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Commodities Briefing 19.Mar 2009

Faith in commodities grows -fund managers' survey
Investors optimistic about global economy
Commodities - Signaling reflation or stabilization?
International forecaster March 2009 - gold, silver, economy + more
'Gold-en' times may endure as dark days loom over commodity markets
Is gold really the safest investment?
Gold surges on Fed shift to buy treasuries
Gold down, but may rebound
Merrill Lynch: Profits from silver to base metals
Copper in gold hunt
Will nickel pay the price for past excess?
Mining & metals sector fundamentals strong: Report
Goldman deepens iron ore price forecast to 40% drop on slowdown
Deutsche Bank expands iron ore presence
China’s lead, zinc sector to see consolidation
A report on Thorium: The newest of the technology metals
Palladium stands to gain from growing PGM interchangeability
Metal ETFs open window to economic horizon
Energy Powers commodity ETF higher
Opec says forget upstream investment at $40 a barrel
Kerr: Oil’s bottom line
Saudi warns of "catastrophic" energy crunch
US streamlines offshore energy approval processes
UK climate change targets 'not tough enough'
Experts: US climate policy must not sideline coal
Global carbon price unlikely for 10-15 years: analysts
Carbon trading vital - US scientist
Reflation investing – Which currencies benefit?
Dollar remains as top global currency
Kazakhstan parliament passed law on commodity exchanges
Yale economist Shiller sees future in derivatives
Big sale of U.S. rice to Iraq lifts rice market
Weaker commodities drag down European equities

Posted on 19 March 2009 by VRS |  Email |Print

From Reuters: Investors are less bearish on commodities than at the start of the year, as confidence grows that China can meet its growth targets, a Banc of America-Merrill Lynch fund managers survey showed on Wednesday.

The number of investors underweight in commodities fell to 6 percent, down from 25 percent in January, the survey of fund managers showed….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Business24-7.ae: Investor optimism about the global economy is at the highest level since December 2005, according to the Merrill Lynch Survey of Fund Managers for March. However, the prolonged banking crisis seems to be stopping them from putting cash into equities.

For the first time in more than three years, investors do not predict lower global economic growth over the next 12 months. Renewed optimism about China’s economy lies at the heart of this revival. Just two months ago, a net 70 per cent of respondents thought China’s economy would worsen in the year ahead….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Financialsense.com: Probably the biggest development in the commodity sector is the solid break of oil through its 50 day moving average (MA), which has acted as price resistance since crude’s peak last year.

Not only has crude broken above its 50d MA but it has also broken the declining trend since its peak last year, as well as broken the declining trend in its relative strength to the stock market (S&P 500, middle panel), with a break into above neutral territory on the RSI, all bullish developments….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Goldseek.com: The new mantra for central banks is ‘zero-interest rates’ and an increase of 2% of GDP in money and credit. After this game has spent itself the only room left to maneuver in will be more inflationary increases in money and credit and monetization. Parallel to these actions are exploding budget deficits worldwide.

As a result of this short-term, opportunism stock markets worldwide are suffering, most recently have broken to new lows not seen in years. Earnings are plunging and dividends are being cut to the bone….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Mineweb.co.za: While safe-haven buying has lifted gold to historic highs in recent weeks, BMO Capital Markets Global Commodity Strategist Bart Melek cautioned Tuesday that a correction may be coming before the rally resumes.

The picture is bleak as Melek warned “it looks quite probable that base metals and bulk commodities will be under siege for the first nine months of the year.”…. Full Article: Source

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From Time: Gold is on the move. As the price of gold threatens to push permanently above $1,000 per ounce, it raises questions about why gold is becoming such a hot commodity and whether it truly is a safe harbor.

There is no question that gold’s price run-up is purely speculative….. Full Article: Source

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From FT: Gold prices surged on Wednesday after the Federal Reserve announced plans to buy $300bn in US Treasuries as the US central bank expanded its efforts to counter the financial crisis.

The Fed’s plans sparked concerns about the outlook for the dollar and inflation, pushing gold sharply higher….. Full Article: Source

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From Indiatimes.com: Despite seeing a price correction of close to $100 an ounce (31.10 gm), bullion analysts expect gold to bounce back soon as uncertainty persists in the global economy.

The yellow metal is down 9% at $910 per ounce levels from $1,000 level in February. This is due to lacklustre demand in physical markets and investors and hedge funds shifting their focus to equities that have rallied smartly in recent days….. Full Article: Source

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From Commodityonline.com: Here is Merrill Lynch’s note on silver and base metals: “Merrill Lynch Global Wealth Management is switching profit made on gains in silver into industrial metals as output cuts curb supply and investors become less negative about prospects for economic growth.

“We have taken some profits on the very strong performance on silver, switching into base metals,” Gary Dugan, London-based chief investment officer for Europe, the Middle East and Africa, said in an interview by phone today. “We are still underweight base metals, but we are increasing our weighting.”…. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Mineweb.com: Listed gold and silver stocks may rank as the best-performing global equities subsectors, relatively speaking, but the past month or so they have witnessed significant switching out of these counters into other listed mining subsectors, led by names specialising in copper, zinc, uranium, and nickel.

As a grouping, listed gold stocks, which have a global investible value of $197bn, have bounced 117% on a weighted average basis from lows seen around October 2008….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Reuters: Stainless steel production fell off a cliff in the fourth quarter of last year and with it went a sector that accounts for around two-thirds of global nickel demand.

The result has been a ballooning nickel market surplus, surging LME warehouse stocks and a price collapse that has forced multiple production cutbacks….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Indiatimes.com: Operators in the mining and metals industry have enjoyed an unprecedented boom over the past decade as China, India and other rapidly-developing economies sought to modernize their infrastructure and a rising middle class was able to afford cars and other metals intensive goods for the first time.

But the year 2008 saw the worldwide mining and metals industry go from the heights of optimism to the depths of despair with the sudden and severe collapse in mining and metals prices in the third quarter, says an Ernst & Young report, titled ‘2008: The year when cash was king’….. Full Article: Source

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From Bloomberg: Goldman Sachs JBWere Pty deepened its contract iron ore price forecast to a record 40 percent decline because of slumping global steel production.

Prices for benchmark Australian iron ore may drop to $55 a metric ton in the year starting April 1, down from a record $91 this year, Goldman Sachs analysts led by Malcolm Southwood said in a report yesterday. It had forecast a 30 percent decline….. Full Article: Source

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From FT: Deutsche Bank is taking a 49 per cent equity stake in London Dry Bulk, a physical and derivatives broker that is expanding from coal into iron ore.

The move comes ahead of talks to settle annual iron ore contract prices at a time when global steel production has slumped. This year’s negotiations between Chinese buyers and Australian and Brazilian suppliers are expected to be protracted….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Yourminingnews.com: China’s non-ferrous industry is all set for a metamorphosis soon with the government also favouring wiping out of all small companies in the filed. As a result China will soon witness all its lead and zinc refineries coming together under one or two big companies.

China’s government also supports such an integration. Otherwise also the global mining industry will undergo mega deals of as much as $10 billion this year as the economic downturn presents once-in-a-lifetime acquisition opportunities….. Full Article: Source

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From Resourceinvestor.com: Thorium could hold the keys to America’s energy independence. Are the pieces finally in place for this new technology metal to come of age?

The potential for thorium to be a breakout investment is based on its potential, and today more and more likely, its use as a nuclear fuel component for civilian reactors used exclusively to produce electricity….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Miningweekly.com: Recent technological advances mean that the three main platinum-group metals – platinum, palladium and rhodium – can be increasingly substituted for one another in a variety of industrial applications, and particularly in emissions-reducing autocatalysts, Stillwater Mining CEO Francis McAllister said.

This means that the decision of which of the metals to use is boiling down more and more to a question of economics….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Thestreet.com: Whether you’re an economic Pollyanna expecting a recovery this year, or an economic pessimist forecasting a decade lost to rampant inflation, realists will be watching for early signs of a recovery in the prices of industrial metals and betting accordingly.

Of the 13 exchange-traded funds, or ETFs, that track industrial or base metals, seven have posted gains this year….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Fxstreet.com: The PowerShares DB Commodity Index ETF (DBC) has gapped up this morning, mostly because the energy complex is up significantly, but so are the grains, too, which has propelled the index above key near-term resistance at 19.50 on the way to test a flattening 50 DMA (now at 19.85).

Lets keep in mind that 55% of the DBC is comprised of crude and heating oil, which enables us to participate in the energy complex. Key near-term resistance resides at 19.85-20.00, which if hurdled and sustained should trigger additional strength the projects to 21.25/50 thereafter….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Petroleum-economist.com: OPEC has shrugged off the International Energy Agency’s (IEA) calls for it to maintain upstream investment through the economic downturn.

The producer organisation cannot invest in any new additional capacity with prices at present levels, the cartel’s secretary general, Abdullah Salem El-Badri, said….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: This is a longer-term player; we’re not going to see oil tomorrow – hopefully – not pop back up to 95 or something like that.We had supply problems, we got political strife. We got growing demand when those regions start to fire up again like in India and China; there is real demand there, and here in the U.S.

Plus, people are not doing anything right now to move into newer biofuels like Mr. Obama has talked about, and certainly investors are not putting their money into alternative fuels when crude is at 35 bucks….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Reuters: Saudi Arabia’s oil minister warned of a possible “catastrophic” energy supply crunch without prompt investment.

“In years to come, if traditional energy supplies should prove inadequate because capital expenditure was curtailed due to unsustainable prices, unreliable indication of future demand or hopes for a substitute that oil cannot deliver, such a supply crunch would be catastrophic,” Ali al-Naimi said on Wednesday….. Full Article: Source

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From Businessgreen.com: Two US government agencies with direct responsibility for renewable energy projects yesterday inked a major new agreement designed to accelerate project approval processes and remove the risk of departmental “turf battles”.

The Department of the Interior (DOI) and the Federal Energy Regulatory Commission (FERC) announced that they had agreed to divide up responsibility for different types of offshore renewable technology, bringing to an end potential bureaucratic overlap between the two agencies….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Telegraph: Tough UK targets to cut greenhouse gases are too weak to help prevent the temperature rises which could lead to dangerous climate change, scientists have warned.

At the end of last year Government advisers recommended the country cuts emissions by at least a third by 2020 to stop climate change. However scientists at the Tyndall Centre of Climate Change have warned that the evidence used to calculate the targets needed is “misleading” and the cuts will have to be much larger to stop temperatures rising above a level that causes extreme weather events, droughts and food shortages….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Euractiv.com: An effective US climate policy is only feasible if the interests of coal-intensive Midwestern states are taken into account, US energy experts said in Brussels

California has long been the leader for US green policy, but 33 states now plan to reduce greenhouse gas emissions and 28 have signed up to a carbon trading scheme, said Terry Tamminen, former advisor to Governor of California Arnold Schwarzenegger….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Reuters: A single global price for carbon emissions is not likely for another 10 to 15 years because governments are dragging their heels on legislation, market analysts said on Wednesday.

“By 2025, we could have one single currency,” orbeo carbon analyst Emmanuel Fages said at a Point Carbon emissions trading conference in Copenhagen….. 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 19 March 2009 by VRS |  Email |Print

From Stuff.co.nz: Creating a fair carbon trading system or emissions tax is important in the climate change battle, but funding is also needed for vital research into alternative energy, a United States expert told politicians today.

Stanford University environmental scientist Professor Stephen Schneider told a select committee set up last year to look at climate change policy that it was vital people had incentives to reduce carbon emissions….. 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 19 March 2009 by VRS |  Email |Print

From Goldseek.com: Reflation refers to policy makers’ attempts to “reflate” the economy, to prop up what many would consider a broken system. Federal Reserve (Fed) Chairman Ben Bernanke made it very clear that he will attempt to stem the tide of market forces:

Bondholders around the world rejoice: the debt of Citi and AIG may now be as good as U.S. government debt (the inverse of this does not sound particularly enthusing however: that U.S. government debt may now be as good as that of Citi and AIG)….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Commodityonline.com: America’s currency the greenback continued to be the top currency of the world despite its economy’s position as it going through a difficult period at the time of world wide credit crisis.

The dollar has climbed by more than 20% since last July, despite the widely held view that top Wall Street banks are insolvent and only surviving on artificial life support. With the flow of credit badly constrained, the US economy is spiraling towards a “Great Depression” – yet the Dollar has risen against all major currencies….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Gazeta.kz: The deputies of Majilis of Parliament of Kazakhstan at the plenary session today passed proposals of the conciliatory commission of the Chambers of Parliament on the bill on commodity exchanges.

Thus, according to the rules, the Law on Commodity Exchanges is considered accepted by Parliament, “Kazakhstan Today” agency reports….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Rferl.org: Weapons of mass destruction. Upper-class slot machines. Two of the more memorable epithets attached to derivatives recently.

Complex financial derivatives, many based on mortgages, were blamed for fueling the current economic crisis….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Guardian: U.S. rice futures held firm on Wednesday, boosted by news Iraq bought 120,000 tonnes from the United States, while most other grain markets stumbled as lower equities and crude oil weighed.
Iraq, one of the world’s leading wheat importers, has diversified toward new origins since last summer after making major U.S. wheat purchases in past years….. Full Article: Source

Posted on 19 March 2009 by VRS |  Email |Print

From Reuters: European equities fell ahead of the results of a U.S. Federal Reserve meeting on Wednesday, with commodities coming under pressure due to weaker crude and metal prices, but banks gaining ground, led by UniCredit.

The FTSEurofirst 300 .FTEU3 index of top European shares provisionally closed 0.8 percent lower at 710.08 points after falling as low as 702.31 points. The benchmark has declined 14 percent so far this year after plunging 45 percent in 2008….. Full Article: Source

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