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Commodities Briefing 06.Feb 2009

Industrial commodity prices to fall further
Demand for Asian commodities to grow
Continued volatility expected in commodity markets
Dollar/oil correlation unlikely to return soon
Oil falls below $41 as downbeat data weigh
Sweden lifts ban on nuclear power
Cryo technology makes natural gas more stable, shippable and is bearish for gas prices
Uranium squeeze hands miners price to work with
Gore pushes emissions plan
Does it matter if carbon prices plummet?
Carbon trading susceptible to Enron type frauds
Growing inventories spook industrial metals market
Base metals prices fall on reports, inventories
Buy steel now, says analyst
Precious metals rise on safe-haven
Gold's seasonal story
South Africa’s gold miners face deepening gloom
Gold will trend upward with wide price swings: analyst
China retains its title as No. 1 gold producer
Goldman raises gold price forecast to $1,000 as ETF holdings hit new record
ETFs absorb more than $3 billion of gold so far this year
Crude oil USO ETF advances off of new all-time low
5 things every ETF investor should know
Canadian dollar little changed amid optimism over commodities
Currency crisis: First the Pound, now the Euro?
Short View: Currencies and interest rates
PIMCO launches fixed income, currency fund
DGCX Euro Futures hits record daily high
Court rejects NCDEX petition against regulator
PXE gets licence to run commodity derivatives market
CME to launch Australian weather contracts, quanto structuresspacer
Rio still seems to lack clear plan to cut its $39bn debt
Zinc falls in London as jump in stockpiles signals lower demand
Corn, soybeans rise as farmers slow sales after price declines

Posted on 06 February 2009 by VRS |  Email |Print

From Fundstrategy.co.uk: The prices of “hard” commodities will fall by an average of 41% in 2009, the Economist Intelligence Unit (EIU) forecasts. In its World Commodity Forecast, the EIU says that the low oil price will continue, predicting an average price of just $35 a barrel this year.

Its crude oil price index, a weighted average of the key benchmark prices, is projected to fall by 64% this year because of collapsing demand. However, it predicts a “limited rebound” in commodity prices in 2010 as investors start to regain some long-term optimism and stocks stand at low levels. Oil will average $50 a barrel in 2010, the EIU predicts….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Marketsmediaonline.com: More exchanges will migrate from over-the-counter to more centralized models in 2009, as consolidation continues and Asian markets keep gaining traction, Financial Technologies Group Director of Investor Relations Miten Mehta tells Markets Media.

“Derivative(s) markets provide risk management capabilities on a round-the-clock basis on a vast array of products (ranging) from finance to energy, from securities to the environment, from banking to agriculture,” Mehta said, when asked about leading trends for 2009….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Prairiebizmag.com: Agricultural commodity markets, like global financial markets, are in turbulent times. While the forecast for 2009 remains murky, continued volatility in the markets is expected.

There are still many profitable opportunities in agriculture. But any predictions for 2009 must first be framed by a review of 2008….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Reuters: The break in the link between oil prices and the dollar seen for much of the past 18 months is unlikely to be reestablished soon.

Crude and the greenback, which historically had little to no direct trading relationship, began to show a strong negative correlation from 2007, when investors rushed into commodities as the dollar weakened….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Reuters: Oil fell below $41 a barrel on Friday, reversing some of the previous day’s gains as the focus turned from a stock market rally to bleak economic news.

U.S. non-farm payrolls numbers due later on Friday are likely to add to the gloom, after data the previous day showed applications for U.S. jobless benefits soared to a 26-year high and German manufacturing suffered its biggest decline since 1990….. Full Article: Source

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From Guardian.co.uk: Nuclear power received a significant boost today when the Swedish government announced plans to overturn a near 30-year ban on atomic plants as part of a new drive to increase energy security and combat global warming.

Ministers said they would present a bill on 17 March which would allow the construction of nuclear reactors on existing sites and introduce a new carbon tax as part of a programme to cut carbon emissions by 40% on 1990 levels by 2020….. Full Article: Source

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From Resourceinvestor.com: Investors should take away two angles from this story. One is that the supply in Liquid Natural Gas is increasing dramatically around the world, and it’s likely that it’s all coming North America, because it is one of the few places on earth that has the geology to store it.

The second point is that natural gas is going to be so abundant, so cheap, and now so global….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Watoday.com.au: BHP Billiton’s go-slow on a multibillion-dollar expansion of its Olympic Dam copper/uranium/gold operation has created a bit of buzz in pure uranium production and exploration plays.

The idea is that it has to be a good thing for the uranium price in the long run that a mine capable of producing 30 per cent of world mine supply of the radioactive stuff is going to stay much smaller for the time being….. Full Article: Source

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From Montereyherald.com: New scientific studies add urgency to the need to reduce carbon emissions, but the United States can do it in a way that strengthens American economic prosperity and national security, former Vice President Al Gore told a Senate committee last week.

Gore called on Congress to pass President Barack Obama’s economic stimulus package because it contains billions of dollars for energy efficiency, renewable energy, an improved national electricity grid and cleaner transportation, which add up to large reductions in carbon dioxide emissions. …. Full Article: Source

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From Nytimes.com: On Wednesday, the price of a ton of carbon dioxide in Europe fell below 10 euros, or a little less than $13 and a record low for the current trading period – before closing the trading day at 10.45 euros.

At its low, the price of carbon was down about 70 percent from its peak last summer. The explanation is fairly straightforward. Recession and a troubled economic outlook mean less consumption. …. Full Article: Source

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From Commodityonline.com: The world’s carbon trading markets are extremely vulnerable to accounting scandals like those symbolized by Enron, WorldCom and Tyco according to leading greenhouse gas and climate change experts and professionals in an international survey released today by Sequence Staffing and the Greenhouse Gas Management Institute.

Results of “The 2009 Greenhouse Gas/Climate Change Workforce Needs Assessment Survey” exposed their concern that lacking capably skilled personnel and experts to properly account for trading, respondents strongly believe there’s a moderate-high risk that carbon trading markets will be plagued by problems similar to the large accounting scandals of the past….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Theaustralian.news.com.au: Industrial metals lost ground overnight, as copper shed more than 3 per cent of its value and the outlook for consumption darkened. Grim economic data from the US pointed to a softening outlook for metals.

The number of US workers filing new claims for jobless benefits hit a 26-year high last week and factory orders plummeted last December, a fifth consecutive monthly decline….. Full Article: Source

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From Metalmarkets.org.uk: Base metals prices were lower Thursday on concerns that demand will continue to fall after a report said that copper production will exceed demand this year, after zinc inventories in London Metal Exchange warehouses were up during the session, and on a new report from the US Labor Department said that new jobless claims rose in the United States again last week.

March copper was down 3 cents to $1.50 per pound in New York while three-month copper dropped $65 to $3,350 per tonne in London after an analyst report said that refined copper production will outstrip demand by 915,000 tonnes this year….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: Right now, the domestic steel industry in the U.S. is lobbying the current administration for $1 trillion over the next two years in an infrastructure package. I don’t know if we’ll get the $1 trillion, but there will be something hefty to contribute to infrastructure.

That takes a little time, but it would put basically a strain on supply in the future for steel if that does come to fruition. …. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Xinhua: Precious metal futures on the COMEX Division of the New York Mercantile Exchange went up on Thursday on safe-haven buying and Britain’s interest rate cut.

Gold prices for April delivery gained 12 U.S. dollars, or 1.3 percent, to 914.20 dollars an ounce. March silver closed at 12.75 dollars per ounce, up 28 cents. April platinum rose 12.30 dollars to 982 dollars per ounce. …. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Insidefutures.com: The battle continues within the US Government to gather the funds to spend our way out of problems. Just moments ago the Senate approved a $925 Billion Stimulus Plan. From what I’ve read, there seems to be a lot of “pork” in the bill, but I believe that very shortly, possibly with a modification or two the plan will pass.

President Obama has a blank check and pen. The American People want help and the President is expected to offer it. Even if the Stimulus Plan proves wrong, it was one of the reasons he was elected and a promise he made to the American People. It will be kept….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From FT: The ammonia still hangs heavy in the air from the last blast. Drenched in sweat, the faces of the miners on the morning shift betray nothing but concentration. Yet when the previous night’s explosion took them a few metres further into the South African rock this week, their gold mine, Mponeng, became the world’s deepest.

The pride of the managers at Anglogold Ashanti’s flagship operation is not enough, however, to reverse the terminal decline of an industry that at its peak in the 1970s produced two-thirds of the world’s gold….. Full Article: Source

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From Platts.com: Though gold prices have been moving mostly upward lately, they have made wide swings in both directions. This market behavior, which makes gold looks like it has bipolar disorder, is nothing to worry about because gold is on a long-term uptrend, according to Jeffrey Nichols, managing director of American Precious Metals Advisors.

“I expect this split-personality behavior, characterized by extreme price volatility, to continue for some time to come with big swings up and down — but, importantly, around a rising trend with support levels moving up step-wise over time,” said Nichols in his latest market analysis. …. Full Article: Source

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From Mineweb.com: The Chinese Gold Association (CGA) said China’s 2008 gold production increased 4.26% to 282 tonnes, retaining its title of the world’s largest gold producer.

In spite of a massive earthquake and an international financial crisis, China produced 11.5 more tonnes of gold in 2008 than in 2007….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Mineweb.com: Gold edged down on Thursday after rising in New York on safe haven buying amid a global financial crisis, with record holdings on the world’s largest gold-backed ETF supporting sentiment.

Selling of scraps persisted in Asia, driven by gold’s recent rise to above $930 as well as fears of falling demand for jewelry during the global economic downturn. Jewelry accounts for nearly 70 percent of global demand….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Mineweb.com: With the gold price reaching records in a number of important consuming nations, jewellery demand is stagnant - but ETFs are soaring; are they establishing themselves as the west’s answer to small bars?

The markets’ renewed belief since the start of this year in gold’s role as a risk hedge has been made abundantly clear and nowhere more so than in the figures released for the Exchange Traded Funds. …. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Marketoracle.co.uk: The US Oil Fund ETF is showing interesting strength today after making a new all-time low this morning. As we speak the USO is pushing against initial key near-term resistance at 29.00, which if hurdled should trigger upside follow-through to test more important resistance at the prior recovery rally peak of 29.50.

If such a scenario unfolds, then the confrontation at 29.50 will determine if the USO has established a very significant intermediate-term low….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Smartmoney.com: Exchange-traded funds are more popular than ever and it’s not hard to see why. Not only are they liquid, transparent, tax efficient and cheap, but ETFs can offer exposure to just about any sector of any market or asset class you can think of. While those attributes give investors some much-needed flexibility in tough, volatile times, ETFs do have some pitfalls.

“The whole thing about exchange-traded funds is that they are traded on exchanges,” says Tom Lydon, president of Global Trends Investments and ETF Trends. “They are indeed funds, but you have to treat them like stocks.”…. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Bloomberg: Canada’s currency was little changed as some indicators suggested commodity prices may improve, renewing investor interest in the currencies of commodity- producing countries.

“Over the last few days, we’ve seen a slightly better trend in the Canadian dollar,” said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank in New York. “Part of that’s been related to commodity areas. …. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Bullionvault.com: How to get a jump on the big central banks as interest rates race towards zero worldwide… Of six central banks voting on interest rates this week, only the European Central Bank in Frankfurt failed to reduce its cost of money to either record or multi-year lows, holding rates steady at 2.0%.

The market’s reaction? Forex traders trashed the Euro vs. those currencies now paying way less than inflation. The result for Eurozone investors? Gold leapt to a new record high by the PM Gold Fix in London, recording a new all-time high above €719 an ounce….. Full Article: Source

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From FT: Interest rate differentials are supposed to be one of the main factors that drive foreign exchange rates. Higher rates will attract funds and so, when one central bank cuts while another stays steady, that should tend to weaken the currency of the bank that cuts.

Thursday’s half percentage point cut by the Bank of England brought UK rates a full point below those in the eurozone as the European Central Bank opted to stay on hold….. Full Article: Source

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From Reuters: Pacific Investment Management Co said it will launch a new global fixed-income and currency fund on Thursday, underscoring investors’ appetite for comprehensive diversification and downside protection.

The fund from PIMCO, which is the world’s biggest bond investment manager, will invest in a broad range of currencies through foreign-denominated debt and plain currency exposure as well as fixed-income securities and instruments, such as corporate bonds and inflation-protected bonds….. Full Article: Source

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From Tradearabia.com: Euro Futures volume recorded a daily high on Dubai Gold & Commodities Exchange (DGCX) reaching 2,963 contracts, valued at $191.5 million – for the first time in its three-year history.

February 4th was the busiest day for Euro futures on DGCX as trades accounted for 75 per cent of the Exchange’s total daily volume, demonstrating the growing importance of currencies in its product range….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Reuters: A court has upheld a decision by the market regulator to stop the National Commodity and Derivatives Exchange (NCDEX) from introducing new transaction fees, officials said.

NCDEX had introduced a new set of trade transaction charges on Jan. 28, without permission from the commodity futures regulator FMC. After FMC objected, NCDEX approached the Bombay High Court on Jan. 30 with a petition….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Praguemonitor.com: The Prague Energy Exchange (PXE) has received a licence from the Czech National Bank (CNB) to operate the Czech market with commodity derivatives, PXE said .

“The market will virtually open to the broad public and will serve companies as a means to secure themselves against swings in electricity prices,” PXE Exchange Chamber chairman Petr Koblic said….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Environmental-finance.com: The Chicago Mercantile Exchange (CME) is to list temperature-based weather contracts for the Australian cities of Melbourne, Sydney and Brisbane.

Both futures and options for heating degree days and cooling degree days will be launched, over monthly and seasonal timescales. Priced in Australian dollars, they will begin trading on 23 February….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Mineweb.com: Global miner Rio Tinto still lacks a clear plan to cut its whopping $39 billion debt load, even after backpedalling last week and admitting it was considering an equity cash call.

Even if Rio opts for the rights issue, it will still have to offload around $2 billion worth of assets to meet its goal of paying down $10 billion of debt by the end of this year, analysts and dealmakers say….. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Bloomberg: Zinc fell on the London Metal Exchange, ending a three-day winning streak, as inventories at almost a three-year high revived speculation about falling demand for the metal used to galvanize steel in cars. Aluminum also slid.

The LME index of industrial metals had climbed 7.1 percent this week at yesterday’s close on speculation government spending on bridges and other infrastructure will spur demand. …. Full Article: Source

Posted on 06 February 2009 by VRS |  Email |Print

From Bloomberg: Corn rose as farmers withheld inventories from last year’s harvest and buyers abroad increased purchases after futures prices fell to a seven-week low yesterday. Soybeans also gained on reduce farmer offerings.

U.S. exporters sold 1.164 million metric tons of corn in the week ended Jan. 29, up 5.1 percent from a week earlier and the third straight week of sales greater than 1 million tons, the first such streak in a year, Department of Agriculture data show….. Full Article: Source

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