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Commodities Briefing 20.Jan 2009

Posted on 20 January 2009 by VRS |  Email |Print

From Theglobeandmail.com: Commodity prices showed a little life in December – if only briefly – after investors warmed to the idea of a big infrastructure spend in the United States and attempts in China to get its economy humming again, both of which stirred earlier dreams of gargantuan copper and oil consumption.

However, Larry Hatheway, an economist at UBS, isn’t so sure that a rebound is really in the works in the near term. For one, commodity prices – and yes, that includes crude oil prices – tend to lag the business cycle, not lead it. That means there would have to be clear evidence of a new business cycle for commodities to take off on a sustained tear, and there isn’t any….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Business24-7.ae: The still weakening economic picture in China is placing a bleaker outlook for commodities. Major commodity export countries, particularly connected to iron ore and coal, are likely to face a sharp fall in demand.

China has long been a global engine for world economic growth both in terms of commodity demand as well as exports which fell by nearly three per cent in December. Chinese imports slumped by 21.3 per cent in the year to December with domestic economic falling fast….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Thomson IM: Asia-focused asset manager Bowen Capital Management Ltd is hunting for winners among alternative energy and waste management companies, and says the financial crisis may prove to be beneficial for some firms in the sector.

Jeremy Higgs, who manages Bowen’s $30 million Green Dragon Fund, said the financial crisis has prompted governments to commit to fiscal stimulus packages that will drive spending on environmental technology. ‘The one silver lining of the financial crisis is possibly the environmental sector,’ said Higgs, managing director at Hong Kong-based Bowen, which oversees $200 million worth of assets…… Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Asianinvestor.net: Jim Rogers has been a long-time bull on China and commodities and the global financial turmoil has strengthened his resolve. China’s resilient economy, strong domestic consumption, high savings rate, and huge foreign reserves make the country a stand-out amid the current global financial crisis, says Rogers.

And the country will emerge even stronger, he adds, when the dust of a prolonged global economic recession settles….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Cattlenetwork.com: Lower emerging market demand in 2009 will be a driving factor behind the slump in commodities, Jeff Currie, head of commodities research at Goldman Sachs Group Inc. (GS), said Monday.

“Last year we did see weakness in OECD (Organization of Economic Cooperation and Development) countries,” Currie said at a Goldman Sachs global investment seminar in London. “In 2009 emerging markets will be joining the ranks.” …. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Istockanalyst.com: There is a multi-swing positive momentum divergence and perhaps a new set of higher highs and higher lows developing in the CRB (Commodity) Index - but might this lead to a reversal in price?

Continue watching the CRB and major commodities very closely - we may be in for a surprise….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Guardian: BP’s green energy arm is under pressure from plunging oil prices and the credit crunch, its chief executive admitted yesterday.

Vivienne Cox, chief executive of BP Alternative Energy, said it would be “foolish” to deny it was harder to get cash for projects in the current climate….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From AFP: Oil-rich Abu Dhabi said Monday it will press ahead with plans to develop solar energy, shrugging off a huge drop in oil prices which is cutting the emirate’s revenues.

“The current economic situation has no impact on Masdar’s intended and planned projects,” said Sultan al-Jaber, chief executive of Masdar, the government-owned Abu Dhabi Future Energy Company charged with developing clean energy….. Full Article: Source

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From Optionetics.com: While optimists continue to search for any sign of a pulse in the US economy, the realist investors among us are resigned to the fact that equities, and most commodities, remain in bear markets.

If you are a call seller, this is good news and aside from a few aberrations, you should continue to collect steady option premiums over the near term. However, for the traders among us who, for some reason, simply feel more comfortable writing puts, the Gold market may be your salvation….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Commodityonline.com: In times of turmoil in 2008, Gold and Government bonds emerged as clear winners. In dollar terms, gold prices increased for eighth consecutive year with gains of 5% in 2008.

For the Indian Investor, gold has provided positive returns for 11 consecutive years with gains of 29% in 2008, Quantum Gold Fund said in an analysis….. Full Article: Source

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From FT: Aluminium prices dropped to their lowest level for more than five years on Monday. The deteriorating outlook for demand was underlined by a further large rise in aluminium stocks held at London Metal Exchange warehouses.

The LME’s benchmark three-month aluminium contract fell 3.1 per cent to $1,420 a tonne, after touching $1,409, its lowest level since September 2003….. Full Article: Source

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From Mineweb.com: Bloomsbury Minerals Economics forecasts copper prices will hover below $3,000 tonne through most of 2009 with a strong recovery in 2011 after slow improvement in 2010.

Following marginal refined copper use, Bloomsbury Minerals Economics’ Paul Dewison forecasts that this year will be one of the worst years on record. However, while 2009 is set to be “a pretty dismal year, prices will recover,” he added….. Full Article: Source

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From Guardian: Trading activity on the London Metal Exchange will be boosted by investors and high volatility this year, but volumes are unlikely to beat last year’s record because producers and consumers are expected to stay away.

The exchange saw volumes rising 22 percent to 113 million lots from 2007 as investors were attracted by limited supplies and firm Chinese demand pushing the benchmark copper contract to a record high of $8,940 per tonne last July….. Full Article: Source

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From Guardian: Mining output cuts and shelved investment plans are laying the foundations for a strong metals price recovery when the world eventually returns to growth, fund manager BlackRock said.

But London-based Evy Hambro, managing director at BlackRock, said that until the global economy starts to respond to large fiscal and monetary stimuli, prices of industrial metals will stay near the marginal or highest costs of production….. Full Article: Source

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From FT: An ambitious plan to create one of the world’s biggest mining groups through the merger of up to five Russian companies has been proposed by two billionaire tycoons.

Oleg Deripaska and Vladimir Potanin, the two biggest shareholders in Norilsk Nickel, have proposed the merger as the groups seek to restructure tens of billions of dollars in debts….. Full Article: Source

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From FT: Wasn’t all that warm fuzziness over the election of Obama just so….. so….warm and fuzzy? Now for cold and hard-edged. That describes the emotions over the intragovernmental fights that get going in earnest this week.

The most immediate are over the nature of the economic stimulus, or who has the longest reach. When that is settled within the next couple of months, the struggle moves on to harder issues, such as the massive rework of environmental law and regulation….. Full Article: Source

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From Guardian: Britain’s attempts to position itself as a centre for the green power industry suffered a blow today when it emerged that ministers have refused to commit the country to a new international body set up to promote renewable power.

The German environment secretary, who came up with the idea for the International Renewable Energy Agency, said he was disappointed countries such as the UK and America were dragging their feet….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Quamnet.com: The Australian Dollar is showing a high level of volatility and is leaping about like the country’s emblematic marsupial. Predicting the next movement is difficult. The next directional move against the US Dollar will rely on risk sentiment and fundamentals.

The Australian dollar should not fall below 0.6000 to the USD, as the Reserve Bank of Australia aggressively supported the currency at this level through both policy statements and currency intervention. …. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Forexnews.com: The world is turning to Washington D.C. this week, as the new presided of the United States will start an historical four year mandate. The work to be done is huge and hope is at the extremes.

A new large incentive package is expected shortly, but much time is necessary for the current sharp recession to mitigate….. Full Article: Source

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From Bloomberg: New Zealand’s dollar will fall at least 4 percent to the lowest level since 2002 against the U.S. currency because of the risk the nation’s credit rating will be downgraded, according to Commonwealth Bank of Australia.

Standard & Poor’s last week revised the outlook on New Zealand’s AA+ foreign-currency rating and said it may be cut should the current-account deficit and overseas debt damp growth. …. Full Article: Source

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From Moneymorning.com: The Russian ruble fell yesterday (Monday) to levels not seen since the 1998 banking crisis, as the nation’s central bank devalued the currency for the sixth time in seven days. The devaluation is seen as a sign of further deterioration in the Russian economy and comes despite government efforts to orchestrate an orderly retreat.

A drop in the price of oil, the war in Georgia, and a gas-export dispute with the Ukraine have put a huge dent in the Russian economy, which now teeters on the verge of recession. …. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From WSJ: At a time when launches of exchange-traded funds have all but halted, and a number of firms are shutting unloved funds, Newton, Mass.-based Direxion Funds has a hit.

In little more than two months, Direxion’s family of “leveraged” and “inverse” ETFs, which help investors magnify bets or bet against certain sectors of the stock market, have picked up hundreds of millions of dollars in assets and trade millions of shares a day, even as criticism continues to dog that class of ETF….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Mondovisione.com: ETF Securities Limited has seen total Assets Under Management (AUM) in its physical gold ETCs grow in the past year to $4.8 billion, up $1.75 billion. The 55% increase in assets is due to gold’s dominant position as a liquid safe haven asset while not being subject to credit risk.

In addition, gold’s low to negative correlation with equities helped it to dominate 2008 performance tables, with a 4% increase in USD and 44% increase in GBP. ETFS Physical Gold (PHAU) grew by $1.2 billion and Gold Bullion Securities (GBS) grew by $550 million during 2008….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Wealth-bulletin.com: Agricultural funds made 9.5% last year, according to data provider BarclayHedge, while almost every other investment opportunity lost money.

The funds produced “robust returns” in the first half of last year as grain prices rose and there was talk of food shortages, although many of the funds suffered from the subsequent market turbulence, according to Sol Waksman, BarclayHedge’s founder….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Bloomberg: Wheat may advance 26 percent to $7.30 a bushel by the end of this year as demand continues to increase and farmers respond to slumping prices by planting fewer acres, Commerzbank AG said.

The grain’s immediate potential to rise is limited because of an expected surplus of about 30 million tons this year, Frankfurt-based analysts Eugen Weinberg, Barbara Lambrecht and Carsten Fritsch said in a note to investors today. They forecast higher prices in the “medium term,” citing rising consumption and reduced plantings. …. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Bloomberg: India, the world’s second-largest grower of rice and wheat, may next month lift a two-year ban on futures trading in the cereals as record harvests cool domestic food prices.

The Forward Markets Commission, the market regulator, will write to the federal government seeking an end to the curbs tomorrow, Chairman B.C. Khatua said in an interview yesterday. …. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Moneycontrol.com: MCX (Multi Commodity Exchange of India Ltd) has signed MoU s with 5 large trade associations of Rajasthan. Rajasthan is a rapidly growing state and has become an exciting and attractive proposition.

This alliance is aimed to spread awareness about benefits of commodity futures market at regional level and broad base the participant on the electronic platform offered by MCX. …. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Livemint.com: Multi-Commodity Exchange of India, or MCX, is at an advanced stage of launching imported thermal coal futures after receiving permission from the regulator, Forward Markets Commission, or FMC.

“We are at an advanced stage of launching the futures (imported thermal coal)… talking to stakeholders and will soon launch,” chief executive Joseph Massey said on Monday….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Guardian: The commodity murabaha contract is one of the most common financing structures in the Islamic industry and is frequently used to secure sharia loans. Some Islamic scholars think this structure should be avoided as much as possible, saying it closely resembles an interest-bearing transaction.

The Accounting and Auditing Organisation for Islamic Financial Institutions is of the view that the commodity murabaha while not invalid, is not ideal….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Forbes: Copper rose to a one-week high on Monday on hopes that China’s State Reserves Bureau (SRB) will buy the metal from the international market.

An official at Jiangxi Copper, China’s top refiner of the industrial metal, said the SRB was likely to buy copper from the international market since domestic copper smelters have limited stocks….. Full Article: Source

Posted on 20 January 2009 by VRS |  Email |Print

From Reuters: Oil steadied below $35 a barrel on Tuesday, having fallen around $2 on Monday after Russia and Ukraine signed a gas deal that would help secure supplies to Europe, while no improvement was in sight for oil demand.

Economic gloom deepened after the U.K.’s Royal Bank of Scotland posted the biggest loss in the country’s corporate history, with stock markets in Asia following European counterparts lower….. Full Article: Source

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