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Commodities Briefing 14.Jan 2009

Commodities luring speculators
Every commodity crash has a silver lining
Crude could go down to $33/bbl: Kotak Commodities
OPEC's oil exports seen below $400 billion in 2009: EIA
Global power demand to languish in 2009
Saudi Kingdom to go beyond OPEC cut
Fresh Uganda oil find ‘Africa’s biggest’
New twist for Pickens in energy independence fight
Bulgaria to ask EU for aid to reduce energy dependence on Russia
IndianOil defers plan to buy stake in Canada oil sands
Rising commodity prices to trigger renaissance for nuclear and gold
Tantalum: A modern metal, actually
Gold or equity: Which generates more global trade?
Will the gold rush continue in 2009?
How (some) mighty miners have fallen
Climate Exchange upbeat
India: Record foodgrain output likely this year
Coffee shortage brewing after poor Brazil crop
Wheat gains on speculation demand for U.S. supplies will rise
2008's ETF winners
Index-tracker ETFs gain investor favor
Investors surge into ETCs since November
Navigating the ETF marketplace in 2009
EU Parliament marks Euro's 10th birthday
Japan may devalue currency as strong yen poses threat to economy
Dollar rises against major currencies
Dollar hits 1-mth high vs euro on risk aversion
Elders sells commodity trading arm
SGX appoints new head of operations
Environmental defense fund launches innovation exchange
ADX to list first ETF in March; Offer derivatives by year-end
Commodity slump bruises trade
Oil settles above $37 on Saudi cuts, cold weather
Comex copper closes higher after support holds
Rising dollar keeps gold prices in check
World markets slide on negative economic indicators

Posted on 14 January 2009 by VRS |  Email |Print

From Theglobeandmail.com: It appears hedge funds are beginning to bet that the selloff in commodities that is triggering a bout of deflation is overdone.

Speculators have been adding to their long positions (bets that prices will rise in value) in a broad range of commodities followed by the U.S. Commodity Futures Trading Commission…. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From FT Alphaville: Commodities may have had a disastrous run on Monday, but if you look at the energy complex in detail it wasn’t as bad as is being made out.

Firstly, the Brent contract as traded on ICE is staying firmly above the $40 per barrel mark, last quoted about $42.74….. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Moneycontrol.com: Raghavan Sundararajan of Kotak Commodities said crude prices could go down to USD 33 per barrel.

“The near-month contract in crude is approaching expiry. So what is happening in crude is because of the wide contango in crude, traders are buying the near month and selling the far month,” Sundarajan said. …. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Reuters: Cheaper crude oil prices will drop OPEC’s oil export revenues in 2009 to the lowest level in five years, the U.S. government’s top energy forecasting agency said on Tuesday.

The Organization of the Petroleum Exporting Countries said it will cut its production by a total of 4.2 million barrels per day to try to stop the fall in prices….. Full Article: Source

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From Commodities-now.com: The outlook for energy commodities this year remains grim, according to Francisco Blanch, Commodity Strategist at Merrill Lynch in London.

With global economic activity on a freefall and unemployment rising, the outlook for energy commodities remains rather grim. …. Full Article: Source

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From Arabnews.com: Saudi Arabia plans to go beyond OPEC’s deepest ever single cut in supply as the world’s top oil exporter looks to halt a slide that has lopped over $110 off the oil price since July.

The Kingdom will pump below its OPEC target in February at its lowest level in over six years and is prepared to go further still to balance a market battered by falling demand and a global recession, Minister of Petroleum and Mineral Resources Ali Al-Naimi told reporters yesterday….. Full Article: Source

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From Timesonline.co.uk: Heritage Oil announced details of a large oil discovery in Uganda yesterday, which the company claimed could be the largest onshore discovery in sub-Saharan Africa.

Heritage said that its latest discovery – Giraffe1 – in the Lake Albert region, could total at least 400 million barrels of oil….. Full Article: Source

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From AP: Texas oilman T. Boone Pickens is adding a new wrinkle to his push for U.S. energy independence: monthly updates to remind Americans how much money they’re paying for foreign oil.

Pickens, a billionaire who is spending $60 million on a high-profile campaign to boost the use of wind power and natural gas, said Tuesday the updates would be a yardstick for measuring the incoming Obama administration’s progress on its goal of eliminating Middle East oil imports within a decade….. Full Article: Source

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From Xinhua: Bulgarian Energy Minister Peter Dimitrov said on Monday the country is going to ask the European Union (EU) for 400 million euros (about 520 million U.S. dollars) in aid to help reduce its energy dependence on Russia, the local press reported on Tuesday.

Dimitrov said about 125 million euros (about 163 million dollars) will be used to build pipelines connecting Bulgaria’s natural gas network to those of Greece (the Turkey-Greece-Italy pipeline) and Romania….. Full Article: Source

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From Livemint.com: The change in strategy is because the acquisition would be financially viable only when crude oil prices are at $60 per barrel compared with $38 per barrel Tuesday.

Even a small stake in oil sand blocks could run into billions of dollars, simply because it is very expensive to extract oil from oil sands—which are essentially deposits of bitumen (a kind of coal)—that is first converted to crude oil using specialized technology and then further refined to produce petroleum products….. Full Article: Source

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From Theaureport.com: Commenting on what he views as an inevitable hike in commodity prices—and an equally inevitable shift into inflation—James Passin considers a nuclear renaissance a sure bet too.

James discusses the changing landscape of nuclear technology and shares his love of gold and his thoughts about where its price is headed in the coming years….. Full Article: Source

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From Hardassetsinvestor.com: Quite apart from having been discovered relatively recently, tantalum’s uses are decidedly modern, especially its main use in electronics: in capacitors.

While tantalum capacitors may command only a 3-5% share of the overall capacitor market, in 2007, according to figures from Talison Minerals (until recently the world’s largest single producer of tantalum), demand for the tantalum wire and metal powder used to make them accounted for around 50% of global tantalum production (around 2,000 tonnes of tantalum metal)….. Full Article: Source

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From Commodityonline.com: There is still no conclusive evidence to establish that global gold trading beats equity trading volumes. However it is a fact that gold trading through OTCs, through Futures and options in exchanges and Exchange Traded Funds have zoomed by 50-80 percent in recent years.

According to a report by International Financial Services Ltd (IFSL) London, although the value of above ground gold and silver is relatively small compared to the global equity and bond market, turnover is high….. Full Article: Source

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From Thisismoney.co.uk: Gold bullion beat all other asset classes yet again in 2008, the second year running and the third time since 2005. A £1,000 investment in gold bullion on New Year’s Eve last year would now be worth more than £1,427, according to new research from BullionVault, a gold dealer.

During the same period, the FTSE 100 index of the UK’s top firms has dived by almost one-third of its capitalisation, turning £1,000 into less than £689….. Full Article: Source

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From Mineweb.com: For mining companies, the full impact of the ongoing unravelling of global financial and credit markets is yet to be fully described and understood.

Since March 2008, when Bear Stearns, once a Wall Street investment bank, went down, the global economy has been subjected to one money-related catastrophe after another, be it the failure of Lehman Bros., another Wall Street investment bank that hit the gutter in mid-September 2005, or the virtual collapse of the US auto industry….. Full Article: Source

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From Growthcompany.co.uk: Emissions exchange operator Climate Exchange says trading volumes rose 175 per cent last year. The AIM-quoted company, which claims volume shares of 91 per cent in European Union Allowance futures and options and 87 per cent in Certified Emission Reductions, says it started this year with 357,078 open-interest contracts, against 176,110 at the beginning of 2008.

Run by ex-insurance luminary Neil Eckert, Isle of Man-based Climate Exchange, which lifted first-half pre-tax profits from £309,000 to £1.6 million on doubled interim turnover of £11 million, highlights a fourfold increase in trading volumes across its ‘Carbon Financial Instrument complex’ last year….. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Livemint.com: India is likely to witness bumper foodgrain production this year, breaching last year’s record, on the back of conducive weather and higher acreage under rice, coarse cereals, oilseeds and pulses.

India produced a record 230.67 million tonnes of foodgrain in 2007-08, favoured by an all-time-high output of rice, wheat, coarse cereals and pulses. Higher acreage and good weather would boost prospects….. Full Article: Source

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From FT: A substantial fall in Brazilian coffee production this year looks likely to drag the global coffee market into a supply deficit in 2009-10, according to the International Coffee Organisation which released its latest monthly report on Monday.

The ICO said Brazil’scoffee production, which follows a biennial cycle (high output one year followed by low the next), could fall from 46m 60kg bags in 2008-09 to between 36.9m and 38.8m bags this year, a drop of 16 to 20 per cent….. Full Article: Source

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From Bloomberg: Wheat prices rebounded from the biggest plunge since at least 1986 on speculation that demand will increase for high-quality U.S. grain used to make staple foods such as bread and pasta.

Japan said today it plans to buy 90,000 metric tons of U.S. wheat for March shipment. The Philippines may boost imports of the grain to be used in animal feed because domestic corn prices more than doubled….. Full Article: Source

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From Morningstar.com: In 2008, ETFs experienced total cash inflows of approximately $160 billion, with much of the action occurring in the back half of the year when fear trumped greed and markets went into panic mode.

Scott Burns, director of ETF Analysis wrote an article at the end of September discussing some theories as to why there has been such a divergence in asset flows between ETFs and their open-end mutual fund brethren….. Full Article: Source

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From WSJ: Investors are abandoning riskier stock strategies in favor of the relative calm and lower costs of plain-vanilla exchange-traded funds.

Through November, ETFs posted net buying, or inflows, of $138 billion for 2008, while long-term mutual funds saw an exodus of $185 billion, according to consultants Financial Research Corp….. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Investmentweek.co.uk: Inflows into exchange traded commodities have risen by over £577.5m since November 2008, according to new data from ETF Securities.

It follows sharp declines in the ETC sector during the July to October period last year….. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Seekingalpha.com: Not unlike the sentiment toward the market as a whole, the battered feelings of investors have begun to turn against segments of the exchange-traded product industry.

Fiftyeight exchange-traded funds (ETFs) and exchange-traded notes (ETNs) closed during 2008, prompting some commentators to cry doomsday—with one well-read Web site posting an “ETF Deathwatch” for funds on the brink….. Full Article: Source

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From IHT: The European Union celebrated the euro’s 10th birthday on Tuesday, saying the shared currency is a strong beacon of stability during the financial turmoil. The global crisis also has increased the allure of the currency to several countries in Europe that have never adopted it.

European Central Bank chief Jean-Claude Trichet said the downturn and banking crisis has demonstrated the benefits of the euro, which was launched on Jan. 1, 1999….. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Indiatimes.com: Rising currency amid the deepening global recession has become headache for the Japanese economy. In the past five months, the yen has
moved from 110 to 89 against the US dollar, dampening the demand for the Japanese goods in foreign countries.

Japan, which is in the midst of its first recession in the last seven years, showed a trade deficit of 93.4 billion yen, against a surplus of 907.6 billion yen a year earlier….. Full Article: Source

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From Xinhua: The dollar rose against major currencies Tuesday as investors’ risk appetite was hurt by comments from U.S. Federal Reserve Chairman Ben Bernanke.

In a speech in London, Bernanke supported the use of further fiscal stimuli to support the economy, but said that would not be enough to bring the economy back to health and Wall Street may need additional bailouts. …. Full Article: Source

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From Forbes: The dollar rallied broadly on Tuesday, hitting a one-month high against the euro as falling shares and weak oil prices underlined the global economy’s problems, cranking up the drive to shed risky positions.

Escalating risk aversion also boosted the low-yielding Japanese yen to its highest level against the dollar in nearly four weeks….. Full Article: Source

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From News.com.au: Futuris subsidiary Elders has sold its commodity trading arm, Elders Risk Management, to Nasdaq-listed US commodity trader FCStone for an undisclosed sum.

Elders Rural Services managing director Mike Guerin said the decision to divest was in line with the company’s refocus on core services. “We’re not commodity traders,” Mr Guerin said. …. Full Article: Source

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From Mondovisione.com: Singapore Exchange Limited (SGX) announced today that it has appointed Mr Benjamin Foo, Senior Vice President (SVP), as Head of Operations. He is currently SGX’s Head of AsiaClear and Clearing and Commodities Business.

The appointment takes effect from 1 March 2009. In his new role, Mr Foo will be responsible for the trading, clearing and settlement operations of the securities and derivatives markets, as well as the securities depository function. …. Full Article: Source

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From Greenbiz.com: The Environmental Defense Fund (EDF) has launched its new Innovation Exchange website with the purpose of encouraging and making it easy for companies to share best practices related to energy, water, climate and a host of other issues.

The site contains recommendations, case studies, research, tools and other resources on a number of topics organized by environmental aspect or industry. …. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Khaleejtimes.com: Abu Dhabi Securities Exchange (ADX) will list its first Exchange Traded Funds (ETFs) in March, and will offer derivatives contracts by year-end, said its chief executiveTom Healy.

Tom Healy said Abu Dhabi Securities Exchange would be the first bourse in the Middle East to offer an asset-backed product that would expand choices and opportunities to investors. …. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Theglobeandmail.com: The world is turning its back on Canada’s commodities. Slumping global demand for resources, particularly oil, drove Canada’s trade surplus to its lowest level in more than a decade, pointing to lower corporate profits and a deepening downturn in the months to come.

Deteriorating demand and falling prices for energy products spurred a 6.8-per-cent drop in exports, while the same factors drove a 4.8-per-cent slide in imports, Statistics Canada said. …. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Guardian: Oil prices settled higher on Tuesday, bolstered by cold weather in the United States and comments by OPEC member Saudi Arabia that it had made deep production cuts.

The news offset a report by the U.S. Energy Information Administration further revising down its forecast for 2009 global oil demand….. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Fxstreet.com: Copper futures turned higher late Tuesday after bouncing from chart support, with the metal helped by a recovery in crude oil plus ideas that mining companies may rein in new investment during soft economic times and low metals prices, analysts said.

Initial weakness was blamed on worries about the economy dampening demand, along with continually rising warehouse inventories….. Full Article: Source

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From Forbes: Gold prices ended trading slightly lower Tuesday, giving up some earlier gains, as a strengthening dollar kept the commodity’s advance in check.

Oil prices rebounded slightly while other precious metals and agriculture futures were mixed….. Full Article: Source

Posted on 14 January 2009 by VRS |  Email |Print

From Voanews.com: Another dismal day on the overseas markets as the global economic downturn continues. In Asia, tumbling Chinese exports are now affecting jobs there. In Europe, British retail sales are nose-diving.

Wave upon wave of negative economic reports keep pushing the world markets down….. Full Article: Source

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