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Commodities Briefing 07.Jan 2009

China makes strategic use of commodity collapse
India: Commodities begin year with a bang
Australia: Rising commodities prices lift share markets
Prices for NZ commodities fall in December
Commodities down, Hedge Funds not out as market looks to '09
Commodity doom and the African economy
Gold will win the battle of the safe havens
Gold needs to maintain above $825- $830 range
Copper leaps on index rebalancing
Shortage of lead sees 40 percent metal price rise in China in past month
The world must go beyond Doha
Steve Rayner: The climate change challenge
Canada’s Dollar rises to highest in two months on commodities
US Dollar mixed against major currencies
Energy & Carbon - Review of the year 2008
Europe begins to freeze as gas taps are turned off in energy war
Oil prices to top $100/bbl by end of 2010-Pickens
Rally ahead of index reshuffle of investments
Fund buyers back in commodities game
Dubai commodities exchange records strong growth
MCX may launch electricity futures
Nasdaq opens derivatives clearinghouse
IDCG launches clearinghouse for OTC IRS
2009 weights of Dow Jones-AIG Commodity Index
Shanghai Futures Exchange to launch steel futures trading
CME reports sharp dropoff in December futures trading
China's strategic commodity purchases
Kuwait, Iran join OPEC peers with supply oil cuts
Comex copper futures surge on index reweighting
Oil hits $50 as Middle East conflict escalates
Opec cuts boost prices
Cotton rises as falling output may exceed decline in demand
Chicago grain futures gain with bullish sentiment
Dispute drives wholesale gas prices sharply higher
Gold edges down on firm dollar
US soy above $10, at 3-month high on weather woes

Posted on 07 January 2009 by VRS |  Email |Print

From Reuters: China’s government is using the collapse in commodity prices to further its domestic agenda, with support for stricken sectors tailored to speed up reform plans rather than rescue ailing companies or prop up prices.

To survive plummeting demand for exports — a sharp turnaround after several years of booming global demand — many industries are looking for state help and consolidation….. Full Article: Source

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From Economic Times: Year 2009 has started on a positive note for the commodity markets with most commodities rallying. In the non-agri space, crude oil has shown substantial gains, followed by base metals.

Even the agri counter, driven by sugar, soyabean, guar seed and spices, is witnessing better interest amongst investors. Gold has, however, acted as a contrarion, having fallen on the back of a rising dollar….. Full Article: Source

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From The Australian: The Australian share market reversed direction yesterday, rising strongly on the back of surging commodity prices.

The benchmark S&P/ASX 200 climbed 55.7 points, or 1.5 per cent, to 3742.7 while the All Ordinaries was up 50.3 points at 3689.2, despite a poor lead from Wall Street, which slid almost 1 per cent after car manufacturers released weak December sales figures….. Full Article: Source

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From Nbr.co.nz: The ANZ’s index of international commodity prices last month recorded its broadest fall in prices since the series started more than 20 years ago. Every commodity, except apples, recorded a fall in December, ANZ economist Steve Edwards said today.

That represented the broadest monthly drop in commodity prices measured across the New Zealand export basket since the series started in 1986….. Full Article: Source

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From Cattlenetwork.com: Hedge funds that trade commodities are warily sensing opportunities. A number of managers are wading deeper into commodities - a surprising move given that the hedge-fund industry has just wrapped up one of its toughest years on record and raw materials prices are plumbing lows.

Commodity boosters argue the futures contracts they trade on regulated exchanges are transparent and easy to convert into cash, two attractions for investors trapped in more opaque asset classes….. Full Article: Source

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From Commodityonline.com: The unprecedented commodity price boom that began in October 2001 and that lasted for more than seven years came to an end in July 2008 amid slowing global economic growth.

According to the World Bank’s Global Economic Prospects 2009, overall, global GDP growth is projected to decline to 0.9 percent in 2009 while growth in developing countries will fall to 4.5% from 7.9% recorded in 2007….. Full Article: Source

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From Mineweb.com: Ultimately, as the realisation worldwide materialises that the U.S economy is hugely overstretched, gold will come to the fore as the true safe haven - but it may take some time to do so.

The gold price is already showing signs of volatility in the New Year with the price rising strongly at the close of 2008 and the first couple of days of 2009 and then falling back fairly sharply….. Full Article: Source

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From Commodityonline.com: It is difficult to get an accurate read on today’s price action because it was dominated by front running of index fund rebalancing to conform to changes being made in some of the major commodity indices.

Copper was up 7% at one time today based solely on a heavier weighting of the metal in two of the indices….. Full Article: Source

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From Theglobeandmail.com: Copper climbed to its highest level in nearly five weeks on Tuesday, buoyed by economic stimulus optimism and an annual portfolio rebalancing by major commodity index funds, but the rally was expected to be short-lived as demand concerns remain.

The Dow Jones AIG recalculates the weightings for the individual commodities in its index yearly and is set to raise the weighting for copper traded on the New York Mercantile Exchange’s Comex division….. Full Article: Source

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From Mineweb.com: Reduced supply, coupled with high winter demand, has seen lead prices rise by some 40 percent in China in the past month.Chinese prices of spot lead, used in batteries, have risen 40 percent in the past month, buoyed by reduced supply and stronger winter demand for automobile batteries, industry officials and traders said on Tuesday.

The rise in China, which consumes a third of the world’s lead, exceeded a 16 percent rise the same month on the London Metal Exchange MPB3, where the metal price was $1,122 on Tuesday….. Full Article: Source

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From FT: The recent G20 summit communiqué included a commitment by world leaders not to impose protectionist measures. The ink was barely dry before a number of countries took measures to protect domestic companies.

Russia imposed a number of import tariffs. India slapped restrictions on steel. France created a fund to protect French companies….. Full Article: Source

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From Theglobeandmail.com: One of the things in the long term is that we have to think about how businesses who are close to the coal face, so to speak, on this issue, see themselves.

So, for example, the oil industry for the most part still sees itself as producing petroleum, hydrocarbon fuels. To some extent, with a move towards biofuels, it has taken faltering steps in the direction of seeing themselves as producing liquid fuels, possibly not hydrocarbons….. Full Article: Source

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From Bloomberg: Canada’s currency climbed for a third day, appreciating to the strongest level in two months against its U.S. counterpart, as commodities such as gold and copper advanced and crude oil traded above $50.

“The Canadian dollar is on top of the leader board,” said Sacha Tihanyi, Toronto-based currency strategist at Scotia Capital Inc., a unit of Canada’s third-biggest bank….. Full Article: Source

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From Xinhua: The dollar was mixed against major currencies on Tuesday amid weak data from both the U.S. and the euro zone.

New orders for manufactured goods in November, down for four consecutive months, decreased 4.6 percent, the U.S. Commerce Department reported on Tuesday. The drop was much larger than a loss of 2.5 percent expected by analysts….. Full Article: Source

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From Edie.net: From groundbreaking legislation, to the promise of a greener President, to ever more daring protest stunts, the world of climate change and energy had it all in 2008.

The European Commission began the year by announcing a package of measures to reduce greenhouse gases by at least 20% by 2020….. Full Article: Source

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From Timesonline.co.uk: Outside, the temperature plummeted to minus 12. Inside, the gas stopped flowing to homes in some of Europe’s eastern cities in the dead of night and stayed off all day while the thermometer stayed below zero.

Tens of thousands living on the shores of the Black Sea were the first to feel the bitter impact of Russia’s dispute with Ukraine over gas payments on the coldest day of the year….. Full Article: Source

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From Guardian: Texas billionaire T. Boone Pickens said on Tuesday that oil prices will rise above $100 a barrel by the end of 2010 as the global economy recovers.

Oil prices in the $40 a barrel range are “not going to be around much longer,” Pickens told a gathering at the James A. Baker III Institute for Public Policy at Rice University in Houston….. Full Article: Source

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From Guardian: From copper to grains to oil, a range of commodities were lifted on Tuesday in a wave of buying by investors as major commodity indexes prepared to reshuffle their portfolios for the year.

Oil rose to a one-month high above $50 per barrel before retreating amid fresh concerns over the U.S. economy, copper rallied 7 percent and U.S. soybeans surged to three-month highs….. Full Article: Source

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From Canadiancattlemen.ca: The continued talk of weather concerns in South America has the funds thinking it’s time to get back in the game and they pushed futures values up across the board.

This may offer some additional momentum to the markets but a change in weather could derail this rally real fast and there are calls for showers later this week in some of the drier regions in South America….. Full Article: Source

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From Gulf Daily News: The Dubai Gold and Commodities Exchange (DGCX) posted strong growth in precious metals, currencies and energy last year. It also diversified its portfolio by introducing innovative products into the Middle Eastern market.

The exchange recorded 26 per cent year-on-year growth with 1.14 million contracts, valued at $57.5 billion, traded last year. Average daily volume touched just over 4,500 contracts last year, an increase of 28pc compared with 2007….. Full Article: Source

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From Business-standard.com: Power producers and consumers may soon have a new hedging tool in the form of electricity futures as Multi Commodity Exchange (MCX) is readying itself to launch the product, and is expecting regulatory approval for the same shortly. The MCX spokesperson was not available for comment.

According to Section 15 of the Forward Contracts (Regulation) Act 1952, futures trading in electricity is permissible. Spot power trading is done on the Indian Energy Exchange (IEX), floated by the FT group, and the Power Exchange of India (PXI), promoted by the National Stock Exchange (NSE) and others….. Full Article: Source

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From WSJ: A derivatives clearinghouse owned by Nasdaq OMX Group Inc. has gone live in recent days and started clearing over-the-counter contracts tied to interest rates.

The exchange operator’s chief executive, Bob Greifeld, said it is looking to sell equity stakes in the clearinghouse in the coming months….. Full Article: Source

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International Derivatives Clearing Group, LLC (IDCG), a majority owned, independently operated, subsidiary of The NASDAQ OMX Group, Inc.(sm), today announced the official launch of its clearinghouse. IDCG began accepting U.S. Dollar denominated Interest Rate Swap (IRS) Futures contracts for clearing and settlement on December 29, 2008.

These IRS Futures contracts have been cleared by IDCG’s wholly owned, Commodity Futures Trading Commission (CFTC) regulated clearinghouse, International Derivatives Clearinghouse (IDCH)….. Full Press Release: Source

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From Mondovisione.com: The target weights for the Dow Jones - AIG Commodity IndexSM (DJ-AIGCI (SM) ) to be implemented in January 2009 and originally published on August 13, 2008 are repeated below.

The 2009 target weights were originally approved by the Dow Jones-AIG Commodity Index Supervisory Committee in August 2008….. Full Article: Source

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From China Knowledge: The Shanghai Futures Exchange (SHFE) is planning to launch the steel futures contracts on the mainland after the Lunar New Year, according to an unnamed industry sources.

The Chinese futures exchange will team up with the Dubai Gold and Commodities Exchange, India’s National Commodity & Derivatives Exchange and the Multi Commodity Exchange of India, as well as the London Metals Exchange and Chicago Mercantile Exchange to jointly launch the trading….. Full Article: Source

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From WSJ: CME Group Inc., which owns three major U.S. futures exchanges, reported a 22% fall in average daily trading activity in December, leaving the world’s largest operator of derivatives exchanges with its lowest annual increase since 1999.

Reduced activity in its core complex of interest-rate products left the Chicago-based company, which owns the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, with year-on-year declines in four of the last 12 months….. Full Article: Source

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From Guardian: Following is a list of commodity purchases planned by China’s state and commercial reserves. The list includes purchases and planned purchases by the State Reserves Bureau and by Yunnan Province, which has launched its own drive to buy up metals.

The SRB is buying directly to replenish state reserves that typically are stored for an unknown length of time…… Full Article: Source

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From Dailytimes.com.pk: Evidence of OPEC members implementing the group’s biggest ever output cuts grew on Tuesday as Kuwait and number two producer Iran told some Asian customers of bigger supply curbs, hoping to put a firmer floor under prices.

Iran and Kuwait will deepen curbs on supplies to customers this month, refiner sources said on Tuesday, as both Gulf producers join OPEC peers in cutting back output to put a firmer floor beneath prices….. Full Article: Source

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From Fxstreet.com:Copper futures rallied as participants bought amid commodities index reweighting, but that support is tenuous as economic concerns linger.

March copper rose 12.4 cents, or nearly 8.5%, to settle at $1.5830 per pound on the Comex division of the New York Mercantile Exchange. The contract hit $1.5850, its highest point in more than a month….. Full Article: Source

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From FT: Oil prices hit the the $50 a barrel level on Tuesday amid escalating violence in the Middle East as fighting between Israel and Hamas showed little prospect of ending quickly.

Nymex February West Texas Intermediate fell 23 cents to $48.58 a barrel after touching a high of $50.04….. Full Article: Source

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From FT: Oil prices rose above $50 a barrel on Tuesday amid a growing belief that Opec is succeeding in delivering cuts in production.

Oil traders have been largely sceptical about the cartel carrying out the three output cuts totalling 4.2m barrels a day it has announced since September. But preliminary evidence of lower supplies has now pushed prices higher….. Full Article: Source

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From Bloomberg: Cotton prices rose to a 10-week high in New York on expectations that a plunge in global production will exceed a drop in demand and as investors snapped up commodities that declined in value in 2008.

Global cotton output may fall by 7.4 percent in the year ending July 31, more than an expected 5.5 percent drop in demand, the U.S. Department of Agriculture said Dec. 11….. Full Article: Source

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From Xinhua: Soybeans and wheat jumped Tuesday to a three-month high and corn gained the most in three weeks on the Chicago Board of Trade.

Short covering and some new speculative long positions provided a sharp boost for prices in the grain markets, said analysts….. Full Article: Source

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From Guardian: Wholesale gas prices rose sharply yesterday as the cold snap continued to drive British demand higher.

Analysts played down the immediate impact of the row between Russia and Ukraine but said if it dragged on there could be an impact on the price of gas coming into the UK….. Full Article: Source

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From Reuters: Gold edged down on Wednesday as the dollar’s gains against the euro reduced the metal’s appeal as an alternative asset.

As of 0022 GMT, spot gold fell 0.5 percent to $859.00 an ounce from New York’s notional close of $863.35. Still, gold is off a two-week low of $838.55 marked in New York on Tuesday, when the dollar extended its rally to a one-month high against the euro….. Full Article: Source

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From Guardian: U.S. soy soared to a three-month high above $10 a bushel on Tuesday with the market lifted by weather worries in South America and continued strong demand for soy, especially from China.

“There’s a lot of dryness that extends from Buenos Aires to Santa Fe, Argentina, northeastward into west-central Rio Grande do Sul. That is a significant growing area in Argentina and an important bean area in Rio Grande do Sul,” said Mike Palmerino, forecaster for DTN Meteorlogix weather….. Full Article: Source

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