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Commodities Briefing 06.Nov 2008

Posted on 06 November 2008 by VRS |  Email |Print

From Reuters: Commodity-related blue chip stocks in Asia are attractive as big companies with a decent cash balance can wipe out competitors and survive the current market turmoil, Nomura Asset Management said on Wednesday.

Vipul Mehta, senior portfolio manager at the Japanese firm, said India and China will still lead Asia’s economic growth, underpinning demand for commodities….. Full Article: Source

Posted on 06 November 2008 by VRS |  Email |Print

From Guardian: J.P. Morgan Chase & Co aims to join the top ranks in the commodities and energy business and is not pulling back from expansion plans despite the uncertain global economic outlook.

“We are striving to be a top-tier commodity franchise globally,” said Blythe Masters, head of the U.S. bank’s global commodities business….. Full Article: Source

Posted on 06 November 2008 by VRS |  Email |Print

From FT: Commodities prices yesterday 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 Scotsman.com: Lower oil prices may provide welcome relief for the economy and consumers, but they are not here to stay. According to the head of one of Scotland’s largest oil companies, the price of crude oil will soon be moving back towards $100 a barrel.

Since peaking at $147 a barrel in July, the price of crude has more than halved, trading briefly below $60 a barrel in London at the end of October and averaging below $70 since….. Full Article: Source

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From Mineweb.com: The most (and least) favoured subsectors in global mining and oil, during the past eight trading sessions, where nearly USD 700 bln in market value has been recaptured.

Materials (mainly mining) stocks continue to lead a global equity markets recovery, along with bank and energy stocks, and emerging market stocks generally. In the past eight trading sessions, the world’s top 20 mining stocks and top 20 oil stocks have regained a total of nearly USD 700bn in value….. Full Article: Source

Posted on 06 November 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: While you were distracted by crashing banks and clashing US senators, you may have missed a small environmental earthquake. The price of carbon has collapsed.

In only three months, life has become a lot cheaper for polluters. The financial cost of warming the planet has plummeted in Europe’s emissions trading system (ETS) and the effectiveness of such a volatile market mechanism in curbing carbon is being questioned….. Full Article: Source

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From Telegraph: If you are going on holiday to New York this winter, the recent swing in currency movements will make for an expensive trip. However, some investors have benefited from the skyrocketing rise of the dollar and yen by taking a punt on the currency markets.

The pound has lost a quarter of its value against the dollar in the past year. While Christmas shoppers last year flocked to New York to take advantage of a two dollar to the pound exchange rate, this year they will only get around one and a half dollars to every pound….. Full Article: Source

Posted on 06 November 2008 by VRS |  Email |Print

From Mineweb.com: Hecla Mining President and CEO Phil Baker insisted that long-term fundamentals for silver have never been better. Despite the financial loss, Hecla reported its second largest quarterly silver production for the past 20 years, as well as its highest-ever zinc production.

“While there is a great deal of short-term uncertainty about the prices of the metals we produce, I believe in the long-term the fundamentals have never been better,” Baker advised….. Full Article: Source

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From AP: Gold and other commodities stumbled Wednesday, erasing some of the previous session’s big gains and reflecting steep losses in the equities markets.

Commodities prices, which have tended to mirror the direction of equities in recent weeks, enjoyed a substantial rally on Tuesday as investors looked forward to putting the presidential election behind them….. Full Article: Source

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From Fairinvestment.co.uk: UK energy prices have risen at double the pace of the European Union average, recent statistics from the Organisation for Economic Co-operation and Development (OECD) have revealed.

According to the OECD, the price of energy in the UK has risen by 29.7 per cent in the 12 months up to September 2008, compared to 15 per cent in the EU overall….. Full Article: Source

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From Independent: The world’s biggest steel maker, ArcelorMittal, shocked the market yesterday when it doubled production cuts and said earnings will drop. The increasingly bleak outlook for manufacturing across the globe as the world’s economy veers into recession has taken its toll on demand from Mittal’s clients including builders and car makers.

The Luxembourg-based company’s earnings were also short of analyst estimates, and Arcelor warned that profit may almost halve to $2.5bn (£1.5bn) in the fourth quarter…. Full Article: Source

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From Mondovisione.com: Dubai Gold & Commodity Exchange (DGCX) today announced a 40 per cent growth in year-to-date volume, reaching 1,070,914 contracts, valued at US $ 54.1 billion.

The strong growth to date in 2008 is underlined by the Exchange’s strategic mix of products, said Malcolm Wall Morris, Chief Executive Officer, DGCX. “During the year, the Exchange not only initiated steps to expand its portfolio, but also reviewed existing contracts in response to customer’s feedback.”…. Full Article: Source

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From Mondovisione.com: Deutsche Börse is further expanding its XTF segment for exchange-traded index funds (ETFs) on the pan-European Xetra trading platform and has admitted a new ETF issued by Lyxor International Asset Management, a subsidiary of Société Générale, to trading.

The Lyxor ETF MSCI ASIA APEX 50 tracks the performance of the MSCI ASIA APEX 50 Price Return Index including dividends. This index contains the 50 largest companies in terms of market capitalization – thus the most liquid equities – in Asia ex-Japan….. Full Article: Source

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From Theaustralian.news.com.au: Copper shed nearly 9 per cent as inventories rose and the US dollar weighed after the US election. Most other base metals were also weaker.

The US dollar erased some of its earlier gains against a basket of other currencies but remained stronger after posting its biggest one-day slide in 13 years the previous day and as Democrat Barack Obama won the US presidential election….. Full Article: Source

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From Mineweb.com: Société Générale is the latest bank to revise its fundamental commodity forecasts in the face of deteriorating economic conditions and in the introduction to a detailed study, the bank says that the sharp correction that started in July 3rd should be interpreted as the bursting of the speculative bubble that had been fuelled by inflation and the depreciation of the US dollar.

The fall has not reflected a valuation of anticipated fundamentals, but has remained dominated by purely financial considerations, and commodity prices have fallen to a much greater extent than the stock market indices over the period….. Full Article: Source

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From Xinhuanet.com: China’s first futures exchange, Zhengzhou Commodity Exchange (ZCE), signed a memorandum of understanding with U.S.-based NYSE Euronext on Wednesday to develop futures and options markets and establish a long-term partnership.

The agreement enables the two to share information on market conditions and also knowledge of local policies and regulations….. Full Article: Source

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From Theglobeandmail.com: Venezuelan President Hugo Chavez’s government says it is taking over one of the world’s largest gold deposits, operated by Toronto’s Crystallex International Ltd., because it needs to boost its gold reserves amid the global financial crisis.

The nationalization of the Las Cristinas project, which Crystallex has said could contain more than 16 million ounces of gold worth about $11.8-billion (U.S.) at today’s prices, could prove the death knell for the junior miner’s decade-long struggle to build the mine….. Full Article: Source

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From Commodities-now.com: Intel Corp has long strived to reduce its carbon footprint. Now, by buying renewable energy credits — purchases that guarantee the generation of wind, solar and geothermal electricity — it is stepping up the pace. It’s all part of corporate America’s attempt to neutralize their carbon emissiob.

Many companies are being proactive, reasoning that it is healthy for both the environment and business. Indeed, the pressure to address global warming has influenced the public and private sectors to come up with solutions — not just feel-good ideas but ones that cut emissions using the latest technologies and market-based strategies….. Full Article: Source

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From FT: Commodity markets face an impending “hetacomb” of sharply lower demand, according to the Swiss bank UBS, which yesterday issued one of the most pessimistic short-term forecasts among the investment community for the energy, minerals and metals markets.

“Hecatomb is defined as a large-scale slaughter,” said Daniel Brebner, a UBS analyst in London. “Given the rout in commodity markets, this word is, unfortunately, appropriate in characterising the current and likely near-term environment for commodities markets.”…. Full Article: Source

Posted on 06 November 2008 by VRS |  Email |Print

From Icis.com: The Dubai Multi Commodities Centre (DMCC) and the Dubai Gold and Commodities Exchange (DGCX) expect to launch their Middle East and Asia plastics futures contracts in mid-December 2008, a DMCC official said .

“We don’t expect them to remain physical - we would like the contracts to be used as financial instruments to hedge against market volatility,” said James Bernard, associate director of commodities at DMCC….. Full Article: Source

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From Bloomberg: Wheat fell the most in three weeks on speculation that demand for U.S. grain will wane as global production increases. About 13.2 million bushels of U.S. wheat were inspected for export in the seven days ended Oct. 30, down 40 percent from the previous week, the government said.

Global production in the marketing year through June 30 will jump 12 percent to a record 683 million metric tons (25.1 billion bushels), the London-based International Grains Council said on Oct. 30….. Full Article: Source

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From Theglobeandmail.com: October was actually nowhere near the worst decline for the main Canadian and U.S. indexes. The S&P/TSX composite fell about 17 per cent in the month, far less than the decline of almost 23 per cent in October, 1987. The Dow dropped about 14 per cent in the month, again far less than its record fall of just under 23 per cent, also in October, 1987.

What made this autumn so remarkable were the back-to-back declines in September and October. While September, 1987, wasn’t a great month, both the U.S. and Canadian markets fell by less than 3 per cent. September of this year was much worse, so the combined two-month decline in 2008 was devastating….. Full Article: Source

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From Mercopress.com: A United Nations report shows that international seaborne trade surged to record levels last year but has since declined because of the financial crisis, jeopardizing the health of many developing countries, especially those that depend on commodities.

The UN Review of the Maritime Transport (RMT) finds that seaborne trade surpassed 8 billion tons last year and reached a peak at the start of this year….. Full Article: Source

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From Thestar.com.my: Bursa Malaysia is looking at expanding the derivatives and Islamic securities markets in the long term. Chief executive officer Datuk Yusli Mohamed Yusoff said it would target the commodities sector in the derivatives market, and real estate investment trusts (REITs) and exchange-traded funds (ETFs) for Islamic securities.

According to Yusli, it is important to continue expanding the CPO derivatives market to keep its relevance….. Full Article: Source

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From Steelguru.com: The London Metal Exchange has upgraded its electronic trading platform called LMEselect. The upgrade will provide a more robust system that offers operational efficiencies.

The upgrade comes on the back of a record trading month for the Exchange overall and also LMEselect. Exchange volumes were up 44% in October compared to the corresponding period of 2007 with 11,218,308 lots traded. LMEselect also recorded an increase of 23% on its previous record month….. Full Article: Source

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From Energyefficiencynews.com: The UK Government has launched a £6 million Green Living Fund aimed at charitable and voluntary organisations supporting programmes that help individuals and communities live sustainably.

“With around 40% of emissions caused by individual choices and actions, behaviour change is crucial, and this is where third sector groups such as charities, NGOs, voluntary organisations, social enterprises and faith groups play an important role,” explains Energy and Climate Change Minister, Joan Ruddock….. Full Article: Source

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From ABC: Economic consultant Access Economics is predicting a sharp reduction in mining investment by late next year.Director David Rumbens says investment should stay high until the end of this financial year.

But beyond that, he says, prepare for a fall. Mr Rumbens says the slump in commodity prices is to blame, and mining companies are already starting to review their investment….. Full Article: Source

Posted on 06 November 2008 by VRS |  Email |Print

From Investors.com: Leveraged inverse commodity ETFs, which go up when their indexes go down, shot higher in October as bears trampled the bulls. PowerShares DB Crude Oil Double Short ETN, (DTO) which makes money from falling prices, rocketed 66.61% in October. Its opposite, PowerShares DB Crude Oil Double Long ETN, plunged 58.73%.

The price of crude oil sank 34.46% to a 16-month low of $65.96 a barrel in October — its steepest decline in 26 years — as U.S. demand dropped at its sharpest rate in 28 years….. Full Article: Source

Posted on 06 November 2008 by VRS |  Email |Print

From Bloomberg: Astmax Commodity Global Macro Fund, run by former Sumitomo Corp. copper trader Tetsu Emori, will increase its focus on oil after making a 12 percent return since May by selling grain, fuel and metals futures in falling markets.

The 1.4 billion yen ($14 million) fund, which takes long and short positions in global commodity markets ranging from corn and coffee to aluminum and oil, rose every month since inception on May 12 through October, according to Emori. It rose 2.6 percent last month, beating an estimated 2.6 percent drop by the Eurekahedge Hedge Fund Index. …. Full Article: Source

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