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Commodities Briefing 03.Feb 2009

Posted on 03 February 2009 by VRS |  Email |Print

From Theaustralian.news.com.au: Fortescue Metals Group chief executive Andrew Forrest has tipped commodity markets to bottom in 2009. “2009…I think will be the bottom of the market,” Forrest said.

Forrest said the drivers of the mining boom remain intact and that stimulus packages being put in place by the Chinese government will quickly boost its economy and turn around demand for commodities….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Learningmarkets.com: Few trends have been as dramatic or as fast as the decline in commodity prices over the last several months. There is a lot of speculation that prices can’t drop further and demand is likely to pick up in a few quarters.

If the market is in fact oversold and a correction or reversal is likely in 2009 then it raises the question of how a trader should invest to get the best exposure to that market. Does it make more sense to buy commodities and commodity ETFs or are commodity sector stocks and ETFs a better choice?…. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Guardian: Switzerland’s bank Credit Suisse expects trading volumes at its over-the-counter iron ore paper market to more than double to over 15 million tonnes by end-2009, a senior executive at the bank said.

Uncertainty in the global economy and increased volatility in iron ore and steel prices and volumes are likely to encourage steelmakers to do more business on the spot market, Kamal Naqvi, head of fund coverage of commodities at Credit Suisse said….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Midasletter.com: For decades the Commodity Futures Trading commission languished as an underfunded regulatory backwater in Washington. But that is set to change after the financial crisis exposed wide fissures in the U.S. regulatory system.

Congress is keen to bestow significantly more authority to regulate commodities and other more exotic instruments, but how this will take shape is emerging as a tug of war in Congress and with the White House….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Rttnews.com: Australia’s commodity price index in SDR terms rose 0.8% in January, following a revised 4% fall in December, a report by the Reserve Bank said Monday.

The increase in the index was largely due to rise in the prices of gold, wheat and nickel. This was partly offset by price falls for steaming coal, barley and aluminium….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From FT: Oil prices fell on Monday, leading a broader retreat in commodities prices, as fresh economic indicators from China, Japan, the US and Europe painted a gloomy picture for short-term raw materials demand.

The return of Chinese traders after last week’s new year celebrations brought further selling, particularly in gold and base metals, as they adjusted their position to lower prices in New York, and London, traders said….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From IHT: Oil steadied above $40 a barrel on Tuesday, after falling nearly 4 percent the previous session when U.S. data sparked further concerns over the economy and demand in the world’s top energy consumer.

A U.S. government report on Monday showed consumer spending fell for the sixth straight month in December and the outlook remaining bleak, adding to the grim picture painted by earlier data releases in Asia and Europe….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From FT: Cost pressures on military budgets, caused in part by last year’s rocketing oil prices, are pushing the UK and other leading powers to consider alternative fuels and propulsion technologies.

Fuel costs accounted for $17bn of the combined budget for the world’s top 20 military spenders last year, and the sharp increase in the price of oil added $6bn to the bill, according to estimates in a Jane’s Industry Quarterly study last month….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Reuters: China may unveil a plan this month to boost its petrochemical sector after introducing incentives to support the auto and steel industries to counter the impact of slowing economic growth, state media said.

The plan needs to be reviewed by industry experts and coordinated between two ministries before being submitted to the State Council, China’s cabinet, for final approval, the Shanghai Securities News said, citing an official involved in the plan….. Full Article: Source

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From Guardian: A decline in output of Russia’s star asset, oil, could provide a rare opportunity for foreign firms to gain more access to its energy sector, even though the sting of Moscow reneging on previous deals still hurts.

Speaking at the World Economic Forum last week in Davos, Prime Minister Vladimir Putin surprised investors by calling for “mutual access” to energy assets to boost greater energy security. He added Russia should not revert to “isolationism”….. Full Article: Source

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From Guardian: The Netherlands needs to reach a clearer position on the future role of nuclear power in the country’s energy mix, the International Energy Agency (IEA) said in a review released on Monday.

The Dutch government has agreed not to take any decisions on new nuclear power plants during its term, which runs until 2011, but the IEA said policy decisiveness should be a priority….. Full Article: Source

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From AFP: Global wind energy capacity surged by 28.8 percent in 2008, as the United States became the world’s leading market, an industry survey showed Monday.

The Global Wind Energy Council said the US and China showed the strongest growth in wind energy as the global electric-generating capacity rose to 120.8 gigawatts at the end of 2008….. Full Article: Source

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From Guardian: Everyone in the UK could have their own carbon budget by 2020, says the head of the most comprehensive trial of the idea. Personal allowances set a limit on emissions produced by activities such as driving and heating homes.

People could switch to greener services or do without to meet their allowances, sell credits if they did not use them all, or buy credits if they went over the budget because of more highly polluting activities such as flying….. Full Article: Source

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From Carbonnews.co.nz: The row over the working of the European Union’s emissions trading scheme has intensified with EDF Energy warning that speculators risked turning carbon into a new category of sub-prime investment.

Vincent de Rivaz, the chief executive of the UK arm of the French-owned gas and electricity group, said politicians and regulators needed to revisit the way the ETS was working and whether it was bringing the results they wanted….. Full Article: Source

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From FT: In the depths of the mid-1970s recession, a swathe of US banks was left out of pocket when Herstatt Bank, a privately owned German operation, was put into liquidation by German regulators.

The Americans had handed over dollars to Herstatt earlier that day as one leg of routine foreign exchange transactions; they fully expected deutschemarks in return a matter of hours later. …. Full Article: Source

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From Bloomberg: The ruble slumped to its weakest level against the dollar in 11 years as investors speculated Russia will be forced to give up its currency defense after draining reserves.

The ruble lost as much as 1.7 percent to 36.3550 per dollar, nearing the weakest end of a trading range widened by the central bank less than two weeks ago. Bank Rossii Chairman Sergey Ignatiev pledged on Jan. 22 to use reserves to keep the currency at a level of 41 against a basket of dollars and euros, which translated to 36 per dollar….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Fnarena.com: When commentators talk of commodity currencies the Australian, New Zealand and Canadian dollars are traditionally at the forefront of investor thinking, but as Standard Chartered points out African currencies are also viewed by the market as currencies closely linked to commodity prices given Africa’s exports are heavily weighted to primary products.

United Nations Conference on Trade and Development data show exports of ores, metals and fuel products accounted for 74% of all African exports in 2006 against just 18% of exports being of manufactured goods….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Reuters: MF Global Ltd said on Monday it has expanded its over-the-counter (OTC) energy brokerage in Singapore, at a time of tightening credit due to the global financial crisis.

The company also broadened its equity derivatives team in Hong Kong, it said in a statement. In January, MF Global secured two new OTC energy broking teams with nine brokers handling gas oil, kerosene and jet fuel, and seven brokers on fuel oil….. Full Article: Source

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From Mondovisione.com: The Australian Securities Exchange (ASX) today announces the start of trading of four Exchange Traded Commodities (ETCs) in the newly created AQUA market.

The four new products have been developed by ETF Securities Ltd, a UK-based business with Australian origins, which launched an exchange traded gold product on ASX in 2003 and is now the global leader in exchange traded commodity products….. Full Article: Source

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From Livemint.com: The Forward Contracts Regulation Act leaves the decision on pricing in the hands of exchanges. If anything, the regulator may need to step in if an incumbent exchange is charging exorbitant fees.

In what may be a first in India’s financial markets, a regulated entity has taken a regulator to court.National Commodity and Derivatives Exchange Ltd (NCDEX) has filed a writ petition against commodity markets regulator Forward Markets Commission (FMC) for issuing a stay order on its proposal to reduce transaction fees….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Mondovisione.com: Eurex, the international derivatives exchange, today launched its new futures and options on gold. The US dollar denominated contracts are based on the benchmark gold fixing of the London Bullion Market Association, referenced to the largest gold spot market in the world. Trading hours are between 8 am and 10 pm CET.

To support the product launch, Eurex is waiving trading and clearing fees until the end of June 2009. From day one, market makers have agreed to ensure a liquid order book. …. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Mineweb.com: Mineweb’s readers have spoken - the gold price high for 2009 will be $1345, the low price will be $764, the year-end price will be $1172 and the average over the year will be $992 - or at least that is the result of averaging out all the entries in this year’s Mineweb gold price competition.

This shows that Mineweb readers in general are, in a vast majority, confident that gold will perform well this year and certainly the initial performance of the gold price suggests that this may well be the case - but whether it will perform as well as readers think is the big question. …. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Reuters: Gold extended losses on Tuesday, having posted its biggest daily percentage fall in three weeks the previous day on profit taking, but record exchange traded fund holdings still boosted sentiment.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said it held arecord of 853.37 tonnes of gold as of Feb. 2, up 9.78 tonnes fromJan. 29….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Ibtimes.com: In the past three years, the popularity of ETFs (exchange traded funds) has exploded. ETFs allow investors and traders alike to easily purchase a basket of companies as well as trade commodities and currencies through a typical brokerage account.

The benefits of trading like a stock, low expense ratios, easy diversification and tax efficiency have all contributed to the demand for this relatively new trading vehicle….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Bloomberg: Platinum fell in New York on concern that demand for the metal used in jewelry and auto parts will decline amid a global economic slowdown. Palladium rose.

Consumer spending in the U.S., the world’s biggest economy, declined more than expected in December, the Commerce Department said today in Washington. …. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Compareshares.com.au: Not too long ago base metals were the hottest of commodities. In their bull markets the prices of these industrial-use metals had soared to lofty heights to reflect the speculative risk premiums brought on by greatly imbalanced markets.

Copper, zinc, nickel, lead, and aluminum achieved staggering trough-to-peak gains of 574%, 523%, 1124%, 829%, and 151%!…. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Mineweb.com: Reports in Sunday’s UK broadsheet newspapers, The Sunday Times and The Sunday Telegraph, both pointed to debt-ridden mega miner Rio Tinto being involved in major asset sales talks with China’s state-owned Chinalco, which already holds an 11 percent stake in the company.

While the two newspaper reports differed in the detail, it would seem they are, indeed accurate in that such talks have been under way. Indeed Rio has issued a response to the reports confirming that they are in progress, but giving no specific details….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Insidefutures.com: As the world’s largest producer and exporter of coffee, Brazil remains a focus when analyzing coffee prices. As we have discussed in past coffee articles, Brazil experiences an every other year “on/off” cycle in production.

“On” years produce more beans, “off” years produce less. The 2007/08 harvest produced 46- 48 million (60 kg) bags of coffee. The 2009 Brazilian harvest is mostly in the warehouse already, expected to total nearly 38 million bags….. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Nasdaq.com: Wheat prices edged to their lowest level in nearly two weeks in early trading on Monday as the weakening economy has fueled demand concerns. March wheat fell to $5.54 per bushel, down 14 cents on the session. The grain has been trending lower for a week and has lost about 50 cents in that span.

Last week, Department of Agriculture showed wheat sales were just 23,500 metric tons in the week ended Jan. 22. …. Full Article: Source

Posted on 03 February 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: Treasury Inflation-Protected Securities (TIPS) do exactly what their name suggests. They are U.S. Treasury bonds designed specifically to protect investors against inflation. To do that, both the interest and the principal payments are indexed against the Consumer Price Index.

So the yield quoted on a TIPS security is a “real” return; that is, an incremental return that’s added to the rate of inflation…. Full Article: Source

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