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Commodities Briefing 31.Oct 2008

Posted on 31 October 2008 by VRS |  Email |Print

From Bloomberg: Gold fell for the second day in Asia, extending a monthly drop that may become the worst in more than 25 years, as a stronger dollar and declines in crude oil reduced its appeal as an alternative asset.

Gold tumbled by more than 15 percent this month, the largest plunge since February 1983, according to Bloomberg data. Oil has slumped 37 percent while the U.S. dollar index against six major currencies gained 7.3 percent this month….. Full Article: Source

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From Guardian: Investors who would normally seek a safe haven in gold in what is one of the worst financial crises in history are shunning the precious metal because of the market’s extreme volatility. But bullion prices have dropped so sharply that buying is active in the Asian physical market, and that could bode well for gold prices in the weeks ahead.

“There is absolutely no question that when you see these kind of ranges and volatility for gold, you are going to step aside because you can get very hurt,” said Bruce Dunn, vice president of trading at New Jersey-based Auramet Trading….. Full Article: Source

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From AP: Investors fled commodities Thursday after the first reading on third-quarter gross domestic product provided an emphatic signal that the economy is indeed in a downturn.

Gold fell sharply on the news, as did other precious metals and energy and agriculture futures. “In general, a weakening economy should hurt demand for commodities, especially gold, which is a luxury type item,” said Tom Pawlicki, an energy and precious metals analyst with MF Global Research in Chicago….. Full Article: Source

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From Marketwatch.com: Crude-oil futures closed with a loss of more than 2% Thursday, retreating from an earlier high above $70 a barrel as traders assess whether interest-rate cuts in the U.S. and China may help revive the global economy and spur energy demand.

“Oil futures have been pretty erratic over the last four months,” said Charles Perry, president of Perry Management, an energy-consulting firm. Oil experienced some profit-taking after the $4-plus rise on Wednesday, he said. The dollar dropped Wednesday, also helping crude’s rise, he said….. Full Article: Source

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From FT: In the rolling red hills of northern South Africa, yellow drills painstakingly map one tiny pocket of the metre-thick, saucer-shaped seam of ore that extends over 370km and contains more than three-quarters of the world’s known reserves of platinum.

It could be a million miles from the pulverised trading floors of the world’s financial capitals. But the platinum industry is bearing the brunt of a dramatic reversal in investors’ enthusiasm for metals….. Full Article: Source

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From Times Online: In the cycle of boom and bust that has characterised the global economy over the past decade, commodity prices have played a central role. The Western industrial economies cannot now escape recession.

The recent precipitate collapse in oil prices is, however, an isolated source of encouragement as businesses and consumers brace themselves for the gathering storm. Three months ago oil prices reached almost $150 a barrel. Yesterday they traded at just over $60. In normal times, oil prices act as an automatic stabiliser….. Full Article: Source

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From Theglobeandmail.com: The global financial meltdown should have settled the long-standing debate between gold bugs who consider bullion the ultimate store of value and those who think the yellow metal is merely another commodity.

Instead, it’s proven both camps wrong, at least so far, according to Peter Munk, the founder and chairman of the world’s largest gold miner, Barrick Gold Corp….. Full Article: Source

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From Sky.com: Instead, Barack Obama and John McCain see potential votes in promoting green energy as a job generator in a depressed economy, while uncoupling America from its reliance on foreign oil imports.

The scale of the task is immense. Americans make up 5 percent of the world’s population but consume a quarter of its energy, while the country spends 300 billion dollars each year on foreign oil, from countries such as Venezuela and Iraq, to slake its thirst for power…. Full Article: Source

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From Guardian: Royal Dutch Shell and Exxon Mobil followed BP yesterday by revealing record quarterly profits. Royal Dutch Shell, the biggest oil firm in Europe, beat City expectations with third-quarter current cost-of-supply profits - which strip out unrealised inventory gains and losses - up 74% to $10.9bn (£6.7bn).

Exxon Mobil, the world’s largest oil company, smashed its own record for the highest quarterly earnings from a US firm, by delivering a profit of $14.83bn….. Full Article: Source

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From Cattlenetwork.com: Though investor confidence may be at or near historic lows, the wild swings in commodity and equity prices in recent months have been nothing short of a boon for options traders.

While this isn’t a new phenomenon, options volume has swollen to record highs with advances in technology allowing traders in some markets to exercise options electronically instead of being tied to a specific trading floor. Options also present traders with another tool to try and capitalize on volatility - a critical component of any options trade - in commodities and equities, and the surging interest in options shows no signs of abating….. Full Article: Source

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From Reuters: European energy companies struggling to raise cash from banks to fund projects could turn to the European carbon market, say bankers.

Energy infrastructure projects are typically 70 or 80 percent debt-financed, but following the financial crisis many banks are closed for any new lending for the remainder of 2008 and possibly into 2009, developers say….. Full Article: Source

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From Ibtimes.com: The Euro continued its strength against the U.S. Dollar after today’s announcement of a decline in U.S. 3rd Quarter Gross Domestic Product and yesterday’s rate cut by the Fed. The announcement by Germany of an economic stimulus plan also helped the EUR USD appreciate.

The strong surge in the EUR USD reached a key retracement point on the charts and was met with profit-taking. This action is typical during a short-covering rally. The key resistance zone is 1.3049 to 1.3219….. Full Article: Source

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From Guardian: China’s third interest rate cut in six weeks will be much less of a boost to commodities demand in the world’s fastest-growing consumer of raw materials than a hefty infrastructure spending programme.

Slowing exports are already eating into the country’s huge hunger for commodities — copper consumption growth next year is seen falling to 6 percent, one third the rate in 2007 — and even a major fiscal package will likely only slow the decline….. Full Article: Source

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From Indexuniverse.com: The Toronto Stock Exchange (TSX) is again slashing fees and adding electronic trading incentives to spur volume and liquidity of exchange-traded funds and other listed securities.

The changes are aimed at ETF market makers and high-velocity traders, who use electronic trading platforms to buy and sell throughout the day and take advantage of minute-by-minute arbitrage opportunities….. Full Article: Source

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From News.com.au: Queensland’s booming mining towns like Gladstone and northern coal towns will be robbed of billions of dollars under a federal plan to slash carbon emissions.

The most comprehensive Treasury modelling undertaken in the nation’s history shows that even under modest cuts to emissions by 2050, Queensland’s gross product is forceast to fall by 6 per cent – more than any other state….. Full Article: Source

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After living in Russia’s shadow since the 19th century, the countries of central Asia have in the past decade been increasingly able to assert themselves in their own right, thanks to their energy resources.

Kazakhstan and Turkmenistan have become increasingly important as producers of oil and gas respectively, and great hopes are invested in them as future suppliers to the world….. Full Article: Source

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From Mineweb.com: Global policy interest rate directions in play as the dollar and yen take a breather. The impact on commodities and currencies where commodities are key to local economies, is already beginning to be seen.

After trading at multi year lows on Tuesday this week, the dollar index took a breather before, and following, Wednesday’s decision by the Federal Reserve, the US central bank, to cut its policy interest rate by 50 basis points to 1%. The yen, which, like the dollar, has staged a huge multi month rally, is also breathing easier….. Full Article: Source

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From Resourceinvestor.com: We wondered this very morning whether the effect of the Fed’s near-emptying of its rate-cut ‘bullet magazine’ would last any longer than Sarah Palin’s post-election popularity. Well, we no longer need to wonder. The dollar-negative impact was about as long-lived as that surge in the polls.

Well, we no longer need to wonder. The dollar-negative impact was about as long-lived as that surge in the polls. Expectations early this morning were that the U.S. economy would show as steep a rate of shrinkage as Sen. Ted Stevens’ fanbase. Well, the GDP data showed less of a decline than expected for the past quarter, and first-time jobless claims were unchanged….. Full Article: Source

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From Reuters: Emerging markets such as China and India could make up for declining oil demand from developed countries and may be the cause for demand growth in 2009, the International Energy Agency’s chief economist said on Thursday.

The IEA cut its 2008 oil demand growth forecast by 250,000 barrels per day to 440,000 bpd earlier this month, but said 2009 growth would depend on whether countries like India and China go into a recession as deep or as fast as developed countries….. Full Article: Source

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From FT: Chinese steel production has been dropping along with the steel price for weeks.

But the situation in Tangshan, China’s steel capital, shocked even a seasoned steel market analyst recently: “The statistical data sound depressing, but what we observe on the ground is more devastating,” says Bonnie Liu of Macquarie Bank….. Full Article: Source

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From Mineweb.com: AngloGold Ashanti CEO Mark Cutifani says world gold production will continue to drop for the next five years and gold fundamentals will assert themselves.

AngloGold Ashanti CEO Mark Cutifani expects gold production to drop 3% per year over the next five years as the gold industry has failed to make the necessary investment in the industry….. Full Article: Source

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From ABC: Prime Minister Kevin Rudd says the Government will look at a range of reduction targets and carbon prices before deciding on a final emissions trading policy later this year.

The Treasury Department’s economic modelling shows emissions trading will only slow economic growth by one tenth of 1 per cent….. Full Article: Source

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From WSJ: The world’s largest investment banks are preparing to commit more capital to support the $55 trillion credit-default-swap market ahead of tighter regulation.

Thursday, nine large credit-default-swap dealers expressed support for a central clearinghouse being developed by derivatives-exchange-operator IntercontinentalExchange Inc. ICE, of Atlanta, said it is acquiring Clearing Corp., the Chicago company that dealers had earlier picked to set up a clearinghouse to guarantee their credit-default swaps….. Full Article: Source

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From Economist.com: Who wants to be a gazillionaire? Dotcom tycoons in the 1990s rose and fell over a period of years. The recent commodities boom, by contrast, made people fabulously wealthy in a matter of months. But their fortunes have evaporated just as quickly.

There is no better example than Andrew Forrest, who left mobs of Australian investors howling back in 2002 after a foray into nickel mining blew up, only to recover in spectacular form….. Full Article: Source

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From FT: Oil prices fell and base metals retreated in Thursday’s volatile session for commodity markets which surrendered much of the previous session’s gains.

Wednesday’s cut in US interest rates sparked a big surge for the Reuters- Jefferies CRB index, a global commodities benchmark, which jumped 5.9 per cent, a record one-day gain….. Full Article: Source

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From Farmonline.com.au: Wheat Exports Australia (WEA) says it is confident new companies accredited to export wheat for the first time this year have enough money in the kitty to do so. But WEA won’t be going back over the books in light of the current financial crisis and it can’t be held responsible if an exporter goes bust.

WEA’s chief executive officer, Peter Woods, said this week that his board took a thorough look at every element of finance and risk management of the companies which applied to export wheat under the newly deregulated system….. Full Article: Source

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From Post-gazette.com: While recent months have seen a global contraction in both debt and equity markets, at least one financial market has been booming this year, a market that scarcely existed five years ago.

The global market for “carbon trading” grew 36 percent between January and September, to $84 billion from $67 billion, according to New Energy Finance, a London-based company that tracks activity in energy markets. By year’s end, the market is expected to surpass $100 billion….. Full Article: Source

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From Bangkokpost.com: MFC Asset Management will launch its new commodities fund investing in farm futures contracts in early 2009. MFC president Pichit Akrathit said the fund would have an initial size of 50 million baht and an option to expand later to a target of 300 million baht.

MFC signed an agreement yesterday with the Agricultural Futures Exchange of Thailand (AFET) and the Thai Rubber Association (TRA) setting the groundwork for the new fund….. Full Article: Source

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From Mineweb.com: Gold Fields CEO, Nick Holland, reckons the gold price will hit $1,000 next year and stay there, but doesn’t look for significant appreciation above that level.

Interviewed on SAfm Radio in Johannesburg yesterday by Mineweb Editor in Chief, Alec Hogg, Gold Fields CEO, Nick Holland, gave some interesting views into his take on the gold price. “I believe gold will go through $1000 and stay there during the course of 2009″, said Holland….. Full Article: Source

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