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Commodities Briefing 01.Dec 2008

Posted on 01 December 2008 by VRS |  Email |Print

From IHT: Over the summer, the OPEC cartel couldn’t prevent oil prices from surging to record levels even when its members pumped full out. Now, the producers seem equally unable to stop prices from collapsing as the global economy cools down.

Members of the Organization of the Petroleum Exporting Countries left an informal meeting in Cairo this weekend without an agreement to reduce production, but with rising doubts about fraying discipline and tensions within the group that accounts for 40 percent of the world’s oil exports….. Full Article: Source

Posted on 01 December 2008 by VRS |  Email |Print

From FT: The prevailing wisdom was that, for emerging market currencies, this time it was different. The asset class may have been plagued by bouts of turbulence from the Asian financial crisis and Russian default of 1997-98 to the Argentine crisis of 2002, but politicians and central bankers had learnt the lessons.

Disciplined fiscal and monetary policy meant many emerging countries now basked in twin government and external surpluses, meaning they were no longer reliant on the fickle whims of foreign financiers….. Full Article: Source

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From Bloomberg: A decade after OPEC failed to prevent oil from collapsing to $10 a barrel, the world’s biggest producers are delaying the action needed to arrest the steepest slide in energy prices.

Ministers from the Organization of Petroleum Exporting Countries postponed debate on a second cut in output in as many months during meetings in Cairo Nov. 29. They will wait until later this month, after a slump in global economies and the popping of the commodities bubble sent oil down almost $100 from its record price in July to as low as $48.25 a barrel in New York on Nov. 21….. Full Article: Source

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From FT: JPMorgan is offering investors access to commodity markets via a Ucits III fund that tracks its new Commodity Curve Index Energy Light Total Return Index. The fund has been licensed for sale initially in Austria, France, Germany, Italy and the Netherlands.

The index includes 35 commodities in five sectors, but restricts the energy allocation to a maximum of 33 per cent, a limitation that enables it to meet Ucits diversification requirements….. Full Article: Source

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From Dvorak.org: Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world’s monetary system with liquidity, according to an internal client note from the US bank Citigroup.

The bank said the damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps that had never been tried before…. Full Article: Source

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From Indiatimes.com: As the global liquidity crisis hits most asset classes, including stocks and commodities, investors are increasingly turning towards comparatively safer assets, which promise a limited downside and a consistent store of value.

While among precious metals, gold is always believed to meet these criteria, traditionally, silver was also seen as a store of value and considered to be one of the prominent precious metals….. Full Article: Source

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From BBC: The UK is “closer than ever before” to joining the euro, according to the president of the European Commission, Jose Manuel Barroso.

Speaking on a French radio show, he said British politicians were considering the move because of the effects of the global credit crunch….. Full Article: Source

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From Guardian: Important decisions about the future of coal power in Britain are likely to be made today when the government’s climate change committee sets out plans to de-carbonise the economy.

The committee will publish its first report recommending how Britain can achieve its target of cutting greenhouse gas emissions by 80% by 2050, which could eventually see the country ending almost all fossil fuel use to generate energy or run cars and public transport….. Full Article: Source

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From Mineweb.com: South Africa’s 3Q gold output fell 16.2 percent in the third quarter compared with 3Q 2007 as the world’s former top gold producer begins to move down the production ladder.

The South African Chamber of Mines reports that South Africa’s fall from its world No. 1 gold producer status, which, according to most figures occurred last year in favour of China, continues as a number of factors have already made this a difficult year and output continues to fall….. Full Article: Source

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From Marketoracle.co.uk: Richard Russell (Dow Theory Letters): “Inflate or die, which one will it be?”
“Suddenly, the whole investment world believes in deflation. The TIPS (inflation adjusted government bonds) have collapsed, commodities have crashed, gold goes nowhere, bonds remain near their highs, the dollar remains strong.

“Meanwhile, Bernanke and Paulson are battling the forces of deflation with all the ammunition at their command. I believe Fed chief Bernanke will fight deflation with the last dollar available at the Fed. Paulson will give the US Treasury away before he gives in to deflation and economic contraction….. Full Article: Source

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From Businessmirror.com.ph: The Baltic Dry index, a measure of shipping costs for commodities, retreated for a sixth-consecutive month in November as slowing economic growth cut demand for commodities including iron ore and coal to make steel.

The index tracking transport costs on international trade routes fell 18 points, or 2.5 percent, to 715 points, according to the Baltic Exchange. The measure has fallen 94 percent from a record on May 20 and is at its lowest since January 6, 1987….. Full Article: Source

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From Theaustralian.news.com.au: The government’s biggest concern about the economy is that commodity prices will fall further and faster than expected. The run-up in commodity prices has been so dramatic over the last five years that there is little precedent to guide forecasters about how big the reversal in prices might be.

Treasury’s budget update last month tipped that the terms of trade (the ratio of export prices to import prices) would show a rise of 10.75 per cent this year, reflecting the boom-time iron ore and coal contracts won last April. It forecast a partial reversal of 8.5 per cent in 2009-10….. Full Article: Source

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From Business24-7.ae: Dresdner Kleinwort said it expects gold prices to average $870 an ounce this year, falling to $740 an ounce in 2009. For silver, it forecasts an average price of $15 an ounce in 2008 and $9.75 next year.

Gold is typically seen as a hedge against inflation. Some traders said they thought gold’s prospects remained positive as the market awaited the outcome of Opec’s production meeting this weekend and a spate of US economic data….. Full Article: Source

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From Commodityonline.com: The Commodity Futures market could not work in full swing last week on account of Mumbai terrorists attack. It was closed for a day and even when markets resumed, trading was thin as many couldn’t reach their offices.

Except perhaps, gold, cocoa and sugar most commodities including crude oil are badly affected by global recessionary trends. In the near term, crude oil prices may exhibit a weaking trend due to OPEC postponing its decision to cut production….. Full Article: Source

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From Theaustralian.news.com.au: The global credit crunch is slowing Brazil’s roaring agricultural sector — at a time when more food, not less, is needed around the world.

A steep drop in global crop prices and rising costs of farm supplies, combined with tighter credit, are causing the slowdown in one of the world’s fastest-growing breadbaskets….. Full Article: Source

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From Indiatimes.com: These are troubled times and one can not blame investors out there, who feel that investment is a synonym for risk. Stocks crashed after giving an amazing bull run for 5 years. Oil doubled in less than 12 months but fell even sharply.

Commodities, on their part, were the last to go. While risk and reward go hand in hand, has any investment married better returns with lower risk? If you had bought a chunk of 22-carat gold in November 2003, you know the answer….. Full Article: Source

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From AP: The head of Iran’s nuclear power agency said Sunday the country is willing to help neighboring Arab countries build joint light-water nuclear power plants if they are interested.

There was no immediate reaction from Arab countries, many of whom are deeply suspicious of the Islamic Republic’s intentions regarding its controversial nuclear program….. Full Article: Source

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From Bangkokpost.com: The battle between US rescue plans and the recession is escalating, leaving oil prices directionless.

Last week, the price of West Texas Intermediate crude rose more than $4 in the wake of the announcement by the US government of the plan to rescue Citigroup, the weaker US dollar, high expectations of the US government bailing out General Motors, and China’s interest rate cut of 1.08 percentage points to 5.58% to boost economic growth. …. Full Article: Source

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From Thepost.com.pk: Asian currencies performed strongly against the dollar this week as the yen fluctuated on continuing concerns over the global economic downturn.

Japanese Yen: The yen fluctuated against the dollar in a holiday-shortened week, facing upward pressure as concerns persisted over global financial turmoil and the US economic downturn. The Japanese currency stood at 95.29-32 against the dollar in Tokyo at the end of daytime trading on Friday, slightly off from 94.98-95.00 against the dollar a week earlier….. Full Article: Source

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From Nzherald.co.nz: The new Government’s decision to put the emissions trading scheme on hold pending a review came as a bolt from the blue.

Stakeholders had been led to expect that there would be some changes to the ETS but the proposal to pass legislation putting it on hold was completely unexpected….. Full Article: Source

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From Bloomberg: Jim O’Neill, the Goldman Sachs Group Inc. economist who in 2001 coined the acronym BRIC from the initials of the four big emerging economies, says the faster growth investors have come to expect from these countries will survive this crisis.

O’Neill, who is based in London, says the citizens of the BRIC nations are poised to spend more. “The BRIC consumer is going to rescue the world,” he says. . …. Full Article: Source

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From Theglobeandmail.com: Uranium miners have found themselves with a hearty recipe for powering a stock market revival: rising prices for the nuclear fuel, strong demand, and supply disruptions. The only ingredient missing is investors.

The spot price for uranium has surged 25 per cent over the past five weeks, a performance unmatched by the stocks of companies in the uranium sector. From a basket of 56 stocks tracked by Haywood Securities, for example, 42 fell over the last week, three were unchanged, and just 11 saw gains….. Full Article: Source

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From Thehindubusinessline.com: Low world wheat prices – currently quoting around $200 a tonne or even less – are expected to affect planting for 2009. Much of the reduction is likely to happen in the developed countries where there usually is a supply response to prices.

Current world wheat prices are half of the average price that prevailed during the second half of 2007 and early part of 2008. The total output in 2008 expanded by a record 10 per cent or 63 million tonnes (mt) to 673 mt, resulting in huge surplus and rising stocks….. Full Article: Source

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From Theaureport.com: Gold is surprisingly accessible for the average private investor. Most of us know that the stock market is open for investment to anyone who has the means and the will to buy shares, but few people imagine that gold could be a viable investment choice for the person on the street.

Historically, relatively few of us have chosen to put our money into gold, perhaps because the price has been very poor for a very long time. Unlike throwing your money into emerging markets, or even the buy-to-let housing market, it appeared there was no fast buck to be made through the precious metal….. Full Article: Source

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From FT: Falling commodity prices are leading the world’s biggest oil companies to ease their rush into US natural gas supplies.

Chevron, the secondbiggest US oil company, said it would hold back plans to expand production in Colorado’s Piceance basin….. Full Article: Source

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From Moscowtimes.ru: Russia is promoting its coking coal producers in Asia to boost exports and help offset a slump in demand from domestic steelmakers, Raspadskaya said.

“We understand how Russian coking coal can reach Asian markets and now is a good time to expand market share,” said Alexander Andreyev, the firm’s deputy CEO. Russian suppliers want to target buyers in Japan, South Korea and China, he said….. Full Article: Source

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From Mineweb.com: Now that the collapsed metal markets have led to BHP Billiton dropping its bid for Rio Tinto, CEO Marius Kloppers can bring his strong organisational skills to bear on new forward drive.

BHP Billiton (BLT.L) Chief Executive Marius Kloppers will likely use the same pragmatic resolve to grapple with a collapse in metals markets that he did in ditching a mega takeover of mining rival Rio Tinto….. Full Article: Source

Posted on 01 December 2008 by VRS |  Email |Print

From Ibtimes.com: Oil will dominate interest this week in commodity markets, even after OPEC members delayed a decision on whether to cut production again this year.

That’s because the delay is only until December 17 and the next full meeting of OPEC. OPEC said after the meeting at the weekend that it would take any “additional action” needed to stabilize the market at a summit in Oran, Algeria….. Full Article: Source

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