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Commodities Briefing 11.Dec 2008

Posted on 11 December 2008 by VRS |  Email |Print

From Reuters: To some the six-year bull run in commodities is definitely over, but depressed markets and deep cuts in output may yet set the stage for another bubble.

When that will be is uncertain given the crisis engulfing financial markets, but many investors take the view a significant recovery could be at least two years away….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Telegraph.co.uk: Rio Tinto gambled its future by contracting debt on a grand scale to fund its heady expansion near the top of the commodity bubble.

There is no such thing as consensus in the commodity world, but most experts still think that the economic arrival of two billion people in Asia is a “game-changer” that will underpin prices for years to come. Oil fields are running down in the North Sea, Mexico, and Western Siberia….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Fxstreet.com: The Euro (EUR) finally broke through the 1.3000 level as commodities extended their rally and the USD was broadly weaker. Above 1.3000 has been hard to maintain though in recent times so the market is hesitant to be too aggressive above the key level.

EUR/GBP tested resistance at .8800 as the Euro outperformed other majors. Overall the EUR/USD traded with a low of 1.2905 and a high of 1.3069 before closing the day at 1.3020. …. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Businessgreen.com: The high uptake in developing countries of projects which gain funding through carbon trading schemes will flood the market with credits in 2009 leading to a collapse in the price of carbon credits, according to a report out today by the Carbon Trust.

Initiatives such as the Clean Development Mechanism (CDM) and Joint Implementation (JI) were set up by the Kyoto protocol to allow developed countries to buy in carbon credits to meet emissions targets from emission reduction projects in developing countries….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From WSJ: Exchange-traded funds that let investors bet on energy prices and stocks are among the most popular offerings, judging by their considerable trading activity, but some of these ETFs have been slammed by the steep declines in crude-oil prices.

“There simply is very little buying coming into the markets,” said MF Global analyst Edward Meir. “With respect to crude, it is anyone’s guess where we go from here.”…. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Guardian: Gold ended over 4 percent higher on Wednesday, rising above $800 an ounce on the back of technical support, broad-based commodity gains and higher appetite for risks across all asset classes.

Strength in the industrial metals and firmer equity markets also cheered buyers, as U.S. stocks held onto initial gains because of improved economic sentiment….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Timesonline.co.uk: Russia is poised to join Opec in a co-ordinated action next week that could lead to global oil production being cut by up to two million barrels a day.

The move, designed to put a floor under a slide in crude prices of more than two thirds since July, will be announced to coincide with Opec’s meeting in Oran, Algeria, on Wednesday, according to Sergei Shmatko, the Russian Energy Minister. …. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Reuters: A majority of investment funds in North America plan to place at least 10 percent of their money in commodities over the next three years, despite the recent collapse in prices which has left many nursing heavy losses, according to an annual survey by Barclays Capital.

“People still want commodity exposure in their portfolios,” said Barclays Capital analyst Kevin Norrish. “They still greatly value commodities for their diversification prospects.”…. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Mineweb.com: Major Drilling Group International, the world’s No. 2 mine drilling company, expects a “significant” slowdown in base metals exploration next year and is uncertain about future activity in the gold-mining sector, the company said on Tuesday.

On a conference call to discuss the company’s second-quarter earnings, Chief Executive Francis McGuire said the current economic climate has weighed on drilling activity and will continue to do so in the short to medium term….. Full Article: Source

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From Cattlenetwork.com: Investors burned by the commodity crash this year now have another way to lose money. Some markets that major commodity indexes track have tilted into an extreme version of a pattern known as “contango,” in which commodities for delivery within weeks cost less than those for delivery later on.

Index-tracking funds often “roll” nearby contracts from one month to the next as they expire. In a contango market, that means selling low and buying high on a monthly basis. …. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Globeinvestor.com: More than $6.8-billion (U.S.) in Canadian spending commitments made by RioTinto PLC are being delayed or suspended as the London mining giant wrestles with the crushing debt load it took on to buy Alcan Inc.

Rio is suspending an $800-million expansion of its iron ore operations in Labrador and initiating a drastic company-wide cost-cutting plan that will see a dramatic slowdown in spending on three Canadian aluminum smelter projects in Quebec and British Columbia worth about $6-billion….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

The Credit Suisse Commodity Return Strategy Fund, managed by Christopher Burton and Andrew Karsh, provides exposure to the return of the Dow Jones - AIG Commodity Index Total Return, and is designed to achieve positive total return relative to the performance of the Index.

The Fund invests its assets in a combination of commodity-linked derivative instruments and fixed-income securities….. Full Press Release: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Mondovisione.com: The Regional Financial Centre of Almaty City (RFCA) and OJSC “Russian Trading System” Stock Exchange have set up a commodity exchange, JSC “Eurasian Trading System” headquartered in Almaty, Kazakhstan.

The new exchange is 60% owned by RTS and 40% by RFCA, with the total authorized capital of $533,000. Trading on ETS is scheduled to start in the first quarter of 2009. The new commodity exchange is a trading floor for spot and derivatives trading in commodities. Initially, futures contracts on wheat and fuels will be launched….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From BBC: As the massive yellow truck approaches the digger, it manoeuvres into position and honks its horn, signalling its readiness to receive a payload of 400 tonnes of black, oily sand.

Already, another truck has stopped some 100m away, ready to take its turn ferrying oil sand from the mine face to the crushers for the first step in its processing into oil. …. Full Article: Source

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From Telegraph: Sterling hit a record low against a basket of currencies today after the pound sank to new lows against the euro overnight, weighed by a grim outlook for the UK economy and the prospect of more rate cuts.

Trade-weighted sterling was at 79.7, Bank of England data showed. It was the lowest on a daily basis on BoE data going back to 1990….. Full Article: Source

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From Guardian: A cross-party group of Lords has called on the government to reinvest the millions raised from the sale of carbon emission permits in green technology, following criticism that ministers are planning to add the funds to the Treasury’s books.

In a bid by member states to reach the EU target of cutting carbon emissions by 20% by 2020, a portion of permits are already being auctioned within the emissions trading scheme (ETS), but plans to be decided in Poznan tomorrow could see 100% of permits auctioned….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Seekingalpha.com: With the price of oil falling dramatically lately, oil stocks have begun to significantly outperform the commodity. Below we highlight the historical ratio of oil stocks (S&P 500 oil & gas group) to the price of oil. When the line is rising, oil stocks are outperforming oil, and vice versa when the line if falling.

As shown below, as oil made its meteoric run earlier this year, the ratio got all the way down to its lowest levels since the early 1990s….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Yourrenewablenews.com: Morocco’s state-run pension fund Caisee de Depot et de Gestion (CDG) has set up a carbon trading fund with capital of MD300m ($35m). CDG will hold 50 per cent of the capital of Fonds Capital Carbone Maroc (FCCM). The European Investment Bank will hold a 25 per stake.

Caisse de Depots et Consignations, which heads up sustainable development in the country, will also hold 25 per cent. FCCM will promote and participate in projects connected with implementing the clean development mechanism of the Kyoto Protocol on climate change, which was agreed in 1997….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Reuters: The international financial crisis is set to sharply slow growth in emerging and developing economies next year, ending a five-year global commodity price boom, the World Bank said on Tuesday.

The World Bank’s 2009 Global Economic Prospects report forecast world growth will weaken to 0.9 percent next year from 2.5 percent in 2008 with simultaneous recessions in the United States, Western Europe and Japan….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

The development of a successful global carbon trading market that delivers real and cost-efficient greenhouse gas emission reductions will require an improved market infrastructure, according to a report issued today by The Bank of New York Mellon entitled, “Towards a Common Carbon Currency: Exploring the Prospects for Integrated Global Carbon Markets.”

The report — prepared in conjunction with Point Carbon, a world-leading provider of market intelligence, forecasting and advisory services for the energy and environmental markets — finds that for a global carbon trading market to allocate capital to the lowest cost carbon reduction projects worldwide it must be based on standardization, liquidity, transparency and predictability. …. Full Press Release: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Scoop.co.nz: New Zealand farmer confidence has slumped as concerns about global financial markets and flagging commodity prices take hold, according to the latest quarterly Rabobank/Nielsen Rural Confidence Survey.

The latest figures show New Zealand rural confidence has moved into negative territory, with more farmers now expecting conditions to worsen than to improve….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Dw-world.de: The European Union must pay special attention so as not to gamble away its leading position on climate protection, Geman Environment Minister Sigmar Gabriel said.

There are several complex questions that need to be answered, such as ‘how should all this be financed?’ and ‘which states should bear CO2 output reductions?’ These questions are the subject of our talks in Poznan. But pioneering decisions will not be made here….. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From Mineweb.com: With major miners cutting back capex commitments sharply and others unable to proceed with current projects in the pipeline, logic suggests we may be in for another commodities boom sooner rather than later.

The latest cuts announced today by major mining company, Rio Tinto follow on announcements of huge cutbacks in capital spending by all the other major mining companies amounting to tens of billions of dollars in total. …. Full Article: Source

Posted on 11 December 2008 by VRS |  Email |Print

From AP: Commodities investors set aside their preoccupation with the economy Wednesday, focusing on a weakening dollar as they sent prices for gold and other contracts higher.

Futures that have suffered a protracted decline on a steady stream of bad economic news and the dollar’s long advance reversed course as the greenback, down over the past two weeks, fell against the euro and other major currencies….. Full Article: Source

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