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Commodities Briefing 05.Dec 2008

Posted on 05 December 2008 by VRS |  Email |Print

From FT: Merrill Lynch warned that oil prices could fall as low as $25 a barrel next year if the recession affecting the US, Europe and Japan extended to China, the main driver of demand growth in commodity markets in recent years.

Merrill’s warning came as oil prices sank below the $44 a barrel on Thursday, the lowest level in almost four years, in spite of dramatic interest rates cuts in the UK, Europe and Sweden….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From WSJ: The analyst who projected $200 oil should have lopped off a zero. The crash in oil, copper, grain and other commodity stocks in 2008 has outpaced the crash of technology stocks at the turn of this century - with many taking only six months for the 80% wipeouts that took the tech sector two years.

Chart watchers warn that the sheer momentum of the commodities selloff will likely carry losses even further. …. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Indexuniverse.com: Net cash flow into exchange-traded funds in November blew away October levels, with more than $26.3 billion coming into ETFs, according to data from the National Stock Exchange.

In October, during the worst of the investor panic, net cash flow into ETFs was only $7.3 billion. There were 271 ETFs and 26 exchange-traded notes with net outflows in October, and 179 ETFs and 16 ETNs with outflows in November….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Reuters: Forecasters may be overestimating the global supply of base metals, particularly zinc, Octagon Research said on Thursday, suggesting that hard-hit metal prices may rebound sooner than expected.

Analyst Hendrik Visagie said in a note that the market has been too focused on concerns about falling demand, and has been ignoring a supply side that is becoming much leaner as low prices and tight credit markets have forced producers to shut mines and delay new projects….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Worldofwallstreet.us: Admitted Gold and Silver are both down a little today, but crude oil and copper (the commodities I follow most closely) cratered by more than 5% to multiyear lows.

I’ll leave it to gold-theoridy to explain this, but given the alternative (when gold was correlated closely with crude) what we have now is way better for gold miners than early summer….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Straitstimes.com: Australia’s government will announce a soft start to carbon trading, cutting emissions by 5-10 per cent in a move likely to anger environmentalists but soothe businesses fearing a downturn, reports said on Friday.

The centre-left government will unveil its plans for the carbon regime on Dec 15 following divisions among senior cabinet ministers concerned about the impact a 2010 carbon trading start-up could have, as Australia fights now to avert recession….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Structuredproductsonline.com: Investors are increasingly turning to exchange-traded funds (ETFs) over other investment vehicles such as structured products, swaps and certificates, amid concerns surrounding counterparty risk, transparency and liquidity, according to the latest Barclays Global Investors’ (BGI) industry review.

Investors are showing a preference for ETFs with a fund structure, especially those which invest exclusively in securities. In the first nine months of 2008, net sales of ETFs in Europe amounted to US$54.1 billion, while European domiciled mutual funds net sales were minus $302 billion, based on data by Lipper/Feri….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Xinhuanet.com: European Union (EU) environment ministers struggled on Thursday for a deal over a climate change and energy package that would help the 27-nation bloc to meet its emissions reduction ambitions.

The ministers were debating a proposal by the European Commission on specific measures to implement a deal reached by EU heads of state and government last year to reduce greenhouse gas emissions by 20 percent by the year 2020 from 1990 levels….. Full Article: Source

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From Bloomberg: Investors should avoid industrial commodities through 2010 because the global recession will sap demand for copper and energy, said Tiberius Asset Management.

“You don’t want to be invested in anything that has a high correlation with the economy,” Christoph Eibl, who helps manage more than $1 billion of commodity investments at Tiberius Asset Management AG, said today in New York. “I don’t like industrial commodities.” …. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Guardian: The first Asian coal futures contract will this Friday add spark to the nascent paper market for the world’s most abundant form of energy, providing a hedge not only against prices but the rising threat of credit risk.

The Newcastle coal futures contract, the first to be based on globalCOAL’s dominant NEWC price benchmark, will allow end-users to lock in prices that have fallen two-thirds from their July record high of $200 a tonne, and provide a chance for producers to protect against a deepening decline….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Smeweb.com: The pound sterling plunged yesterday, with its overall value tumbling to its lowest for 13 years against the US dollar, as another spate of dire economic news left markets convinced that the Bank of England will order a further, drastic cut in interest rates today.

Interest rate cuts are not good news for the pound as investors will receive less return on their investments; thus demand for the UK currency falls along with rate cuts….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

CME Group, the world’s largest and most diverse derivatives exchange, announced today that the Commodity Futures Trading Commission (CFTC) has given regulatory approval for changes to its world benchmark Soft Red Winter Wheat futures contract.

The changes, which include seasonal storage fees and additional delivery points, are designed to improve convergence between wheat futures and cash prices at contract expiration. CME Group requested approval of the changes from the CFTC based on input from market participants, including commercial firms, grain elevator operators, individual traders, proprietary trading firms and others….. Full Press Release: Source

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From News.com.au: RIO Tinto’s stubborn rejection of BHP Billiton’s $US66 billion ($102 billion) offer appeared more misplaced than ever yesterday, as the share price gap between target and suitor narrowed to just $5.

A year ago the gap was $100 and at the peak of the deal in May, the trading gap between the two mining giants was more than $106. In the past month, investors concerned about Rio’s huge debts and the world’s faltering demand for commodities have sent the company’s share price down 60 per cent….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Latimes.com: In the U.S., the true comfort foods are chocolate and coffee — which may provide relief for investors battered by plummeting prices for oil, gold, wheat and other products.

The prices of most commodities have tumbled this year as recession has spread around the globe, hammering consumer demand for the raw materials that go into a loaf of bread, your car’s gas tank and much more….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Foxnews.com: Just as the world’s existing financial markets were hitting a five-year low two weeks ago, Britain’s Treasury raked in a cool $80 million from a brand-new one.

The occasion was Britain’s first auction of carbon-dioxide permits. Almost 4 million were auctioned off to greenhouse-gas emitters in a sale that was four times oversubscribed….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Livemint.com: Futures trading in soya oil, chana, potato and rubber resumed on 4 December on the MCX, NCDEX, NMCE and NBOT platforms, after a near six-month ban on the four items ended on 30 November.

At 1100 hours, while soya oil and chana opened weak, potato and rubber were firm. Soya oil, which has been re-launched on NCDEX, MCX and NBOT, opened weak, taking cues from the international market….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Reuter: Zurich Cantonal Bank said holdings of its platinum-backed exchange-traded fund ZPLA.S rose 27 percent to 105,200 ounces on Dec 1 from 83,000 in late September, and are up nearly 70 percent from June this year.

ZKB’s head of asset allocation Erich Meier attributed the rise to an increased appetite among investors for hard assets as a hedge against economic turmoil, and rising concerns over the prospects for mine supply….. Full Article: Source

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From Guardian: Exxon Mobil Corp expects the rate of growth in global energy demand to ease slightly in the years 2005 to 2030 due to improved energy efficiency, according to an outlook released on Thursday.

Demand growth will be fueled by rising populations and expanding economies, the world’s largest publicly traded oil company said, increasing by an average of 1.2 percent annually….. Full Article: Source

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From Rednet.cn: The recent depreciation of China’s currency against the US dollar was normal and China won’t rely on a weaker yuan to boost exports, Commerce Minister Chen Deming said on Thursday.

“The recent small fluctuation of the yuan against the dollar was completely normal. I’d call it the dollar strengthening, rather than the yuan depreciating,” Chen said….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Mhwmagazine.co.uk: claim a coalition of leading companies and environmental groups in a report to be launched at the House of Commons today (Thursday).

Far from presenting a crisis for environmental policy making, the challenges posed by the credit, resource and energy crunches actually reinforce the urgent need to accelerate the transition to a low-carbon, resource efficient economy, and align economic, environmental and societal benefits….. Full Article: Source

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From Reuters: Morgan Stanley disclosed on Thursday it is dissolving seven managed futures funds and closing eight managed futures funds to new investors as its Demeter Management Corp unit withdrew as controlling partner of these funds, effective Nov. 30.

Fund investors who have not already redeemed their interests in the seven funds will see distributions of any remaining assets on Dec. 15, according to filings with the Securities and Exchange Commission. The filings did not say why Demeter was withdrawing as general partner….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Thestreet.com: There is much confusion, speculation, lack of knowledge, etc. regarding the impact of ETFs upon the overall market.

The introduction of leveraged or “ultra” ETFs has only resulted in exacerbating the mystery of the effect of ETFs upon the indices, including the recent volatility that has gripped the markets from a day-to-day perspective and, more importantly, during the final half hour to hour of trading….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Bloomberg: Corn extended losses, falling to a 15- month low, on signs the global economic slump is cutting demand for grain from the U.S., the world’s largest exporter.

A slowing world economy has reduced demand for raw materials with consumers curbing spending and credit restrictions hampering imports. U.S. exporters sold about 387,000 metric tons of corn in the week ended Nov. 27, down 17 percent from a week earlier and 10 percent below the four-week average, the U.S. Department of Agriculture said yesterday in a report….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From FT: In the energy market, the price of crude oil is not the only value that is falling.

The difference between the price of oil for immediate delivery and the one-year forward contract – a key indicator – on Thursday widened to -$13.50 per barrel, the largest spread since US oil futures started trading 25 years ago. …. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Reuters: Aluminium prices touched 4-1/2 year lows on Thursday as the Bank of England and the European Central Bank cut rates and investors fretted about the demand outlook as inventories rose.

“People are taking big interest rate cuts as a sign that things are bad and therefore we should be worried,” analyst David Thurtell at Citi said….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Mineweb.com: Vale, the world’s largest iron ore miner, said it is laying off 1,300 workers and putting 5,500 more on paid leave, the latest sign of Brazil’s exposure to the international crisis.

Brazil’s second-biggest firm said that the credit crisis and weak demand had led it to make the layoffs and enforced leaves, which in total account for 11 percent of its global work force of 62,000 workers….. Full Article: Source

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From Thestar.com.my: The volatility of major currencies in recent months, especially the greenback, has played havoc on the books of many local companies, resulting in a number of them, particularly those with operations overseas, incurring sizeable foreign exchange (forex) losses.

But this is not the major concern for most companies. What most Malaysian companies are worried about is the continuing weakening of the ringgit against the dollar, which will have significant impact on their operational cost as well as revenue and bottomline, say most analysts….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Thehindubusinessline.com: The five listed gold exchange traded funds’ (Gold ETFs) return surged 9 per cent on the exchanges in November although their asset base and gold holdings declined.

The total gold holdings of the five ETFs as on November 30, 2008 had dropped to 5.55 tonnes, from 5.61 tonnes as on October 31, 2008. This works out to a marginal fall of 0.7 per cent in holdings….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From Guardian: Oil fell more than 6 percent on Thursday to its lowest level in nearly four years in response to further bleak economic data that could spell a deeper decline in global energy demand.

The number of U.S. workers on jobless rolls hit a 26-year high last month, the government said, while another report showed U.S. factory orders fell sharply for the third month in a row….. Full Article: Source

Posted on 05 December 2008 by VRS |  Email |Print

From AP: Gold and other commodities prices fell Thursday investors extended their flight from the futures markets amid more signs of economic weakness.

The dominating driver of the commodities markets in recent months has been the fear of a sharp drop in demand for raw materials as the country sinks further into a recession….. Full Article: Source

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