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Commodities Briefing 26.Feb 2009

US commodity trend funds find pensions elusive
‘Holes in the ground’—the end of the commodity super cycle
VBV to raise commodity holding
Swaps need regulation after bank losses, Gensler says
Chinese government buying has and will continue to lift base metals prices out of the cellar
Gold investors make 120pc return in four months
Gold’s rebound fuels hopes of $1,200 mark
Gold market surplus to widen in 09
ETF Securities gold assets reach all time high
Gold most favored investment this year, World Gold Council says
Gold coin shortage as demand soars
Schork: Sub-$30 oil possible
Oil above $42 on optimism demand drop slowing
Opec unlikely to hit $75 target
Nigeria could be key gas player: Oil chief
Oil chiefs urge offshore drilling
Are natural gas producers in denial?
Obama's energy boost
China energy intensity fell 4.5 pct in 2008-official
Renewable energy improves
Cap-and-Trade vs. Carbon Tax: CO2 Crowd Breaking Ranks with President?
How to Raise Capital for Free (Thanks to Carbon Trading)
Carbon trading looks wobbly
Indian Rupee futures take off
Yen off to worst start since 2000 as economy shrinks
Is the Yen at a turning point?
Tokyo Grain Exchange rejects merger push, plans new products
Launch of new petroleum product swap futures contracts
FMC rejects NCDEX plan to lower transaction fee
Malaysia, Indonesia agree to strengthen commodity prices
Base metals prices gain on demand hopes
Gold miners see growth, base metals seek rebound
Mineral Councils of Australia urges continuing investment in mining ahead of recovery
US copper futures end up on outside market strength
Warning over record decline in sugar supply
Corn rises as high fertilizer costs may reduce U.S. planting
Oil up 6 pct as demand rises; copper, grains follow

Posted on 26 February 2009 by VRS |  Email |Print

From Forbes: Trend-following fund managers in the United States aim to reel in bigger clients after placing winning bets on falling commodity prices, but conservative pension groups like Calpers and their advisers said on Wednesday they aren’t biting.

High management fees of up to 6 percent a year and another 20 percent on profit is one reason why such fund managers — who buy when markets are up and sell when they are down — are disliked by those advising pensions, endowments and other institutional funds….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Livemint.com: The rise in commodity prices was driven by the confluence of a number of factors. Debt-driven growth in major developed countries drove strong growth (both export and domestic) in emerging markets such as China and India. This, in turn, fuelled demand for resources.

In a virtuous cycle, the growth drove demand in major commodity producers such as Russia, the Gulf, Australia, Canada and South Africa, whose strong economic expansion fuelled further growth globally by way of increased consumption and investment….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From IPE: VBV, the largest Austrian Pensionskasse, wants to invest more in commodities and is looking at a foray into infrastructure.

“The excess liquidity is out of commodities which makes it more interesting than before,” explained Günther Schiendl, CFO at VBV….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Bloomberg: Gary Gensler, the nominee to head the Commodity Futures Trading Commission, is dogged by a decade- old debate with former Chairman Brooksley Born over whether to regulate private derivative contracts blamed in part for $1 trillion in global bank losses.

The Baltimore native, then working for Treasury Secretary Robert Rubin, was on the side that opposed oversight by the CFTC, the watchdog for $5 trillion in commodity and financial futures. …. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Mineweb.net: Raw material demand for metals and minerals will be boosted by China’s massive infrastructure programs with base metal prices already lifting off their near-term lows in December.

In her monthly Scotiabank Commodity Price Index analysis, economist Patricia Mohr noted that “China was a big factor in boosting copper and zinc prices, as the State Reserve Bureau (SRB) bought significant volumes at bargain prices for its ‘strategic ‘ inventories and in support of China’s large smelting & refining industry.”…. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Telegraph: Private investors who have bought exchange traded funds that track the performance of gold miners have more than doubled their money since October last year. A gold investment that private investors can buy on the stock market has gained in value by more than 120pc in four months.

The Russell Global Gold fund, an “exchange traded fund” or ETF that tracks the performance of gold miners, has produced a total gain of 121pc since October 27 last year….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From FT: Commodity markets struggled for clear direction during a highly volatile session yesterday. Gold initially extended its retreat for a third session, sinking as low as $952.30 a troy ounce before recovering to $972.90, up 1 per cent on the day.

“Chartists viewed yesterday’s recovery as encouraging as gold rebounded from a recent resistance level of $951.80 last touched on February 12, only to rebound higher, suggesting that the uptrend for prices remained intact….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Mineweb.com: The gold market surplus will widen from 60t (1.9m ounces) to 284t (9.1m ounces) this year, despite the fact that total gold supply is expected to weaken slightly to 3,770t (121m ounces), says the VM Group.

The Group said in its recent Yellow Book that although this was the largest surplus for a number of years, it was “relatively modest” given the potential for investment demand outside of ETFs and coins to absorb this metal. …. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Commodityonline.com: Gold continues to attract strong safe haven flows, with gold prices breaking through $1000/oz last week on strong investor demand for physically backed gold. Physically-backed gold ETC inflows rose $31 million last week, equivalent to 44,937 ounces.

ETF Securities has seen a 33% increase in gold holdings over the past 3 months to all time highs, bringing gold assets to $7.0 billion (7.03mn ounces), the largest gold ETC/ETF holdings in Europe, and the second largest in the world, according to a weekly review by ETF Securities Ltd….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Bloomberg: Gold is the most favored investment this year ahead of investment-grade bonds and other assets, according to a survey of investment advisers, the producer-funded World Gold Council said.

About 60 percent of the 31 advisers surveyed in Europe expect investors to take fewer risks this year compared with 2008, while about 30 percent expect investors to be less risk averse, the London-based council said today in a report. Almost 60 percent expect better market conditions this year….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From FT: The rush by retail investors into bullion coins is creating shortages as mints across the world struggle to meet the surge in demand, dealers and mint officials say.

The scarcity is lifting coin premiums to as much as 5 per cent above the spot gold price, a level reached briefly after the collapse of Lehman Brothers last September, when coin shortages also surfaced. …. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: Now it was interesting; in September, when oil was at $115, I was at OPEC, and I gave a presentation to OPEC, and in this presentation with oil well above $100, I gave them my call for $75. And I tell you, I was surprised how surprised they were that I thought it could go to $75.

I didn’t think oil was going to $75, because if OPEC thought it was impossible, then I think we were going to $50, because if they thought it – everyone – and they were betting the wrong way, and when they had to exit, that exit pushed us past $65, which is where probably fair market value is in today’s market….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From AP: Oil prices inched higher above $42 a barrel Thursday in Asia as a lower-than-expected U.S. crude inventory increase sparked investor optimism that the collapse in demand may be slowing.

Benchmark crude for April delivery rose 9 cents to $42.59 a barrel by midmorning in Singapore on the New York Mercantile Exchange. The contract gained $2.54 on Wednesday to settle at $42.50….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Zawya.com: Opec has managed to halt a steep slide in oil prices by slashing supplies but it would be impossible for the group to push them up to its presumed target of $75 a barrel, a London-based energy centre said yesterday.

The Centre for Global Energy Studies (CGES) said the 12-nation Organisation of Petroleum Exporting Countries (Opec) had trimmed its crude supply by nearly 2.3 million barrels per day out of the agreed total cut of 4.2 million bpd but further output reductions are expected this month and in March….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From AFP: Nigeria could be a key player in the global gas industry if obstacles are removed, a multinational oil giant’s chief executive said Wednesday, as the west African country neared completing a deal with Russia’s Gazprom.

The west African powerhouse which has the seventh largest proven natural gas reserves in the world — 187 trillion cubic feet — taps roughly three billion cubic feet a day….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From AP: Executives of the biggest oil companies sought to convince lawmakers Wednesday that expanded offshore drilling will produce jobs and help the nation’s economy, although new leases in areas that have been off limits would not be issued for years.

“We can help put America on the road to economic recovery,” said Larry Nichols, chairman of Devon Energy Corp., as the executives testified before the House Natural Resources Committee….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Nationalpost.com: While global economies continue to weaken, natural gas production appears to be growing despite soft demand and the threat of liquefied natural gas heading to the U.S. this summer without a home.

Many producers in the exploration and production space have made more than one round of spending and production cuts for 2009. Their primary concern is liquidity, while the sentiment in the oil patch is that the current downturn will be worse than previous cycles in the recent past….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From MSNBC: When a politician starts talking about renewable energy and carbon caps, pollster Stan Greenberg usually sees what he calls a “glazing-over” moment - as in voters’ eyes glazing over with disinterest. But when President Obama talked about how America had to take back the lead in energy innovation, that moment didn’t come.

Instead, Democrats as well as Republicans picked up on Obama’s call for energy independence, and revved up the debate on the morning after….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Reuters: China’s energy use in generating each dollar of gross domestic product fell 4.5 percent in 2008, Liu Qi, deputy administrator of the National Energy Administration said on Thursday.

Energy intensity fell 3.66 percent in 2007 after declining only 1.79 percent in 2006, according to the National Bureau of Statistics….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Calgaryherald.com: Renewable resources such as wind and solar will provide enough baseload electricity to meet the needs of society in the near future, said a longtime energy conservation advocate.

Roger Peters, national secretary to the board of the Canadian Renewable Energy Alliance, said new technology to harness the wind and sun will make reliance on renewable resources feasible by possibly 2020-30 and certainly by 2050….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Heritage.org: In last night’s speech, President Obama remarked, “So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.”

Today the House Committee on Ways and Means held a hearing on the scientific objectives for climate change legislation, but according to a reliable source, the hearing evolved into a debate amongst Democrats arguing on the merit of a carbon tax versus a cap-and-trade….. Full Article: Source
A SQUARE’s report on recent webinar on carbon-led investing - with voice-over (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 26 February 2009 by VRS |  Email |Print

From Businessweek.com: No, that headline isn’t wrong. And no, it’s not a trick to get you to read this posting (although hopefully it helps). While reporting for a recent article on Europe’s cap-and-trade carbon dioxide market, I came across an eco-financing trend that could have implications when/if the U.S. unveils its own federally-mandated emissions trading scheme.

In short, Europe’s heavy industry, such as oil refiners and steel manufacturers, has turned the Continent’s carbon market into a new source of financing to cover running costs. …. Full Article: Source

A SQUARE’s report on recent webinar on carbon-led investing - with voice-over (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 26 February 2009 by VRS |  Email |Print

From Weeklytimesnow.com.au: With next year’s start for an emissions trading system affecting many food companies, agribusiness suppliers and primary producers, the past few weeks haven’t given us a clearer picture of the brave new world.

A “market” will be the main mechanism to send the signals to large greenhouse gas emitters. The financial crisis has hurt almost every form of market, and carbon trade has been swept into the vortex….. Full Article: Source

A SQUARE’s report on recent webinar on carbon-led investing - with voice-over (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 26 February 2009 by VRS |  Email |Print

From WSJ: India’s young currency futures markets are showing signs of promise, prompting some players to demand even more tools and leeway to hedge against foreign currency risk.

These constituencies argue that the central bank must permit a broader range of investors to participate in futures trading — and additional types of contracts to be traded — if India’s corporate sector is to truly prosper. There’s a growing drumbeat of support for the re-introduction of interest rate futures….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Bloomberg: The yen is off to its worst start in nine years against the dollar as Japan’s tumbling exports and the fastest economic contraction since 1974 end a rally sparked by investors seeking a refuge from the financial crisis.

The currency slumped 6.4 percent against the dollar this year as global stock markets extended 2008’s losses….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Seekingalpha.com: On January 26, when the Yen was trading around JPY88/USD, we suggested the Yen at the 80 level was like gold at $147/ounce, i.e., on a pinnacle from which the only direction was down. Commodity guru Jim Rogers describes the USD and Yen rallies as “artificial” and the result of forced liquidations (of carry trades).

UBS currency analysts in Tokyo have estimated that approximately JPY20 trillion of yen carry trades were unwound in the second half of 2008, and were a major factor in the yen’s spurt to the JPY88/USD level. …. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Bloomberg: The Tokyo Grain Exchange, which forecasts a net loss this year, is rejecting proposals to merge with other bourses and will boost product offerings to revive profit, Chairman Yoshiaki Watanabe said.

“We can share trading systems, but we won’t combine our organizations,” Watanabe said in an interview, referring to suggestions that the TGE merge with the Tokyo Commodity Exchange, known as Tocom….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Commodities-now.com: CME Group, the world’s largest and most diverse derivatives exchange, today announced 13 new petroleum product swap futures contracts, scheduled to begin trading on March 8 for trade date March 9.

These contracts are listed with, and subject to, the rules and regulations of NYMEX. The products will be available through CME ClearPort®, an open clearing system….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Thehindubusinessline.com: Following the Bombay High Court order, commodity market regulator Forward Markets Commission (FMC) heard National Commodity and Derivative Exchange of India (NCDEX) proposal to reduce transaction fee but rejected the move.

Rajeev Agarwal, Member, FMC, said after hearing NCDEX argument (post-Bombay High Court judgement), the Commission was convinced that the action of NCDEX to reduce transaction fee was neither in the interest of the exchange nor the industry as a whole….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Bernama: Malaysia and Indonesia have agreed to work together to strengthen commodity prices in particular palm oil and rubber amid the current sagging world prices. Malaysia and Indonesia jointly account for 85 percent of global palm oil production and 40 percent of natural rubber production.

Both countries in a joint statement released here on Wednesday said they have also agreed to take appropriate measures to ensure stable prices in particular for palm oil….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Metalmarkets.org.uk: Base metals prices saw more gains Wednesday as it looked as if demand for the metals used in construction and manufacturing could be on the rise.

May copper was up 4 cents to $1.54 per pound in New York while three-month copper added $125 to $3,410 per tonne in London….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Reuters: Soaring gold prices and rock-bottom base metals have split the mining sector into camps of haves and have-nots, with the contrast clearly evident at the BMO Capital Markets Metals and Mining conference, which wrapped up on Wednesday.

With gold prices having flirted with record highs this week and mining costs in decline, gold producers in attendance talked up expansion possibilities and tried to sell potential investors on new projects….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From marketwatch.com: Investment in mining projects should not be derailed or slowed in response to the current slump in demand if the global market is to avoid sharp price increases in future, a senior industry official said.

Demand for minerals will soon exceed supply, and the ability to address capacity constraints will be the new determinant of economic competitiveness, Mitch Hooke, chief executive officer of the Mineral Councils of Australia, told an industry conference. …. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Reuters: U.S. copper futures closed up for the third straight session Wednesday, with follow-through momentum from a late-Tuesday rally on Wall Street and a firmer tone in crude oil helping to lift the red metal back above $1.50 a lb.

Copper for March delivery HGH9 rose 3.75 cents, or 2.5 percent, to settle at $1.5245 a lb on the New York Mercantile Exchange’s COMEX division….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From FT: Global sugar production is poised for a record fall this year due to funding constraints caused by the credit crisis and structural problems in the market, Czarnikow, the sugar merchant, warned on Wednesday.

Production is forecast to fall 15.2m tonnes, or 8.9 per cent, to 155.3m tonnes in 2008-09, leading to a supply deficit of 10.4m tonnes….. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Bloomberg: Corn rose for the third straight day on speculation that farmers in the U.S., the world’s largest producer and exporter, will plant less this year because of high fertilizer costs.

This week, the Department of Agriculture probably will reduce its forecast for corn acreage from earlier this month, a Bloomberg survey showed. …. Full Article: Source

Posted on 26 February 2009 by VRS |  Email |Print

From Reuters: Signs of a recovery in U.S. energy demand boosted crude oil prices by 6 percent on Wednesday, helping copper and grains markets to a higher close as well.

Gold continued its losing streak, closing down for a third straight session as investors backed away from the so-called “safe haven” after rediscovering an appetite for oil and other riskier commodities. The dollar’s persistent strength [USD/] also weighed on the precious metal….. Full Article: Source

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