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Commodities Briefing 24.Oct 2008

Posted on 24 October 2008 by VRS |  Email |Print

From Reuters: The economic downturn will hurt demand for metals and lead to sharp price falls, but in the medium term prices could recover and put the last commodity boom in the shade, consultants CRU Group said.

The downturn would also provide an opportunity for some participants in the metals industry, CRU said in a statement. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Sky.com: If you’d have asked anyone two years ago what would happen if oil breaches $140 barrel, they’d have told you, without hesitation, that there would be a worldwide recession.

Well back in the summer oil did hit $147 and, would you Adam and Eve it, the world’s big economies now all look headed for recession.The high price of oil was not wholly responsible for this downturn - the near-collapse of the banking system did most of the hard work there - but oil prices did help inflation play its part. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Seekingalpha.com: Steel companies in the Market Vectors Steel Index Fund (SLX) dropped about 16% Wednesday and fell 70% over the last 6 months. Those numbers are comparable to the collapse in networking stocks of the dot-com bust!

It’s not much better for the more diversified miners. The S&P Metals and Mining Index Fund (XME) gave up nearly 19% in a single session, and blew up by 65% over the last half year. Gold, silver and copper may be down, but spot prices are not quite as bad off as company share prices. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From FT: When Opec ministers meet today in Vienna, they will be looking in dismay at tumbling oil prices. But some might be even more concerned about activity in an obscure corner of the energy market – options trading, where investors have amassed a record position betting that prices could fall even further.

The strong buying of put options – an insurance against falling prices as the contracts give holders the right to sell oil at a predetermined price and date – comes as spot oil prices fell this week to a 16-month low of $66.2 a barrel …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Nzherald.co.nz: Today’s global food crisis shows “we all blew it, including me when I was president,” by treating food crops as commodities instead of as a vital right of the world’s poor, Bill Clinton told a UN gathering on Thursday.

The former president, addressing a high-level event marking Oct. 16’s World Food Day, also saluted US President George W. Bush - “one thing he got right” - for pushing for a change in US food-aid policy. He chided the bipartisan coalition in the US Congress that killed the idea. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From BBC: “Urgent and drastic” policy and system changes are needed if the UK is to meet EU targets on renewable energy, according to a committee of Lords.

The UK’s commitment to producing 15% of its energy from renewable sources by 2020 is “laudable, but an enormous challenge”, the EU committee said. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Mineweb.com: A personal viewpoint from a Swiss fund co-manager on the immediate and long term future for the gold price vis-à-vis Central Banks and the IMF in particular: Right now, I believe we are very close to a significant short and long term event happening in the gold market.

For the short term, in my view, there are two possibilities: one is very bullish for gold (such as the breakdown of the systematically applied suppressing schema followed by massive safe heaven buying and a huge spike in the price of gold) and the other is very bearish for gold (such as significant gold sales from supranational organizations like the IMF or the ECB). But the long term implications will nevertheless be on both ways bullish. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Guardian: One of China’s biggest companies will today become the first state-controlled business in the country to join an international agreement to cut greenhouse gas emissions.

The powerful Climate Group will announce three Chinese members, including the majority state-owned China Mobile, which has 420 million customers and is one of the country’s 10 biggest companies. It is the world’s biggest mobile phone operator. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Independent: The pressure is on for the cartel of global oil-producing countries to cut output at today’s emergency meeting to try to stabilise the erratic price.

Chakib Khelil, the Algerian oil minister, and president of the 13-strong Organisation of Petroleum Exporting Countries (Opec), said that the group would “most probably” agree a cut, and US crude futures rallied from a 16-month low the previous day. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Forbes: Commodities–seen as a bright light in the investing firmament in the first half of this year–were among those afflicted late in the third quarter, and they continue to be in October, according to the article, titled ‘Credit Gloom Envelops Commodities.’

The risk of fallout is rising as fear about a global recession intensifies and concern about demand grows. At the same time, additional reverberations are emanating from factors unrelated to the fundamentals of supply and demand. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Business.theage.com.au: The double whammy of China’s self-imposed credit squeeze and the Western world’s financial turmoil has continued to force a retreat in commodity prices.

But Rio Tinto remains confident that the negative forces on commodity demand will dissipate, leading it to expect a bounce in demand next year. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From FT: Profits at Bunge, the world’s biggest oilseed processor, tumbled by a third in the three months to the end of September, compared with the same period in 2007, as tight credit markets and the weakening of Brazil’s currency took their toll on the agribusiness.

“The third quarter was a volatile time in the global agribusiness and food markets,” said Alberto Weisser, chairman and chief executive. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: There are some great buying opportunities in the agribusiness sector for patient investors. This is the view of ABN AMRO Morgans senior agribusiness analyst Belinda Moore.

She told a joint NAB Agribusiness-ABN AMRO Morgans event last night that ASX-listed agribusinesses were well positioned to benefit from the recent step change in soft commodity prices, and Australian agriculture’s standing in world markets. “Despite all the negativity we might be reading, we still need to eat and there is no substitute for food,” she said. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Business-standard.com: The Reserve Bank of India (RBI) on Thuresday said there were signs of moderation in inflationary pressures but warned that commodity prices, despite falling in the second quarter, will remain at elevated levels.

In its pre-policy report, the central bank reiterated its resolve to bring down inflation to around 7 per cent by March 31, 2009, while lowering it further to 3 per cent over the medium-term. The central bank said inflationary pressures continued to persist in most emerging market economies fuelled by rising commodity prices particularly of energy, food and metals. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Marketoracle.co.uk: The connection with commodity prices and the movement of the U.S. dollar continues to remain tight and over-ride year-over-year fundamentals. Oil and gold are particularly linked to the currency and weakness or strength in the dollar are quickly transferred to positive or negative trading patterns for these natural resources.

Thought macro fundamentals play a decisive role in the longer-term direction of commodity prices, investors of raw materials, with a 1-2 year time frame, should should remain focused on the dollar’s movement more than supply and demand fundamentals. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Elliottwave.com: Don’t lose your way to opportunity in Cotton. Right now, the October 23 Daily Futures Junctures presents original price charts and objective analysis of the market that shows a classic “Fourth Wave” pattern underway.

And, according to Daily Futures Junctures’ editor Jeffrey Kennedy, knowing the depth and duration of this pattern is quite simple. In his words: “When wave four is quick, its retracement of wave three is deep. Conversely, when wave four is time consuming, its retracement of wave three is most often shallow.” …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Mondovisione.com: ETF Securities Limited, the innovator and pioneer of Exchange Traded Commodities (ETC), has formally completed the acquisition of the world’s first gold ETCs - Gold Bullion Securities listed on the London Stock Exchange and the Australian Stock Exchange.

Due to the acquisition, the Marketing Agent Agreement between Lyxor and Gold Bullion Holdings Ltd and Gold Bullion Securities Ltd., will expire. Lyxor will no longer act either as marketing and distribution agent, or as liquidity provider for Gold Bullion Securities on the various European Stock Exchanges where it is listed. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From FT: Drax, the owner of western Europe’s largest coal-fired power station, yesterday unveiled a £2bn renewable energy investment plan in an effort to diversify its business and cash in on government subsidies.

Drax said it planned to build three 300MW power plants that would burn biomass, including energy crops and agricultural or forestry waste. The plants will be built in partnership with Siemens of Germany, with Drax owning 60 per cent of the project and operating the plants and Siemens owning 40 per cent and supplying the technology. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Istockanalyst.com: There is currently a debate raging about whether this financial crisis will be inflationary or deflationary, and whether the secular bull market in commodities is dead or just seeing a substantial bull market correction.

If the US Federal reserve and global central banks, as advertised, pump shiploads of liquidity and fiscal stimulus into the financial markets, won’t this be inflationary and a negative for the currencies that will be debased by all this stimulus? …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Advancedtrading.com: JP Morgan and Trading Technologies have entered into a global software licensing and distribution agreement under which JP Morgan will make Trading Technologies’ X_Trader order entry software and TTNet hosting solution available to its trading desks and global futures and options clients.

JP Morgan will leverage the TTNet hosting solution to distribute the X_Trader software. Clients will have access to Trading Technologies’ FIX connectivity and high-speed derivatives exchange gateways as well. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Bloomberg: Aluminum surged by the exchange- imposed daily limit in Shanghai, advancing for the first time in four days, as producers cut output and after crude oil rallied.

Rio Tinto Group and Alcoa Inc., the second and third-largest producers of the lightweight metal, are among companies to have idled or shuttered capacity on concern that market turmoil and a global economic slowdown will curb demand. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From AFP: The euro edged higher in volatile trade Thursday as the market focused on problems in currencies in emerging economies. The euro was trading at 1.2926 dollars around 2100 GMT, up from 1.2867 late in New York on Wednesday.

The dollar slipped to 97.27 yen from 97.79 yen. The single European currency slid to 1.2728 dollars earlier Thursday in Asian trading, its lowest level since November 2006. It also hit 123.43 yen, a level not seen since December 2002. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Structuredproductsonline.com: Singapore Exchange (SGX) has seen its derivatives and exchange-traded funds (ETFs) markets set new trading records in September 2008. In the period from July-September, a record 17,369,505 derivatives contracts were traded, marking a 17% increase from the 14,831,554 contracts in the previous record from January-March 2008.

During September, 6,483,272 contracts were traded, which is almost 11% more than the last record of 5,842,187 contracts traded in July 2008 and a 68% increase from the amount traded in September 2007. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Reuters: Chile’s state-owned Codelco, the world’s largest copper miner, said on Thursday the super cycle of high copper prices was over, and said it was taking measures to address slumping prices for the red metal.

“The super cycle has come to an abrupt end,” Codelco Chief Executive Jose Pablo Arellano told reporters in Santiago. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Bloomberg: Global cotton demand will drop more than expected a month ago as slowing retail sales and tightening credit reduce purchases by textile mills, especially in China, the biggest importer, industry researcher Cotlook Ltd. said.

Consumption will drop to 25.15 million tons in the year through July 31, 2009, down 2.4 percent from a year earlier and 1.9 percent less than forecast last month, Birkenhead, U.K.- based Cotlook said today in an e-mailed report. Rising costs and slowing sales are making yarn prices unprofitable for mills, the researcher said. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Asianewsnet.net: Investors are fleeing commodities, including recent red-hot favourite gold, as global inflation eases and the United States dollar gains ground. Gold, popular as a hedge against inflation, has lost much of its dazzle in the past fortnight with prices slumping to their lowest level in more than a year.

After hitting a record US$1,033.90 an ounce in March this year, gold slumped to $705.53 at one point yesterday (October 23), the lowest level since September last year. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Cpifinancial.net: The Dubai International Financial Exchange (DIFX) is to allow companies to list, trade and clear in dirhams (AED). The DIFX has also announced an extension to its trading hours, currently 11.45am-5pm, Monday-Friday, by opening from 10am-5pm from Sunday to Friday.

Jeffrey Singer, who became DIFX chief executive in July, said, “We have a lot of institutional liquidity but need to attract retail liquidity. These regulations have been put in place to facilitate that end.” …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From Mineweb.com: The global aluminium market is heading for big surpluses in the next couple of years as smelters outside China delay cutting output despite weak demand and falling prices, analysts said.

But one believes more cutbacks will come through sooner rather than later to combat rising stocks. Around half of the industry is now operating at a loss, and Chinese plants, which have the highest costs, have announced reductions. …. Full Article: Source

Posted on 24 October 2008 by VRS |  Email |Print

From SMH: The Federal Government should delay its proposed carbon emissions trading scheme (ETS) for two years to shield struggling small businesses from extra costs, Queensland’s peak business body will urge the Prime Minister.

Commerce Queensland will also call on the Commonwealth to pay business’ superannuation costs under an 18-week paid maternity leave proposal made by the Productivity Commission last month. …. Full Article: Source

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