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Commodities Briefing - Archive | August, 2009

China demand may drive commodities higher

Posted on 31 August 2009 by VRS  |  Email |Print

From As major consumer of a wide variety of commodities, the industrial world has always been known for its influence over the commodity markets.

However, over the last couple of years, China has undoubtedly been the mover and shaker of the global commodities – be it energy products, base and precious metals or agriculture, with its robust economic growth and humungous imports to meet its ravenous appetite for consumption…………..Full Article: Source

Demand for commodity has to catch up for sustainability

Posted on 31 August 2009 by VRS  |  Email |Print

From The frequent fall and rise in commodity prices last year baffled the investors and traders worldwide. With global interest rates at their multi-year low and abundant liquidity in the global financial markets, a turnaround in commodity prices from their multi-year low looked valid until mid-July.
However, now the market is buzzing with the talk of a commodity bubble in making…………..Full Article: Source

China’s SOEs may terminate commodities contracts

Posted on 31 August 2009 by VRS  |  Email |Print

From China’s state-owned enterprises may unilaterally terminate commodities contracts as they try to cut massive losses from financial derivatives, an industry source told Caijing on August 28.

According to the source, China’s State-owned Assets Supervision and Administration Commission (SASAC) has sent notice to six foreign financial institutions informing them that several state-owned enterprise will reserve the right to default on commodities contracts signed with those institutions…………..Full Article: Source

Excess liquidity may create a new bubble

Posted on 31 August 2009 by VRS  |  Email |Print

From The producer price index for commodities has risen more than the consumer price index from the beginning of 2007 till middle of 2008, thereby putting pressure on margins as raw material costs rose more than selling prices. The squeeze in margins was compensated by rising sales volumes.

However, following the global financial crisis, producer prices for commodities plunged by 18% from July 2008 to a bottom in March 2009 compared with only a 3% decline in inflation…………..Full Article: Source

Regulation could topple oil prices

Posted on 31 August 2009 by VRS  |  Email |Print

From A debate is emerging over how curbs on energy market speculation may impact oil prices, with at least one major bank boldly expecting the new rules will trigger a 30-percent price plunge.

The outcome holds wide-ranging implications for G20 developed nations collectively spending as much as US$4.8 trillion to stimulate their economies through the worst global recession in decades…………..Full Article: Source

Oil markets need speculators if the price is to be right

Posted on 31 August 2009 by VRS  |  Email |Print

From Whenever market prices, especially energy prices, start making things rough for consumers, or whenever importing governments are dismayed by the size of their trade deficit due to crude imports, speculators are blamed.

You see it in the newspapers, you hear it on the television and I have even overheard shoppers in New York blame speculation for high petrol prices…………..Full Article: Source

Oil market not driven by supply or demand

Posted on 31 August 2009 by VRS  |  Email |Print

From Analysts have been expecting a downward correction for some time now but, apart from a modest price drop in July, the market has regained the buoyancy witnessed since March this year.

The average price for the Opec basket of twelve crudes in August is likely to be over $71 per barrel, thereby wiping out the decline in July ($64.59 per barrel) over June ($68.36 per barrel) and going further ahead…………..Full Article: Source

Oil doubts recovery

Posted on 31 August 2009 by VRS  |  Email |Print

From Crude oil fell US$2.68 a barrel yesterday, bringing its drop over the past week into official 10% correction territory, and dragging Toronto stocks sharply lower on concern the economic recovery is struggling.

“There was maybe too much speculation on the price of oil,” said Richard Briggs, Calgary-based vice-president at MF Global Canada. “It got a little too expensive, and now it looks like a recovery is going to be somewhat slower than expected.”………….Full Article: Source

Kuwait official sees no Sept OPEC supply cut

Posted on 31 August 2009 by VRS  |  Email |Print

From Reuters: OPEC is unlikely to cut output at its September meeting because oil prices were stable, a member of the Kuwait’s Supreme Petroleum Council said in published remarks on Sunday.

The group would focus on better compliance with previous cuts when it meets next month, Imad al-Atiqi told the al-Seyassah newspaper…………..Full Article: Source

Qatar’s Attiyah: OPEC likely to keep output steady

Posted on 31 August 2009 by VRS  |  Email |Print

From Reuters: Qatar’s Oil Minister Abdullah al-Attiyah on Sunday said OPEC was likely to keep oil production targets unchanged when it next meets in September.

“In my opinion, OPEC will not change the situation,” he told Reuters by telephone…………..Full Article: Source

ADNOC: oil exports will rise

Posted on 31 August 2009 by VRS  |  Email |Print

From The Abu Dhabi National Oil Company (ADNOC) has told customers oil exports from the capital will rise in October after months of steep cuts agreed to by OPEC to boost prices.

The move indicates the state oil firm may raise production, despite little prospect that OPEC will change its output quotas at its meeting in Vienna on September 9…………..Full Article: Source

150 years ago, world entered the age of oil

Posted on 31 August 2009 by VRS  |  Email |Print

From One hundred and fifty years ago last Thursday, in the sleepy lumber town of Titusville, Pa., “Colonel” Edwin Drake was persistently hammering a pipe into the ground in search of a replacement for depleting whale oil as a fuel for lamps. At a depth of 69 feet below ground he finally struck oil, and the world changed forever.
Over a century and a half his 25 barrels per day well would give rise to a global industry of 85 million barrels per day, making oil the world’s most strategic commodity, one that supplies 40 percent of the world’s energy…………..Full Article: Source

World’s top producing oil nations and oil fields

Posted on 31 August 2009 by VRS  |  Email |Print

From 150 years ago this week, Colonel Edwin Drake struck oil in Titusville, Pennsylvania. Ever since, oil has become the most important commodity in the world.
Despite the hype about green technologies and other alternative sources of energy, crude oil will continue to be the major source of energy for many years to come…………..Full Article: Source

Moving forward with carbon capture plans

Posted on 31 August 2009 by VRS  |  Email |Print

From The world’s largest carbon capture project launched by a coal-fired power plant broke ground in July in Shanghai.

After completion, which is scheduled before the end of this year, the project will capture as many as 100,000 tons of carbon dioxide annually…………..Full Article: Source

Will prices of metals/commodities be able to maintain tempo?

Posted on 31 August 2009 by VRS  |  Email |Print

From Refined Zinc’s demand-supply data suggests that the over-supply , which surfaced in 2007, deepened further and rose 48% to 273,000 tonnes in the first six months of 2009 from of 184,000 tonnes in 2008.
Given that zinc prices were on a decline from late 2007—unlike other base metals, which began falling only since mid-2008—the recovery in its prices since March ’09 seems reasonable…………..Full Article: Source

Precious metals bull market, we haven’t seen anything yet

Posted on 31 August 2009 by VRS  |  Email |Print

From The stock market’s still on tap for a ferocious fall after Labor Day, claims TraderTracks editor Roger Wiegand—as he told a few months back.
The veteran prognosticator doesn’t see much to be encouraged about on the global economic front, either, with the engines of growth “melting like snow in July.” However, he does see the makings of some “pretty exciting” action in precious metals…………..Full Article: Source

Palladiums bullish posture bodes well for all precious metals

Posted on 31 August 2009 by VRS  |  Email |Print

From We are starting the precious metals off this week with a chart of palladium. Why? - as the chart shows, palladium rises from the lower right hand corner of the chart to the upper left hand corner - to a new yearly high: a bullish signature.

Palladium’s bullish posture should bode well for the other metals, which will likely follow suit. In all rallies, one of the metals is first to begin the move. It is fascinating that palladium is the leader…………..Full Article: Source

Copper and gold still top but lithium adds a bit of flavour

Posted on 31 August 2009 by VRS  |  Email |Print

From The most in-demand mining stocks among the world’s 100 biggest miners, by value, feature most commonly connections to copper, gold, and also to coal, and specialties such as uranium and lithium.
There is also a notable presence of stocks with connections to India, currently supported by a country equity market that ranks as one of the world’s best-performing, having supplanted China earlier this month, where equities are cooling off from 12-month highs on fears that liquidity could be reined in…………..Full Article: Source

Ups and downs for gold and silver - but look at the longer term trends

Posted on 31 August 2009 by VRS  |  Email |Print

From If one reads the daily newswire services coverage of the gold and silver price - and similarly for most other commodities too - undue importance is often imparted to intra-day price movements, yet these generally have little or no real significance in the overall scheme of things.

What one really needs to follow are the overall trends as expressed by the markets - not only for the metals themselves but also for other significant market moving elements - of which the strength of the dollar is the most significant…………..Full Article: Source

China’s liking for silver is good news for miners

Posted on 31 August 2009 by VRS  |  Email |Print

From In the days when governments believed that their currencies needed to be anchored to something real as a means of ensuring the worth of the paper and coin in circulation, everyone chose gold.
Except China — it backed its currency with silver…………..Full Article: Source

Commodity ETC assets reach all time high at $13bln

Posted on 31 August 2009 by VRS  |  Email |Print

From ETF Securities (ETFS), the global pioneer of Commodity ETCs and 3rd generation Exchange Traded Funds (ETFs), announced today that its global assets under management (AUM) now exceed $13bn, up 85% or $6bn since the beginning of 2009.
This strong rise in AUM this year is the result of continued strong inflows into Commodity ETCs and also commodity-equity ETFs…………..Full Article: Source

ETFs for China solar energy exposure

Posted on 31 August 2009 by VRS  |  Email |Print

From President Obama is determined to establish the U.S. as “the world’s leading exporter of renewable energy,” but it seems that he may face some stiff competition from a familiar source.

According to a recent article in the New York Times, China has established itself as the early leader in the race to become the dominant producer of green energy alternatives, a significant obstacle to U.S.-based firms hoping to capitalize on increased focus on the development of alternative energy sources…………..Full Article: Source

Currency futures clock 1,500pct growth in 1 year

Posted on 31 August 2009 by VRS  |  Email |Print

From Backed by a smooth trading history and exponential growth in turnover for a full year, participants in the currency derivatives segment are now looking for addition of more products, innovations, a move towards physical settlement and extension of trading hours to synchronise with the US and European markets.

It has been exactly one year since trading in rupee-US dollar (Re-$) futures was introduced in India…………..Full Article: Source

New hurdles loom for commodities ETFs

Posted on 28 August 2009 by VRS  |  Email |Print

From Surging retail demand for ETFs and ETNs has the CFTC and the SEC enforcing strict position limits, sowing confusion and talk of new instruments.
Momentum appears to be building for financial regulatory reform in Washington as officials trumpet the need to offer extra protection for small investors. But for some investors in exchange-traded funds and notes that focus on commodities, the increased oversight may actually work against them…………..Full Article: Source

Deutsche Bank launches Asia’s first money market ETF

Posted on 28 August 2009 by VRS  |  Email |Print

From Deutsche Bank has launched Asia’s first money market exchange-traded fund (ETF). The db x-trackers US Dollar Money Market ETF, which was first listed in London in April 2008, was cross-listed in Singapore and Hong Kong yesterday.

With this latest listing, there are now 10 db x-trackers in Singapore and seven in Hong Kong. Deutsche Bank introduced its db x-trackers brand to Asia in February this year when it listed Asia’s first inverse ETF in Singapore and expects to have around 30 additional listings in the region within the next 12 months…………..Full Article: Source

Commodities expected to rebound after July dip

Posted on 28 August 2009 by VRS  |  Email |Print

From Commodity prices slipped in July after two months of gains but are expected to rebound as some G7 countries join China in the economic recovery, Scotiabank said in its monthly commodities report.

“U.S. industrial activity posted a 6.7% month-over-month increase last month - the first gain in eight months - and Germany and France recorded a surprising 0.3% quarter-over-quarter increase in GDP in the second quarter of 2009, emerging from recession sooner than expected,” said Scotiabank commodities specialist Patricia Mohr…………..Full Article: Source

Is there any opportunity for commodity profitability in the near future?

Posted on 28 August 2009 by VRS  |  Email |Print

From When the global economy turned south a year ago, the baseline of agricultural prices was quickly recalculated by the Food and Agricultural Policy Research Institute at the University of Missouri, whose economists released their 10 year forecasts in early 2009.
That was then and this is now, and FAPRI says the “outlook for many agricultural commodities has changed markedly” since earlier this year. Has the outlook gotten better or worse?………….Full Article: Source

CFTC’s Gensler sees ‘clear consensus’ on derivatives regulation

Posted on 28 August 2009 by VRS  |  Email |Print

From Bloomberg: New regulation of the derivatives market that regulators failed to rein in nine years ago has wide political support thanks to the financial crisis, Commodity Futures Trading Commission Chairman Gary Gensler said.

Gensler said in an interview today he is encouraged the financial industry recognizes “that there’s a consensus in Washington, both in the administration and on Capitol Hill that we have to bring the full over-the-counter derivatives marketplace under regulation.” …………..Full Article: Source

Position limits in world energy markets

Posted on 28 August 2009 by VRS  |  Email |Print

From Reuters: U.S. regulators are working with overseas counterparts to crack down on speculation in energy markets, and are expected to impose tougher position limits and cut exemptions provided by exchanges.

The following is a list of current position limits imposed by exchanges in the top world energy contracts: NYMEX WTI Crude Oil Any one month - 10,000 net futures; all months - 20,000 net futures; but not to exceed 3,000 contracts in the last three days of trading in the spot month…………..Full Article: Source

IEA expert urges developed countries to reduce emission, support developing countries

Posted on 28 August 2009 by VRS  |  Email |Print

From Xinhua: Developed countries have to take quick actions to reduce their greenhouse gas emissions while providing technical support to China and other developing countries in this area, a senior analyst with the International Energy Agency (IEA) said in a recent exclusive interview with Xinhua.

Ralph Sims, an expert on renewables and climate change, said that the Chinese government and people have attached great importance to climate change and are seeking to adopt a more sustainable development strategy to help deal with the problem…………..Full Article: Source

Energy in Russia: No consensus on oil production shortages

Posted on 28 August 2009 by VRS  |  Email |Print

From Telegraph: The world will face a “catastrophic energy crunch” within five years, warns Dr Fatih Birol, chief economist of the International Energy Agency (IEA). Russian analysts are less certain, but say that, in the future, Russia will launch 60pc of the new oil fields.

The IEA report is based on the assessment of more than 800 oil fields, accounting for 75pc of global reserves……………Full Article: Source

US seeks independence with natural gas

Posted on 28 August 2009 by VRS  |  Email |Print

From BBC: “Energy independence” has almost become the Holy Grail in the US.

Here, the environmental debate often does not concern saving the planet, or reducing the effects of human action on the global climate…………..Full Article: Source

Oil prices: Why expensive oil might not help clean energy

Posted on 28 August 2009 by VRS  |  Email |Print

From WSJ: Greens might have another reason to worry that higher oil prices won’t be a boon for renewable energy.

Oil prices could well return to $100 before long—but not because of scarcity, excessive demand, tough new environmental rules or anything else that might help clean energy…………..Full Article (Subscription Required) : Source

OPEC will not change output quota

Posted on 28 August 2009 by VRS  |  Email |Print

From The Organization of Petroleum Exporting Countries (OPEC) will likely leave output quotas unchanged at its next meeting in September, Qatar’s oil minister says.

“OPEC may extend the rollover because the market situation needs this to balance demand and supply,” Abdullah bin Hamad al-Attiyah told Dow Jones in a telephone interview…………..Full Article: Source

Libya: OPEC likely to hold steady on volatile markets

Posted on 28 August 2009 by VRS  |  Email |Print

From Zawya Dow Jones: The Organization of Petroleum Exporting Countries, producer of almost 40% of the world’s oil, will likely hold output steady at its next meet in Vienna in September amid ongoing market uncertainty, Libya’s top oil official said Thursday.

“Volatility is still in the market,” Shokri Ghanem, head of the Libyan National Oil Co., told Zawya Dow Jones on the phone when asked what action the group, known as OPEC, is likely to take on Sept. 9…………..Full Article (Subscription Required) : Source

Oil speculators dominate open interest in oil futures

Posted on 28 August 2009 by VRS  |  Email |Print

From A new policy paper by Rice University’s Baker Institute for Public Policy shows a clear increase in the size and influence of noncommercial traders, or “speculators,” in the oil futures market since regulations were eased by the Commodities Futures Modernization Act of 2000.
Speculators now constitute about 50 percent of those holding outstanding positions in the U.S. oil futures market, compared with only about 20 percent prior to 2002…………..Full Article: Source

India plans energy efficiency trading scheme

Posted on 28 August 2009 by VRS  |  Email |Print

From India’s prime minister this week unveiled an energy efficiency trading system designed to save 5% of the country’s energy consumption, and 100 million tonnes of carbon dioxide (CO2) annually, by 2015.
The initiative – which is expected to cover around 700 installations – is to be underpinned by a market in tradable energy efficiency certificates…………..Full Article: Source

Carbon emission trading to become China’s new financial product

Posted on 28 August 2009 by VRS  |  Email |Print

From Carbon emission trading will become a new financial product and be traded on China’s exchanges, said Mei Dewen, general manager of China Beijing Environmental Exchange (CBEE) on August 26.

Xie Zhenhua, vice minister in charge of the National Development and Reform Commission (NDRC), also noted that exploratory emission trading would be open to certain fields. Industry insiders believe that Xie’s words reflect the government’s positive attitude…………..Full Article: Source

Japan on alert over China’s plans to restrict exports of rare earth metals

Posted on 28 August 2009 by VRS  |  Email |Print

From Japan is readying itself for a potential showdown with China at the World Trade Organisation as Beijing considers plans to strangle global supplies of rare earth metals — the “green” lanthanide metals used in hundreds of environmental and military technologies.

Global supply of the rare-earth metals, which are vital to the mechanisms of hybrid cars, wind turbines, iPods, lasers, super-efficient light bulbs and radar systems, is 95 per cent controlled by China…………..Full Article: Source

Base metals slump on China curbs, may go downwards

Posted on 28 August 2009 by VRS  |  Email |Print

From Bears dominated Thursday’s trading session in base metals, as prices slumped today on reports that Beijing will curb industrial oversupply and pare back easy credit.
A bearish inventory report also put pressure on prices. However, a weaker dollar came to the rescue and provided downside support…………..Full Article: Source

Palladium’s rally may screech to halt without ‘clunkers’

Posted on 28 August 2009 by VRS  |  Email |Print

From A steep run-up in the price of palladium, an integral component of auto manufacturing, is likely to reverse if car sales falter now that the popular “cash for clunkers” rebate program has ended.

Speculation that more car sales would lead to higher auto output, and thus more appetite for metals used in auto production, has made palladium the best-performing precious metal this year. Higher investment demand has also helped…………..Full Article: Source

How the drought might affect gold demand in world’s biggest market

Posted on 28 August 2009 by VRS  |  Email |Print

From Gold demand in India, the biggest market for the yellow metal, may fall by around 20% in the rural markets due to drought situation, according to industry estimates.
Already, gold imports have been lower by 56% in 2009, and experts say, dip in agriculture production may keep rural buyers away from jewellery shops during the upcoming festival season…………..Full Article: Source

Global gold hedge book drops just 31 tonnes in Q2 - SocGen

Posted on 28 August 2009 by VRS  |  Email |Print

From Next year should see at least 80 tonnes of dehedging - a far cry from the annual average of 290 tonnes since net dehedging became part of the annual supply-demand balance in 2000.

The latest quarterly hedge book analysis from Société Générale, using figures compiled by independent research house GFMS Ltd in conjunction with Brady plc and its risk management software, shows that the outstanding delta-adjusted global mining hedge book contracted by just 33 tonnes over the first half of the year, and a similar volume is expected for the second half…………..Full Article: Source

Where does silver go next?

Posted on 28 August 2009 by VRS  |  Email |Print

From Back in April, we spoke with David Morgan, editor of and The Morgan Report, about the silver market, from the metal’s role in the green revolution to his thoughts on silver’s future.
With silver up 10% (and gold up 5%) since we last spoke, we thought it was time to check back in with the precious metals expert…………..Full Article: Source

Australian dollar heads for longest monthly gains in 20 years

Posted on 28 August 2009 by VRS  |  Email |Print

From Bloomberg: The Australian dollar rose, heading for its longest stretch of monthly advances in 20 years, as rising prices for equities and commodities boosted demand for the nation’s higher-yielding assets.

New Zealand’s currency climbed after a report showed that home-building approvals rose for the third time in four months in July, adding to evidence the nation will emerge from its worst recession in three decades…………..Full Article: Source

U.S. dollar bulls may be hobbled by economy

Posted on 28 August 2009 by VRS  |  Email |Print

From Reuters: The U.S. economy has been improving, and dollar investors are starting to take notice. But punters who bet on more greenback gains from stronger U.S. economic data and interest rate hikes could be disappointed.

Having been largely driven by swings in risk sentiment over the past year, the currency market is slowly refocusing its attention on growth and yield differentials as the global recession nears an end…………..Full Article: Source

Currency diversification is good, but which currencies?

Posted on 28 August 2009 by VRS  |  Email |Print

From bond yields had reached a top in the middle of June, but the US Treasury market came back from the brink and rallied (i.e. yields fell) on the realisation that higher government bond yields mean higher mortgage rates and that the US housing market is too fragile to cope with such higher rates.
The rally then ran out of steam as risk trades were re-applied and safe-haven government markets slipped once again…………..Full Article: Source

A contrarian currency bet

Posted on 28 August 2009 by VRS  |  Email |Print

From Moments of deep, dark despair often turn out to be excellent buying opportunities in hindsight. In early March, a lot of the talk was of a new Great Depression and the stock market plummeted to oversold levels.
But those who were bold enough to go against the crowd have been handsomely rewarded, racking up gains of around 50 per cent in less than six months…………..Full Article: Source

Cocoa to fall on West Africa harvest, Rabobank says

Posted on 28 August 2009 by VRS  |  Email |Print

From Bloomberg: Cocoa prices will fall 15 percent as harvests in West Africa boost supplies in September and October, Rabobank International said today.

Cocoa will “find strong support” around $2,400 a metric ton, and a recovery is forecast next year as demand improves, Rabobank’s Agri Commodity Markets Research unit said in a report. Futures tumbled 4.6 percent to $2,821 today in New York…………..Full Article: Source

3 ways to invest in water’s future

Posted on 28 August 2009 by VRS  |  Email |Print

From Money Central: In a warming world, the potential for disruption of historic weather patterns is likely to make water the new oil. Here’s how to play it.
India is an extreme case: About 60% of India’s cropland is totally dependent on rainfall, because it isn’t irrigated at all, and decades of overpumping from underground supplies have left many rural wells high and dry, above sinking water tables…………..Full Article: Source

August 2009
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