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Commodities Briefing 30.Oct 2008

Posted on 30 October 2008 by VRS |  Email |Print

From Guardian: The International Energy Agency yesterday sought to play down a report that it believes global oil production is falling faster than previously thought.

The Financial Times said a draft of the IEA’s annual world energy outlook calculated world production would fall by 9.1% a year without extra investment. A number of oil-producing countries are reported to be finding it harder to finance new projects because of the recent sharp fall in the oil price….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From FT: Commodities prices rose sharply on Wednesday, with oil trading above $69 a barrel, as the dollar retreated after the Federal Reserve lowered US interest rates half a percentage point to 1 per cent.

The Reuters-Jefferies CRB index, a global benchmark for commodities, rose almost 6 per cent propelled by a surge in energy, metals and agricultural raw materials. The price of several commodities, ranging from wheat to oil and from nickel to sugar, rose 10 per cent on the day….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From IHT: The stock market is in shambles, credit markets are squeezed and corporate earnings are falling. But one piece of the mangled U.S. economy is making an improbable comeback: The once-almighty dollar.

As the financial meltdown clobbers world economies from South America to Asia, investors desperate for safe assets are plowing money into the battered buck — helping it snap a six-year slide and reclaim its long-held status as a stable asset during rough times….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Guardian: Declining availability of oil will hit the UK earlier than generally expected, with potentially devastating implications for the UK economy, report warns. The risk to the UK from falling oil production in coming years is greater than the threat posed by terrorism, according to an industry taskforce report published today.

The report, from the Peak Oil group, warns that the problem of declining availability of oil will hit the UK earlier than generally expected - possibly within the next five years and as early as 2011….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Theglobeandmail.com: Gold hit a one-week high as the U.S. dollar weakened sharply Wednesday, and the precious metal stayed firm after the Federal Reserve cut U.S. interest rates, as markets had expected.

Gold’s rise came amid strength across the entire commodity sector as global markets welcomed the Fed’s recession-fighting rate cut. Silver and palladium, sometimes seen as industrial metals, also rallied as stocks kept rising….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Bloomberg: Copper jumped 10 percent, the most in two years, on speculation the Federal Reserve will lower U.S. borrowing costs, reviving economic growth and demand for metals.

The Fed probably will lower its benchmark interest rate by at least 0.5 percentage point to 1 percent at its policy meeting today, according to the median forecast of 70 economists surveyed by Bloomberg News. Copper had gained 10 percent in the previous two days on expectations a rallying stock market and lower borrowing costs would help ease the global economic slump….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From AP: Commodities prices surged Wednesday after the Federal Reserve slashed a key interest rate, undermining the dollar and boosting demand for hard assets as a hedge against inflation.

The Fed lowered its benchmark federal funds rate from 1.5 percent to 1 percent in an effort revive the ailing U.S. economy and loosen restrained credit markets. Lower interest rates can spur economic growth but tend to depress the dollar as investors go elsewhere for better returns. The 15-nation euro rose to $1.2852 in late Wednesday trading in New York from $1.2597 late Tuesday….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Guardian: If eight companies across a broad spectrum of UK industry had warned, five years ago, that a ruinous credit crunch would hit the global economy this year, might the government have taken the warning seriously?

Might UK leadership in damage limitation have been proactive, rather than reactive? Could a softer landing and a faster recovery have been possible as a result? Today, eight British companies are warning of a ruinous oil crunch five years from now….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Radioaustralia.net.au: The Australian opposition says the government must delay the release of its plans for an emissions trading scheme, until the effects of the global financial crisis have been considered.

The government is releasing the Treasury Department’s economic modelling on the ETS today, but it does not take into account the recent global economic downturn.The opposition’s emissions trading spokesman, Andrew Robb, says it would be grossly irresponsible for the government to press ahead with its carbon trading plans at the moment….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Canada.com: Not since Canada cut the Canadian dollar loose to float freely on world exchange markets nearly four decades ago has the loonie gained as much in a single day as it did Wednesday.

Catapulted by falling U.S. interest rates and a big jump in oil and other commodity prices, which also propelled Bay Street’s resource-rich benchmark TSX to a further hefty triple digit gain, the loonie leaped by a near record 3.87 cents US to 81.63 cents US, just two notches shy of the 3.89 cents US rise on June 1, 1970, when Canada moved to a floating exchange rate….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: Manganese, molybdenum and bauxite have topped the annual list of hot commodities for 2009. Zinc, vanadium and cobalt are in the deep freeze.

Allan Trench, Australasian regional director of CRU research and advisory group said the “commodities thermometer” showed there were still opportunities for expansion and IPOs among junior miners with the right assets…. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Southwestfarmpress.com: The Multi-Commodity Exchange Program (MCEP), launched two years ago by the National Cotton Council, is proving to be a highly successful educational program as well as an American agriculture coalition-building effort.

The MCEP was launched in October of 2006 when producers from the Midwest/Far West traveled to North Carolina to observe cotton production/processing and other agricultural operations. Then, a group of Sunbelt growers saw agricultural production/processing and agribusiness operations in North Dakota in August of 2007….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From FT: Base metals have staged a strong rebound this week in spite of deepening gloom among investors about the outlook for the global economy and the prospects for demand.

Nickel has rebounded 35 per cent, tin has vaulted 28.9 per cent while lead and copper have jumped almost 23 per cent. The increases have left traders and analysts debating whether this is a temporary bounce from oversold levels or if the market is stabilising following a slew of production cuts announced by mining companies in recent weeks….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Alibaba.com: Only the brave or the foolish would make predictions about the future amid the biggest market upheaval in three generations. But it is already clear the crisis is profoundly reshaping the commodity trading industry. The mix of intermediaries, customers and financial resources are all being substantially redrawn.

So here are some tentative thoughts on how the industry will be remade over the next three to five years. The most immediate impact has been on the availability of funds….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Presstv.ir: OPEC has plans to further reduce oil output if its production cut announced last week fails to push crude prices toward recovery.

“We will have to wait and see how the market will react … [but] if this problem continues then we will have another cut,” said Abdalla Salem El-Badri, the secretary general of the Organization of Petroleum Exporting Countries (OPEC), on Tuesday….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Forbes: The oil and gas industry got a rare lift Tuesday as glowing earnings reports encouraged investors back into the sector. The Energy Select Sector exchange-traded fund gained $6.23, or 15.3%, to close at $47.09 and the Oil Service Holdrs ETF added $6.16, or 7.8% to close at $85.35.

Shares of Occidental Petroleum barely reacted to third-quarter earnings growth of 71.5% but the stock did spike after management said capital expenditures would stay relatively stable, implying that its business would do so as well….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Dailyreckoning.com.au: The spot gold price sank in October, dropping right back to 13-month lows at $683 an ounce. After failing to breach $930, this collapse marked the third step lower from March’s all-time high of $1,032.

And from a technical perspective, the Gold Chart looks horrible - recording lower lows and lower highs for the last six months and more. Right? Well, fact is, the action has actually been greatly muted if we allow for the shocking volatility in gold’s No.1 competitor for “safe haven” funds, the almighty US Dollar….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Chicagotribune.com: Gas prices are likely to stabilize around $3 per gallon, the head of the nation’s third largest oil company predicted Wednesday. Jim Mulva, the chairman and chief executive of ConocoPhillips, said gas prices rose too much too fast over the summer and are now dropping too much.

He said a $3 price would balance supply and demand, allow oil companies to fund further research and satisfy drivers weary of high prices….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Mineweb.com: Higher costs and other factors mean that the first major gold mining companies to issue their quarterly statements both have been hit hard by higher costs with a negative impact on earnings.

Two of the world’s leading gold miners reported big drops in quarterly earnings on Wednesday as soaring costs for fuel and raw materials ate into margins already narrowed by a slumping gold price….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Guardian: The future of global carbon markets is finely poised as recession threatens the political will to shoulder costs but New Zealand, Australia and Japan follow Europe with their own cap and trade schemes.

Strong carbon markets depend on tough climate change goals, now under discussion in international talks to replace the Kyoto Protocol from 2013.
Clear visibility is therefore limited to a four year horizon, in a market tipped to exceed $100 billion in 2008….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Chicagotribune.com: Citadel Investment Group is reducing its ties with a planned rival to CME Group Inc. iin favor of its new joint venture with the Chicago derivatives exchange operator. The Chicago-based hedge fund group is pulling its board member from the bank-backed ELX Electronic Liquidity Exchange, according to a source close to the matter.

Citadel will retain an equity stake and would use the still-to-be launched ELX platform, which aims to challenge the CME’s dominance in Treasury futures….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From 247wallst.com: CME Group Inc. is set to report earnings after the close of trading today. The futures and commodities exchange giant estimates (from First Call) are $3.98 EPS and $644.3 million in revenues. Exchanges and financial companies do not offer guidance, but next quarter estimates are $4.02 EPS and almost $712 million in revenues.

If the exchange hits its targets from now until the end of the year, the company’s stock has a forward P/E of roughly 16.0. We would point out that estimates have come down with the markets over the last quarter. …. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Mathaba.net: More than 10,000 farmers in northeastern Thailand are threatening a protest which will block a major highway unless the government boosts its guaranteed prices for rice harvested during the current 2008-2009 season.

Northeastern Farmers Assembly chairman Paradorn Posri on Tuesday submitted the paddy farmers demand to Deputy Prime Minister Olarn Chaipravat through the Khon Kaen governor asking him to review the government’s guaranteed price for rice reached during a Cabinet meeting earlier in the day….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Mineweb.com: Despite the current gloom in the resource sector, resource stocks will boom again as the world pulls out of the current financial mire.

Despite all the gloom and doom in the industrial and precious metals sectors at the moment, there is little doubt that resource stocks will surge back into favour again, but the big question is when, and how much overall sentiment has been damaged by recent events, and how long such damage will continue….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Hardassetsinvestor.com: Despite the recent swoon in precious metals prices, it seems there’s still a dearth of physical gold and silver available for retail investors. Those lucky enough to actually acquire bullion or coins in their local markets complain about paying inflated premiums.

Meanwhile, warehouse stocks of gold and silver seem plentiful. A lot of theories abound for this seeming anomaly. But let’s be realistic. There’s always been a difference between the retail and wholesale markets for metal. Most of the world’s bullion supply is in commercial-sized bars, after all. It’s called a wholesale market for a reason….. Full Article: Source l

Posted on 30 October 2008 by VRS |  Email |Print

From Bloomberg: Wheat rose the most in at least 20 years on speculation the Federal Reserve and European Central Bank would cut interest rates, increasing liquidity and freeing up capital that will allow buyers to purchase U.S. supplies.

Investors bought baskets of commodities including energy, metal and grain futures on expectations the Fed would cut its benchmark lending rate. After markets closed, the central bank reduced the rate to 1 percent from 1.5 percent, which may encourage borrowing and spur overseas importers to purchase U.S. grain….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Morningstar.com: OneSteel Ltd. said Thursday it expects prices for steel and steelmaking inputs to remain volatile but that the fundamentals underpinning the market remain strong.

“The fundamentals suggest the outlook for the medium to longer term should remain positive; however, the events of the past few weeks have resulted in uncertainty for the near-term,” OneSteel said in a presentation….. Full Article: Source

Posted on 30 October 2008 by VRS |  Email |Print

From Commodityonline.com: Hear ye, hear ye, one and all: The supercycle is dead. Long live the supercycle! Commodities on the whole have declined nearly 50% from their peak as a result of the credit crisis.

This has led some to declare that the “commodity supercycle” – the idea that we are merely in mid-innings of a massive, multi-decade commodity bull market – is defunct too. I’ll admit it… the weekly chart is hard to ignore. If one had to assess the health of the supercycle by way of the Reuters CRB Index alone (as shown above), Monty Python’s Dead Parrot sketch would spring to mind….. Full Article: Source

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