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Commodities Briefing 21.Jan 2009

Industrial commodities mirror production falls
Growth profile important once commodities recover
Constellation divests commodities wing in Europe
Macquarie, Jim Rogers launch China commodities index
Agricultural commodities to rebound in 2009
Japan commodity fund value falls to new low in Dec
Fall in commodities to further drag down German producer prices
Oil set for "Swift and Violent Rebound" in second-half, 2009
Oil prices to hit $90 by year-end
Oil dips below $33 on recession fears
Russian gas begins to flow into wary Europe
Turkey hopes to be EU energy hub after gas crisis
Gold outperforms stocks and commods in Q4, says WGC
Gold prices advance as investors seek safety
No supply cut boost for platinum in 2009
BHP to close Australia nickel mine indefinitely
Production cuts, shelved plans lay foundation for strong metals price recovery
State of mining is bad, but it could get worse
Continued deterioration in metals demand ‘all too clear'--Barclays
Pound hits 7-year low against the dollar
Commodities move against the US dollar
Dollar gains, pound suffers on UK bank woes
Australia: Emissions trading plan too 'cumbersome'
Surge in demand for gold ETCs
ETFs selling better than mutual funds, Barclays reports
Oil, gold accounts for 90% of flows into long ETCs
Japan's TOCOM to extend trading hours in May
China's cotton imports down 14% in 2008
Cotton prices fall most in a week as China’s demand declines
Cocoa in commodities spotlight
Gold declines in Asia on deflation concerns, dollar rally
Most commodities plunge as Obama takes charge

Posted on 21 January 2009 by VRS |  Email |Print

From Guardian: Prices of industrial commodities such as copper, aluminium and oil slid on Tuesday as new data highlighted the dire outlook for global economic growth and poor demand prospects.

Gold bucked the overall downtrend, despite a higher dollar, as strong physical demand boosted sentiment, while grains and softs such as sugar and coffee were mixed….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Nationalpost.com: Expectations for a significant rebound in oil and gas prices any time soon are growing dimmer by the day as even record cold temperatures prove fruitless so far against the deflationary power of falling energy demand.

But prices will recover eventually, believes Octagon Capital analyst Warren Verbonac, and when they do, upside in junior stocks will be predicated on strong growth prospects….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From IHT: Constellation Energy says it has agreed to divest the majority of its international commodities business — including its coal and freight operations and European energy trading units — to an affiliate of Goldman Sachs.

The company did not disclose financial terms. Baltimore-based Constellation Energy Group Inc. said Tuesday the deal is part of a previously announced plan to increase its liquidity and reduce collateral requirements….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Asianinvestor.net: Macquarie Funds Group and Jim Rogers have joined together to create an agricultural commodities index that reflects changes in food consumption patterns in China.

The Macquarie and Rogers China Agriculture Index is an investable index that tracks changes in the price of a basket of agricultural commodities most commonly consumed in China. Having posted a return of more than 11% for the month of December, the index outperformed most regional equity markets and other agricultural indices….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Foodproductdesign.com: Agricultural commodities will rebound this year despite recent losses and turbulent economic times, said a report released Jan. 19 from Commerzbank.

There had been a sharp fall in prices in the last few months and prices were now back to the levels of mid 2006 or even lower. Commerzbank said corn should be the best performer, rising 50 percent by the end of the year to $6 a bushel as demand will remain robust….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Reuters: The face value of Japanese commodity funds sold by brokerages fell 2.7 percent in December from the previous month to a record low of 21.4 billion yen ($236.9 million), industry data showed on Tuesday.

It was the 16th straight monthly decline, the Japan Commodities Fund Association data showed….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Forextv.com: With oil costs having retreated notably since their highs over the summer, expectations are calling for further declines in Germany’s producer price growth rate in December.

Ahead of the Federal Statistical Office’s producer price inflation report scheduled for Wednesday, the median consensus forecast is pointing to industrial prices growing at an average rate of 4.2% in the 12 months to December, down from the previous month’s 5.3% print….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Oilvoice.com: In a statement that has made the whole of the oil industry sit-up and take notice, Goldman Sachs Group commodity analyst, Jeffrey Currie, said that he expects a “swift and violent rebound” in energy prices in the second half of 2009.

Such a positive forecast for oil prices comes as a bit of surprise at a time when crude has recently reached its nadir – falling to $32.40 in mid-December….. Full Article: Source

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From Zawya.com: Oil prices will return to normal at a level from $70 to $90 by the end of 2009 with global growth starting to take off in the second quarter of the year, a senior official of Abu Dhabi National Energy Company (Taqa) said.

Taqa CEO Peter Barker-Homek told Emirates Business at the second World Future Energy Summit that global economies will start stablising by the end of the second quarter of this year with the change of the US administration contributing to this development….. Full Article: Source

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From Telegraph: Oil slipped below $33 a barrel in New York, hitting a new low for the year, on persistently weak expectations for the global economy. Analysts said the price was distorted by regional factors, such as limited storage availability, but it was indicative of the severe recession in developed countries and a drop in global demand for oil.

David Fyfe, head of oil industry and markets at the International Energy Agency, said: “There was a little support for prices with what was happening in Gaza, the cold weather, and a bit of a bump up for the Russia-Ukraine gas crisis….. Full Article: Source

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From Guardian: Siberian gas started flowing into the EU yesterday, ending the bitter dispute between Russia and Ukraine that shredded both countries’ reputations as fuel suppliers and left Europe desperately seeking to shift its energy policies away from dependence on Russian monopolies.

A new 10-year deal on gas pricing and transit between the Russian and Ukrainian state gas firms, Gazprom and Naftogaz, saw Russia pumping the gas through Ukraine’s pipelines to Slovakia in the EU while Kiev allowed the fuel to flow without interruption….. Full Article: Source

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From Guardian: If any country could profit from Kiev and Moscow’s recent gas row it would be Turkey, that is if it can garner political support to revive its endangered dream to become a supply hub for Europe’s energy supplies.

That is partly what Prime Minister Tayyip Erdogan and European Commission President Manuel Barroso tried to sound out during the Turkish premier’s trip to Brussels this week….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Forbes: The average price of gold jumped 25 percent to $871.90 an ounce in the fourth quarter of last year on safe-haven buying as an global economic crisis deepened and as stocks and other commodities fell sharply, the World Gold Council said Tuesday.

Investment demand for bullion remained strong in the fourth quarter, with 96 tonnes of gold bought in terms of gold-backed exchange-traded funds, compared with a record 145 tonnes in the third quarter, industry-sponsored World Gold Council (WGC) said in its quarterly investment report….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From AP: Gold prices advanced Tuesday as investors sought safety amid fears of a deepening global banking crisis. Other commodities fell amid expectations that demand will continue to weaken.

Signs that banks are still suffering big losses from soured loans, and warnings that those losses will continue for some time have investors worried that the government’s efforts to prop up the financial system won’t be enough….. Full Article: Source

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From Guardian: Platinum prices will see little benefit this year from a widely anticipated fall in supply as cost and operational concerns discourage South African producers from closing down their mines.

A 60 percent slump in the platinum market that has seen white metal slide from more than $2,200 an ounce in March last year to below $1,000 now has led to speculation its production was unsustainable at present price levels….. Full Article: Source

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From Reuters: BHP Billiton Ltd/Plc, the world’s biggest mining group, will suspend its Ravensthorpe nickel mine in Australia indefinitely due to poor prospects for profitability, finally bowing to the pinch of a global slowdown.

It also said in a statement on Wednesday that it would reduce mining activity at its Mount Keith project in Australia but would maintain nickel concentrate output….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Mineweb.com: 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

Posted on 21 January 2009 by VRS |  Email |Print

From AP: Withering cost cuts across the mining industry have left tens of thousands of people without jobs from the Arizona desert to the Andes — and there is a litany of evidence that the situation is growing worse.

International mining companies also have postponed or canceled projects and padlocked the gates to mines as consumers have cut spending on cars, jewelry and housing….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Mineweb.com: Barclays Capital Commodities Research analysts forecast a “dire near-term outlook for the global economy and metals demand.” “For most metals, we see barely, if any, growth in global consumption over the next six months and we highlight the growing risk that global demand may begin to contract,” they advised.

In Barclays’ recent Metals magnifier report, the analysts noted, “Over the past few weeks, the macro outlook has worsened further, and there is not even a glimpse of bottoming in key macro specific indicators.”…. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Guardian: Sterling tumbled to its lowest level against the dollar in seven-and-a-half years today, as traders digested the implications of the government’s latest multibillion-pound lifeline to support the banking sector.

On the foreign exchange markets the pound shed more than six cents to hit $1.3860, its weakest point since June 2001. Banking shares also came under further pressure, with shares in Lloyds Banking Group plummeting almost 50% at one stage, to 33.8p. Barclays lost another 12% to 77.5p….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Learningmarkets.com: The norm is to see commodity prices moving counter to the US Dollar’s value. Today however, the dollar gained against most of he major currencies at the same time that oil and gold were also gaining.

This is bad news for inflating ecnonomies and American exporters as it could increase costs and reduce international competitiveness. The move was accompanied by one of the worst days for financial stocks in the US over the last few weeks….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Guardian: The dollar climbed broadly on Tuesday, boosted by sterling’s tumble to a 7-1/2 year low on UK banking sector concerns, while the view that the euro zone will suffer a deep recession pushed the euro to a six-week low.

The dollar hit its strongest level against a currency basket since early December, with market participants also saying that euphoria ahead of Barack Obama’s inauguration as U.S. president had increased short-term demand for the U.S. currency….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Canberratimes.com.au: A key senator’s concerns about the Federal Government’s emissions trading scheme have strengthened during his self-funded visit to North America.

Independent senator Nick Xenophon, who shares the balance of power in the upper house, fears the scheme is poorly designed….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Trustnet.com: ETF Securities has seen total assets under management in its physical gold exchange-traded commodities grow 55 per cent in the past year to $4.8bn.

The increase is due to gold’s dominant position as a liquid safe haven asset while not being subject to credit risk.In addition, ETF Securities says gold’s low to negative correlation with equities helped it to dominate 2008 performance tables, with a four per cent increase in USD and 44 per cent increase in GBP….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Canadian Press: The rush into exchange traded funds has been gathering pace in tough times, with the dominant operator in Canada declaring it outsold the best-selling long-term mutual fund providers during 2008 for the first time.

Barclays Global Investors says its iShares ETFs added $4.4 billion in net new assets during the year. Meanwhile, the mutual fund industry’s assets, excluding money market funds, suffered about $15 billion in net shrinkage….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Commodityonline.com: Net flows into all long ETCs rose by $216mn last week, the largest weekly rise since July 2008. Oil and physically-backed gold ETCs accounted for 90% of the increase with a diverse group of precious metals,agriculture and energy ETCs seeing the remainder of the inflows.

Long oil ETCs saw their strongest inflows ever, with total inflows rising by $147mn during the week. Total inflows have now increased by $583mn since the beginning of November, rising faster than any other commodity class….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Reuters: Tokyo Commodity Exchange Inc has decided to extend trading hours of all derivatives contracts later this year to boost liquidity by inviting more foreign participants, its president said on Tuesday.

The extented trading hours will commence when Japan’s main commodity market launches upgraded trading systems, TOCOM President Masaaki Nangaku said at a regular news conference….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Chinadaily.com.cn: China imported 2.11 million tons of cotton in 2008, down 14.1 percent from 2007, according to statistics from China Customs.

The imported volume in December 2008 dropped 47.7 percent year-on-year to 168,000 tons, said Customs….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Bloomberg: Cotton prices fell the most in a week as the global recession erodes textile consumption in China, the world’s largest buyer of the fiber.

China reduced cotton imports by 14 percent last year to 2.1 million metric tons, the National Development and Reform Commission said today. In 2008, cotton futures dropped 28 percent, ending a three-year rally. …. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From FT: Cocoa stole the spotlight in commodity markets on Tuesday with prices in London reaching a fresh 23-year high above £1,850 a tonne, boosted by sterling’s weakness against the US dollar and concerns about disappointing output in Ivory Coast, the world’s largest cocoa producer.

Liffe May cocoa jumped 6 per cent to a peak of £1,860 a tonne, its highest since October 1985. …. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Bloomberg: Gold dropped in Asia as a slide in equities renewed deflationary concerns and a rally in the dollar curbed the metal’s appeal as an alternative investment.

The Dow Jones Industrial Average had its worst Inauguration Day decline yesterday as speculation banks must raise more capital sent financial shares to an almost 14-year low. Bullion has fallen 3.5 percent this year as the index slid 9.4 percent….. Full Article: Source

Posted on 21 January 2009 by VRS |  Email |Print

From Commodityonline.com: Barack Obama was sworn in as the 44th President of the United States, taking office at a time when the U.S. economy is in its worst shape since World War II. Most commodities were lower today.

The March S&P 500 closed down 42.60 at 806.00, the lowest level in eight weeks, with growing concerns about banks around the world and the possibility of more surprises in the balance sheets….. Full Article: Source

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