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Commodities Briefing 16.Jan 2009

Commodities investors hit as oil benchmarks diverge
No short-term positives for commodity prices
Hanging up the commodities boom hat
Why hedge funds are liquidating commodities
Commodity investors see rich pickings in grains
Jittery investors take refuge in physical gold
Gold is down, but not out
Gold and silver trading at record levels in 2008
Gold revaluation - Clutching at golden straws
Gold...a short sale on the next rally?
South African gold output plunges by 14%
Fresnillo forecasts repeat of record 2008 silver production in year ahead
9 ETFs for 2009 (and beyond)
OPEC again cuts 2009 world oil demand forecast
No gas for you in US
Russia no longer 'reliable' energy supplier
UAE in line to become first Arab country with nuclear power
Companies lay out wishes for US carbon law
Carbon market worth almost €100bn in 2008
Business-enviro group comes out for cap-and-trade
Aviation industry looks to cut emissions
Europe leads growing carbon markets, for now
India hops on the carbon credit bandwagon
UN carbon trading scheme suspends reluctant Russia
Metal futures cool down after price rebound
Rio Tinto considers cutting output further
Data hurts base metals prices
Russia devalues again, rouble at record low vs dlr
N.Z. Dollar volatility reaches two-month high as risks rise
How can a currency rise in value - even with shockingly low interest rates?
Four FMC nominees on board of commodity bourses
CME Group to expand international incentive programs
Benchmark DME Oman crude oil futures contract up 35% on previous high
CX and ICE Futures Europe begin publishing a CER Index as price reference tool
World Cocoa Foundation pledges to make cocoa-growing sustainable
Oil, copper dive on scare over US jobs, banks

Posted on 16 January 2009 by VRS |  Email |Print

From FT: The price difference between the world’s two main oil price benchmarks - West Texas Intermediate and Brent - widened yesterday to a record as inventories at the delivery point of WTI, in Cushing, Oklahoma, surged to an all-time high.

ICE February Brent traded yesterday at a record intra-day premium of $8.46 a barrel over Nymex February WTI, well above a previous peak of $6.60 a barrel set in May 2007….. Full Article: Source

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From Fnarena.com: Commodities enjoyed a positive start to 2009, but as Barclays Capital points out, this is quickly fading. Sentiment continues to deteriorate on the back of weaker demand side signals, with energy and some base metals among the hardest hit this week.

Economic data are not helping, as on the group’s forecasts, global GDP will contract in the June quarter….. Full Article: Source

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From Todaysfinancialnews.com: Our neighbors to the south had a fantastic few years, but the boom is over. For countries like Brazil, Chile and especially Venezuela it is time to diversify… or bust. After enjoying nearly half a decade of economic good-ol’-days, South America is retracting faster that a lawmaker making an inadvertently bigoted joke.

Brazil was the target of many American investment dollars after it led the world in significantly increasing its use of alternative fuels. Its ethanol industry made many Americans “green” with envy. But now that oil prices are plummeting, the country’s Cosan SA Industria e Comercio, the world’s second largest sugarcane producer, is wondering what happened to all its customers….. Full Article: Source

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From Commodityonline.com: It was another one of those mass long liquidation days by index funds and hedge funds as nearly everything that remotely resembled a commodity or was associated with commodities was jettisoned in favor of paper IOU’s (also known as US bonds).

About the only commodities that I could see that were in the plus column today were the grains, particularly the soybean market which found buying on drought fears out of South America and wheat which found support out of hard freeze fears. Corn went along for the ride….. Full Article: Source

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From Guardian: Global financial and economic meltdown has hammered commodities, but investors still see rich pickings in agricultural staples such as grains and rice — essentials the world cannot do without.

The strong outlook for the agricultural sector this year is likely to be closely followed by prospects for oil where output cuts by OPEC countries are expected to accelerate over the next few months, leaving the market short….. Full Article: Source

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From Guardian: Investors are seeking out the security of physical gold as economic uncertainty and falling interest rates knock the appeal of other assets, with premiums for gold coins and bars soaring and ETF holdings on the rise.

Metals consultancy GFMS said on Thursday that overall demand for bullion held firm in 2008 from a year before, as a sell-off by institutional investors raising funds to cover losses on other markets was balanced by fresh interest in physical gold….. Full Article: Source

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From Indiatimes.com: When crude oil prices have taken a beating due to economic concerns and huge inventory pile-up, safe-haven buying of gold that generally moves in tandem with crude oil, has ensured that the yellow metal price has not eroded to the same extent.

Heavy buying by exchange traded funds (ETFs) and jewellery demand from Asian countries have also kept yellow metal more stable. …. Full Article: Source

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Gold and silver trading has posted record activity since the start of the credit crisis according to IFSL’s Bullion Markets 2009 report. The traditional “safe-haven” appeal of precious metals has attracted many investors to this asset class. Gold turnover increased 58% in 2008 to a record $20.2 trillion.

Silver trading increased 39% during the year to a record $2.6 trillion. The growth in turnover was partly due to an increase in prices of precious metals during the year with gold posting an all time high in March of $1,011 per ounce….. Full Press Release: Source

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From Mineweb.com: Some gold analysts are coming up with theoretical moves which could have a huge impact on the gold price, but will the suggested scenarios ever happen?

Gold analysis and theorising is a hazardous exercise with the metal price seldom seeming to follow what would appear to many to be the logical path to new heights - and on the occasions it does surge dramatically, it then tends to come crashing down again, burning the fingers of many. …. Full Article: Source

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From Insidefutures.com: Gold was winner in 2008! Yes, Gold turned out to be one of the few markets that held value year on year in 2008. Were the results spectacular? In comparing gold versus the results of the stock indices and practically every commodity market, yes. Gold did what it is suppose to do. It held value.

The Inauguration: This coming week ushers in a new Presidency and with it new hopes and lots of spending. Hope is going to be very crucial in turning the market psychology from one of doom and gloom to one of “hope”. …. Full Article: Source

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From FT: Gold production in South Africa in 2008 sank to its lowest level since the Boer War, pushing the country into third place in the league of global producers behind China and the US.

The country’s gold output dropped by an estimated 14 per cent, the sharpest decline since 1901….. Full Article: Source

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From Mineweb.com: Despite tough times for the mining industry, the world’s largest primary silver producer still intends to pursue acquisition opportunities. The world’s top silver miner Fresnillo declared 2008 to be a milestone year for the company with an all-time high of 34.8 million ounces of silver production, and forecast that this year’s production will be in line with last year’s totals.

Attributable 2008 gold production was also in line with expectations at 263,000 ounces of gold with this year’s production expected to match last year’s total….. Full Article: Source

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From Usnews.com: Few sectors of the market caught a break in 2008. Uncertainty seems to be the theme so far in 2009, but that hasn’t kept analysts and market watchers from predicting which slices of the market are poised for blastoff.

An easy and low-cost option for average investors to tap into specific areas of the market is exchange-traded funds, which behave like stocks but track indexes (the ETF universe contains a mind-boggling array of choices). …. Full Article: Source

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From Guardian: World oil demand will contract more than expected this year and the weakening economy may further erode consumption, OPEC said on Thursday, building a case for additional supply cuts.

In a monthly report, OPEC said it expected demand to fall by 180,000 barrels per day (bpd) in 2009, 30,000 bpd more than its previous forecast. Oil use is declining this year and in 2008, the first drop in more than 20 years….. Full Article: Source

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From Hardassetsinvestor.com: As you may have heard, Russia’s Gazprom cut off the flow of natural gas into Ukraine at the beginning of January. Since natural gas is such a localized market, it could be tempting to write off the news as a local concern-but we live in a global economy, and a shortage in one country can have far-reaching ripple effects.

Even though we are snug in our heated homes here in the U.S., we may feel the hangover from this dispute in the months, and years, to come….. Full Article: Source

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From Telegraph: Russia has lost its status as a reliable energy supplier after cutting off gas to Europe, the International Energy Agency said. The agency advises industrialised countries on energy policy and the downgrading of Russia’s credibility as a gas supplier is intended to put pressure on Moscow.

“Russia has cut off its status as being a reliable gas supplier to Europe,” said Fatih Birol, the IEA’s chief economist….. Full Article: Source

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From Guardian: The United Arab Emirates took a step yesterday towards becoming the first Arab country to acquire a nuclear capability, a move that could prompt other states to seek to join the club and alter the balance of power in the region.

The Gulf state said it was seeking a nuclear programme for energy, not to produce an atomic weapon. But other Arab countries, if they built reactors, may be more likely to switch from civilian to military use….. Full Article: Source

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From Guardian: A group of large U.S. companies, including the troubled Big Three automakers, on Thursday offered Congress a blueprint for greenhouse gas regulation with looser limits than President-elect Barack Obama has called for.

The U.S. Climate Action Partnership, a group of 26 big companies and several environmental organizations, proposed reducing greenhouse gas emissions by 80 percent from 2005 levels by 2050 through an economy-wide cap-and-trade program….. Full Article: Source

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From Commodities-now.com: 4.9Gt CO2e traded in 2008 – up massive 83% on previous year, more than double 2007’s figures. The global carbon market in 2008 grew substantially both in terms of volume and value, dramatically bucking the current downturn which has depressed most global commodity trading.

Overall, 2008 saw 4.9 billion tonnes (gigatonnes or Gt) of carbon dioxide equivalent (CO2e) change hands, up 83% on 2007, according to a recent report - Carbon Market Monitor - released by Point Carbon….. Full Article: Source

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From Chron.com: Business and environmental leaders today unveiled a wide-ranging energy plan and embraced a mandatory timeline for slowing and eventually reversing the growth of greenhouse gas emissions.

The core of the initiative, developed by a 2-year-old consortium known as the U.S. Climate Action Partnership, is a cap-and-trade system under which oil refineries, power plants and other industrial operations could stay within federal limits for greenhouse gas emissions by buying and selling permits to release pollutants blamed for climate change…. Full Article: Source

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From Guardian: The aviation industry has become increasingly conscious of the growing demand to address environmental concerns as well as its own fuel costs.

Industry experts reckon that emission levels are falling by about 2% a year as older aircraft are replaced by newer, more fuel-efficient, planes….. Full Article: Source

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From Businessweek.com: As the world’s financial markets slide from bad to worse, here’s a small silver lining to a pretty big grey cloud. According to European consultancy Point Carbon, the global carbon market actually grew 83% last year.

In total, $125 billion of carbon credits — representing an estimated 4.9 billion metric tons of carbon dioxide equivalent — were traded from Europe to Australia in 2008….. Full Article: Source

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From Ciol.com: Human activities have been increasing the concentration of greenhouse gases (GHG) in the atmosphere and that in turn has enhanced the green house effect, which is commonly known as global warming.

The impact of climate change or global warming has been disastrous leading to rise in average global temperature, which is expected to go up by one to four degrees Celsius in next 100 years. …. Full Article: Source

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From Carbonnews.co.nz: The immaturity of one of the United Nation’s flagship carbon trading schemes has been underlined after Russia was suspended from registering carbon credits on the international transaction log (ITL) as a result of unpaid fees.

A spokesman for the UN confirmed that Russia had been suspended from using the log over its failure to pay outstanding fees related to its participation in the scheme….. Full Article: Source

Posted on 16 January 2009 by VRS |  Email |Print

From Xinhuanet.com: The latest spurt in the prices of key metals in the Shanghai commodity futures market has many traders and users wondering if prices that went on a free fall in the past several months have touched bottom.

Not so fast, say the leading analysts and economists interviewed by China Daily. Their reservation, they said, was based on spot price projections that were influenced by supply and demand estimates, producers’ inventory levels and established industry practice. …. Full Article: Source

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From WSJ: Rio Tinto is considering another wave of production cuts and asset sales as the world’s economy shows no solid sign of recovering.

The Anglo-Australian miner cut fourth-quarter production of its core product, iron ore, by 18% in response to sagging demand from steelmakers. Meanwhile, prices for aluminum have fallen drastically, requiring an inventory write-down to reflect the drop. Copper profit also has been hit because of falling demand and prices….. Full Article: Source

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From Metalmarkets.org.uk: Prices for base metals fell Thursday on the news that machinery orders in Japan were down 16.2 percent in November over October, more than twice the anticipated decline.

The drop in orders emphasized concerns that demand for industrial metals are likely to continue to fall….. Full Article: Source

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From Guardian: Russia’s rouble hit a historic low against the dollar on Thursday as the country sped on with a devaluation of the currency to adjust to lower oil prices and the worst economic outlook in a decade.

A central bank official confirmed the rouble’s trading band had been widened for the fourth time this year and the 16th time since it began a series of mini-devaluations aimed at gradually weakening the currency in November….. Full Article: Source

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From Bloomberg: New Zealand dollar volatility touched the highest level in almost two months amid concern a weakening global economy will damp investor demand for the country’s exports.

The kiwi, as New Zealand’s currency is dubbed, has declined more than 9 percent versus the U.S. currency this week. …. Full Article: Source

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From Worldcurrencywatch.com: There is one fundamental principle that guides currency traders all over the world. It’s actually pretty simple. It goes like this…

Forex traders buy currencies with higher interest rates to secure higher yields. In doing so, they push up that currency’s value. On the other hand, Forex traders tend to take their money and run away from currencies with lower interest rates - and that pushes the currency’s value down….. Full Article: Source

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From Business-standard.com: The commodity market regulator FMC has changed its nominees on the boards of commodity exchanges, for the next two years. The regulator has replaced its existing nominees and has appointed four new members effective December 23, 2008, Forward Markets Commission (FMC) said.

FMC Director Anupam Mishra, who was on the board of NCDEX, is nominated for MCX. Sanjay Lunia and Prabhakar Patil replace P K Singhal for NCDEX and Cotton Association of India (CAI) respectively. P K Singhal was on the board of both NCDEX and CAI in the last tenure, FMC stated….. Full Article: Source

Posted on 16 January 2009 by VRS |  Email |Print

CME Group, the derivatives exchange, has announced it is expanding its international incentive programs to provide its global customer base with greater access to CME, CBOT and NYMEX products. The incentive programs will include a simplified fee structure and will be extended until December 31, 2010.

“CME Group’s commitment to its global customers is made even stronger through these expanded incentive programs,” said Rick Redding, CME Group Managing Director, Products & Services….. Full Article: Source

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From Commodities-now.com: The Dubai Mercantile Exchange Limited (DME) announced today that a total 6,484 contracts traded on the Exchange on Tuesday 13th January.

This marks a new DME record for volume of contracts traded on the Exchange on a given day, up 35% on the previous high of 4,819, reached on Nov 18th 2008….. Full Article: Source

Posted on 16 January 2009 by VRS |  Email |Print

From Commodities-now.com: Following the successful launch of CER Futures and Options contracts in 2008 and the subsequent development of liquidity in these contracts, ECX and ICE Futures Europe introduced the CER Emissions Index on 12 January 2009.

This complements the two existing ECX EUA indices, the EUA morning marker and the EUA index, published since January 2006….. Full Article: Source

Posted on 16 January 2009 by VRS |  Email |Print

From Environmentalleader.com: The World Cocoa Foundation announced sustainability principles and goals (PDF) to help guide industry efforts and prioritize the foundation’s development projects in West Africa, Southeast Asia and the Americas.

The foundation and its members say they are committed to working towards responsible environmental stewardship in cocoa-farming communities where soil and water are conserved, following Integrated Pest Management approaches to limit the use of chemicals….. Full Article: Source

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From Guardian: Oil prices plunged more than 10 percent on Thursday and top industrial metal copper sold off sharply too on deepening U.S. job losses and fear over the stability of top U.S. banks.

A stronger dollar also discouraged users of other currencies from investing in dollar-denominated commodities….. Full Article: Source

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