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Commodities Briefing 18.Feb 2009

Carbon exchanges cashing in amid EU slowdown
EU carbon prices plummet as emissions fall
Surge in commodities ETFs
Commodities bouncing back in 2009
Goldman says underweight commds, cites carry cost risk
SEB fund sees value in commodities and currencies
Shipping index indicates gains for countries exporting commodities
Can China lead way out of global slowdown?
U.S. oil holds at $35
Venezuela to slash spending as oil prices fall
Russia, China sign $25 billion energy deal
Pickens reduces energy investments, holdings fall 97%
Outlook declining for international coal trade
Between the lines: Carbon trading is failing in its basic 'green' function
Is alternative energy dead?
New fund of funds to focus on pure-play cleantech investments
Gold tops $975 on demand for store of value; silver also climbs
Upwards momentum builds as gold breaches $950
Don't kick yourself later for not buying gold and silver now
Debt and high grading to push up metal commodities
The big rise and great fall of base metals!
ETFs to top $1 trillion in 2 yrs-Strategic Insight
Currency issues weigh on eastern Europe
Euro falls below $1.26 on bets Europe’s bank turmoil to worsen
Australian dollar may hit 50 US cents; imports sink
Eurex to launch commodity index futures in March
Ghana can learn from Ethiopia on commodity exchange
ICE & ICAP announce successful completion of first-ever agricultural cleared swap transaction
Bumper crop: India govt may export wheat for first time in 6 years
Soybeans slide to near 2-month low on recession woes
Oil, copper lead drop in commodities to lowest since June 2002

Posted on 18 February 2009 by VRS |  Email |Print

From Reuters: Carbon emissions exchanges are thriving, making as much as 2 million euros ($2.55 million) a week in revenues, Reuters data shows, just as European industry struggles to survive in the wake of the economic downturn.

Under the European Union’s Emissions Trading Scheme, heavy industry is allotted an annual quota of emissions permits called EU Allowances (EUAs), and are forced to buy more, often over carbon exchanges, if they emit more carbon dioxide than allowed….. Full Article: Source

A SQUARE’s webinar with voice over on carbon led investing (which non-A SQUARE subscribers can purchase individually) can be accessed here:http://www.opalesque.com/asquare/509/Webinar_Carbon_Led_Investing.html

Posted on 18 February 2009 by VRS |  Email |Print

From FT: Sales by cash-strapped companies and traders’ fears of the impact of the economic downturn saw European Union carbon prices test recent lows on Monday.

The price of a permit to emit a tonne of carbon dioxide under the EU’s emissions trading scheme stood at €8.40 on Monday, according to Point Carbon, an analyst company. …. Full Article: Source

A SQUARE’s webinar with voice over on carbon led investing (which non-A SQUARE subscribers can purchase individually) can be accessed here:http://www.opalesque.com/asquare/509/Webinar_Carbon_Led_Investing.html

Posted on 18 February 2009 by VRS |  Email |Print

From FT: Commodities exchange traded funds’ assets under management have surged to almost overtake those in commodities indices, the traditional vehicle for gaining exposure to the asset class.

If sustained, the move, which has been driven by strong inflows into gold and other precious metals-backed ETFs, could signal a shift in the way investors access commodities. …. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Marketoracle.co.uk: The numbers for 2008 are in, and we can now quantify just how rough the year was for commodity spot markets. So far in 2009, the results are much better, though that’s not the case across the board.

Out of our basket of 14 hard and soft commodities, only coal and gold finished 2008 in positive territory. Coal was up 12.6 percent due to a relatively strong first half of the year, while gold rose nearly 6 percent during the year as many investors concerned about rapidly devaluing assets fled to a safe haven….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Reuters: Investors seeing the bottom of the collapse in commodity prices drawing near, should hang fire and remain focused on equities, analysts at Goldman Sachs said in a research note.

The investment bank said rising forward price curves for commodities, also known as contango markets, meant speculating in the asset class was still a risky proposition and investors would be better placed putting their money in mining and energy equities….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Reuters: Investors should buy into heavily sold commodities and take positions in companies that will benefit from sharp currency movements, the manager of the SEB Asset Selection fund said.

Hans-Olov Bornemann, Stockholm-based manager of the 1.6 billion euro (1.1 billion pounds) fund, told Reuters the heavy sell-off in commodity prices means they are now attractively priced….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Livemint.com: Shipping costs have more than doubled this year, so it may be time to buy kroner, Aussies and loonies. “The 147% jump in ocean transport prices is evidence that China’s $580 billion stimulus plan will lift raw materials,” said Ihab Salib, who oversees $3 billion at Federated Investors Inc. in Pittsburgh, US.

That would benefit countries exporting them, so Salib is actively trading Norway’s kroner and Australian and Canadian dollars, nicknamed Aussies and loonies….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Livemint.com: Lots of people have said lots of times in the past year that cash is king. So which country has oodles of surplus cash these days? It’s China, of course.

It has almost $2 trillion of foreign exchange reserves, a low fiscal deficit and its public debt is just 18.5% of gross domestic product (GDP), so it has the money to boost its economy….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Reuters: U.S. oil prices were little changed at $35 a barrel on Wednesday after falling nearly 7 percent a day earlier on fresh concerns over the economy and sliding oil demand, which has caused inventories to bloat.

Global markets were roiled by fear that Eastern Europe’s battered economies would drag down Western banks, while oil traders braced for an eighth consecutive rise in weekly U.S. crude oil stock data….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From AP: President Hugo Chavez’s government will slash public spending to confront the falling price of oil, a top official said Tuesday.

Venezuela relies on oil for 94 percent of exports and nearly half the government budget. Finance Minister Ali Rodriguez said the government has enough savings to avoid serious problems this year but nevertheless plans cutbacks….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From AP: Russia and China signed a $25 billion energy deal in Beijing on Tuesday that will see the Asian country secure oil supplies from Moscow for the next 20 years in return for loans, Russia’s state pipeline monopoly Transneft said.

As part of the broader energy supply deal, China’s Development Bank will lend $15 billion to Rosneft, Russia’s state-owned oil major, and $10 billion to Transneft, a vital boost for energy companies as they struggle to raise capital amid straitened lending conditions and plunging oil prices, Transneft spokesman Igor Dyomin said….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Bloomberg: T. Boone Pickens, the billionaire hedge-fund manager who forecasts oil will more than double in the next 10 months after being driven down by the global recession, shed energy-related shares as their value declined, a public filing showed today.

Pickens, who held 26 energy companies in his BP Capital Management LP fund as of a Nov. 14 filing, had nine according to a filing made today….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Snl.com: The international coal market has taken a beating in recent months due to the weakening global economy, and conditions are expected to get worse before they get better, according to Friedman Billings Ramsey & Co.

“As we are going through mid-February, key statistics coming out of China, Japan and Europe continue to indicate that the coal market is about to slump further as we head into the low demand period of spring, putting pressure on the export spot markets,” FBR analyst David Khani wrote….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Scotsman.com: Last summer, the price of carbon dioxide on the EU emissions trading market hit a peak of 30 a tonne. But then came the recession and the oil crash. By the start of February, was trading at only 11.80 (£10.42).

Last week it hit an all-time low of 8.20 for this phase of the scheme, though the volume of trading remains high. At this price, no longer provides an incentive for investing in “clean” technologies and renewables….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: It’s almost axiomatic to say that we all care about the effects of global warming (hi Mr. Gore!). Nobody wants to swim down 5th avenue.

But it really wasn’t until last year’s phenomenal oil spike that people started talking about alternative energy with any kind of practical fervor – and that brought investment dollars….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Cleantechbrief.com: The Far Hills Group, a financial services firm specializing in the placement of alternative investment offerings, has joined forces with cleantech fund manager Russell Diamond to form Solution Capital Partners, a cleantech fund of funds manager.

Diamond, the former manager of a smaller cleantech-focused fund-of-funds, R&D Capital Partners, will handle to the day-to-day management of the new fund….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Bloomberg: Gold jumped to more than $975 an ounce, the highest price since July, on speculation that low interest rates and government spending will devalue currencies, boosting the appeal of precious metals as a store of value. Silver and platinum also rose.

Gold priced in euros and pounds reached records today as equities worldwide slumped on concern that the global recession may deepen….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Theaureport.com: In what has been a relatively steady climb over the past few weeks, gold moved back well above the psychological $950 an ounce mark in this morning’s trading (over $960 at the time of writing) - the first time in seven months it has achieved this level.

Silver was approaching $14 an ounce, being pulled upwards by the gold price. Platinum and palladium were also better as platinum maintained its differential price advantage over gold….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Seekingalpha.com: Gold is powering up towards $1,000 an ounce, and while the odd hesitation along the way is possible it will shortly cross this boundary, hit a new all-time high and then head upwards again.

A trend is your friend, especially if you take advantage of it. For gold the question is how best to leverage the up trend….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Resourceinvestor.com: In the supply and demand equation, focusing on supply is the basis for a rebound in metal commodities thereby positively affecting explorers, developers and operating companies that survive the current blood bath.

I pointed out in my earlier letter that gold would lead the way in for all commodities to rebound. As we have seen, gold is now over $935/oz., up from $750/oz. in November 2008, resulting in some gold stocks rebounding between 100% to 300% in a three-month period….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Commodityonline.com: When the world was celebrating the never-ending rise of commodities a few months ago, it never expected such a huge fall after the gain.

But, with the unfolding of US economic slowdown, the reality slowly dawned on the world and commodities prices also suffered. The main commodities hit by the recession were base metals….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Reuters: Increased use of asset allocation models and fee-for-service investment advice will help push the amount of cash into exchange traded funds (ETFs) over the $1 trillion mark in two years, a new study predicts.

These two major shifts in how money is invested helped pump the ETF market to more than $725 billion globally by the end of last year, New York-based mutual fund research firm Strategic Insight (SI) said….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Nytimes.com: A new dividing line is settling across central Europe with economic repercussions that are already painful and could potentially be disastrous.

Rather than being based on ideology, the division this time is based on countries that use the euro and those that do not….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Bloomberg: The euro fell below $1.26 for the first time since early December after Moody’s Investors Service said it may cut the ratings of several banks with units in eastern Europe, adding to concern financial turmoil will deepen.

The dollar and yen gained against most of their major counterparts as stock markets fell, making the U.S. and Japanese currencies more attractive as havens. Poland’s zloty traded near a record low versus the euro as Deputy Prime Minister Grzegorz Schetyna said the weakening of the currency is dangerous. …. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Theage.com.au: The Australian dollar may sink to as low as 50 US cents even as import demand shrivels, led by a slump in machinery shipments.

Data out today showed merchandise imports sank by 14% in January, or $2.86 billion, from the previous month to $17.261 billion. That compared to a downwardly revised $20.121 billion in December, the Australian Bureau of Statistics…. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Energyrisk.com: Eurex will be the first European exchange to offer trading in commodity index derivatives with the launch of four new contracts on March 30. The new futures will be based on the Dow Jones-AIG Commodity Index and the three sub-indexes for agriculture, energy and industrial metals.

“The commodity index futures extend our existing suite of gold and emission rights derivatives, bringing new hedging and trading opportunities to our customers,” says Peter Reitz, member of the Eurex executive board….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Allafrica.com: Ghana could consider Ethiopian experience of commodity exchange if it wants to solve the problem of post harvest losses of agricultural produce, a Ghanaian newspaper said over the weekend.

The Ghana Business News said Ghana’s Private Enterprises Foundation (PEF) was proposing for the establishment of a plan-commodity market-hoped to solve the problem of post harvest losses of agricultural produce that has perennially engulfed the country’s agricultural sector….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Commodities-now.com: IntercontinentalExchange, Inc., a leading operator of global futures and over-the-counter (OTC) marketplaces and clearing houses, and ICAP, the world’s premier interdealer broker, announced the successful execution through ICE Clear U.S. of the first agricultural cleared swap transaction in the history of U.S. exchanges.

The OTC sugar swap transaction was submitted to the clearinghouse by ICAP, on behalf of Infinium Capital Management and Credit Suisse….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Livemint.com: India, the world’s second biggest wheat producer, is likely to export the grain for the first time in six years after bumper harvests boosted stocks, a leading grains trader said on Tuesday.

The country will harvest 76.5 million tonnes (mt) of wheat this year, just 1.6% below official estimates, Vijay Iyengar, managing director of Singapore-based Agrocorp International Pte Ltd, said. …. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Forbes: U.S. soybeans skidded to near two-month lows Tuesday on worries that the deepening global recession will ease demand for oilseeds and grains.

There were fresh signs that the recession was worsening, including a U.S. report showing that manufacturing production in New York state fell to a record low in February. The Dow industrials were down more than 250 points, hovering near 7,580 when Chicago Board of Trade grain markets closed….. Full Article: Source

Posted on 18 February 2009 by VRS |  Email |Print

From Bloomberg: Commodities plunged to their lowest level since June 2002, led by energy and industrial metals, on mounting signs that the global recession is deepening and demand for raw materials will decline further.

The Reuters/Jefferies CRB Index of 19 prices dropped for the sixth straight session, the longest slump since December….. Full Article: Source

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