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Commodities Briefing 22.Oct 2008

Posted on 22 October 2008 by VRS |  Email |Print

From FT: Asia has become the world’s engine of commodities demand. In spite of the region’s critical role, however, it has failed to establish a strong commodities exchange.

The vacuum has allowed London, New York and Chicago to thrive as commodities trading hubs. But battle lines are being drawn by old and new participants in Asia, which are determined to become the recognised commodities exchange for the region….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Europeanpensions.net: Pension funds must continue to invest in commodities, despite recent scares and turmoil across the financial sector, says veteran commodity investor, Jim Rogers.

Rogers said that a blanket exposure to commodities should be maintained “especially for pensions” as “it is the only way they can protect themselves from inflation and the printing of money”. He said that, for pension funds, investment in commodities is “one of the best [options] for the next decade, if not the best”….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Financialpost.com: Non-OPEC oil producers like Russia, Norway and Mexico should contribute production cuts to help stabilise sagging prices, OPEC President Chakib Khelil said.

Mr. Khelil, who is also Algerian Energy and Mines Minister, added in an interview with Algerian state radio that if oil prices fell below US$70 a barrel many oil projects internationally “will be delayed or die.”…. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Forbes: There is a pervasive, and admittedly seductive, argument floating around that the U.S. is headed for a dire bout with deflation. These folks point to the recent decline in commodity prices as solid evidence.

I contend that the decline we have seen in commodities has been a consequence of deleveraging and the self-feeding process of liquidation brought on by highly leveraged institutions finding themselves at the door of bankruptcy, selling everything and anything to raise needed cash. Once one sells down prices, another is compelled to follow suit….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Hardassetsinvestor.com: In times of economic crisis - such as the plummeting stock market of fall 2008 - the idea of holding gold is attractive. But the status of the market also opens up opportunities for investment in the pick-and-shovel enterprises that bring us that gold.

If you haven’t yet read our piece, Spot, Stock Or Future, you may want to check it out before reading further. In that article, we outline the basic differences between physical ownership (or more realistically, owning physical gold through an ETF gold trust, like GLD), futures and equities. The purpose of this article is to get beneath the surface of the mining sector - pardon the pun….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Indianexpress.com: Following the global financial crisis and a sudden dip in demand for metals, metal prices which were riding in the last two years have seen heavy fall of up to 51 per cent just in a month’s time.

Price of copper has tanked by 27.80 per cent in the spot markets in Mumbai metal market. Nickel led the fall losing 51.5 per cent in value from September 20 to date. Zinc prices slipped by 37.55 per cent while tin prices declined by 23.02 per cent and lead by 23.50 per cent in the said period….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Thestar.com.my: The Malaysian economy is set to slow to 4% in 2009 due to the impact from sluggish global economic growth, but stabilising crude oil and crude palm oil (CPO) prices will help mitigate the slowdown, analysts said.

“We’ve a forecast gross domestic product growth of 4% for next year, definitely not the most conservative in town but at a level we’re comfortable with since Bank Negara will more than likely come out with a figure of between 4% and 5%,” said Chris Eng, associate director at OSK Research Sdn Bhd….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Reuters: British based ETF Securities said on Tuesday AIG had posted around $1.5 billion of collateral to cover its contracts linked to its exchange traded commodity (ETC) products.

Trading in more than 100 of the company’s AIG-linked exchange traded commodity funds were briefly suspended on the London Stock Exchange in September due to problems with liquidity, as many banks and brokerages cut exposure to American International Group….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Fool.com: I asked a portfolio manager yesterday what he thought of the financial crisis, and he quickly replied, “I had nothing to do with it.” Although good for a chuckle, the statement also contains a timely lesson for every Fool: Be defensive.

When economies get into trouble, many investors seek the relative safety of hard assets. Following the late-summer launch of the Market Vectors RVE Hard Assets Producers ETF (AMEX: HAP), investors now have access to a broad basket of commodity-related equities tracking a benchmark index which commodity expert Jim Rogers himself helped to construct….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Business-standard.com: Dubai Multi Commodities Centre has launched Dubai Cotton Centre, a new trading subsidiary, to consolidate its position as a key link in the global cotton supply chain between central Asia and consumers across Asia.

According to a release, the newly-established DCC also signed trade agreements with Uzbekistani suppliers to buy 100,000 tonnes of cotton and sell it in the wider Asian market. Uzbekistan is third major cotton exporter in the world, and is a key supplier to Asia….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Indexuniverse.com: Commodities prices have increased more in the aggregate over the last five years than at any other time in U.S. history. We have seen commodity price spikes occur in the past as a result of supply crises, such as during the 1973 Arab Oil Embargo.

But today, unlike previous episodes, supply is ample: [T]here are no lines at the gas pump and there is plenty of food on the shelves….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Telegraph: The Prime Minister is to speak at the opening of BWEA30, the British Wind Energy Association’s 30th annual conference, at London’s Excel Centre. He will tell delegates at the conference that the UK industry is now a world leader, having overtaken Denmark as the largest offshore wind energy generator.

But senior figures in the industry will tell Mr Brown there is little chance of achieving the government’s goal of wind generating one third of all UK electricity by 2020….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Chinadaily.com.cn: Important progress in China-Russia energy cooperation is likely to be achieved during Premier Wen Jiabao’s visit to Moscow next week, Deputy Foreign Minister Li Hui said.

“China and Russia have a positive and confident attitude toward promoting energy cooperation,” Li told a press conference, after announcing that the premier would visit Russia and Kazakhstan from Oct 27 to 31. Vice-Premier Wang Qishan will reach Russia two days before Wen to attend a bilateral energy dialogue, Li said….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Nytimes.com: At the beginning of the year, OPEC producers felt confident that strong economic growth and tight supplies would keep oil prices high. When oil crossed the $100-a-barrel threshold in February, the cartel’s president blamed speculators and said there was not much OPEC could do.

But now, panic is gripping producers as prices drop. Oil is down by half since July, and the speed of the decline has stunned oil-rich governments that have become dependent on high prices….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From IHT: The Japanese government said that it would introduce a voluntary carbon market based on companies’ pledged emissions cuts and hoped that thousands of firms would sign up to what could become a forerunner of a mandatory cap-and-trade project.

The project, once it is up and running next year, is expected to be the broadest emissions market in the country. But some say it still falls short of what Japan needs to make deep emission cuts and could backfire….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Washingtontimes.com: Gold and copper prices tumbled sharply Tuesday after the dollar gained ground against the euro, knocking a key peg of support from under precious metals and other commodities.

The dollar rose to its highest level since March 2007 against the European currency as investors seeking safe, liquid assets flocked to the greenback. A stronger dollar typically prompts investors to shed commodities bought as a hedge against inflation or weakness in the U.S. currency….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From FT: BHP Billiton said growth from China, its most important commodities customer, had “softened” during the three months ended September and warned “volatility and uncertainty” would continue in the short term.

The world’s biggest mining group delivered the downbeat assessment when issuing its quarterly production review which showed strong gains in petroleum, iron ore, manganese, and coal compared to the previous September quarter but declines in aluminium, diamonds and stainless steel materials….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Indexuniverse.com: Commodities, which fall within the broad category of hard assets, are an interesting class from a portfolio perspective. Since 1970, they have provided relatively high returns, exhibited negative correlations with equities and bonds, and acted as a hedge against event risk.

As stated earlier, the attribute of negative correlation makes an asset class an excellent diversifier of risk. Thus, commodities appear to be worthy of consideration for inclusion in a globally diversified portfolio. We base the analysis in this chapter on evidence accumulated since 1970 on the S&P GSCI-perhaps the most commonly cited commodities index….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Thestar.com: Junior mining companies are cutting hundreds of jobs in northern Ontario due to plunging metal prices, and analysts say some miners will go out of business before the global financial crisis is over.

FNX Mining Co. Inc. said today it is suspending commercial production at its Levack nickel mine near Sudbury, Ont., because of low prices and high operating costs. As well, North American Palladium Ltd. placed its Lac des Iles mine near Thunder Bay, Ont., on care and maintenance, laying off 350 workers….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Watoday.com.au: Commodity prices, after plunging from record highs in the first half of the year, may head lower as global growth slows, according to Caterpillar, the world’s largest maker of bulldozers and excavators.

“A weakening world economy could continue to push prices down and impact producers’ investment plans,” Peoria-based Caterpillar said today in its third-quarter earnings statement. Global growth will drop to the slowest pace since 2002, the company said….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Farmonline.com.au: Early last week Rabobank predicted an Australian wheat harvest of 20.5 million tonnes, the USDA pegged it at 21.5mt and Ron Storey of Australian Wheat Forecasters predicted the crop in a range of 20mt to 22mt. However, several other forecasters have now weighed in on the issue and are predicting lower numbers.

According to Mark Martin, risk management adviser and director at commodity manager MarketAg, national production won’t be more than 19mt, given poor crops in parts of southern New South Wales, Victoria and South Australia….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Theaureport.com: Expect short-term hesitancy in the upward movement of the gold price until liquidity returns to the markets, says Frank Holmes, CEO and chief investment officer at U. S. Global Investors and co-author of the new book “The Goldwatcher: Demystifying Gold Investing”.

He predicts gold will go to $1,000, even $2,000, over the next two years. A growing money supply due to a change in government policies will help lift some juniors out of their misery, too….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Bloomberg: Production from Escondida, the world’s largest copper mine, slumped 32 percent in the September quarter because of declining ore grades and electrical failures at the mill, owner BHP Billiton Ltd. said.

Total mill output at the mine in Chile fell to 208,600 metric tons in the three months ended Sept. 30 from 305,200 tons a year earlier, Melbourne-based BHP said today in a statement. BHP’s share of copper sales dropped 27 percent to 118,200 tons….. Full Article: Source &sid=asxpt9kgwbRg&refer=commodities

Posted on 22 October 2008 by VRS |  Email |Print

From News.com.au: The carbon trading scheme will cost public transport users 30 cents more a day, but freewheeling motorists will be compensated.

New research shows the price of an adult daily ticket jumping to $6.80 as train and tram commuters foot a $180 million-plus bill over the first three years of the scheme, the Tourism and Transport Forum said….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Dailytimes.com.pk: European wheat prices edged up on Tuesday as a weaker euro, brighter export outlook and a lower Australian crop forecast helped reverse lower US markets overnight which had stalled after two days of solid gains.

Traders said the largely technical move in the French market should also be seen against the backdrop of a slight improvement in the general financial market mood. The downward revision from Australian Crop Forecasters of its 2008/09 wheat crop forecast to 20 million tonnes from 21 million due to low rainfall in the south-east grain belt, supported prices….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Mineweb.com: The head of a diamond trading group said a downturn in the United States, the world’s top consumer, may compound his members’ debt burden, and as such he welcomed a move by De Beers to trim supply in the coming months.

Avi Paz, president of the World Federation of Diamond Bourses, told Reuters in an interview on Tuesday he was concerned about the debt burden in the diamond industry….. Full Article: Source

Posted on 22 October 2008 by VRS |  Email |Print

From Indexuniverse.com: Since peaking in early, July commodity prices have plunged by more than 25% as measured by the Dow Jones-AIG Commodity Index.

The main catalyst for the decline was a sharp fall in the oil price following weaker-than-expected U.S. and European economic data as well as continued indications of weakness in global auto sales and gasoline consumption….. Full Article: Source

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