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Commodities Briefing 04.Mar 2009

Rio economist sees rough year ahead for commodities
China will soon lift demand for commodities, says ABARE
China's CIC sees opportunities in natural resources
NZ: Commodities drop for 7th consecutive month
Our coming commodities crunch
Farm exports forecast to rise despite global downturn
Revenue from Australia's commodity exports to plunge
S&P: Agriculture leads the S&P GSCI lower in February
Iran's 'cure' for oil prices
Oil: $300? or $10?
Oil steady above $41 as investors eye inventories
Black days for white metal
Gold continues its correction towards $900
Gold-backed ETFs on a roll
Iron ore miners plan to hold out on prices
Copper rises on stock draw-downs
China to proceed with $9 bln Congo plan
China 'nervous' over Rio Tinto-OZ Minerals deal scrutiny
Despite subdued outlook, mining companies may buy at bargain basement prices
ABARE forecasts strong rise in iron ore, 10% copper increase
Abu Dhabi exchange delays first ETF
Aussie, Canadian currencies ETFs hold promise in '09
Brazil’s Real rises as commodities rebound on increased demand
Armenia devalues currency
Russian farmers urged to buy fuel at commodity exchanges
Merge SEC, CFTC into markets regulator
MCX grapples with low volumes in agri futures
Deutsche Boerse tops CME derivatives volume in Feb
South Africa sees binding climate change policy in 3 years
EU ministers shirk third-world climate finance
Turkey to become key carbon market to kick CO2 habit
Canada, U.S. to co-ordinate carbon-reduction projects
ETF Securities: The fundamentals of oil
Cocoa rebounds on gains in stocks, forecasts of supply deficit

Posted on 04 March 2009 by VRS |  Email |Print

From Reuters: Global miner Rio Tinto expects 2009 to be a rough year in terms of both prices and volumes for key commodities, the firm’s chief economist said on Wednesday.

Vivek Tulpule, speaking to Reuters on the sidelines of a conference, said a pickup was possible in 2010, though people should not be blind to the risk of a prolonged slowdown….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Theaustralian.news.com.au: China will soon regain its appetite for Australian commodities, with the financial crisis likely to put only a temporary dent in its massive and growing demand for iron ore and coal.

New figures from the Australian Bureau of Agriculture Resource Economics predict a sharp slump in Australian export earnings in 2009-10 as customers, particularly China, pay far less for commodities….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Reuters: China Investment Corp sees investment opportunities in energy and commodities sectors as prices have fallen steeply, Jesse Wang, a senior official with the country’s $200 billion sovereign wealth fund, said on Wednesday.

Officials have said that CIC wants to diversify its portfolio in the natural resources sector after booking heavy losses on high-profile financial investments in private equity fund Blackstone and U.S. bank Morgan Stanley….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Nbr.co.nz: The prices for New Zealand’s key exports continued their march south for the seventh consecutive month in February, down another 4.6% to the lowest level since March 2006.

Wool and skin prices got hit the hardest, dropping 7.6% and 7.2% respectively, while eight other commodities also declined in price and three remained static from the previous month….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Livenews.com.au: Australia is facing the prospect of rising balance of payments problems if forecasts for our vital commodity exports from the key government forecaster are anywhere near right.

In fact we could face half a decade of falling commodity export income, rising balance of payments pressure, an increasing international debt burden and some tough choices for the then federal government of the day….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From mineweb.net: Farm export earnings are forecast to rise in 2008-09 and 2009-10, despite the global financial crisis. This and other commodity projections out to 2013-14 are contained in the March issue of Australian commodities released today by Phillip Glyde, Executive Director, ABARE.

“A substantial increase in crop production combined with a significant depreciation of the Australian dollar is expected to support farm export earnings in the short term,” Mr Glyde said….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From News.com.au: The value of Australia’s commodity exports will plunge 17 per cent in fiscal 2010 due to lower returns from mineral and energy exports. At the same time, the Australian Bureau of Agricultural and Resource Economics said the Australian dollar would drift lower in fiscal 2010 to average at US68 cents, and 55 on a trade-weighted index basis.

In its first outlook statement for the fiscal year that starts July 1, the Federal Government’s chief commodities forecaster said it expected the value of commodity exports to fall to $161.7 billion, from a revised estimate of $195.7 billion for this financial year….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

Standard & Poor’s, the world’s leading index provider, announced today that the S&P GSCI lost 6.10% in February, marking its eight consecutive month of declines. Leading the Index lower during the month was the S&P GSCI Agriculture Index, which fell 8.15%.

“While Agriculture was the weakest sector within the S&P GSCI in February, the biggest blow was delivered by Energy, the largest Index sector by weight, which fell 7.39% during the month,” says Michael McGlone, Director of Commodity Indexing at Standard & Poor’s…. Full Press Release: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Forbes: Oil minister Nozari loosely promises a solution, but it might not go very far. These are uncertain times for energy exporters like Iran. Crude oil prices are trading around $40.00 per barrel, which admittedly is slightly above Iran’s expectations of $37.50 for this year’s budget, but still a far cry from the $100.00-plus prices seen at the height of summer 2008.

Although Iran and its fellow members at the Organization of Petroleum-Exporting Countries are unlikely to announce any more production cuts when they meet on March 15, Iran’s oil minister Gholamhossein Nozari still let slip on Tuesday that OPEC would consider a “new solution” to boost prices….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: Associate Editor Dave Nadig chats with Matt Hougan about the tremendous decline in oil this week, and digs into pundit predictions of $300 oil, the prospect for OPEC cuts, and the signals from the long term futures contracts.…. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From IHT: Oil prices were steady above $41 a barrel Wednesday in Asia as investors looked to a U.S. crude inventory report later in the day for signs of demand amid the worst recession in decades.

Benchmark crude for April delivery fell 26 cents to $41.39 a barrel by midmorning in Singapore on the New York Mercantile Exchange. Prices rose $1.50 to settle at $41.65 on Monday….. Full Article: Source

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From Investorschronicle.co.uk: Since platinum hit its all-time closing high in early March 2008 of $2,300 (£1,630.22) per oz, it has plummeted 53 per cent and now trade around $1,070. If this sounds bad, the period since early December has actually seen something of a fight-back by the white metal, which had sunk as low as $763 in October.

But notwithstanding some recent recovery, platinum miners have also seen their valuations tank since last spring….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From FT: Gold tumbled towards the $900 an ounce level on Tuesday while oil prices staged a rebound after a sharp fall in the previous session but confidence among commodity investors remained fragile amid ongoing weakness across equity markets.

Gold continued its correction, dropping 2 per cent to $907 a troy ounce, moving between a low of $906.30 and a high of $932.30….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Theaureport.com: It was Warren Buffett who said that you learn who’s been swimming naked when the tide goes out. But it is Tyler Mordy who’s pointing out the few swimsuit-clad investment products standing on the shore now that the tide of economic growth has clearly ebbed—and some of them have a golden glow.

The ETF industry has ballooned to about $650 billion in assets under management, up from about $70 billion in the year 2000 and a very long way from the first ETF that was launched in Canada in 1993….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From FT: Iron ore miners plan to postpone any agreement in annual negotiations with steelmakers until as late as the summer, betting that demand, and therefore market prices, will improve.

Senior executives involved in the talks told the Financial Times that annual iron ore benchmark prices were still likely to drop for the fiscal year starting on April 1, but said that by waiting longer than normal, they hoped to avoid a large cut….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Theglobeandmail.com: Copper bounced up nearly 5 per cent Tuesday after four days of heavy inventory draw-downs, but analysts said the demand outlook was still grim, with the global economy in turmoil.

Copper for three months delivery on the London Metal Exchange closed at $3,539 (U.S.), up from Monday’s close of $3,385 when it posted a 1.8 per cent fall. The contract firmed to a three-week high at $3,580 a tonne in after-hours trade….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Bloomberg: China plans to spend $9 billion on mining and infrastructure in the Democratic Republic of Congo and won’t bow to a demand from the International Monetary Fund to alter the accord, the Chinese ambassador to the country said.

China’s biggest single investment in Africa will give Congo roads, railways, hospitals and schools in return for metals worth $50 billion at current prices….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Abc.net.au: PricewaterhouseCoopers says Chinese activity in the Australian mining sector will increase if the latest moves get regulatory approval.

It has released a report showing global mining deals involving Chinese buyers surged four-fold during 2008 to almost $41 billion….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Mineweb.com: In their annual “Mining Deals 2008 Annual Review”, PricewaterhouseCoopers suggests that, while the short-term outlook for mining deal activity from western mining companies is subdued, mining companies with available funds “may well find 2009 to be a year where they can utilize their financial strength and achieve acquisitions at long-term bargain basement prices.”

In the analysis by the Global Mining Deals Team, PwC called last year “the year of what might have been….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Mineweb.com: Australia forecast a strong rise in iron ore production and a 10 percent jump in copper mine output in the year to June 2010, even after factoring in a more prolonged economic slump that has already triggered supply curbs.

In its first forecasts for the coming financial year, the Australian Bureau of Agricultural & Resource Economics also said on Tuesday that a slight rise in the wheat crop would yield sharply higher exports, while production of coking coal was expected to remain largely unchanged after a downward revision….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Tradearabia.com: The Abu Dhabi Securities Exchange (ADX) is delaying its first exchange-traded fund (ETF) until the second quarter due to market conditions, its chief executive said on Tuesday.

The ADX had already delayed the launch of ETFs from the end of 2008 to the first quarter of 2009, given the current market climate….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Indexuniverse.com: Investors in basic materials and oil exchange-traded funds have been getting burned since last spring. And it hasn’t been pretty. Take the United States Oil ETF. Since its peak last July at $119 a share, it has fallen to trade around $25. That’s a 79% free fall.

Even the United States 12-Month Oil ETF has been hit hard. It’s the sister ETF, and as the name implies, USL trades in the 12-month oil contract (USO buys the front-month contract). USL has dropped 72% in the same time frame. …. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Bloomberg: Brazil’s real rose for the first time in three days as a rebound in commodity prices rekindled investor demand for emerging-market assets.

The real increased 1.6 percent to 2.4082 per U.S. dollar at 3:12 p.m. New York time, after most trading in Brazil had ended, from 2.4473 yesterday. It fell as much as 2.4 percent to 2.4501 yesterday, the lowest since Dec. 19….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Armenialiberty.org: Armenia effectively devalued its national currency, the dram, by more than 20 percent on Tuesday after the International Monetary Fund pledged to provide it with $540 million in emergency loans designed to minimize the impact of the global economic crisis.

The dram tumbled from 305.7 to 372.5 per U.S. dollar in trading at Yerevan’s NASDAQ OMX stock exchange immediately after the Central Bank of Armenia (CBA) decided to limit its hard currency injections in the local market….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Rbcnews.com: Fuel purchasing for agricultural producers should be carried out through special fuel exchanges, Russia’s First Deputy Prime Minister Viktor Zubkov told a spring sowing campaign meeting in Moscow today.

“A pilot project has been planned this year to provide the agribusiness sector with fuel through a commodity exchange,” he said….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Reuters: Congress should create a new capital markets regulator to protect investors by combining the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, a group representing U.S. mutual funds said on Tuesday.

The Investment Company Institute (ICI) said a capital markets regulator could set legal standards for investment advisers, broker-dealers and money market funds, as well as address gaps in the regulation of hedge funds, derivatives and municipal securities….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Business-standard.com: Multi-Commodity Exchange (MCX), the country’s top commodity bourse that has an indomitable space in energy and metal futures, is grappling with the problem of sluggish agricultural commodities volume, which remain lower than its rival National Commodities and Derivatives Exchange (NCDEX).

Of 26 farm commodities, futures trading in 17 with delivery in March, April, May and June showed zero volume, according to MCX data….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Easybourse.com: Deutsche Boerse edged out CME Group Inc. as the world’s largest derivatives exchange by volume in February amid signs that the flagging market for interest-rate contracts is stabilizing.
CME, the Chicago exchange operator, also suffered its first decline in average rate per contract in more than a year at a time when cost cutting and revenue diversification are viewed as key to maintaining profit growth across the financial-exchange sector….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Reuters: South Africa expects to put in place a binding climate change policy within three years to cap emissions by 2020-25, the environment minister said at the launch of a climate summit on Tuesday.

Minister of Environmental Affairs and Tourism Marthinus van Schalkwyk said lack of action could lead emissions in South Africa, the continent’s largest emitter, to quadruple by 2050….. Full Article: Source

Posted on 04 March 2009 by VRS |  Email |Print

From Euobserver.com: Poorer countries have been left hanging by EU environment ministers, who at a meeting in Brussels failed to produce any clear funding commitments to help the developing world tackle climate change.

Ministers from the 27 member states were in the European capital on Monday (2 March) to discuss proposals published in January by the European Commission on what stance to take at the upcoming UN conference in Copenhagen in December….. Full Article: Source
*A SQUARE’s 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 04 March 2009 by VRS |  Email |Print

From Todayszaman.com: Voluntary carbon trading projects in Turkey have increased rapidly, reaching 45 from 30 in the first quarter of 2008 and resulting in a greenhouse gas reduction of about 5 million tons and about 20 million euros in gains, making Turkey a key candidate in the world market, especially after the Kyoto Protocol expires.

Turkey’s ratification of the Kyoto Protocol, a UN-led pact to combat climate change, ushered the country into a new era and with it into new projects to catch up with the developments since the accord was first agreed upon by world governments in 1997. …. Full Article: Source

*A SQUARE’s 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 04 March 2009 by VRS |  Email |Print

From Canada.com: Canada and the United States will ensure there is co-ordination and no duplication in $7 billion worth of technology projects — $3.5 billion on each side of the border — aimed at reducing carbon emissions from coal-fired power plants and the Alberta oilsands, Environment Minister Jim Prentice said Tuesday.

He made the comment during a news conference in Washington, where he announced Canada-U.S. government working groups will be established to follow up on the “clean-energy dialogue” agreed during President Barack Obama’s recent meetings with Prime Minister Stephen Harper in Ottawa….. Full Article: Source

*A SQUARE’s 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 04 March 2009 by VRS |  Email |Print

Below is a synopsis of the presentation:

• Total oil ETC inflows have now increased by $912mn since the beginning of November, the fastest growth and AUM since their introduction in 2005.

• Through May to July ’08 investors built large net short positions in energy – mainly with purchases of ETFS Short Crude Oil - as the oil price surged towards a peak.
• Over the past 10 years oil has tended to outperform when equity markets are falling.
• Global demand for oil is expected to increase by over 30% between 2008 and 2030. Global demand for gas is expected to increase by 50%. The recent crisis is unlikely to materially damage this long term demand.
• Combined oil and gas demand is expected to continue to make up the bulk of world energy supply in 2030 (58% vs 60% in 2008).
• Oil ETC inflows have surged since November, totalling over $900 million. Daily flows are averaging $100 million at present.

Full presentation:

Posted on 04 March 2009 by VRS |  Email |Print

From Bloomberg: Cocoa rebounded from a three-month low after U.S. equities advanced and an industry group forecast a larger supply deficit than a year earlier.

The Dow Jones Industrial Average of 30 leading stocks climbed after dropping below 7,000 yesterday for the first time since 1997. The Reuters/Jefferies CRB Index of 19 commodities rose as much as 1.4 percent. …. Full Article: Source

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