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Commodities Briefing 10.Mar 2009

Posted on 10 March 2009 by VRS |  Email |Print

From BBC: The global economy will shrink this year for the first time since World War II, the World Bank has said. The bank’s forecast is gloomier than other estimates, which still foresee some growth.

By the middle of 2009, industrial output could be as much as 15% lower than 2008, while trade may record the biggest decline in 80 years, it said….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Voanews.com: The Asian Development Bank says the global economic crisis has erased $50 trillion in wealth around the world. Bank President Haruhiko Kuroda said Monday the current crisis is the most serious the world has seen since the Great Depression.

Kuroda said he believes Asia will be one among the first regions to emerge from the crisis and will be stronger than before….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From FT: The majority of investors plan to increase their exposure to commodities but are shifting away from the long-only, passive indices that characterised the asset class in the early 2000s and are instead moving into more sophisticated instruments.

The findings, in a survey by Barclays Capital among 230 institutional investors, corroborate anecdotal evidence that pension funds, sovereign wealth funds and other investors were shifting away from indices such as the S&P GSCI….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Reuters: The commodity boom and bust in the last 5 years suggests there is a natural limit on how much investment money these markets can absorb before price-setting mechanisms become distorted and prices unmoored from supply and demand fundamentals.

Exchange operators and dealers have a strong interest in increasing turnover and volume, since it boosts income from fees and commissions. But most also argue that increased turnover makes markets more efficient because it sharpens price discovery and makes them more liquid….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Reuters: One might have assumed commodity prices bumping along near multi-year lows would repel investors from the once hot markets. But the opposite may be true thanks to high volatility — a key ingredient in profit making.

Crude oil and copper prices have tumbled to a fraction of their peaks hit last summer, as the global economic crisis has taken its toll. To be sure, the rout has brought with it a decline in open interest in the markets….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Barrons.com: Commodities from basic metals to agricultural products look a lot like stocks these days, losing half of their value over the course of several months last year. And now, despite the strength in gold and other precious metals, they are still floundering.

For investors looking for alternatives to save their decimated equities portfolios, this is not the place. Despite relatively low prices, there is no rush to snap up cotton, corn and coffee right now….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Energyrisk.com: Investors are bullish about commodities in the long term, according Barcap’s annual investor survey, with 79% of participants planning to initiate or increase their exposure to commodities over the next three years.

The recent success seen by exchange traded products, such as exchange traded funds (ETFs), is set to continue over the next 12 months with 22% of investors using them to invest in commodities. Some 26% said they would be using long/short index strategies….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Goldseek.com: While stocks have made new lows commodities have held up well and especially in the past few months. Compared to stocks, commodities have actually hit a new bull market high (relative terms).

Take a look at a long-term chart of the CCI/SPX ratio. (I prefer to use the CCI, as the CRB is too heavily weighted in Oil). The ratio peaked in July 2008 at 0.49 and bottomed in December 2008 at 0.35. It has rallied all the way to a new high at 0.51….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Miningaustralia.com: The value of Australian commodity exports is forecast to fall by 17% to $162 billion in 2009-10, according to the latest Australian Bureau of Agriculture and Resource Economics (ABARE) commodity outlook.

This and other commodity projections out to 2013-14 are contained in the March quarter issue of the outlook….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Thestar.com: Oil prices rose to the highest level in two months as investors geared up for the potential of more OPEC production cuts. Benchmark crude for April delivery gained $1.55 to settle at $47.07 a barrel on the New York Mercantile Exchange.

A barrel of oil, which last cost more than $50 in early January, had reached as high as $48.83 earlier in the day….. Full Article: Source

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From Guardian: Fears of a global recession and persistent concerns about the banking sector lifted the U.S. dollar on Monday as global stocks mostly faltered and oil prices shot higher on expectations of another OPEC output cut.

Government debt prices fell as U.S Treasuries retreated on the prospect of $63 billion in new supply this week and shorter-dated euro zone bonds slipped ahead of 8 billion euros worth of two-year paper from Germany on Wednesday….. Full Article: Source

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From Hardassetsinvestor.com: The U. S. Energy Information Administration reports that while there was a drop in natural gas inventories of 102 billion cubic feet for the week ending March 4 due to cold weather and the increase in heating demand that goes along with it, underground inventories are still high.

In fact, as the EIA points out, that 102 billion cubic feet drawdown is 19 billion cubic feet lower than the average inventory drawdown at this time of year….. Full Article: Source

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From Reuters: China has filled all four of its state-owned emergency oil reserve tanks to the brim and should now invest in oil tankers to add more to inventories while oil prices are low, a senior industry executive said on Monday in a rare acknowledgement of Beijing’s secretive oil inventories.

Coupled with data last week showing a one-third rise in commercial crude oil stockpiles last year, the admission suggests that a large share of of China’s oil import growth last year was pumped directly into storage, and could be relied upon quickly to soften any demand recovery or if prices should rise….. Full Article: Source

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From Thepeninsulaqatar.com: Top exporter Saudi Arabia wants OPEC to discuss stricter compliance with existing supply curbs before considering more cuts.

Some members of the group, alarmed by falling demand, have made the case for more aggressive action. Since September, the Organisation of the Petroleum Exporting Countries has agreed to cut 4.2 million barrels per day — about five percent of global daily supply….. Full Article: Source
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Posted on 10 March 2009 by VRS |  Email |Print

From AP: The Environmental Protection Agency on Monday launched a review of coal ash storage facilities and said it would draft regulations for coal ash by the end of the year.

In a letter sent to the corporate headquarters of 61 power companies, the agency asks for information about the contents, historic spills and record of inspections at the estimated 300 coal ash storage ponds and landfills nationwide….. Full Article: Source

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From Times Online: The rolling plains of Castilla-La Mancha are dominated by the windmills that provoked the fevered imagination of Don Quixote. But Spain’s relentless investment in wind power and other renewable energy sources has proved wrong those who thought it was tilting at windmills.

The sleek white wind turbines and hydroelectric plants that have sprung up across the country in recent years generated 30 per cent of Spain’s energy this year for the first time. …. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Telegraph: The howling prairie gales that blow almost continually across this flat and empty state could, it has been estimated, light up a quarter of America. If there was one industry whose bright future looked assured, it was green energy, and particularly wind, which is widely regarded as the most promising alternative to fossil fuels.

However, just as its fortunes soared last year, so they are on the wane now….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From RTE: A new report suggests Ireland has the capacity to become a global financial hub for carbon trading. The report from the organisation Business in the Community concludes that if Ireland moves in this direction, it has the capacity to rebuild its financial reputation internationally.

Business in the Community is the leading organisation involved in corporate responsibility, and its membership includes heavy-hitting companies such as the ESB and Intel. …. 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 10 March 2009 by VRS |  Email |Print

From Structuredproductsonline.com: Index provider Standard & Poor’s has launched the first in a series of global low carbon indexes. The S&P US Carbon Efficient Index is designed to provide exposure to the performance of large-cap US companies with low carbon emissions, while aiming to track the return of the benchmark S&P 500.

The index, part of the provider’s thematic series, is designed to be used as an underlying for financial products….. 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 10 March 2009 by VRS |  Email |Print

From Reuters: Government infrastructure spending will drive a rebound in metals prices, while gold may reach $2,000 an ounce in the next year if the dollar falls, an executive with UK fund house Schroders said.

“The potential for very sharp price rises in industrial metals this year is very good,” emerging market debt and commodities product manager Christopher Wyke told Reuters….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Londonstockexchange.com: Uncertain conditions in the global economy and increasing investor insecurity have triggered a rush to buy up gold among hedge funds, according to reports.

Traditionally, the investment pools have avoided gold because it generates no yield and costs money to insure and store, the Financial Times stated….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Commodityonline.com: There is no stopping the gold. If you want any proof for that just check out the World Gold Council data. According to the council, total demand for gold in India, the world’s largest market for the metal, was up 84 per cent in tonnage terms in the fourth quarter of 2008 calendar year. In fact the jewellery demand was up 107 per cent.

As banks and large financial houses started selling gold to retail customers, Indian consumers invested more in gold in 2008. The WGC says 71% of the purchases was for jewellery and 29% for investment products such as gold bars and coins….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Bullionvault.com: The founder of a major hedge fund has today (March 9th) claimed that Investing in Gold is a prudent move, regardless of how the economy fares in the coming few years.

David Einhorn, who set up the Greenlight Capital fund, hit the headlines last year after revealing that he shorted Lehman Brothers before its collapse as he felt it was too exposed to the declining property market….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From FT: Hedge fund investors who made money last year by betting against investment banks are buying gold as a way of betting against central banks.

The gold bulls include David Einhorn, founder of hedge fund Greenlight Capital, who last year came under the spotlight for his short selling of shares in Lehman after arguing that the bank did not have enough capital to offset its exposure to falling property prices….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Commodityonline.com: Gold prices have succumbed to the overall effects of an ailing economy and investors seem to follow the trend of shorting gold and related exchange traded funds (ETFs).

On Friday, gold futures closed slightly higher on flight-to-safety buying, reversing an eight-day losing streak, reports Allen Sykora for The Wall Street Journal….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Indexuniverse.com: €9.4 billion is currently invested in diversified Eurozone government bond ETFs, forming a significant part of the overall European fixed income ETF sector. These ETFs track a diverse range of indices, provided by iBoxx, EuroMTS, Barclays and JP Morgan.

The funds have been one of the best-performing segments of the European ETF market over the last 18 months, as investors sought a safe haven from the equity markets, and as interest rate declines gave capital gains to those holding bonds….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Bloomberg: The currencies of commodity- producing countries like Norway, Australia and Canada may strengthen as a rally in oil signals other commodities may follow, according to BNP Paribas SA.

“We remain friendly on commodity currencies and view today’s oil-price rally as an indication for other commodities to follow,” strategists at BNP Paribas wrote in a research note sent today….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Reuters: Mining industry players, burned by a collapse in prices after several years of booming markets, are prepared for an extended downturn, hoping China will eventually regain its enormous appetite for metals.

“The underlying fundamentals in the developed world are bleak and look set to remain so for some time,” RBC analyst Fraser Phillips said in a research note this week….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Bloomberg: Copper dropped the most in more than two weeks on renewed concern that the recession may curb demand for the metal used in homes, cars and appliances.

The global economy is likely to contract this year for the first time since World War II and trade will drop by the most in 80 years, the World Bank said yesterday in a report. …. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Economic Times: Prices in the world sugar market made marked gains in the last week of February on the back of the Indian government mulling the import of white (refined or processed) sugar at zero duty .

Quotes for the London Daily Price (LDP) for white sugar for May 2009 closed for the week (ending March 1)at $399.60 or $5.60 higher than the previous week s ((week ending February 22) closing quotation….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Fointelligence.com: Fundamental factors, not speculation, were more likely to have caused last year’s price spikes in commodities, according to the result of an inquiry by the International Organization of Securities Commissions – but markets still need to be more transparent and better supervised.

The technical committee of Iosco – the association of 191 national securities regulators – commissioned a Task Force on Commodity Futures Markets in October to investigate concerns around the price rises and volatility in agricultural and energy commodities in 2008, and to find out whether regulators were supervising futures markets in the right way….. Full Article: Source

Posted on 10 March 2009 by VRS |  Email |Print

From Bizjournals.com: Agora-X LLC launched a new electronic platform that enables negotiating, executing and clearing of over-the-counter trades in exempt commodities such as energy and metals.

Kansas City-based Agora-X is a subsidiary of Kansas City-based FCStone Group Inc. Agora-X launched its first electronic trading platform for commodities and derivative contracts in December. Nasdaq OMX Group Inc. has a 20 percent stake in Agora-X….. Full Article: Source

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