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Commodities Briefing 28.Oct 2010

Posted on 28 October 2010 by VRS |  Email |Print

From Thestar.com.my: Further monetary easing by the US Federal Reserve could cause a rise in commodity prices, undermining the impact of moves aimed at supporting economic recovery, according to an official from the Paris-based International Energy Agency (IEA).
Investors could divert cheap US cash into commodities, triggering a rise in raw material prices and stoking inflation, said Eduardo Lopez, the IEA’s senior oil demand analyst……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Indiatimes.com: China, wrongfooted by a blistering rally in corn, cotton and sugar markets , could be forced to replenish strategic reserves run down in a failed attempt to cool prices. Purchases by the world’s biggest consumer of cotton and the second-largest consumer of corn and sugar would provide fresh bullish momentum to prices already near record or multi-year peaks.
China, which buys around 60% of soybeans traded across the world, could be in the market to take more than 5 million tonnes of corn in 2011, according to some analysts, quadruple its buys this year and potentially making it the world’s fifth largest importer. The country is already the world’s No. 1 cotton importer……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Bloomberg: Commodities in China snapped a rally, led by rice, zinc, soybean oil and rubber, on growing concerns that security regulators may tighten trading rules to curb excessive speculation.
The Zhengzhou Commodity Exchange, China’s first such bourse, yesterday increased the margin requirement for rice, rapeseed oil, wheat and sugar trading to 8 percent from 3 percent or 4 percent, a statement on its website said yesterday……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Business-standard.com: Agricultural commodities rocketed in markets abroad this month on bullish fundamentals, triggered by a weakening dollar. But in India, they remained range-bound due to measures taken by the government, including timely release of foodgrain, and beginning of harvesting of kharif soybean and corn.
Corn and soybean rose sharply at the Chicago Board of Trade (CBOT). Corn for delivery in December rose 13 per cent to the highest level since September 2008. Rabobank continued its positive view on prices, with risks remaining skewed to the upside. Corn (maize) was at $5.68 per bushel at CBOT on Wednesday……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Marketwatch.com: The “respectable” reason for investing in commodities is to “hedge against inflation.” But ever since crude oil shot up to $140 a barrel in 2008, performance has attracted billions of dollars to the asset class over the past two years, when inflation has not been an issue.
Still, if commodity prices rocket higher, inflation could be ignited in the not-distant future……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Seekingalpha.com: Today, commodity prices are more sensitive to the monetary policy than consumer prices and employment. The current one year inflation expectation, according to the Cleveland Fed, is 1.36%, an increase of 0.46% from 0.90% before the QE talks. Over the same period, commodity prices measured by Dew Jones-UBS Commodity Price Index have shown a 9% increase.
The corporate profit margin is in danger of collapse as an unintentional result of the Fed’s QE program. Given that commodity prices move well ahead of any improvement in wealth growth, consumption, or employment, the production cost is rising faster than the retail price……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Kitco News: Little in financial markets has been as hotly anticipated as next week’s Federal Open Market Committee meeting, where the Federal Reserve is expected to announce another round of quantitative easing.
Gold and other markets have risen sharply since the idea was first floated by Federal Reserve Chairman Ben Bernanke in August. Market watchers believe the Fed will buy longer-dated Treasury bonds, but how much is up for debate……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Nytimes.com: Global warming, energy independence and good 21st-century jobs are three compelling reasons why Washington must do a lot more to promote renewable energy.
Congress seemed to get it in 2005 when it directed the Interior Department to approve enough wind, solar and other projects on public land to produce 10,000 megawatts by 2015 — enough to heat, cool and light five million homes. Not much has happened since……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From UPI: As Iran seeks to establish its supremacy in Iraq, its ancient enemy, the countries are also clashing in OPEC where Iraq’s re-emergence as a leading oil producer seems likely to upset the balance of power in the cartel.
Given the political turmoil inside Iraq as it struggles to form a coalition government seven months after an inconclusive parliamentary election produced no clear-cut winners, this energy rivalry could yet have geopolitical consequences that could threaten regional stability……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Mineweb.com: Despite the G20 meeting deciding little apart from countries paying lip service to currency stability, gold has suffered a minor setback from its peak, but is this the start of a collapse or just a pause in its upwards rise?
The gold market expressed its disdain of the intentions issued by the G-20 by taking the gold price back to $1,345 at the morning Fix. We’ve seen $1,380 and the drop off last week was sudden. The dollar fell this morning back to $1.40 before pulling back to the $1.387 area when New York opened……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Commodityonline.com: Additional gains recorded overnight brought the US dollar very near the 78 mark on the trade-weighted index and contributed to a fresh dip in gold prices down to the $1,326.00 level. Crude oil felt the rising dollar-induced selling heat as well, losing nearly $1 to fall to $81.72 per barrel.
Much of what was seen overnight was due to rising apprehensions related to next Tuesday’s Fed meeting……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Mineweb.co.za: The world remains in a financial bind, the likes of which it has probably never seen and those people calling for corrections or bubbles in the gold market are flat out wrong. After a short pull back, gold could see a sharp move higher in November if recent history is any guide.
Speaking on Mineweb.com’s Gold Weekly podcast, Sprott Asset Management’s chief investment strategist, John Embry said the recent pullback is probably healthy for the market as many participants are focused on not only the up-coming US elections but also the potential for a further bout of quantitative easing to be announced when the FOMC meets next week,………………………………………Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Futuresmag.com: Fresh off the heels of the passage of financial reform that gives the Commodity Futures Trading Commission broad new powers, one of its commissioners is publicly calling on the regulator to step up an ongoing investigation into the silver market.
The statement by Commissioner Bart Chilton came during a CFTC hearing yesterday at which the regulator was exploring the implementation of its new oversight responsibilities……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Bloomberg: JPMorgan Chase & Co. and HSBC Holdings PLC were sued by an investor claiming they manipulated silver futures and options prices in violation of U.S. antitrust law by placing “spoof” trading orders.
The investor, Peter Laskaris, alleges that starting in March 2008, the banks colluded to suppress silver futures so that call options, or the right to buy, would decline, and put options for the right to sell would increase, according to the complaint filed today in federal court in Manhattan……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Mineweb.com: Scotiabank’s Pat Mohr said prospects for a further round of Fed ‘quantitative easing’ is weakening the U.S. dollar, boosting commodity prices and extending the commodity price super-cycle. “Spot palladium prices should average US$510 per ounce in 2010 and US$650 in 2011, up from only US$265 in 2009 and US$352 in 2008,” Mohr predicted in her October Scotiabank Commodity Price Index report.
Mohr noted that rising autocatalyst demand in China and other emerging markets, in the face of supply constraints, will boost prices……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Mineweb.co.za: Analysts are concerned about the frenzy being whipped up in the world of rare earths as investors, concerned about China’s dominance, search out new supplies. China’s increasing reluctance to supply the rest of the world with rare earths is whipping up a gold rush-like frenzy to find new producers of the elements needed to manufacture everything from high-tech weapons to mobile phones.
Producers and would-be producers are forging new supply pacts with consumers, and investors are scooping up shares in mining companies promising to replace the lost Chinese material……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Cityam.com: This year’s annual London Metal Exchange (LME) week was abuzz with the news that physical exchange-traded commodities (ETC) for base metals are going to see the light of day.
After plenty of speculation in both the press and the markets, ETF Securities confirmed what many had assumed and announced that it was preparing to launch physically backed industrial metal ETCs……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Seekingalpha.com: Even as Copper prices fell on Tuesday after the rise of the US dollar, retreating from a 27-month peak hit earlier in the session and tracking choppy currency trading ahead of a key Federal Reserve meeting next week, the launch of new physically backed exchange-traded products [ETPs] in industrial metals is dominating base metals market and generating a lot of speculation about their effect on prices and demand.
Tight Supplies Helping Copper: Supply shortages have been a major factor behind the surge in copper prices due to a combination of falling ore grades in major producing nations, labour problems and project delays……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Reuters: Launching physically backed copper exchange traded funds (ETFs) will be popular, but could face hurdles as supplies for the red metal tighten, Credit Agricole said on Wednesday.
Talk that physically backed exchange-traded products (ETPs) in industrial metals are imminent has dominated base metals markets in recent months, generating speculation about their effect on prices and demand……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Bloomberg: The first U.S. exchange-traded fund linked to companies producing rare-earth elements and strategic metals will begin trading in New York tomorrow, according to Harvey Hirsch, a senior vice president at Van Eck Associates Corp., the issuer of the security.
The ETF will track an index that consists of 24 mining companies including Iluka Resources Ltd., the world’s largest zircon producer, and Titanium Metals Corp., Van Eck said in a report……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Business-standard.com: The National Commodity and Derivatives Exchange (NCDEX) is witnessing steady spurt in non-agri commodity futures trading since the last one month.
According to the exchange data, in non-agri commodities, futures trading has gone up in crude oil (light sweet crude contract), copper (copper cathode) and steel substantially……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Reuters: Morgan Stanley urged the U.S. Commodity Futures Trading Commission to adopt a flexible approach toward speculative position limits, a new regime that the regulator is slated to unveil in coming weeks.
The banking firm recommended the CFTC propose interim limits in energy markets, and possibly certain precious metals markets that would not prevent businesses from using futures and swaps to hedge risk……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Thehindubusinessline.com: A derivative, goes its definition, is an instrument which derives its value or strength from its underlying assets. On this touchstone, option in a share is a derivative just as share futures are. Why, even a share itself, come to think of it, is a derivative deriving as it does its strength from the value of the undertaking(s) of the company issuing it.
A unit of a mutual fund derives its value from net asset value (NAV) which is nothing but the current market value of all the shares and securities the scheme has invested in as increased by the income if any that has accrued and as reduced by all the liabilities and ultimately divided by the number of units participating in the scheme……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Reuters: France will seek reform of the global monetary system during its upcoming G20 presidency to protect emerging economies and to diversify international reserves, Economy Minister Christine Lagarde said on Wednesday.
France, which takes over the chair of the G20 group of leading economies in mid-November, has placed reform of the international monetary system at the top of its agenda for its year-long presidency……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Straitstimes.com: Singapore’s carbon market is growing and new firms are setting up shop here on the back of increased interest in carbon trading in Asia.
Ministry of Finance Permanent Secretary Chan Lai Fung said on Wednesday Singapore’s position as a major international financial centre has attracted key players such as Tricorona and Gazprom, which are the world’s leading traders of carbon……………………………………….Full Article: Source

Posted on 28 October 2010 by VRS |  Email |Print

From Canadafreepress.com: In a little reported move, the Chicago Climate Exchange (CCX) is ending carbon trading this year — the very purpose for which it was founded. CCX will remain open for business, however, as it transitions into the murky world of dealing in carbon offsets.
Outside of a report in Crain’s Chicago Business and a soft-pedalled article in the certain-that-cap-and-trade-will-happen trade publication Carbon Control News, the media has ignored the demise of the only voluntary U.S. effort at carbon trading……………………………………….Full Article: Source

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