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Commodities Briefing 28.Nov 2008

Posted on 28 November 2008 by VRS |  Email |Print

From FT: Goldman Sachs and Morgan Stanley have dominated the commodities business for almost two decades, but for the first time their de-facto duopoly is under threat.

The credit crunch has forced the two Wall Street banks, which dominate all areas of commodities, from taking clients’ risk and hedging positions to proprietary trading, to adopt a more cautious approach….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Citywire.co.uk: The risk of further commodities price falls is minimal, according to Union Bancaire Privée (UBP) head of investment strategy Christophe Bernard.

Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Mineweb.com: Prices of thermal and coking coal will fall 20 and 26 percent respectively in 2009, a Reuters poll showed on Thursday, thinning miners’ profits as a slowing global economy chews into demand.

Prices of Asian thermal coal, mainly used to generate power, may fall to $100 a tonne in the 2009 Japanese fiscal year, down 20 percent from this year’s agreed price of $125, a median forecast of 10 analysts said….. Full Article: Source

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From Telegraph: Demand for gold is soaring and Citigroup analysts predict the price could break through the $2,000 an ounce barrier. The price of gold itself has fallen, and is now trading in a range around $720 to $750 an ounce, having peaked at more than $1,000 in the summer. Nevertheless, this reflects a dramatic rise from a bottom of $270 in 2001.

However, the gold price has increased only modestly once inflation is taken into account; current prices match those of the late 1980s and early 1990s in real terms. But the gold price story is more complicated, particularly for sterling investors….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Reuters: As a global economic crisis deepens, gold has not only held firm in dollar terms but also appreciated against other non-U.S. currencies, and strong physical buying despite higher prices signals the metal has legs to rally further.

A flight to safety amid economic uncertainties has bolstered the dollar and the yen, which hurt dollar-denominated gold and made bullion more expensive when priced in other currencies….. Full Article: Source

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From Fleetstreetinvest.co.uk: Thanksgiving. Other Americans may take the day off. But not us…. not here at the headquarters of the Daily Reckoning. We’ve got some reckoning to do. But let us take a moment to bow our heads and offer this Prayer of Thanksgiving…

Thank you, good Lord, for everything. We are still alive. We are still solvent. Help us stay that way. If not both, at least the former. Lead us not into temptation. Keep us in gold and cash until this is over….. Full Article: Source

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From Thenational.ae: Oil producers will face a tough market next year even if Opec trims production by as much as a further one million barrels per day on top of present output cuts, a top commodities official at Morgan Stanley said today.

A slowing economy and significant additions to global refining capacity threaten to weaken the fundamentals of the market for petrol and other oil products, said Hussein Allidina, the head of commodities research for the New York bank, which has a strong focus on commodities….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Investopedia: With boom-and-bust oil prices, many investors feel they have to capitalize on some of this excitement before it’s too late, and so they turn to funds like the DWS Global Commodities Stock Fund. In the end, though, it’s like a dog chasing its tail, going round and round in circles.

The DWS Global Commodities Stock Fund is a closed-end fund that invests in the stocks of companies involved in the commodities business, as well as commodities-linked structured notes. These pay a return (above principal) based on the performance of a basket of commodities over a defined period. …. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Theglobeandmail.com: Retreating hedge funds helped drive down the Scotiabank Commodity Price Index by a record 15.6 per cent in October, the sharpest month-to-month drop in the index’s data base, which goes back nearly 37 years.

The index fell to 192.1 points during the month from 227.7 in September, with plunging oil prices leading the way down, Patricia Mohr, Scotiabank’s commodity specialist and a vice-president of economics, said in her latest report Thursday. However, it remained slightly above its year-earlier level of 191 points….. Full Article: Source

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From Moneymanagement.com.au: Commodity prices are not expected to rise until the second half of next year, presenting a gloomy outlook for the resources sector for the next six months.

“From 2004 to just three months ago, commodity prices kept growing, but the commodity boom is now over,” Plato Investment Management managing director Don Hamson said at a Russell presentation. “The calling off of the BHP/RIO deal was the last nail in the coffin for the end of the commodity boom.” …. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Telegraph:It is time to become bullish on the oil price. The marginal cost of producing a barrel of oil is about $50. This is how much it costs the average oil company to drill, dig, pump and deliver a barrel of crude to market.

If the price falls below this level, some producers will be pumping oil at a loss. So, with the oil price close to its marginal cost of production, Questor believes now is the right time to buy oil….. Full Article: Source

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From Bloomberg: Chile’s fixed-rate peso bonds remained at their highest level since the securities were issued in April amid speculation slowing inflation will allow the central bank to cut the benchmark interest rate.

Chile’s central bank said in a Nov. 13 report, it expects inflation to drop to 3 percent in 2010, from the current 9.9 percent annual pace. Policy makers, who next meet on Dec. 11, have raised the overnight interbank rate 2.25 percentage points to 8.25 percent this year in a bid to stem inflation….. Full Article: Source

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From Abc.net.au: Householders who ‘do their bit’ to reduce greenhouse emissions may be wasting their time, says one expert, who is concerned about Australia’s proposed emissions trading scheme.

Economist Dr Richard Denniss of the Canberra-based think tank, The Australia Institute, made the comments in the lead up to the government’s release of a white paper on a national Carbon Pollution Reduction Scheme….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From FT: Nasdaq OMX, the transatlantic exchange group, is set to launch Britain’s first electricity exchange after winning a contract to create a power market to match the highly successful ones in Scandinavia and Germany.

The group, which runs the Nord Pool power exchange in Scandinavia, has been chosen to run the market by a group of energy companies and financial institutions after a competitive tender organised by the Futures and Options Association, a London-based industry body whose members are the main participants in exchange-traded derivatives….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Livemint.com: Global oil demand is expected to decline slightly in 2008 and 2009, the first drop in a generation, as the most severe economic crisis since the 1930s slashes consumption across the developed world.

Worldwide demand will decline by 20,000 barrels per day (bpd) in both 2008 and 2009 to 86.03 and 86.01 million bpd (mbpd), respectively, according to a Reuters poll of 11 analysts, banks and industry groups….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Bloomberg: The global aluminum surplus is expected to rise 36 percent next year as supply increases and demand falls, Goldman Sachs JBWere Pty forecast.

Aluminum supply may exceed demand by 2.18 million metric tons, rising from an excess of 1.60 million tons this year, Goldman said. Further production cuts were “desperately needed in order to avoid a massive inventory-build,” analysts led by Malcolm Southwood wrote in the report yesterday….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Guardian: When oil almost topped $150 back in July, politicians flew around the world trying to quell the panic it created. Many commentators declared the era of cheap oil over for ever. Now the price has sunk below $50.

Politicians are still flying around the world, trying to quell a different form of panic. Many analysts declare that with the recession, and the drop in demand for the black stuff, cheap oil is back to stay….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: Having failed twice in two months to calm plunging oil markets, OPEC ministers are set to weigh another round of steep production cuts as the world’s economic travails continue to drive crude prices to levels not seen in years.

The Organisation of Petroleum Exporting Countries has scrambled since September to stem the fall in oil prices, which is now putting pressure on OPEC budgets from Ecuador to Kuwait. Ineffective in blunting the price spike earlier this year, the cartel is proving similarly hapless in putting a floor under collapsing prices….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Guardian: Institutional investors have withdrawn billions of dollars from the oil market as prices have collapsed in the last few months and look unlikely to return until the recession hits bottom — probably well into next year.

Since oil prices peaked in early July at over $147 a barrel, these money managers, who invest in oil in the hope of better returns for their investors and to diversify their portfolios, have become increasingly risk averse….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Mineweb.com: Based on the assumption that current strong physical gold demand highlights an existing supply deficit, Toronto’s Wellington West Capital Markets forecasts that, “if the increased structural deficit in gold supply continues, gold prices should adjust higher.”

Wellington metals analysts also advised, “Given the potential change in market fundamentals, we believe it is time investors revisit investing in the junior and intermediate gold producers.”…. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Theglobeandmail.com: Copper fell nearly 3 per cent on Thursday, shrugging off a softer U.S. dollar, dragged lower by the persistent poor demand outlook, while aluminum and lead fell on news that China may cut or abolish export taxes on the metals.

China may reduce or cancel taxes on exports of primary aluminum and refined lead, and it may allow copper smelters to import some concentrates duty free, as part of its move to boost exports and improve firms’ operations….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From FT: Base metals retreated across the board on Wednesday as fears of falling demand eclipsed news of extraordinary policy moves aimed at boosting economic activity in China and Europe.

Copper sank 1.5 per cent to $3,710 a tonne, approaching last week’s three-year low, as traders shrugged off China’s largest official interest rate cut in a decade and a European Union €200bn stimulus plan, and instead focused on fresh evidence of deteriorating global demand for metals and a glut in supply….. Full Article: Source

Posted on 28 November 2008 by VRS |  Email |Print

From Canada.com: Commodity prices are falling at their fastest pace in decades, cutting a swath through the economy as tumbling crude puts Alberta oilsands projects on ice and crashing base metal prices shutter mines across the country.

Scotiabank reported Thursday its monthly commodity price index fell 16.6 per cent in October, the sharpest monthly decline since the index was created in 1972. The oil and gas sub-index led the plunge, off 21.8 per cent….. Full Article: Source

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