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Commodities Briefing 04.May 2011

Posted on 04 May 2011 by VRS |  Email |Print

Rising commodity prices pose the biggest risk to recovery after the 2008 global financial crisis, according to a risk.net poll

Rising commodity prices and the ensuing risk of inflation are seen as the biggest threats to the continued recovery of the global financial services industry from the 2008 crisis, according to a risk.net poll. A total of 40% of 355 respondents to the poll deemed this to be the biggest risk……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Peter SchiffOn Tuesday, the S&P 500 closed lower for a second consecutive day with investors wondering if commodities were about to drag down the market in a big way. Perhaps of greatest consequence was the sharp sell-off, in silver which suffered its biggest two-day loss since 1987, after flirting with $50 an ounce just days ago.
Also, oil prices dropped with Brent Crude breaking under the 20-day moving average, a key level that had helped support prices since November. Has the commodities trade become seriously overheated?………………………………………Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Societe Generale has followed Goldman Sachs in warning of tougher times for commodities prices, warning that the end of easy monetary policy in the US “could well herald the end” of the sector’s rally.

The conclusion of the second round of so-called quantitative easing, or QE2, in which the US Federal Reserve has been pumping money into the economy through bond purchases, will deprive commodities of a key ingredient of their winning streak, the French bank said……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Agricultural commodity markets closed lower Monday afternoon At the top of list of things the market is watching is the rain delayed planting we are seeing in most areas of Central Illinois, said Brian Basting with Advance Trading.
Although the forecast calls for drier weather, cool temperatures remain. Basting said improved conditions have come to the Western Corn Belt, and parts of Iowa and Nebraska are planting, but the Northern Plains are still struggling, and it is very wet in the Eastern Corn Belt. Basting predicted most farmers in this area are probably still a week away from getting into the fields, and that is if we get no more rain and assuming warmer temperatures are on the way……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

For the past year I have been warning readers that the increase in the Money Supply and the Federal Reserve’s balance sheet would lead to higher prices for almost all raw materials priced in dollars. Sure, the prices for some things– such as real estate– have not risen, and may not rise for a very long period of time, but clearly commodities have skyrocketed over the past year.

Not to worry says the Fed; the prices of some things are actually falling, and inflation is under control……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries should produce more crude oil—even of the sour, heavy quality—because refineries would use it at a lower price, the executive director of the International Energy Agency said Tuesday.

The statement underscores the widening gap between oil producers and consumers. OPEC’s two largest producers recently said there was no need to supply more barrels to an already oversupplied market……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

The Organisation of Petrol Exporting Countries (OPEC) output fell further in April as fighting in Libya and field maintenance in Angola cut supplies, despite extra oil from Saudi Arabia and Nigeria, a Reuter’s survey found.

According to the survey, which interviewed oil companies and OPEC officials and analysts, the average production of 12 members of the Organization (OPEC) was at 28.42 million barrels per day last month, down from 28.48 million barrels per day in March……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

While most fund managers seemed to stick with the status quo and remain in gold and silver last week, some notable hedgies are taking profits and looking elsewhere, reports the Wall Street Journal.

Sources tell the paper those include:George Soros. His $28 billion hedge fund firm, now run by Keith Anderson, believes deflation is less of a threat. That’s a key reason why Anderson and the Soros team moved into gold, becoming the seventh-largest holder of the SPDR Gold ETF (GLD). They also believe the Fed at some point will begin signaling a rate hike, helping to ward-off inflation……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

We speak to two of Europe’s top performing commodity boutique fund managers, Georges Lequime of ERIG and Patrick Pittaway of URAM, to find out why they think gold equities have some catching up to do with the soaring gold price.

Lequime, manager of the Earth Gold Fund, and Pittaway, manager of the Share Gold Cap and URAM Gold Allocator funds, are Citywire AAA-rated and AA-rated respectively for their three year risk adjusted performance……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Silver’s shine is fading fast, and the market for the precious metal may have reached a top in a speculative, mad dash by ETF investors.
“The last move higher over the last month or so has really been driven by the strength of the retail investment demand, so the levels up here are not supported,” said Suki Cooper, precious metals analyst with Barclays Capital……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Sharp declines in silver, alongside a stronger dollar, weighed on precious metals markets Tuesday, snapping gold’s four-day winning streak as investor sentiment soured. Silver for May delivery settled down $3.502, or 7.6%, or $42.576 per troy ounce.

The most actively-traded silver contract, for July delivery, settled $3.499 lower, or down 7.6%, at $42.585 per troy ounce……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

The silver price has overshot the metal’s fundamentals and a correction is due, an analyst says. The silver futures price has been highly volatile, rallying to a 31-year high last week and tumbling 12 per cent in a matter of minutes on Monday after the Chicago Mercantile Exchange raised its margin requirement for speculative traders.

On Tuesday, the silver price for July delivery on the Chicago Mercantile Exchange firmed to $US45.16 an ounce, from an open of $US44.03/oz……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

The parabolic move in precious metals continued last week, as both gold and silver notched new record highs. For gold, this is nothing new; we’ve seen the yellow metal hit records week after week. But silver was another matter entirely.

After 31 years, silver prices have finally surpassed their previous record, hit in 1980 when the Hunt brothers unsuccessfully attempted to corner the market. The new high, set last Tuesday, was $49.79/oz, or slightly above 1980’s $49.45 print. Meanwhile, gold got as high as $1,569/oz:………………………………………Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Exchange traded funds tracking silver and oil were among the steepest decliners in the commodity complex Tuesday as higher margin requirements and lingering questions about the Federal Reserve’s bond buying program rocked the ETFs.

The iShares Silver Trust was down nearly 5% in afternoon trading Tuesday on volume of about 140 million shares. CME Group late Monday raised margin requirements for Comex silver futures, the third such hike in about a week……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

The London Metal Exchange is considering building its own clearing system to boost earnings, it said on Tuesday, but European clearing house LCH.Clearnet said it was still best placed to serve the market.

“The LME is giving serious consideration to the possibility of building its own clearing house… we have reached the point at which deeper examination of the issues requires some discussion in the public arena,” the LME said in a notice to members……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Thomas McMahon, chief executive of the Singapore Mercantile Exchange (SMX) resigned over the weekend.
The Singapore Mercantile Exchange announced on May 1 that chief executive officer Thomas McMahon has resigned. He has decided to “move on to pursue his personal interests within the industry”, according to a company statement, and will continue to work in Singapore……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

The forward markets commission has once again approached the finance ministry and the law ministry to look into who has jurisdiction over commodity exchange traded funds, reports Mitra Joshi and Kritika Saxena of CNBC-TV18.

Silver prices have surged this year, almost doubling to Rs 67,000 per kilogram in five months and this has asset management companies jumping to launch Silver Exchange Traded Funds. But the question is: who will regulate these products? The FSDC has been asked to take a call……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Emerging market debt was little changed and developing region currencies were mixed as investors remained cautious in taking on risk and as the day’s economic news again highlighted inflationary pressures in developing markets.

The risk premium, or spread, on the J.P. Morgan Emerging Markets Bond Index Global was unchanged at 300 basis points over Treasurys. In price terms the index was up 0.15%……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Pressure from a growing middle class will encourage China’s leaders to push ahead with cleaning up the environment, the European Union’s climate action commissioner said Tuesday.

Beijing also acknowledges the need to combat climate change and sees big business opportunities in green energy projects, Connie Hedegaard told a briefing during a visit to South Korea……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

The European Union will take testimony this week on a regulatory “gap” exposed earlier this year, when criminals stole carbon permits and forced the closure of spot trading for 15 days.

The European Commission, overseer of the world’s largest emissions-trading system, is due to meet tomorrow in Brussels with emitters, traders, researchers and climate groups to discuss protection for contracts for immediate delivery……………………………………….Full Article: Source

Posted on 04 May 2011 by VRS |  Email |Print

Increased rice supplies from Thailand, the biggest shipper, may help to boost global stockpiles and cap prices, the Food and Agriculture Organization said, mitigating record food costs that have pushed millions more into poverty.

“There is enough production in the world to keep prices down,” Concepcion Calpe, a senior economist at the United Nations’ agency, said in an e-mail interview. Thai supplies may be “abundant” this year, with rising output helping to boost reserves, Calpe wrote, without giving precise forecasts……………………………………….Full Article: Source

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