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Commodities Briefing - Archive | September, 2009

Brazil’s biggest fund manager bets on commodity rally

Posted on 30 September 2009 by VRS  |  Email |Print

From Bloomberg: Oil prices and Brazilian stocks have room to rally as investors underestimate the speed of the global economic recovery, said Joao Ayres Rabello, the president of BB DTVM, the nation’s biggest asset-management firm.

Real estate companies, which have more than doubled this year, and raw-material exporters may be poised for the biggest advance among Brazilian stocks, said Rabello, who oversees the equivalent of $167 billion in assets at BB DTVM, the asset- management arm of Banco do Brasil SA…………………Full Article: Source

Can hedge funds help commodity stocks?

Posted on 30 September 2009 by VRS  |  Email |Print

From Can hedge funds help commodity stocks and prices? Here is a research analysis from Fortis Metals Monthly as to how the hedge funds activities have been in September:

The overall performance of hedge funds in our database wobbled in June but the latest data, from July, shows a return to the up-trend, and in the first seven months of 2009 average returns remain positive, at 1.7%…………………Full Article: Source

Hedge funds reborn

Posted on 30 September 2009 by VRS  |  Email |Print

From Forbes: Hedge fund managers (and would-be hedge fund managers) may finally have reason to celebrate this year — new fund launches are on the rise. If they keep up at this pace, it could be the first year since 2005 to show some annual growth in new fund formations.

This is on the heels of 2,100 hedge fund failures since the credit crisis…………………Full Article: Source

The commodity index reborn

Posted on 30 September 2009 by VRS  |  Email |Print

From The Commodity Futures Trading Commission spent all summer pushing for tighter regulation of commodity ETFs, which the agency blames (rightly or wrongly) for running up energy prices last year.

For the CFTC, it’s not a question of whether they should impose new regulations, but how much: Position limits, tighter regulation of swaps contracts and higher capital and margin requirements for derivatives are all possibilities currently on the table…………………Full Article: Source

Baltic dry to jump on Chinese bulk demand, Cosco says

Posted on 30 September 2009 by VRS  |  Email |Print

From Bloomberg: The Baltic Dry Index, the main measure of shipping costs for commodities, may surge more than 80 percent by the end of the year on increased demand for shipments to China, according to China Ocean Shipping (Group) Co.

The gauge may rebound to 4,000 points as local governments encourage factory output, especially of steel, Kong Fanhua, a senior researcher at the company, said in an interview…………………Full Article: Source

Red-letter day is looming for commodities

Posted on 30 September 2009 by VRS  |  Email |Print

From WSJ: China’s Communist Party wants a no-surprises celebration of its 60 years in power. Hopefully, world commodity markets will comply.

A strong correlation between global commodity-futures prices and those on Chinese markets makes extended holidays in China increasingly problematic, as traders found after the National Day break last year…………………Full Article (Subscription Required): Source

Five ways to profit from the commodity nobody likes

Posted on 30 September 2009 by VRS  |  Email |Print

From Forget Superman… the real man of steel is Lakshmi Mittal, chairman of the world’s biggest steelmaker, Arcelor Mittal ADR.

Mittal has built an empire – and a personal fortune – by being optimistic when it comes to the global steel industry…………………Full Article: Source

Scotiabank bullish on copper as base metals lead commodities higher

Posted on 30 September 2009 by VRS  |  Email |Print

From Copper is expected to outperform all other base metals over the next five years, leading Scotiabank to rise its target on the red metal even as its price falters temporarily in the face of weaker Chinese demand.

The widely used industrial metal will now average $2.30 US a pound in 2009, rising to an average of $2.90 in 2010, said Scotiabank commodity analyst Patricia Mohr…………………Full Article: Source

Compellingly bullish case for copper - SocGen

Posted on 30 September 2009 by VRS  |  Email |Print

From The latest quarterly Commodity Review from Société Générale describes how the copper market is characterised by “limited visible stock coverage, little in the way of idled overcapacity overhanging the market, strong Chinese import demand, and an expectation of limited supply going forward” that will take the market into a deficit that will start in 2010 and deepen thereafter.

Noting how China represents the key fundamental factor driving the base metals sector, the bank forecasts that China’s share of global base metals consumption is expected to approach 40% in 2010 - despite a downgrade in the bank’s forecast for Chinese growth in 2010 to 8%…………………Full Article: Source

Base Metals profit booking could re-emerge

Posted on 30 September 2009 by VRS  |  Email |Print

From Base metal prices ended on a mixed note as a stronger dollar capped the upside. Though we witnessed a recovery in prices, the stabilized dollar put a lid on the gains as sentiments remained fragile.
In the absence of US economic data, trading in the base metals complex was subdued…………………Full Article: Source

Commodity investments push up palladium prices

Posted on 30 September 2009 by VRS  |  Email |Print

From Palladium popped above 300/oz in mid-September, with its highest London fix $299/oz, on the 17th of the month.
A rally in other precious and base metals, together with a general sense of economic optimism and renewed commodity investment inflows, all helped push palladium prices to their highest since August 2008…………………Full Article: Source

Scotiabank enables gold bugs

Posted on 30 September 2009 by VRS  |  Email |Print

From Gold has long been regarded as the ultimate store of value, which is why it’s so popular among the paranoid and the pessimistic.

The problem with that idea — as old as gold bugs themselves — is a practical one: Once you’ve bought the stuff, how do you get it back to your house without mishap?………………..Full Article: Source

Gold shines in a world wary of rising prices

Posted on 30 September 2009 by VRS  |  Email |Print

From As the world begins to recover from the global financial crisis, investors’ concerns are turning to the problems posed by rising inflation.

When inflation rears its ugly head, investors traditionally turn to gold. Its price is within a couple of percentage points of the all-time high of $US1033 an ounce, set in March last year, and analysts say growing fear of inflation is spurring the buying…………………Full Article: Source

So is it too late to join the gold rush?

Posted on 30 September 2009 by VRS  |  Email |Print

From Gold is selling close to $1,000 (£632) an ounce - up more than 20 per cent over a year. Just five years ago, it was selling for just $400 (£253).

But is this high price a signal you should buy or sell? And should you really swap your old gold jewellery for cash? ………………..Full Article: Source

How to buy gold… At the price you want & get paid for it

Posted on 30 September 2009 by VRS  |  Email |Print

From So what exactly is the best way to grab profits from the important and often explosive world of commodities? In my column last week, I showed you some of the spectacular moves that the four most actively traded commodities (oil, natural gas, gold and silver) have made over the past couple of years.

And when you see the wide trading ranges, it also gives you an idea of just how lucrative they can be…………………Full Article: Source

Gold futures edge higher after testing support levels

Posted on 30 September 2009 by VRS  |  Email |Print

From Gold finished up slightly after a volatile session on Tuesday, with dollar strength continuing to cap gains in the precious metal but with traders seeking support levels after gold’s inability to hold the $1,000 mark.

After trading lower for most of the session, gold futures benefited from a late surge, with the December contract finishing up 30 cents at $994.40 an ounce on the Comex division of the New York Mercantile Exchange. It earlier fell to an intraday low of $986.10 an ounce and rose to a high of $997.20…………………Full Article: Source

Byron King: Peak gold + Weak dollar = $2,000+

Posted on 30 September 2009 by VRS  |  Email |Print

From Unconvinced that the recession is behind us, Byron King is equally sure that the “bottomless pit” mentality of stimulus spending will wreck the dollar.
Those are among the reasons he sees $2,000-per-ounce gold on the not-too-distant horizon…………………Full Article: Source

The silver shortage will come

Posted on 30 September 2009 by VRS  |  Email |Print

From Based on the supply and demand situation of silver, it’s only a question of time when a silver shortage will come. Nobody can predict exactly when this is going to happen, but we have more and more signs that those who control the price of silver are sweating to balance the supply.
The biggest question I have is, will the shorts be successful to cover their short position on time?………………..Full Article: Source

Chinese rivalry for oil assets has silver lining

Posted on 30 September 2009 by VRS  |  Email |Print

From Telegraph: Up until now, Chinese oil firms were hunting for oil in risky places where the majors didn’t already have a big presence or where they were keen to sell, including Iraq and Argentina. But now China is moving into Nigeria in a big way, according to the Financial Times.
CNOOC, one of the three largest Chinese oil companies, is said to be bidding for 6bn barrels of oil reserves…………………Full Article: Source

India promises twelvefold boost in nuclear capacity by 2050

Posted on 30 September 2009 by VRS  |  Email |Print

From India announced the world’s boldest nuclear power development plan yesterday, saying that it could boost its atomic capacity twelvefold by 2050 to end crippling power shortages while limiting carbon emissions.

Manmohan Singh, the Prime Minister, predicted that India could produce 470 gigawatts of nuclear power by 2050, compared with the 3.8GW currently produced by its 17 reactors…………………Full Article: Source

Solar energy facts

Posted on 30 September 2009 by VRS  |  Email |Print

From BBC: It is said that enough solar energy falls on the earth every second to provide all the world’s energy needs for a year - the problem has been how to harness it.

Solar photovoltaic (PV) panels convert sunlight directly into electricity that can be used in the home, but the panels are expensive to install…………………Full Article: Source

Senate may seek greater U.S. carbon cuts than house

Posted on 30 September 2009 by VRS  |  Email |Print

From Bloomberg: A Senate measure to slow global warming calls on U.S. power plants, factories and refineries to reduce greenhouse-gas emissions by 20 percent through 2020, a deeper cut than approved by the House, according to a draft.

The target is part of legislation prepared by the Senate Environment and Public Works Committee staff for release tomorrow, said a person familiar with the process who asked not to be identified before then…………………Full Article: Source

Carbon trading may dwarf that of crude oil

Posted on 30 September 2009 by VRS  |  Email |Print

From If carbon cap-and-trade becomes a reality, get ready for a potential multi-trillion dollar commodities market that could sprout up quickly, but not without growing pains.
“I’m estimating carbon markets could be worth $2 trillion in transaction value – money changing hands – within five years of trading (starting),” says Bart Chilton, a Commodity Futures Trading Commission (CFTC) commissioner, who’s also chairman of its energy and environmental markets advisory committee…………………Full Article: Source

European Union to change carbon trading program

Posted on 30 September 2009 by VRS  |  Email |Print

From European Union to change carbon trading program. The EU has the only functioning international carbon trading program in the world. The Kyoto Protocol called for treaty implementation once countries totaling 55% of the world’s carbon emissions ratified the treaty.
Russia, a large carbon emitter, joined the pact nearly 10 years ago after Bush made it clear the U.S. would not join. When Russia joined the treaty took effect…………………Full Article: Source

Is Europe’s carbon trading all smoke?

Posted on 30 September 2009 by VRS  |  Email |Print

From Europe’s market in so-called carbon credits is designed to cut CO2 emissions using the profit motive.
But some climate campaigners have dismissed it as a giant scam…………………Full Article: Source

ETF Securities boosted by gold bugs

Posted on 30 September 2009 by VRS  |  Email |Print

From ETF Securities has seen its assets rise to an all-time high of $15bn (£9.4bn), driven by demand for physically-backed precious metals ETCs such as gold and palladium.
Demand for physically-backed gold ETCs has seen AUM rise by over $1.1bn over the past six weeks, and the firm’s total gold holdings have now reached 8.4m ounces, up 39% since the beginning of the year…………………Full Article: Source

Commodity ETF for a regulation-happy world

Posted on 30 September 2009 by VRS  |  Email |Print

From When they were introduced several years ago, exchange-traded commodity products were hailed as a major breakthrough, offering average investors easy, cost efficient exposure to an asset class that had previously been accessible primarily through futures markets and physical storage of natural resources, both of which are beyond the reach of many investors.
Exchange-traded commodity products are now the subject of intense scrutiny from a number of parties, with regulators cracking down on funds that have grown so significantly that they now represent a significant portion of all outstanding futures contracts on certain commodities…………………Full Article: Source

ADB wants ‘Asian’ currency

Posted on 30 September 2009 by VRS  |  Email |Print

From The president of the Asian Development Bank (ADB) called on Wednesday for an ‘Asia-common’ currency as another international reserve currency, as part of the region’s joint effort to prevent another global financial crisis.

‘Asia could make the third international currency or Asia-common currency in the near future,’ ADB President Haruhiko Kuroda said at an international seminar on global crisis response…………………Full Article: Source

More currencies likely on DGCX futures list

Posted on 30 September 2009 by VRS  |  Email |Print

From The Dubai Gold and Commodities Exchange (DGCX), the first exchange in the region to trade futures in commodities, is planning to add three more foreign currencies to the list of currency futures currently being traded on the exchange.

According to brokers enlisted on DGCX, which currently runs futures trading in euro-dollar, yen-dollar, GBP-dollar and Indian rupee-dollar, the exchange management has finalised plans to seek the regulator’s approval for the new move to add currencies such as Australian dollar, Canadian dollar and Swiss franc to the list…………………Full Article: Source

ADAG chalks out plan to grow exchange business

Posted on 30 September 2009 by VRS  |  Email |Print

From Gears up to launch stock, commodity futures in three years. The Anil Dhirubai Ambani Group (ADAG) has started work on entering the stock and commodity exchange business.
While it has made a quiet entry into the space through a soft launch of steel trading on the Reliance Spot Exchange, a business plan is being prepared for the launch of a stock exchange, according to Rajnikant Patel, president and chief executive of Reliance Exchange Next, a wholly-owned subsidiary of Reliance Capital for its exchange business…………………Full Article: Source

CQG adds price capturing and risk tools to futures trading platform

Posted on 30 September 2009 by VRS  |  Email |Print

From CQG said Tuesday it has added real-time price capture, error detection and risk management features to its trading platform, by working with algorithm supplier Progress Software.

This is the second result of a partnership first disclosed in November. That gave the CQG futures trading platform the ability to automate trading activity and employ custom algorithms provided by Progress Apama. CQG gives futures traders routing, graphics and technical analysis tools…………………Full Article: Source

Back to basics: Of derivatives and their benefits

Posted on 30 September 2009 by VRS  |  Email |Print

From Generally, financial markets around the world are volatile in nature and hence always mean risk for the players involved!

To reduce this risk, the derivatives were introduced. For the uninitiated, a derivative is a financial contract the value of which is “derived” from a long-standing security such as a stock or a bond, or even an asset, or a market index…………………Full Article: Source

Commodities traders expect big bonuses as hiring heats up

Posted on 30 September 2009 by VRS  |  Email |Print

From After a period of relative inaction, hiring in the UK commodities sector is picking up once again.
It might not be quite at the astronomical levels in Asia, but banks are still trying to lock in top talent in an attempt to stop them jumping ship for competitors with ambitious growth plans………………….Full Article: Source

Commodities attract more foreign investors in GCC

Posted on 30 September 2009 by VRS  |  Email |Print

From Offshore investors, particularly those from the GCC with interest in commodities, are increasingly making Dubai as their destination for investments.
Brokerage firms registered with the Dubai Multi Commodities Centre (DMCC) affirm that investors abroad, especially the ones in the region, are beginning to account for as much as 40 to 60 per cent of their business…………………Full Article: Source

Sugar poised to extend rally, Newedge says

Posted on 30 September 2009 by VRS  |  Email |Print

From Bloomberg: Sugar is poised to extend a rally to the highest price since 1981, according to technical analysis by Veronique Lashinski, a senior research analyst at Newedge USA LLC in Chicago.

Raw-sugar futures for March delivery jumped 4 percent to 24.1 cents a pound yesterday on ICE Futures U.S. in New York, the biggest gain for the contract since Aug. 28…………………Full Article: Source

Sugar prices climb to 28-year high in New York

Posted on 30 September 2009 by VRS  |  Email |Print

From Sugar prices rose, extending a rally to the highest price since 1981, as investors increased buying in anticipation of a second straight global production deficit.

Sugar has more than doubled this year as adverse weather limits cane harvests in Brazil and India, the world’s largest producers…………………Full Article: Source

Commodities ETF sidesteps the hassles

Posted on 29 September 2009 by VRS  |  Email |Print

From Investment firm Jefferies just released the Thomson-Reuters Jefferies Commodity Equity Index Fund, an exchange traded fund that, curiously, doesn’t own commodities or commodities futures.
The ETF owns shares of companies that produce commodities, such as miners and oil firms. The fund avoids the hassles of both futures position limits, which have been a concern for the United States Natural Gas Fund, and the physical ownership of metals………………..Full Article: Source

Hard-asset ETF boom

Posted on 29 September 2009 by VRS  |  Email |Print

From Commodities ETFs are all the rage, and investors can get their hands on hard assets with a variety of broad, specific strategies. Hard-asset ETFs are a good way to diversify your portfolio and protect against inflation and broader market turmoil.

As the ETF industry grows, it is increasingly important to select the right fund for your investment needs. Before snatching up shares of hard-asset funds, it is important to build awareness of the products available today and the outlook for the future………………..Full Article: Source

Commodity stocks now in Index funds

Posted on 29 September 2009 by VRS  |  Email |Print

From ALPS Funds has launched Thomson Reuters/Jeffries CRB Global Commodity Index Fund, with underlying index of 145 commodity related stocks.

Monsanto, Exxon Mobil and Potash are some of the companies under the fund. CRBQ is ALPS’ third ETF with annual expense ratio of the fund at 0.65%………………..Full Article: Source

The three C’s of commodity ETF returns

Posted on 29 September 2009 by VRS  |  Email |Print

From First, a little stage setting. The backyard complaints were made about exchange-traded funds, not notes. ETFs and ETNs, while similar in many ways, are plainly different vehicles for obtaining index exposure. Apple and oranges there, so we’ll look only at ETFs in this analysis.

By the grill, we discussed four broad-based commodity index ETFs:……………….Full Article: Source

ETFs challenge mutual funds’ supremacy

Posted on 29 September 2009 by VRS  |  Email |Print

From WSJ: Exchange-traded funds pose a growing threat to the entrenched supremacy of mutual funds as more investors are drawn to these low-cost, passively managed vehicles, analysts say.

ETFs will continue to challenge the dominance of mutual funds, “the undisputed heavyweight of investment products,” said Cary Stier, leader of Deloitte & Touche’s U.S. asset-management services, in a recent report………………..Full Article (Subscription Required): Source

Credit Suisse may expand ETF products by adding commodities

Posted on 29 September 2009 by VRS  |  Email |Print

From Bloomberg: Credit Suisse Group AG, Switzerland’s second-largest bank, may expand its exchange- traded funds to include commodities such as precious metals.

Assets in the bank’s existing 24 Zurich-listed ETFs for bonds and global equity indexes totaled about 7.8 billion Swiss francs ($7.6 billion) as of Sept. 24, said Thomas Merz, head of marketing and distribution at the bank’s asset management unit………………..Full Article: Source

Platinum ETF holdings at record high of 521,140 ounces

Posted on 29 September 2009 by VRS  |  Email |Print

From Platinum fixed in London on 14th September 2009 at $1,309/oz, the first time it had risen above $1,300/oz since 8th September 2008. Two years ago, on 14th September 2007, it was trading at almost precisely the same level, at $1,294/oz.

Of course the price has not stayed still - between those three dates it surged to over $2,000/oz and then collapsed down to $763/oz - but the continuity is quite remarkable, given how different the fundamental demand outlook appeared from the vantage points of September 2007, September 2008 and September 2009………………..Full Article: Source

The gold rush fuelled by fear

Posted on 29 September 2009 by VRS  |  Email |Print

From In recent weeks gold fever has returned, with the price breaking through the $1,000 an per ounce barrier - and the driving force appears to be fear.

Evy Hambro, who runs the £1.7bn BlackRock Gold & General investment fund, which invests in gold mining shares, says: ‘First it was fear of recession and now it is fear of inflation and worries over the weakness of the US dollar………………..Full Article: Source

Gold is a happening commodity

Posted on 29 September 2009 by VRS  |  Email |Print

From Gold is soon set to become the next global asset bubble now that pivotal global economic events are finally converging to propel its ascent into record territory. The yellow metal is suddenly a happening choice.

There are several recent indicators - Yuokon Gold has acquired a majority stake in Bellhaven’s Gold project, Goldplat has taken over control of Kilimapesa Gold project and even a South African firm is eyeing mining investment………………..Full Article: Source

Indian traders prefer to keep gold in Dubai

Posted on 29 September 2009 by VRS  |  Email |Print

From Indian gold traders trying to escape a doubling of import duty in India are driving the business of Dubai based vaults, CEOs of Dubai Multi Commodity Centre (DMCC) registered brokerage companies say.
Indians traders who earlier imported gold from Dubai, converted it into various forms of jewellery and exported to destinations in East Asia, South East Asia, Europe and North America are now directly exporting it from Dubai, they added………………..Full Article: Source

Gold should stay in the driving seat despite G20 spin

Posted on 29 September 2009 by VRS  |  Email |Print

From Dollar strength and a boost in profit taking saw gold close below $1,000 this past weekend after a couple of weeks where it has spent most of the time above the magic figure. But, has anything really changed?
In essence one suspects that, given the amount of time spent above the level, $1000 may no longer be seen as the psychological barrier it had proved to be, but just another point on a continuing upward path in the gold price………………..Full Article: Source

Gold little changed, hovers around $990

Posted on 29 September 2009 by VRS  |  Email |Print

From Reuters: Gold was mostly flat on Tuesday trading around $990 as traders continued to look to the currency market for direction, although investors were somewhat cautious, saying bullion may be due for a small correction.

The precious metal rose toward $1,000 on Monday, but gave up some gains after the dollar accelerated its advance versus the euro, causing commodities to become less attractive for non-U.S. investors………………..Full Article: Source

A few facts about silver and gold

Posted on 29 September 2009 by VRS  |  Email |Print

From Silver is less than 1/4 of its 1980 cost (nominal prices, not inflation adjusted). Is there anything else on the planet you can think of that is currently 1/4 of its 1980 price? Oh, and do they have the following attributes?

Silver is an industrial metal and a monetary metal. 5,000 years of sound history as a measure of value and store of wealth, portable, fungible, divisible and unique………………..Full Article: Source

The No. 1 way to profit when silver upstages gold

Posted on 29 September 2009 by VRS  |  Email |Print

From While prices of gold don’t necessarily affect silver prices or vice versa, history has demonstrated that when gold rises or falls, silver usually follows suit.

This time around, silver has failed to match the gains that gold posted in recent months, spawning a widespread believe that silver is poised for a bull run. Such factors as a decline in supply and a weakening U.S. dollar have buttressed that bullish belief………………..Full Article: Source

September 2009
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