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Commodities Briefing - Archive | December, 2008

Commodities markets expected to stabilize in 2009

Posted on 30 December 2008 by VRS  |  Email |Print

From AP: During the first six months of 2008, commodities looked to be the savior of investors who were losing money in the stock market. In the second half, particularly for those who had invested in oil, futures contracts were their undoing.

At the start of 2009, commodities have little appeal. Most analysts expect prices to remain under pressure as worldwide demand continues to wane for basic materials of all kinds….. Full Article: Source

Rise and fall of commodities gives hints for 2009

Posted on 30 December 2008 by VRS  |  Email |Print

From Reuters: Just a year ago the debate about grain prices was simple: how high was high? Huge global demand for grains, governments hoarding food, climate fears amid droughts, storms and floods — basically every bullish factor one could imagine hit the markets.

The psychology of short supplies carried over to other commodities as well, especially industrial metals as China and India drew in a rapidly rising share of materials as their economies raced to modernize and transform….. Full Article: Source

Should investors bet on Gold in 2009?

Posted on 30 December 2008 by VRS  |  Email |Print

From You would expect gold to be a great investment in 2009 if the U.S. dollar remains under pressure because the Federal Reserve embraces a more accommodative monetary policy than those adopted by other key central banks.

But there’s a sticking point: The market remains more concerned about deflation than inflation in the near term, weakening one of the more compelling rationales to buy gold….. Full Article: Source

Analysts bullish on 2009 commodity market fortunes

Posted on 30 December 2008 by VRS  |  Email |Print

From Economic Times: While gold could outperform other commodities in 2009, things might start looking up for metals and crude as well by the middle of next year, according to analysts. Among agro commodities, sugar, soybean and rubber along with a few spices could generate interest.

Gold has performed well in comparison to commodities such as base metals and crude oil as well as other asset classes like equities, debt, realty and bank fixed deposits….. Full Article: Source

Global crisis and commodity prices

Posted on 30 December 2008 by VRS  |  Email |Print

From The extreme volatility of commodity prices in world trade over the past year in particular is one more reflection of the turbulence in the global economy.

While some of these price changes may have their origin in financial markets rather than in changes in real demand and supply, they nonetheless have major effects upon producers and consumers….. Full Article: Source

Will oil prices recover after tanking in 2008?

Posted on 30 December 2008 by VRS  |  Email |Print

From Telegraph: The oil price gyrated wildly in 2008, hitting an all-time high above $147 a barrel on July 3 – followed by four-year lows. The big question now is: Where next?

Until the credit crunch saw global markets freeze, demand for oil had been rocketing, mainly because of rapid development in countries such as India and China….. Full Article: Source

Oil said to back near $100 by 2010-2015

Posted on 30 December 2008 by VRS  |  Email |Print

From Reuters: Oil prices may rebound to around $100 per barrel between 2010 and 2015, International Energy Agency Chief Economist Fatih Birol predicted on Monday.

Birol told an energy conference that he saw downward pressure on oil prices in 2009 but said he expected prices to move up again in 2010 with a recovery in the world economy….. Full Article: Source

Opec’s dilemma: sticky supply, slippery demand

Posted on 30 December 2008 by VRS  |  Email |Print

From The problem is that few believe Opec will follow through on its cuts, although the cartel claims it has already cut 1.7mbpd of the initial 2 million it pledged in September.

Saudi Arabia, the most influential member of the Organization of the Petroleum Exporting Countries (Opec), is targeting an oil price of $75 a barrel. It’s not likely to reach that goal in 2009….. Full Article: Source

Oil set for rebound as record drop spurs OPEC cuts

Posted on 30 December 2008 by VRS  |  Email |Print

From Bloomberg: Oil futures may rebound from their worst year to average $60 a barrel next year as OPEC makes record production cuts to counter the deepest economic slump since World War II.

The forecast, the median of 33 analysts compiled by Bloomberg, represents a 50 percent gain from yesterday’s $40.02 closing price….. Full Article: Source

Overview: Mideast tensions drive haven assets higher

Posted on 30 December 2008 by VRS  |  Email |Print

From FT: Concerns about escalating tensions in the Middle East sent oil prices sharply higher on Monday on fears of supply disruption and offered support to gold, US Treasuries and the Swiss franc as investors sought havens.

Benchmark US crude climbed as much as 12 per cent to $42.20 a barrel and gold touched its highest level for more than two months as Israeli aircraft attacked targets in the Gaza Strip for a third day….. Full Article: Source

ETF Securities files for silver ETF in U.S.

Posted on 30 December 2008 by VRS  |  Email |Print

From ETF Securities, a leading provider of commodity-based exchange-traded products in Europe, is entering the U.S. market.

The London-based company has more than $6.5 billion in assets under management and more than 100 different products trading in Europe. It has resolutely stayed away from the U.S. market, however, until now…. Full Article: Source

The most expensive ETFs you’ll never need

Posted on 30 December 2008 by VRS  |  Email |Print

From Exchange-traded funds (ETFs) have been one of the fastest-growing investment products in recent years. Their trading flexibility and low expenses have attracted millions of investors to their doors.

But as more and more of these funds are being rushed to market, expenses on some ETFs have begun to creep up. In fact, some ETFs now charge more than many actively managed mutual funds. Why are some of these funds so expensive? ….. Full Article: Source

BlueGold, Clive Capital Beat most hedge funds in Commodity Rout

Posted on 30 December 2008 by VRS  |  Email |Print

From Bloomberg: The biggest-ever decline in commodities turned Pierre Andurand and Chris Levett into this year’s heroes for investors.

Andurand’s $1.1 billion BlueGold Capital Management LLP hedge fund in London almost tripled between its February debut and November by betting on higher oil prices in the first half of 2008 and then reversing the strategy, the 31-year-old manager said. ….. Full Article: Source

Tips on where to invest your money in 2009

Posted on 30 December 2008 by VRS  |  Email |Print

From History will remember 2008 as the year all financial assets, except for government bonds, plummeted by tens of percentage points. This has been a terrible year for investors the world over. 2009 will be no picnic, either.

Economies around the world are sinking into recessions one after the other, and investors are wary of risks. People used to look for the highest profits, but now all investors want is not to lose, and only afterwards to gain a few percentage points on their liquid assets….. Full Article: Source

Commodities lead European shares higher

Posted on 30 December 2008 by VRS  |  Email |Print

From FT: European shares climbed on Monday as stronger crude oil prices supported commodity stocks, in spite of many traders remaining away from their desks ahead of the new year.

The FTSE Eurofirst 300 rose 0.8 per cent to 810.37 bringing its losses for the year to 47 per cent as pain from the financial sector rippled into the real economy. This compares with gains of 1.6 per cent in 2007, 16 per cent in 2006 and 22 per cent in 2005…. Full Article: Source

Cocoa: The last commodity standing

Posted on 30 December 2008 by VRS  |  Email |Print

From Back in February of 2008, tight supplies were forecast in the cocoa market, along with higher prices. Analysts called for a 14% rise in cocoa prices in the U.S., which would have pushed prices up to $2,325/tonne.

They underestimated the move: Despite the broader pullback in financial markets, cocoa in NY was sitting at $2,626/tonne on Friday, December 26. If NY cocoa hangs tight, it could end the year some 30% up - an outstanding performance given the other pricing trends in commodities right now….. Full Article: Source

Pound poised to gain as BOE slows pace of rate cuts

Posted on 30 December 2008 by VRS  |  Email |Print

From Bloomberg: The pound may rebound from its worst year on record against the euro as investors start betting on a recovery in the U.K. economy, according to the world’s biggest currency traders.

The U.K. currency will strengthen 14 percent against Europe’s common currency next year, after depreciating about 24 percent in 2008, based on the median forecast of 42 analysts and strategists surveyed by Bloomberg….. Full Article: Source

NYMEX Natgas funds cut net short futures-CFTC

Posted on 30 December 2008 by VRS  |  Email |Print

From Reuters: Noncommercial or speculative investment funds on the New York Mercantile Exchange decreased their net short natural gas futures exposure by about 8,200 contracts for the week ended Dec. 22, the Commodity Futures Trading Commission said in a report on Monday.

The report showed funds holding 154,613 net short futures, down 8,221 contracts from the previous week’s total of 162,834….. Full Article: Source

Oz Minerals gets bank lifeline as assets go on block

Posted on 30 December 2008 by VRS  |  Email |Print

From Reuters: Oz Minerals, which mines industrial and precious metals in Australia and Laos, was given another two months to persuade lenders to refinance $560 million in debt as it tries to raise cash by selling assets to combat sharp falls in metals prices.

The company, whose shares were suspended November 28 after dropping 85 percent from their January price, was due by the end of Monday to refinance a $140 million loan and a syndicated credit line of which $420 million has been drawn….. Full Article: Source

Easy come, easy go after China’s gold glitch

Posted on 30 December 2008 by VRS  |  Email |Print

From The world’s biggest bank by market value, the Industrial and Commercial Bank of China, gave gold traders a 23-minute bonanza that cost the bank last week.

A computer glitch at the Industrial and Commercial Bank of China gave gold traders a 23-minute bonanza that cost the bank dearly last week, sparking a debate on Monday as the bank reclaimed the windfall….. Full Article: Source

Australian dollar gains as commodity prices rise

Posted on 30 December 2008 by VRS  |  Email |Print

From The Age: The Australian dollar is higher after the escalation of tensions in the Middle East caused commodities prices to rise and the US dollar to weaken. The Australian dollar was trading at $US0.6882/86, up from Monday’s close of $US0.6864/68.

During the morning, the local unit moved between $US0.6851 and $US0.6906….. Full Article: Source

Dollar rises vs euro in choppy trade as volume thins

Posted on 30 December 2008 by VRS  |  Email |Print

From Guardian: The dollar rose against the euro on Monday, reversing early losses in a late surge as investors snapped up the greenback in thin trading after the single currency failed to sustain gains fueled by fighting in the Middle East.

The conflict had earlier prompted a flight to traditional safe-havens such as the Swiss franc and gold. It also led to euro buying and spurred demand for oil, as well as commodity currencies such as the Australian and Canadian dollars….. Full Article: Source

Copper drops as global stockpiles rise to near five-year high

Posted on 30 December 2008 by VRS  |  Email |Print

From Bloomberg: Copper declined in London after stockpiles jumped to the highest in nearly five years as a global slowdown cuts raw material demand.

London Metal Exchange-monitored inventory jumped by 5,250 metric tons yesterday, to 336,700 tons, the highest since Feb. 9 2004. The stockpiles have increased 71 percent this year while copper prices are down 56 percent, heading for the first annual decline since 2001….. Full Article: Source

India pepper up as traders cover short positions

Posted on 30 December 2008 by VRS  |  Email |Print

From Reuters: India pepper futures ended higher on Monday on short-covering after trading weak all day, analysts said. Pepper prices have fallen close to six percent last week on demand worries and continuous new crop arrivals.

Prices were weak all day as low export demand coupled with fresh arrivals weighed, Kunal Shah, an analyst with Nirmal Bang Commodities said, adding the trend for the near-term was bearish….. Full Article: Source

Canada’s currency appreciates as crude oil, gold prices gain

Posted on 30 December 2008 by VRS  |  Email |Print

From Bloomberg: Canada’s dollar rose for the first time in three days as crude oil advanced on bets a conflict between Israel and Hamas could disrupt supplies and gold climbed as investors sought a haven.

“People are keeping an eye on what’s happening in the Middle East,” said George Davis, Toronto-based chief technical analyst at RBC Capital Markets. The increase in crude oil prices is “underpinning the Canadian dollar,” he said….. Full Article: Source

Analysts expect tough year for commodities in Australia

Posted on 29 December 2008 by VRS  |  Email |Print

From Prices for Australia’s most valuable export commodities including iron ore and copper are expected to tumble next year as demand for the metals contracts in line with slowing global economic growth.

Analysts unanimously agree commodities demand and prices will remain weak in the first half of 2009 - prompting further mine closures and sector consolidation - as the world-wide financial crisis continues…… Full Article: Source

Indian commodities market set to touch USD one trillion mark amid oddities

Posted on 29 December 2008 by VRS  |  Email |Print

From Economic Times: The commodity futures market is set to end 2008 with a record turnover of $ 1 trillion (Rs 50,00,000 crore) an impressive 40 per cent surge despite draggers like political opposition, high inflation levels and ban on trading in a number of commodities.

Enthused by the continuing boom in this market, which experts believe is still in its nascent stage, the year saw many new players entering the fray, including the corporate giants Anil Ambani and Kotak groups, emerging conglomerate Indiabulls and also the public sector entity MMTC….. Full Article: Source

Outlook for energy bleak, but gold may sustain performance

Posted on 29 December 2008 by VRS  |  Email |Print

From The unprecedented surge in commodity prices since late ’04 was due to strong demand from emerging economies, especially China. Another factor was abundant liquidity, which coupled with weak dollar, increased market participation.

As global economic outlook brightened, commodities turned into an alternative asset class and began to mirror the boom cycles of equity or bond markets…… Full Article: Source

Commodities deflated

Posted on 29 December 2008 by VRS  |  Email |Print

From FT: C is for commodities, one of the last bubbles to burst during 2008. And what a pop. Oil was first to go, in July, followed by anything dug from the earth. From its peak, the global mining index has fallen 70 per cent, scattering debris from Russia to Australia and sundering deals such as BHP Billiton’s takeover of Rio Tinto.

What to learn? First, the mining industry has a long history of irrationality and this was a classic speculative “rush”. As for all bubbles, there was a new paradigm, in this case demand from emerging markets, particularly China….. Full Article: Source

Oil prices may average $47-50 a barrel in 2009

Posted on 29 December 2008 by VRS  |  Email |Print

From Oil prices, which hit record highs above $147 (Rs7,041.30 at today’s rate) a barrel this year before plunging under $33, risk slumping more in 2009 as recession curbs world’s appetite for energy, analysts say.

Oil prices have tumbled by about 57% since the start of 2008 when they traded at about $95 per barrel. The market had doubled in value over the course of 2007 from a low point of just under $50 per barrel….. Full Article: Source

Demand for oil will fall by largest margin in 25 years

Posted on 29 December 2008 by VRS  |  Email |Print

From Guardian: Gloibal demand for oil in 2009 will fall by the largest amount for 25 years, according to the chief energy economist of Deutsche Bank.

Adam Sieminski said oil prices could hit a low of $30 a barrel next year, a fall of a quarter from today’s price, because of the sickly global economy. He forecast an average price of $47.5 for the whole year for oil traded in New York….. Full Article: Source

Iron ore price rebound maybe short lived

Posted on 29 December 2008 by VRS  |  Email |Print

From It is reported that China’s imported iron ore stockpiles sitting at major seaports reduce to 59.99 million tonnes on December 19th a massive drop of 14 million tonnes from the month before.

Hectic buying has also pushed up spot ore imports price at the moment, however, the price rebound may be short lived. 63.5% Indian ore fine has risen to USD 80 per tonnes from USD 67 per tonnes in early November, while 66% ore concentrate price also gained 14% to CNY 722 per tonnes in Tangshan, Hebei…… Full Article: Source

Slippery path awaits black gold in 2009

Posted on 29 December 2008 by VRS  |  Email |Print

From The Herald: Crude oil prices, which fluctuated wildly in 2008, will remain volatile during the new year, trading in a range of $40 to $65, according to forecasts from oil traders, economists and the International Energy Agency.

Black gold soared to a record peak of $147.27 in July, 2008, and then fell steeply to levels below $50 as the global credit squeeze and recession took hold….. Full Article: Source

Japanese gold exports doubled this year

Posted on 29 December 2008 by VRS  |  Email |Print

From Mine Web: Japan’s gold exports have doubled this year, largely due to individual investors seeking to lock in profits after gold prices soared earlier in the year.

In the eleven months to November, Japan’s exports of unwrought solid gold, gold bars and sheet totalled 393.9 tonnes, Ministry of Finance data showed….. Full Article: Source

Australian, New Zealand dollars advance on firmer equities

Posted on 29 December 2008 by VRS  |  Email |Print

From Bloomberg: The Australian and New Zealand dollars rose after equity markets advanced, prompting speculation investors will buy the nations’ higher-yielding assets.

The currencies gained before reports this week that economists expect will show U.S. manufacturing shrank at the fastest pace since 1980. The Australian dollar slid 20 percent against the greenback this year and New Zealand’s currency lost 23 percent amid concern about an extended global recession….. Full Article: Source

Thin trading over Christmas, commodities rally

Posted on 29 December 2008 by VRS  |  Email |Print

From U.S. Dollar Trading (USD) very quiet trading with Europe away and thin equity markets in Japan and US. Most of the action was reserved for the commodity front with Oil and Gold rising on fresh geopolitical concerns out of the Middle East and India/Pakistan.

In U.S. share markets, the NASDAQ was up 5 points (0.35%) and the Dow Jones was up 47 points (0.56%). Crude Oil closed up $2.36 ending the New York session at $37.71 per barrel….. Full Article: Source

Indian regulator studying proposal to extend currency futures trading hours

Posted on 29 December 2008 by VRS  |  Email |Print

From The Securities and Exchange Board of India (Sebi) is studying a proposal submitted by exchanges to extend trading hours of the currency futures segment in line with commodities as both are linked closely with each other.

If Sebi approves the demand, trading hours of currency futures will be extended to 11.30 pm from the existing 9 am to 5.30 pm. International trading in futures continues for nearly 23 hours a day….. Full Article: Source

Commodity costs expected to soar from climate change

Posted on 29 December 2008 by VRS  |  Email |Print

From After the global economic meltdown, extreme weather events rooted on climate change will drive up costs of certain commodities including oil and rice, endangering the bottom lines of companies and the pockets of millions of consumers by 2018, according to a publication recently released by international think tank A.T. Kearney Inc.

According to the study, titled “Rattling Supply Chains: The Effect of Environmental Trends on the Fast Moving Consumer Goods Industry,” which assessed certain commodities, prices can increase up to 45 percent and cut earnings before interest and taxes by as much as 47 percent by 2018….. Full Article: Source

Cocoa prices hit a 23-year-high

Posted on 29 December 2008 by VRS  |  Email |Print

From London cocoa futures have hit a 23-year-high as cocoa turned out to be the most lucrative commodity in 2008. Cocoa for delivery in May peaked at $3,320 per tonne in London, which was its highest price since October 1985.

Cocoa traded in the US has also been rising, although not as strongly because of the strength of the dollar….. Full Article: Source

Canadian miners could go bankrupt

Posted on 29 December 2008 by VRS  |  Email |Print

From Few Canadian resource industries fared well in what turned out to be a dismal year for commodities in 2008, as base metal miners were hit particularly hard as credit markets tightened, global demand slumped and prices for everything from zinc and copper to iron ore and aluminum plummeted.

As per report some analysts have now predicted that some of Canada’s big mining companies will go bankrupt before conditions start to improve….. Full Article: Source

Oil looks cheap, but is it time to buy?

Posted on 29 December 2008 by VRS  |  Email |Print

From A flight into cash during the credit crisis has helped drive oil and other commodity prices down so steeply that they are a potential “buy” for pension funds with a longer view. But timing is everything.

“People are sitting on cash — big lumps of it,” said Mark Mathias, chief executive of commodity fund manager Quantum Asset Management. “Everyone is worried about when to go back in. Long-term, oil is cheap, but who knows where it goes in the short term.”….. Full Article: Source

International port traffic seen to drop in 2009

Posted on 29 December 2008 by VRS  |  Email |Print

From The Baltic Dry Index, a measure of shipping costs for commodities, is down 93 percent from a record in May, a sign that traders expect export volumes to stay depressed.

Slowing trade is both a cause and an effect of the first simultaneous contraction in the world’s largest economies since World War II. Throughout this decade, trade grew by 12 percent a year to US$13.6 trillion in 2007, propelling growth in nations from Germany to China and Chile…… Full Article: Source

A recent history of oil prices

Posted on 29 December 2008 by VRS  |  Email |Print

From The price of oil has oscillated from an all-time hike of almost $150 a barrel to a low of $30, hand in hand with the credit-crunch and the inextricable economic connection between money and oil.

In January 1999 the price of a barrel of oil reached a low point of $16 when Iraq increased its oil production at the time of the Asian Financial Crisis when demand for oil fell….. Full Article: Source

China to boost oil and gas imports amid oil slump

Posted on 29 December 2008 by VRS  |  Email |Print

From Reuters: China will take advantage of falling oil prices to boost oil and gas imports, Zhang Guobao, the head of the National Energy Administration, said in remarks published on Monday.

It would actively push forward the construction of the second phase of state strategic oil reserves after having largely completed the first phase, Zhang said in a report in the official People’s Daily….. Full Article: Source

Oil prices risk tumbling further in 2009

Posted on 29 December 2008 by VRS  |  Email |Print

From Oil prices, which hit record highs above $147 a barrel this year before plunging under $33, risk slumping more in 2009 as recession curbs the world’s appetite for energy, analysts say.

“We expect oil prices in early 2009 to remain under pressure given the weakening demand outlook and as global economies continue to slow,” said Nimit Khamar, analyst at the Sucden brokerage in London….. Full Article: Source

ONGC approaches 90% acceptance in bid for Imperial Energy

Posted on 29 December 2008 by VRS  |  Email |Print

From FT: Imperial Energy is closing in on the 90 per cent level of acceptances it needs to seal its takeover by ONGC Videsh, part of the state-owned Indian oil company, as a deadline approaches.

Shareholders have until 1pm London time tomorrow to accept ONGC’s offer of £12.50 a share for Imperial, an energy explorer with most of its assets in Russia….. Full Article: Source

The flip side to lower crude oil prices

Posted on 29 December 2008 by VRS  |  Email |Print

From At a time of low petroleum prices, there will be fewer incentives to step up production or save the environment. Once this is realized, oil prices may start climbing again.

The global petroleum scenario has confounded analysts and the most proactive policy makers alike. Until Last July, crude prices were on a relentless upward march touching a high point of $147 a barrel that month against $60 a year earlier….. Full Article: Source

Myths and facts of futures market trading

Posted on 29 December 2008 by VRS  |  Email |Print

From Futures trading originated in Chicago as early as the 1840s among a group of businessmen and agricultural suppliers who needed to transact soft commo-dities everyday for a living.

At that time, these trading counterparts felt the complications from too many traded prices and dishonesty, as practiced by different merchants, hence suggested a unique way to deal in a fair way without discrepancies….. Full Article: Source

GCC summit eyes common currency

Posted on 29 December 2008 by VRS  |  Email |Print

From AP: In a gathering marred by Israeli attacks on Gaza and pressured by the ailing world economy, leaders of the six Gulf Arab nations are gearing up for a summit in which they are expected to tackle head-on a long-elusive monetary union agreement.

The two-day meeting, beginning Monday in the Omani capital, Muscat, has been touted as a key step in helping the Gulf Cooperation Council’s six member states realize a goal of a common currency and broader economic unity. The push is made all the more relevant by the global economic crisis that has hit hard even these oil rich nations….. Full Article: Source

Euro currency turns 10; seen fulfilling promise

Posted on 29 December 2008 by VRS  |  Email |Print

From AP: Ten years ago, Europe launched its grand experiment with a shared currency — and watched it plunge so far it needed a bailout from central banks.

But as the anniversary approaches of the Jan. 1, 1999, arrival of the euro, economists say the new currency is finally fulfilling its promise as a way to lower borrowing costs, ease trade and tourism, boost growth and strengthen the European community….. Full Article: Source

December 2008
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