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Commodities Briefing 23.Mar 2009

Commodities ignore bearish basics
Global balance has to be adjusted to prevent further crisis
Trade barriers rise as the recession’s grip tightens
Global drive needed for sustainability
Commodity-price surge boosts resource shares
US to quash commodities speculation
The 'false' commodity boom
Argentine farm row fuels food price rises
Oil rises towards $53 ahead of U.S. toxic asset plan
Oil price and OPEC
Some key facts about Venezuela's oil economy
Crude oil poised to slide on low demand
Algerian minister predicts $60-a-barrel crude oil
Japan joins the race for uranium amid global expansion of nuclear power
Alternative-energy investments on back burner
Why carbon trading targets matter
Carbon trading 'undermined by boom and bust'
Water, the scarce commodity
Water: Commodity or human right?
Barclays lifts 2009 gold forecast to $940/oz
Gold to hit new highs in 2009 - CEO Survey
Gold steady above $950, ETF hits new record
Silver ETFs are hot elsewhere, still non-starter in India
Why exchange-traded funds are on a better footing than mutual funds
Chinese stockpiling spurs copper price rally
World steel output falls, Chinese production rises
Euro currency of choice as Fed easing devalues dollar
Fed action bolsters commodity nations' currencies
Yen, Dollar slide on optimism Obama plan to aid risk appetite
Why the US dollar is still resilient
Armajaro to launch emerging markets hedge fund
ICE cotton futures climb as specs buy on inflationary ideas
Commodities rally spills into cotton as Fed plans decimate dollar
Weak $, investments to push gold higher; crude buoyant

Posted on 23 March 2009 by VRS |  Email |Print

From FT: It has been a great week for commodities. But has the price rally got ahead of itself? Although demand has improved relative to the dismal conditions of late last year, analysts and traders warn that conditions have yet to perk up sufficiently to warrant an across the board price rally beyond current levels.

“The market is ignoring near-term bearish fundamentals,” says Adam Robinson, director of commodities at Armored Wolf, a California hedge fund…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Theaustralian.news.com.au: There are concerns policymakers could be setting the stage for another global crisis if they do not address the imbalance between the US economy and the rest of the world.

Morgan Stanley Asia chairman Stephen Roach believes efforts to restore the US to its pre-credit crunch global powerhouse status could be dangerous…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Nytimes.com: After repeated pledges by world leaders to avoid erecting trade barriers, protectionism is on the march, provoking nasty trade disputes and undermining efforts to plot a coordinated response to the deepest global economic downturn since World War II.
From a looming battle with China over tariffs on carbon-intensive goods to a spat over Mexican trucks using American roads, barriers are going up around the world. As the recession’s grip tightens, these pressures are likely to intensify, several experts said…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Gulf-times.com: The global economic crisis will be with us for a generation, not just a year or two, because it is really a transition to sustainability. The scarcity of primary commodities and damage from climate change in recent years contributed to the destabilisation of the world economy that gave rise to the current crisis.

Soaring food and fuel prices and major natural disasters played an important role in undermining financial markets, household purchasing power, and even political stability…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From WSJ: Financial stocks sagged Friday, while a surge in commodity prices overnight boosted resource stocks across the region. With Japanese markets closed for the Vernal Equinox holiday and Dow Jones Industrial Average futures pointing lower, some of the euphoria over the U.S. Federal Reserve’s actions midweek was replaced by caution.

In Hong Kong, the Hang Seng Index declined 2.3% to 12833.51 as financial stocks tracked a drop in Citigroup overnight. Industrial & Commercial Bank of China fell 5.4%, China Construction Bank dropped 5.2% and Bank of Communications shed 5.4%…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Gulfnews.com: Last year’s roller coaster ride in commodity prices left the US Congress and federal regulators with a doozy of a headache in 2009 - what to do about speculators.

Soaring prices for everything from cotton to oil fuelled complaints of excess speculation…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Livenews.com.au: So if you believe gold bugs, last week’s Quantitative Easing by The US Federal Reserve will see surging inflation and a whole collection of other bad stuff.

So if that was the case after the Fed’s move (which means it’s following The Bank of England, the Swiss Central Bank, Sweden and the Bank of Japan), why hasn’t gold exploded past $US1,000 an ounce, topped the old record of around $US1,033 an ounce and gone higher? Gold finished at $US954.20 in New York on Friday for the current futures contract…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From FT: Commodities markets are braced for more rises in food prices this week as an increasingly tense farm strike in Argentina fuels concerns among importers and strains global stocks.

Argentine farmers halted sales of grains, oilseeds and beef until midnight on Friday after the government rejected demands to cut a 35 per cent export tariff on soya and instead sought political support by sharing proceeds with provinces…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Reuters: Oil rose over 1 percent toward $53 a barrel on Monday, bolstered by expectations that the U.S. Treasury’s efforts to stabilize the ailing financial system would speed up a recovery of the U.S. economy.

The U.S. Treasury Department said Secretary Timothy Geithner will hold a briefing at 8:45 a.m. (1245 GMT) on Monday to talk about wide-ranging efforts to stabilize the financial system through pumping cash into faltering banks and other attempts to increase lending…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Triumphnewspapers.com: Oil prices collapsed from a record US$147 per barrel last year to less than US$40 dollars some weeks back, shocking oil producing nations from their temporary economic zone of comfort into the painful embrace of a shrinking world economy following a financial meltdown in the leading economies on earth.
The downturn in the global economy is graphically illustrated in the massive decline in international trade…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Reuters: Venezuela will almost triple the amount of debt it takes on this year and trim its budget to offset lower oil revenues in the OPEC nation, leftist President Hugo Chavez said on Saturday.

The average price for Venezuelan oil so far this year is less than half its 2009 level, causing serious funding problems for the high-spending socialist president, who promises not to cut back social programs and will raise the minimum wage…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Theaustralian.news.com.au: Crude oil prices may decline this week on speculation that US oil and fuel inventories will increase because the recession has curbed demand and as a “fragile” stock market rally loses steam.

Seventeen of 33 analysts surveyed by Bloomberg News, or 52 per cent, said futures would fall through to March 27. Twelve respondents, or 36 per cent, forecast oil prices would increase and four said there would be little change. Last week, 43 per cent of analysts expected prices would rise…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From IHT: Algeria’s energy minister predicted Sunday that crude oil prices could hit $60 per barrel by the end of the year. Chakib Khelil said OPEC has succeeded in keeping prices stable despite plunging demand for oil worldwide because of signs of global recession.

“We’re going to have prices of $60 per barrel by the end of the year — I think it’s possible,” Khelil told reporters at a ministry briefing…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Japanfocus.org: Energy-hungry Japan is revving up its drive to secure uranium abroad as global demand for nuclear power rises amid stubbornly high oil and gas prices and growing environmental concerns.
Major Japanese trading and energy firms are looking at multibillion yen investments in uranium mine projects, with electronics conglomerate Toshiba in February purchasing Westinghouse, the US power plant arm of British Nuclear Fuels, for about US$5.4 billion…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Investmentnews.com: Most people would probably rather not campaign against efforts to develop alternative energy, but from an investment perspective, the case for alternative energy is getting increasingly difficult to make.
Even after crude oil spiked 7% in one day last week on news that the Federal Reserve was buying $300 billion worth of long-term government bonds, oil’s $52-per-barrel price range is still low enough to keep the focus on traditional energy…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Theage.com.au: If carbon trading gets up, the Federal Government will “cap” or put a limit on how much greenhouse gas can be emitted in a given year. That much is reasonably widely understood.

What remains less well understood is that, in doing so, that cap will also put a limit on the cuts to emissions possible that year too…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Guardian: A shake-up in the way the “boom and bust” carbon markets are working in Europe is being urged ahead of tomorrow’s auction of new emission certificates by the UK government.

The Carbon Trust, which is sponsored by government money, and the consultancy PricewaterhouseCoopers argue that controls might have to be put in place to prevent the EU’s emissions trading scheme (ETS) being discredited by a further collapse in prices, which have already slumped from €30 per tonne to just over €10…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Khaleejtimes.com: Fresh and ground water reserves in the UAE will be depleted by 2050 at the current rate of use. This, indeed, is serious and scary and has to be treated with urgency.

With the average rainfall in the UAE being just 77 millimetres per year, and with the lack of other conventional water resources, it’s time the country came up with an efficient water management system at the earliest…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Opednews.com: When people think of water shortages, they tend to think of the Third World. And, indeed, more than 5,000 children die every day as a result of unsafe drinking water, mostly in developing nations.

But we’ve been seeing more and more serious droughts right here in the U.S., like in California and Georgia recently…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Mineweb.com: Barclays Capital has lifted its gold price forecast for 2009 to $940 an ounce, it said, citing the prospect of a weaker dollar and fears over inflation.

“Plans for further quantitative easing by the United States has seen the dollar nosedive,” the bank said in a note. “In that environment, gold will shine, and we have revised our price forecast higher.”….Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Mineweb.com: A continued global economic tsunami and the increasingly urgent scramble for an investment lifeline will combine to power gold prices ominously higher and into uncharted territory later this year.

This is the consensus of opinion among the CEO’s of a dozen emerging to mid-tier gold mining companies who were recently interviewed by BNW Business Newswire…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Indiatimes.com: Gold held steady on Monday above $950 per ounce after slipping back from a three-week high hit the previous session on concerns about inflation following the U.S. Federal Reserve’s move towards quantitative easing.

Gold was trading at $952.10 ounce at 0008 GMT, up 0.1 percent from Friday’s notional close of $950.90. It hit a one-month peak of $966.70 an ounce earlier on Friday…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Mydigitalfc.com: Investors who are hoping to take advantage of rising silver prices through silver exchange-traded funds (ETFs) of mutual funds may have to wait for a while.
The mutual fund industry doesn’t seem to be much enthused about silver ETFs in the same way as gold ETFs, with only one ETF proposal from a mutual fund having been forwarded to the capital market regulator, the Securities Exchange Board of India (Sebi), in the past eight months…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Livemint.com: These days anything even remotely connected with financial engineering arouses suspicion. But all financial engineering need not necessarily end up making a hole in the financial system. Exchange-traded funds or ETFs stand as a good example of successful financial engineering.

These follow what is called “in-kind creation and redemption”—an innovative structure that puts them on a better footing than our mutual funds…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From FT: Copper stockpiling by a secretive Chinese state organisation has helped trigger an impressive rally of 28 per cent in the price of the metal this year.
Copper’s fortunes are closely tied to the industrial cycle so the price jump, bigger than that of gold, has grabbed attention outside the commodities market, with some questioning whether it could signal a turning point for economic growth…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From AFP: World steel output fell 22 percent in February from the same month last year but China defied the trend and reported a 4.9-percent increase, the World Steel Association said Friday.

Output also rose in Iran, where production gained 15.9 percent from February 2008 to 900,000 metric tons…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Bloomberg: Less than a month after lambasting European Central Bank President Jean-Claude Trichet for failing to keep up with Ben S. Bernanke’s efforts to stem the recession, foreign-exchange traders are glad he’s behind the curve.

The 16-nation currency strengthened 7.5 percent versus the dollar since February, after tumbling 9.3 percent in the first two months of the year. JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. are advising investors to buy euros. ….Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Gulfnews.com: The Federal Reserve’s move to crank up the money printing presses last week has soured investors on paper assets in favour of the sort that make cars run and wedding rings shine.

And in the world of foreign exchange, that means big gains for currencies from countries that produce oil, gold, copper and other commodities - physical assets likely to hold their value if growth recovers and inflation gets out of control…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Bloomberg: The yen and the dollar fell, with Japan’s currency touching a five-month low against the euro, on speculation new U.S. government steps to help banks deal with toxic assets will boost demand for higher-yielding currencies.

The dollar extended last week’s biggest decline since the 1985 Plaza Accord on speculation U.S. yields will drop following the Federal Reserve’s plan to buy Treasuries…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Indiatimes.com: Trillion-dollar bailouts, trillion-dollar deficits, and the largest spending bill in US history. No matter how dire the news out of the US, the dollar strengthens. It has carried on rising in spite of new bailouts for two leading financial institutions — Citigroup and AIG — a catastrophic fall in US gross domestic product and more dreadful news about the US housing market.

The dollar has risen 10% against the euro so far this year, and by 7.4% against the yen…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Asianinvestor.net: London-based Armajaro Asset Management has hired Michel Danechi to manage a new emerging markets hedge fund to be launched in the first half of 2009.

Danechi was previously the head of the emerging markets desk at Lehman Brothers International (Europe) and has over 15 years experience in trading emerging markets…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Ccfgroup.com: Speculators covered shorts and established some long positions in ICE Futures U.S. cotton Friday amid expectations for ensuing inflation.

May cotton settled 121 points higher at 44.08 cents a pound and the July contract settled up 118 points at 44.93 cents. For the week, May cotton gained 125 points…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Lubbockonline.com: A surprise Federal Reserve announcement that it will buy longer-term government debt in efforts to revive the economy decimated the dollar last week, triggering a commodities rally that spilled into cotton futures.

Cotton rallied after back-to-back losses to close mixed for the week ended Thursday, with spot May up four points to 42.87 cents, July down 21 points to 43.75 cents and December up 15 points to 48.10 cents…..Full Article: Source

Posted on 23 March 2009 by VRS |  Email |Print

From Thehindubusinessline.com: Commodity markets have yet again lived up to their reputation for volatility with macroeconomic developments, rather than demand-supply fundamentals, providing a boost in the last few days.

After languishing at relatively low levels, commodity prices, led by crude, have begun to move up. The Fed’s surprise decision to announce quantitative easing - buyback of government debts - has had a profound impact on the dollar which has dramatically weakened, while the equity market has begun to move up…..Full Article: Source

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