion of course, is that gold investments should be favored over silver at this time, although it should be kept in mind that silver comes alive and really performs well towards the end of gold uptrends, at which times it is often advantageous to rotate out of gold and into silver….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

Crude oil prices rose 66% from a year ago to US$134.74 a barrel (US$/bbl) on June 20, 2008, amid a tight supply background and continued market speculation and concerns over conflict in the Middle East.

The share prices of leading oil and gas companies in the Asia-Pacific performed bearishly over the past six months to June 20, 2008, down by 23.73% from a year ago on profit taking…. Full Press Release: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Bloomberg: The world coffee market will swing to a deficit of as much as 10 million bags next year from a surplus this year as demand growth outstrips production, said a growers group in Colombia, the third-biggest producer.

Global coffee output will exceed demand by 6-7 million bags this year as Brazil, the world’s largest producer, is in the more productive phase of a two-year cycle, said Juan Lucas Restrepo, commercial manager at the National Federation of Coffee Growers of Colombia….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Independent.co.uk: Money raised from Europe’s Emissions Trading Scheme (ETS) should be used to fund plans for carbon capture and storage (CCS) demonstration projects, the UK government will stress at an EU energy summit.

The Environment Council meeting in Luxembourg is part of a round of meetings to thrash out the details of Brussels’ energy package….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Nytimes.com: Back before the mortgage meltdown turned into the worst financial crisis since the Great Depression, the country’s big economic problem was energy. The presidential campaign was on fire over what to “do” about the price of oil.

Gas cost more than $4 a gallon, it was slowing down the economy, people were driving fewer miles and they were flying less. Believe it or not, this was an economic crisis that affected people who didn’t happen to be pinstriped bankers, hedge-fund managers or cabinet officials….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From FT: Commodities prices fell during a volatile week, with the Reuters-Jefferies CRB index, a global benchmark for raw materials prices, dropping 3.6 per cent amid concerns that the global economy was heading into recession.

The abrupt falls in commodities – the RJ-CRB index hit its lowest level in four years – engulfed gold, which ended on Friday at a one-month low of $775 a troy ounce, down 8.5 per cent on the week….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: If you want to know what is likely to happen to commodities demand, watch the ships. Watchy both those that carry the bulks and those that deliver the finished products. The portents are not good in either case.

First, the Baltic Dry Index which reflects demand and prices for bulk carriers has hit its lowest point since November 2002 when metals demand was in the doldrums. The vessels that carry iron ore from Australia and Brazil constitute a large part of the index. …. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Mineweb.com: Standard Chartered Bank (SCB) says the demand picture for commodities does not look supportive and it expects commodity prices to remain weak well into next year and subdued until the middle of 2009. However, secular demand growth for commodities remains intact in the longer term.

The bank said in a research note that growth is slowing, not only in the OECD, but also in emerging markets, as the impact of the current financial sector crisis spread….. Full Article: Source

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From Lacrossetribune.com: Volatile. That’s the word that might best describe commodity prices going into the fall and winter of 2008. It’s always difficult to predict prices of agricultural commodities, but recent pressures on various commodities and regional and national events are creating a mixture of influences that make commodity pricing even more of an art.

Corn prices that had fluctuated between $2 and $3 a bushel for decades and seldom moved in swings of more then 10 or 20 cents, can now see 80- or 90-cent swings in a matter of days….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Seekingalpha.com: Yet, right now if you are watching the price of gold and silver, it sure feels more volatile. We thank the kind folks at Casey Research for the use of this chart from their worthwhile publication Big Gold.

The precious metals had two dismal days in a row, as all the market forces turned against them, with equities rallying, the dollar moving higher, and oil falling through what was thought to be a pretty secure floor….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Zawya.com: Dubai Multi Commodities Centre (DMCC) announced the establishment of Dubai Cotton Centre (DCC), a new trading arm and a fully owned subsidiary of DMCC, which will consolidate Dubai’s position as a key link in the global cotton supply chain between Central Asia particularly Uzbeskistan and the cotton consuming economies in the wider Asian market.

The newly established DCC also signed a framework agreement with Uzprommashimpeks (UPM), a renowned major exporter under the Uzbekistan Ministry of Foreign Economic Relations (MFER) to buy 100,000 metric tonnes of cotton, and sell it to the wider Asian market. Uzbekistan is the world’s third largest exporter of cotton with major exports to Asia….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Thehindubusinessline.com: Global growth concerns and financial market turmoil continue to batter the commodity market even as investors turn cautious and constantly look for avenues that are not only safe but also bring returns.

Falling crude market and poor demand conditions for base and industrial metals continue to affect the overall market sentiment. Investors are exiting positions that they are unsure of….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Streem.com.au: Professor Ross Garnaut has warned against Australia deferring it’s introduction of emissions cuts and a trading scheme. Experts are to tell Britain their renewable energy targets are far from realistic, raising real doubts on the nation’s climate strategy.

British Prime Minister Gordon Brown is leading a high-profile bid to have wind-power generate a third of the United Kingdom’s energy needs by 2020….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Resourceinvestor.com: According to officials from OPEC members Qatar, Kuwait, Iran and Venezuela, the main reason is to counter the ongoing decline of the global oil price. It’s premised on the assessment that there is too much crude oil in the market.

However, evaluations of mainstream oil consultancies are showing that no real demand deficit exists at present. British and Dutch oil analysts are stating that OPEC’s move is just a move to increase current price levels. Some OPEC officials have indicated that an oil price between $70 and $90 per barrel is the target. Officially, OPEC denies the assertion….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: OF the 140-odd resources companies that Warwick Grigor of BGF Equities charts daily, 90 hit a new 52-week low over the past week.

This will not surprise the average resources investor. But all is not lost — the veteran punters know their market will come back and some are even starting to look for moves when the market bottoms….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From FT: This month, the Frankfurt Stock Exchange launched “Börsenspiel”, a competitive stock trading game aimed at attracting people who have never or only rarely traded stocks.

Virtual seed money of €50,000 will be deposited into a fictitious securities account “for speculating and investing”. Participants will receive a special dictionary and be sent “supporting background articles” on investing to help them get up to speed with the art of stock market investing….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From AFP: President Hugo Chavez will urge fellow members of the OPEC oil cartel to implement a cut in production, with a goal setting a price floor of no less than 80 dollars a barrel, the Venezuelan leader said.

“Our position for the past ten-plus years has been that we have to manage oil production,” Chavez told AFP, ahead of an October 24 gathering in Vienna of the Organization of Petroleum Exporting Countries….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Business24-7.ae: The bourses of Abu Dhabi and Manama plan to list the region’s first exchange traded funds (ETFs) despite a slump in global markets, top officials of the bourses said.

ETFs are investment vehicles that hold assets such as stocks or bonds and trade at almost the same price as the net value of its underlying assets over the course of the trading day. The Abu Dhabi Securities Exchange (ADX) plans to list at least two local and two foreign ETFs by early 2009, its top executive said, while Manama’s securities market is aiming to launch ETFs in the first half, a Bahraini official said….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Businessspectator.com.au: The Australian nickel industry’s share prices have collapsed within 12 months. In 2007 nickel was a market favourite, but the value of six large nickel miners has fallen 80% in six months.

Industry spokespeople said in late October 2008 that the industry is very healthy but the external factors of global economy volatility have hit hard. One London analysts has forecast continuing pressure on nickel prices through 2009…. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Financialexpress.com: The host of problems in the global economy, like the subprime meltdown, the financial crisis downturn in the equity markets, along with commodity prices still remaining at high levels, are all forcing investors to rediscover the lustre in gold.

According to a recent report by team of analysts headed by Kevin Norrish from Barclays Capital, investing in gold will be seen as a way out of the global economic turmoil….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From IHT: A production cut of even 1 million barrels per day at OPEC’s upcoming emergency meeting is unlikely to reverse slumping crude oil prices in the short term, said analysts Sunday, amid mounting calls by several cartel members to take decisive action to keep prices at the US$80 per barrel level.

The Organization of Petroleum Exporting Countries’ decision to hold an emergency meeting next Friday clearly signaled the group’s concern that crude’s recent pummeling would siphon revenue necessary to sustain government spending and weather broader fallout from the current global financial crisis….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Btimes.com.my: The Kuala Lumpur CPO futures market tumbled last week to a new low for the year, in tandem with crude oil and US soyabean oil futures which also hit fresh 2008 troughs.

Fear of a world recession is hurting world commodity markets overall and the local market could not have avoided the downdraft. But the local palm oil industry, in addition being weighed down by a deteriorating world economy, also has its own unique set of challenges which has depressed the local futures market more than others….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Commodityonline.com: Even as Central banks are taking all possible measures to restore investor confidence, policy makers in USA now foresee another problem—deflation in 2009. This could send prices further falling.

India’s Inflation fell to 11.44 per cent for the week ended on October 4 due to decline in oil prices and manufactured goods. Inflation could be falling for the wrong reasons. A lack of demand is leading to inventory liquidation….. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Economicnews.ca: The Australian dollar is up against majors after markets received reports indicating preliminary Australian imports were up in September, and producer prices increased as well. Nevertheless, strategists say the Aussie’s moves upwards are based on commodity prices and risk.

Patricia Gacis, strategist at ANZ Markets said, “The AUD is opening the week on a firmer footing¥as the oil price is higher and risk aversion appears to be moderating.”…. Full Article: Source

Posted on 20 October 2008 by VRS |  Email |Print

From Marketoracle.co.uk: Total commodity assets under management (AUM) fell in the September quarter for the first time since 2003, although the pace of the fall in commodity prices in recent weeks means that this it may come as a surprise.

The fall was reasonably substantial, with Barclays Capital group estimating AUM now stands at US$211 billion compared to US$270 billion at the end of the June quarter. But the important point to note, according to Barclays, is the fall doesn’t reflect outflows of capital from the sector, as on its numbers outflows were broadly matched by inflows during the period. This means the fall is due almost entirely to falling prices across the commodities sector….. Full Article: Source

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