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Commodities Briefing 05.Nov 2008

Fluctuating food commodity prices: A complex issue with no easy answers
Canada's dollar gains to the highest in 3 weeks on commodities
Emerging power shift in mining industry
IntercontinentalExchange targets $55 billion swaps market
Silver Wheaton more bullish than ever on silver price
Investors bet on commodities as financial turmoil rages on
Technology helps commods funds outsmart market
Chicago Climate Futures Exchange’s U.S. carbon emissions Complex sets New Record
Prices of essential commodities to drop by 10 to 20 per cent
Canada: Climate change disclosure heats up
Is Gold the Right Investment for You?
Will commodity exchanges help farmers in India, Ethiopia?
Lyxor lists five new ETFs in Singapore
Rare earth metals: Not so rare, but still valuable
Dalian commodity exchange, NYSE Euronext sign memorandum of understanding
EU energy chief to Turkey, Azerbaijan for talks
Australia: Coming clean on beating carbon emissions targets
Tight credit slows food and energy shipments
Direxion burst into ETF market with eight leveraged ETFs
The good and bad news about base metal prices
New international agency to promote renewable energies
Gold drops in asia after biggest gain in seven weeks on dollar
A market turnaround is getting closer—Here’s why
Global recession reaches carbon market
China expects iron ore price cut
Currency derivatives may face curbs in Korea, China, Hong Kong
Weak demand fails to stop oil rising above $70
EU regulator objects to BHP-Rio tie-up
Metals sector melting, but Quadra on the hunt
ICE launches clearing house; has record October
Gold, other commodities reflect gains in equities

Posted on 05 November 2008 by VRS |  Email |Print

From Cattlenetwork.com: Fluctuating oil prices seem to be the issue of the day, but the cost of food commodities particularly staples such as grains and vegetable oils is a close second in grabbing global headlines.

According to the International Monetary Fund (IMF), world market prices for food commodities rose more than 75 percent from the beginning of 2006 to July 2008. Rising food commodity prices over the last several years have been part of a general increase in global commodity prices, including minerals, metals, and energy. Although the food commodity index rose to a historic high over the past 2 years, the indices for all commodities, and for crude oil in particular, have significantly outpaced it….. Full Article: Source

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From Bloomberg: Canada’s currency rose to the highest in three weeks as commodities including oil gained and global stocks advanced, signaling an increase in risk appetite.

The Canadian dollar, which strengthened for a second day, has jumped 10.9 percent since Oct. 24, paring its decline this quarter to 7.6 percent….. Full Article: Source

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From Businessweek.com: In a sign of the quickly-shifting power struggle in the mining sector, Brazil’s Vale — the world’s largest iron ore producer — said on Nov. 3 it had withdrawn a request to Asian clients for a 12% price increase in 2008 iron ore contracts. Iron ore is the key component in steel.

That’s a marked change from earlier this year when the Brazilian company negotiated a 71% jump in the commodity’s price. Like it or not, steel producers worldwide, particularly in China, are cutting back on production as the global economy teeters towards recession. …. Full Article: Source

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From Investerms.com: IntercontinentalExchange Inc. is one of the few remaining independent futures exchanges. Larger exchanges like the New York Stock Exchange (NYSE: NYX) and the Nasdaq Stock Market have acquired many of the futures and options exchanges in an effort to grow their businesses and compete.

So, where does this leave IntercontinentalExchange and other smaller independent operators? Well, Intercontinental has a plan and it could turn out to be a home run…IntercontinentalExchange recently announced that it would be acquiring Clearing Corporation….. Full Article: Source

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From Mineweb.com: Silver Wheaton President and CEO Peter Barnes believes that the current environment of depressed silver prices will not persist in the long term, potentially strengthening over the next six months.

While admitting that current silver prices are probably “the exact opposite of what most would have predicted in these economic times,” nevertheless, Silver Wheaton President and CEO Peter Barnes declared Monday, “We’re more bullish than ever on the price of silver as a result of what’s happening on the global markets today.”…. Full Article: Source

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From Indiatimes.com: At a time when most investors are scrambling for funds and nursing losses, some investors have found a way to make decent profits. Many of
them took a call six months ago that the bull run in commodities was over. They went ‘short’ on metals and energy. Some even took deliveries in gold and silver, making them true hedgers.

After the US housing market collapse last year, many investors sensed that copper consumption would decline. Also, an imminent slowdown of the Chinese economy sent warning signals….. Full Article: Source

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From Guardian: Artificial intelligence is helping trend-following commodity hedge funds triumph in treacherous markets when human brains alone aren’t enough.

With industry data showing the average hedge fund down 20 percent or more this year due to strategies messed up by plunging commodity and stock prices, some in the game called Commodity Trading Advisors are up 50 percent or more….. Full Article: Source

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From Mondovisione.com: Chicago Climate Futures Exchange, a wholly-owned subsidiary of Chicago Climate Exchange, Inc, announced that open interest in its futures and options complex for U.S. carbon emissions, which includes Carbon Financial Instrument futures and options and Regional Greenhouse Gas Initiative futures and options contracts reached a new record level.

Open interest for the CCFE RGGI products has reached a record level of 5,860,000 million short tons CO2. CCFE has traded 12,485 RGGI futures and options contracts, representing 12,485,000 RGGI allowances with trades occurring…. Full Article: Source

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From Khaleejtimes.com: Amid all the gloom of the global meltdown, news of layoffs and high inflation, this is one piece of news that could bring some cheer to the residents of the UAE. Prices of essential commodities are expected to come down by 10 to 20 per cent, say market sources.

The global financial crisis which hit the international markets badly led to the drop in the price of oil from more than $130 per barrel to $60. This would have a positive impact on the prices of essential commodities in the coming few weeks….. Full Article: Source xfile=/data/theuae/2008/November/theuae_November95.xml&section=theuae

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From Mondaq.com: What public companies are, and are not, disclosing about their climate change risks and opportunities is becoming increasingly important in Canada and the United States.

Securities regulators in Ontario and Alberta are scrutinizing environmental disclosure in general, and institutional investors are engaging in discussions with them about climate risk….. Full Article: Source

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From Wlns.com: Nervous? You may think owning a little gold can calm your jitters in these turbulent times. There’s something soothing about the lustrous metal, which has been the go-to store of value for thousands of years.

If gold will calm your frazzled nerves, then stock up on a bit of it. We’ll give you some good options later on how to do that. But from a hard-nosed investing point of view, owning gold isn’t compelling….. Full Article: Source

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From Commodityonline.com: Can commodity exchanges change the fate of farmers in any country? This is a question which has been discussed world over by governments, analysts, traders and farmers for years. In fact, the answer to this query depends on which country you are talking about.

In a recent attempt to prop up the pathetic condition of Ethiopian farmers, the country launched its first commodity exchange. When it was launched, the priority was to raise food production by creating a safe, transparent agriculture market and ensure that the farmers gets due returns for their produce….. Full Article: Source

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From Asianinvestor.net: Lyxor listed five new exchange-traded funds on the Singapore Stock Exchange yesterday. These include: three South Asian funds; the Lyxor ETF MSCI Asia APEX 50; and the Lyxor ETF Commodities CRB Non-Energy (which will provide investors with a portfolio of metals, agricultural and soft commodities, minus the usual exposure to oil).

The introduction of the five new funds will bring Lyxor’s total ETF offering to 13 in Singapore. In Hong Kong, it already has 12 funds in place….. Full Article: Source

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From Istockanalyst.com: The rare earth metals are, in fact, not that rare! The most commonly occurring rare earth metals - cerium, lanthanum, neodymium and yttrium - are actually more common in the Earth’s crust than lead. And even silver.

While cerium, the most abundant rare earth metal, is more prevalent (60 parts per million (ppm)) than copper, even lutetium (0.5 ppm) and thulium (0.5 ppm), the least abundant, are to be found in the Earth’s crust in greater quantities than antimony, bismuth, cadmium and thallium….. Full Article: Source

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From Euronext.com: NYSE Euronext (NYX) and Dalian Commodity Exchange (DCE) today signed a Memorandum of Understanding (MOU) to develop the futures and options markets in in US and China, and internationally.

The agreement was designed to explore opportunities for extending the global reach of both exchanges. The MOU will enable the two exchanges to explore opportunities for information sharing, exchanging employees, and working together on IT solutions and product design in the global marketplace….. Full Article: Source

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From AP: The EU’s top energy official will travel to Turkey and Azerbaijan Wednesday to show Europe’s commitment to a pipeline that would transport natural gas from the Caucasus westward in 2013, keeping it out of Russia’s grasp.

EU Energy Commissioner Andris Piebalgs will make a push for the Nabucco pipeline, whose viability is threatened by energy deals Russia is pursuing in the Caucasus. If these succeed it will be hard for the EU to ease its dependence on Russia, which provides 40 percent of EU gas imports today — a level that is set to rise in the years ahead….. Full Article: Source

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From Canberratimes.com.au: Within days of its release, the Treasury modelling of the economic implications of the Rudd Government’s emissions trading scheme has come under attack.

The impact of an estimated weekly increase in energy price of about $7 for domestic consumers has been criticised as being too great for the poorer sectors of the Australian community. And energy experts and engineers claim that the economic penalties of the scheme on both domestic and industrial energy users have been grossly underestimated….. Full Article: Source

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From AP: The growing financial crisis is constraining world trade with a jumbled mess of frozen credit that could mean shortages of food and energy supplies for some countries.

Shippers of drybulk goods such as grain and coal worry that importers won’t be able to pay for the goods they receive. And while some anxious exporters hold on to their goods, rates to ship those goods have plummeted to 10-year lows. Some ship owners are even laying up their ships rather than operate at such low rates….. Full Article: Source

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From Structuredproductsonline.com: Direxion, a provider of alternative investment strategies, has entered the exchange-traded fund (ETF) arena with eight leveraged bull and bear ETFs, offering 300% leveraged exposure.

The Direxion Shares 3x ETFs provide 300% of the daily performance, or inverse daily performance of four Russell indexes. The ETFs offer the highest leverage within the ETF market at present. The bull range consists of the Direxion Large Cap Bull 3x Shares which tracks the Russell 1000 index and the Small Cap Bull 3x shares, tracking the Russell 2000 index…. Full Article: Source

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From Resource Investor: Here’s the good news: Mine closures are happening around the world. Literally, every day a Google Alert spits out the name of a mine somewhere on this earth that is either closing completely, partially (reducing production), or thinking about it.

This is especially the case with base metals and specialty industrial metals like platinum and palladium. To wit: Canadian nickel miner First Nickel (FNI) said it had suspended production at its Lockerby Mine in nickel-rich Sudbury, Ont., due to low nickel prices….. Full Article: Source

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From Commodities-now.com: Joint efforts to expand worldwide use of renewable energies recently received a boost as countries from all continents team up to support the establishment of an International Renewable Energy Agency (IRENA).

The agency, an initiative from Germany, Spain and Denmark, is set to be launched in Bonn in January, after 51 countries agreed upon its statute at a conference in Madrid on 23 and 24 October. IRENA is meant to be the first truly international organisation offering both industrialised and developing countries support and concrete advice to help them reach higher shares of renewable energies on the road to low-carbon economies….. Full Article: Source

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From Bloomberg: Gold declined in Asia after its biggest rally in seven weeks as the dollar’s gains against the euro and crude oil’s retreat reduced the appeal of bullion as an alternative asset.

The dollar rose to $1.2929 against the euro at 9:38 a.m. in Singapore after yesterday falling by the most since the 15-nation currency’s 1999 debut as a thaw in money markets reduced demand for the safety of U.S. assets. Crude oil fell by 1.1 percent after rising more than $6 a barrel yesterday….. Full Article: Source

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From Resource Investor: These are the kind of markets that test the courage of investors. Currency volatility overlaying equity volatility has exaggerated all price actions. We believe the trillions of dollars of liquidity slowly filtering through the financial system will produce sunshine for these markets.

However, as we’ve said in our recent presentation, “Enduring a Global Financial Crisis,” we believe this will not be a V-shaped bottom but instead a U-shared bottom. A U-shaped bottom is a stockpicker’s dream….. Full Article: Source

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From Commodities-now.com: The global economic recession will have a significant effect on the European carbon market, nearly halving the shortfall in EU Allowances (EUAs), according to a new projection in the latest weekly report from IDEAcarbon, a leading carbon market analysis and research firm.

In December 2007 IDEAcarbon estimated the Phase II shortfall in EUAs would be 206 million tonnes per year of CO2 equivalent. However, the onset of recession has cut this forecasted shortfall by 44% to 115 million tonnes per year between 2008 and 2012, according to IDEAcarbon’s latest figures….. Full Article: Source

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From News.com.au: China expects international iron ore prices to plummet next year amid falling demand from its steelmakers stung by the global economic downturn, state media reported.

“China’s iron ore inventory at harbours and enterprises has reached 89 million tonnes, which is at saturation levels,” said Luo Bingsheng, vice chairman of the China Iron and Steel Association. “The situation will prompt Chinese steelmakers to cut iron ore imports to reduce procurement costs,” he said. …. Full Article: Source

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From Bloomberg: Asian regulators may limit currency derivatives after losses helped push the South Korean won to a decade low, led to lawsuits in India and caused shares of China’s Citic Pacific Ltd. to collapse.

South Korea will announce measures by December to restrict company purchases of the contracts to a percentage of overseas earnings, Hyeon Jung Gun, head of Korea’s Financial Supervisory Services’ derivatives market team, said. …. Full Article: Source

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From FT: Commodities prices rose across the board, with oil surging above $70 a barrel, supported by producers cutting output in response to falling prices and lower consumption. But traders said the gains could be short lived as demand remained subdued.

The worries about weak demand were exacerbated by a report from the United Nations Conference on Trade and Development that warned that “the unfolding financial crisis has spread to international trade with negative implications for developing countries, especially those dependent on commodities”….. Full Article: Source

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From WSJ: The European Union’s antitrust regulator outlined objections to BHP Billiton’s $83.6 billion hostile takeover of rival miner Rio Tinto, highlighting concerns that the tie-up would create a colossus with too much pricing leverage over iron ore and other commodities needed by European manufacturers.

The objections were expected. The EU remains the most serious regulatory obstacle to the deal, because BHP has received green lights from antitrust authorities in the U.S. and Australia. On Tuesday, BHP, of Melbourne, Australia, said it had received a “statement of objections” from Brussels, a document that lays out the EU’s potential case for…. Full Article: Source

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From Theglobeandmail.com: Copper producer Quadra Mining Ltd. snapped up nearly $55-million (U.S.) of shares in at least one other mining company during the third quarter, signalling it is on the hunt for a merger or acquisition amid the metals sector bloodbath.

The Vancouver company, which operates the Robinson mine in Nevada and is close to completing the Carlota copper project in Arizona, disclosed it paid $54.5-million for shares in an unidentified mining company or companies….. Full Article: Source

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From Guardian: IntercontinentalExchange Inc said on Tuesday it transferred all of its contracts from LCH.Clearnet to ICE Clear Europe, its new clearing house, after a delay of more than three months. The energy and commodities market also announced record futures volume last month across its exchanges in Europe, Canada and the United States.

Exchanges, including U.S. rival CME Group Inc, have benefited from a spike in trading volume since mid-September, when the U.S. financial crisis set off a plunge in world markets….. Full Article: Source

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From SMH: The share market was higher at noon on soaring commodity prices and election day gains on Wall Street. At noon, the benchmark S&P/ASX200 index was up 1.96%, or 82.6 points, at 4297.7, while the broader All Ordinaries index was up 1.94%, or 80.9 points, to 4250.7.

The rise follows advances in the US and other overseas markets, led by banks and energy stocks. The Dow Jones Industrial Average added 1.8%, the S&P500 rose 2.4%, and the Nasdaq composite index gained 1.6%….. Full Article: Source

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