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Commodities Briefing 03.Nov 2008

Posted on 03 November 2008 by VRS |  Email |Print

From FT: Investors that made sizeable allocations to commodities at the start of the natural resources boom five years ago have been handsomely rewarded. But only those who had the prescience to shift out of them by the middle of the year would have held on to the majority of their gains.

Anyone investing in a broad-based basket of commodities in July would now be nursing losses of 40-50 per cent….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Theage.com.au: Qatar’s Prime Minister Sheikh Hamad bin Jassem bin Jabr al-Thani said he believed that between $70 and $90 would be a fair oil price for a barrel of oil.

He was speaking at a news conference after talks with British Prime Minister Gordon Brown, who is touring the oil-rich Gulf trying to attract extra funding for the International Monetary Fund (IMF)….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Chicagotribune.com: Oil stocks have been slammed hard of late. A combination of lower crude prices, the credit crisis and massive liquidations of hedge fund and mutual fund portfolios are behind their downfall.

Meanwhile, OPEC is scrambling to cut its crude oil production to stem what it calls “a dramatic collapse” in prices. For the consumer, prices at the pump may slip further and are unlikely to return to previous highs for a while….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Bloomberg: Commodities had the biggest monthly drop since at least 1956 on concern that a slump in global economic growth will sap demand for raw materials.

In October, the Reuters/Jefferies CRB Index of 19 raw materials plunged 22 percent. Crude oil plummeted by a third, the most ever. Copper fell a record 36 percent, and gold dropped the most in 26 years….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Seekingalpha.com: The face of today’s mainstream financial media has gone from meaningful analysis and commentary to constant tub-thumping between undisciplined Main Streeters, overambitious Wall Streeters, and ignorant bureaucrats. It has turned into a showcase of the blame game, everyone looking for a scapegoat to shoulder the iniquities of the masses.

Though the recent financial-market shenanigans are of historic proportions and have scared stiff nearly every investor on the planet, folks seem to be growing complacent. And it has been easy to fall into this trap and lose sight of investment strategy considering the indiscriminate selloff of virtually every asset class….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Theglobeandmail.com: Anyone who still makes the claim that October holds nothing on September when it comes to the cruel treatment of investors obviously doesn’t go anywhere near the commodities game.

Nothing escaped devastation this October, triggered by forced selling, fading economies and the global flight to safety. Not metals, not grains, not gold, not sugar and definitely not oil. Copper posted its largest monthly decline in more than two decades. Wheat tumbled more than in any previous month for the past 22 years. For gold, you’d have to wander back to 1983 to find a similar nosedive….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Mineweb.com: Did late October see the end of the bear market for commodity stocks? If so where should one invest to take advantage of an upturn? I am indebted to Rod Blake of Canaccord in Vancouver for highlighting the following quote from Canaccord Capital’s Chief Portfolio Strategist Nick Majendie.

“If we are close to a bottom, we believe it will be the quality blue chip stocks that will recover the fastest. Why? The answer is because when there is financial panic, investors sell the good with the bad….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Commodityonline.com: Beijing Olympics had a huge impact on prices of commodities as China had to procure previously unheard quantities of steel, copper, cement etc ahead of the world’s biggest sporting event.

Similary Singapore started the same. Last year August 2007, which saw a considerable run up in prices of commodities. My colleague Manoj and I had the opportunity to see the construction activity of the First Night Race GP at Singapore in person way back in July and had come out with our advisory on the same….. Full Article: Source

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From FT: The credit crisis has cut off much-needed financing for the US power sector, which equity investors have abandoned en masse, setting the stage for a string of mergers or bankruptcy filings.

In the past month, two potential mergers have been announced: Warren Buffett bid onConstellation Energy and Exelon offered to take over NRG Energy. Analysts say Reliant Energy, Dynegy, Calpine, AES and Mirant are likely to be next on the list, with investors betting against them in both credit and equity markets….. Full Article: Source

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From Gulfnews.com: Dubai’s total trade of polished diamonds reached $5.29 billion at the end of the first six months of 2008, the Dubai Diamond Exchange (DDE), a subsidiary of the Dubai Multi Commodities Centre (DMCC).

Polished diamond imports grew by 99 per cent during the first six months of 2008, to reach $2.94 billion from $1.48 billion during the same period in 2007…. Full Article: Source

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From Thestar.com.my: Malaysia has been affected by the fall in prices of export commodities like petroleum, palm oil and rubber. Many developing countries are hit by the end of the commodity boom resulting from the global economic crisis.

Commodity prices have begun to decline sharply in the past few months, at a time when the turmoil in global financial markets intensified, and as recessionary conditions took hold in many developed countries….. Full Article: Source

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From Etaiwannews.com: The Japanese yen weakened against the U.S. dollar after a volatile week on Asian stock markets amid fears a deep global recession lies ahead.

Japanese yen: The yen eased back from 13-year highs against the dollar. The Japanese currency stood at 97.00-02 against the dollar at the end of daytime trading on Friday, down from 95.14-17 against the dollar a week earlier….. Full Article: Source

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From Financialexpress.com: 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

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From Forbes: South Korea’s grain, metal and oil importers are struggling to keep commodities flowing into Asia’s fourth-largest economy as they face a constricted global credit market, a domestic dollar squeeze and tumbling won revenues.

Reeling from that potent treble whammy, raw material buyers say their plight is worse than the woes facing other big importers from Japan to Europe, but has been forgotten by a government focused more on its export-oriented firms and on taming the domestic turmoil caused by the global crisis….. Full Article: Source

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From Bloomberg: Corn and soybeans may rise for a second week on speculation that government interest-rate cuts and banking bailouts around the world will boost food and feed demand in 2009.

Twenty of 35 traders, advisers and grain merchants surveyed Oct. 31 from Tokyo to Chicago said corn would rise and 23 respondents forecast a soybean rally. Corn climbed 7.7 percent to $4.015 a bushel last week on the Chicago Board of Trade after falling to a one-year low. Soybeans advanced 7.6 percent to $9.33 a bushel….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Silverseek.com: The silver market has been looking interesting for months, despite the price collapse. Beneath the surface of the recent spot price falls the structure of the market is changing in such a way that a powerful bull market is being set up.

Metal holdings for Barclay’s iShares Silver Trust (SLV) have so overwhelmed selling pressure that the trust has added a total of 68,921,884 ounces of silver to its holdings so far this year….. Full Article: Source

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From WSJ: PT Bakrie & Brothers, a conglomerate that borrowed heavily from foreign and domestic banks, became the highest-profile Indonesian victim of the global credit crisis on Saturday when it agreed to sell its 35% stake in a highly profitable coal-mining company to a consortium led by a local affiliate of TPG Capital for $1.3 billion.

PT Northstar Pacific Partners of Indonesia, which runs a $400 million private-equity fund in which TPG has invested, said it is leading the bid to purchase Bakrie & Brothers’ stake in PT Bumi Resources. …. Full Article: Source

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From Hardassetsinvestor.com: The gold market has been very volatile over the past six months, and the market’s been behaving oddly. What’s driving the price of gold recently?

Joe Foster, portfolio manager of the Van Eck International Investors Gold Fund (Foster): The fundamentals have not been driving it; that’s clear. Ever since mid-July, when Fannie Mae and Freddie Mac started to collapse, the markets have really started to go haywire … all the markets, gold included….. Full Article: Source

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From Resourceinvestor.com: Securitisation volumes have plummeted in the wake of the subprime crisis. As a result, banks are keeping more loans on their balance sheets and tightening lending standards.

Collapsing global securitisation volumes in the wake of the subprime crisis have raised fundamental questions over the viability of the originate-to-distribute business model.1 Issuance has dropped precipitously in both Europe and the U.S., with banks keeping more loans on their balance sheets and tightening lending standards as a result….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Indiatimes.com: Even though bears have minced domestic markets considerably, has the decline in commodity or energy prices helped the domestic stock market perform better than its Asian peers and other Bric constituents?

While crude prices tumbled by around 60% since its July 11 peak and a 40-50% correction has set in metals and agro-commodities, the Indian stock market has fallen by 27% from mid-July - which is much less than its Asian and Bric peers, analysis shows. Equity markets in other comparable Asian countries such as Korea (-29%), Taiwan (-32%), Japan (-35%), Hong Kong (-37%) and Singapore (-39%) have sharply fallen even as the commodities’ tide turned. …. Full Article: Source

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From Businessspectator.com.au: The Australian junior mining corporation, Aquila Resources, is doing well. The group has coking coal tenements in Queensland and large channel iron ore resources in Western Australia.

It is rumoured that a number of big miners are looking at Aquila, perhaps with a view to a takeover. Possible suitors could include Xstrata Plc, ArcelorMittal or steel groups in China wanting raw materials. The management of Aquila is considering a range of options, but no firm decisions have been made…. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From FT: According to the old adage, correlation is the only thing that goes up in a downturn. Prudent investors who took the precaution of diversifying their holdings across the full panoply of conventional asset classes have been discovering the nasty truth of this maxim in spades in the past year.

Equities, as measured by the MSCI World Index have slumped 46 per cent in the past year, corporate bonds have tumbled 16 per cent, according to a Lehman Brothers’ index, listed real estate companies, as measured by FTSE, are nursing losses of 56 per cent, and commodities, the last major hold-out, have now fallen into line, losing 24 per cent over 12 months according to the Goldman Sachs index….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Mineweb.com: UBS believes that energy, bulk commodities and precious metals are the most attractive commodities in the current environment; base metals producers in for a torrid time.

Investment bank UBS has published its latest economic and commodity forecasts, cutting the prognosis for global GDP growth to 1.3% from 2.2% while suggesting that there are still downside risks to the economic outlook as a result of the speed and magnitude of the deterioration in demand. …. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From Goldseek.com: It is quite clear to those who are long term commodities bulls that the world is not finding massive new supplies of oil, or massive new fields of gold, copper, Uranium, etc. One cannot just go out and decide that today they would like to find a new oil field, or build a new nuclear power plant, or open a new coal mine; these things take time.

Thus if you sell everything now, basically as an investor you are stating that you believe that the commodities bull is over and that supplies of energy will be endless in the years to come….. Full Article: Source

Posted on 03 November 2008 by VRS |  Email |Print

From FT: October proved an unforgettable month for commodity market investors for all the wrong reasons as mounting fears that the global economy was heading for recession generated widespread selling and unprecedented levels of volatility.

The Reuters-Jefferies CRB index was yesterday on course for a decline of almost 24 per cent in October, the worst monthly decline since this global benchmark for commodities was created in 1956…. Full Article: Source

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