Commodities Correspondent
Pratima's Feed
Dec 15, 2009
via Commodity Corner

Why are commodities risky assets for investors?


Recently I received an email asking me to explain why commodities are risky assets. ”I would think energy and raw
materials would still be in demand, even if Dubai defaults,” the writer said.

 It’s a good point. People need to eat, drink, drive and live. They can’t do it without commodities.

Dec 10, 2009

Investors cast wary eye over commodities

LONDON, Dec 10 (Reuters) – Gold came under selling pressure
on Thursday as the dollar held firm, while fears of another bout
of financial turbulence and economic uncertainty also prompted a
retreat from oil and copper.

Industrial metal copper fell to two-week lows of $6,810 a
tonne, gold slipped to $1,121.30 a troy ounce — near this
week’s low of $1,116.80. Crude oil slid to $70.44 a barrel,
near two-month lows hit on Wednesday.

Nov 27, 2009

Gold falls but off 1-week lows on Dubai fears

NEW YORK/LONDON (Reuters) – Gold fell in choppy trade on Friday but finished well above session lows as a dollar rally fizzled and investors bet that the metal’s unique safe-haven appeal would stay intact in the wake of Dubai debt default fears.

Renewed credit fears initially forced investors to heavily sell gold and raise cash to cover losses in equities as well as oil and other commodities.

Nov 18, 2009

Copper ends off 14-mth top after weak housing data

NEW YORK/LONDON, Nov 18 (Reuters) – Copper backed away from a
14-month peak by the close on Wednesday, as the market paused to
catch its breath from recent gains and early momentum faded as
inventories rose, while weak U.S. housing data fanned economic
recovery concerns. Copper for December delivery <HGZ9> on the New York Mercantile Exchange's COMEX division ended up 0.20 cent at $3.1105 a lb, away from a session peak at $3.1720, its highest level since late September 2008. On the London Metal Exchange (LME), benchmark copper <MCU3> touched $6,992 a tonne, another high dating back to September 2008, and more than double the levels seen in January. The metal used in power and construction settled up $25 at $6,880 a tonne. "It's very hard to make a fundamental argument for copper," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey. "Warehouse inventories keep going up and the (housing) data today is certainly not encouraging here, but the funds keep pouring in ... there is just avaricious demand for commodities," he said, referring to data on Wednesday showing construction of new U.S. homes off sharply last month. Separately, the U.S. Labor Department said the Consumer Price Index rose 0.3 percent last month, a touch above market expectations. [ID:nN1899353] Prices of industrial metals have been rising since early April, when markets with the help of stronger economic data from around the world, including top consumer China, started to think the worst of the recession could be over. "Expectations of better times in 2010 is behind the strength in industrial metals," said Robin Bhar, analyst at Calyon. "There is a feeling that it will take time for more positive data to translate into final real demand." Furthermore, a weaker dollar, which makes commodities cheaper for holders of other currencies, has helped push up prices of base metals in recent months. [USD/] Chinese purchases of copper for stockpiling up until the middle of July meant stocks of the metal in LME warehouses fell. But since then stocks have risen by more than 60 percent to above 410,000 tonnes, the highest since late April. LOCAL SPECULATION LME stocks of aluminum at above 4.55 million tonnes are still within touching distance of the record high of 4.629 million tonnes seen in September. Aluminum <MAL3> closed at $2,065 a tonne from $2,036 on Tuesday. The metal used widely in transport and packaging hit $2,095 a tonne, its highest since Aug. 5, after it held above support at $2,040 a tonne and markets started to factor in seasonally higher options activity. Options give holders the right to buy or sell the three-month aluminum contracts. Stainless steel ingredient nickel <MNI3> hit $17,475 a tonne, the highest in more than a week. It closed at $17,200 a tonne from $16,900 at the close on Tuesday. Prices of nickel have come under pressure from stocks at 15-year highs above 132,000 tonnes. Expectations are for nickel stocks to move towards record highs above 150,000 tonnes set in November 1994. [ID:nLI531468] "There is local speculation in China that part of the country's privately held nickel stocks could be released to market, perhaps as much as 50,000 tonnes before year end," investment bank Fairfax said in a note. Battery material lead <MPB3> touched a one-month high at $2,447.75 and ended at $2,403 from $2,385 on Tuesday. Zinc <MZN3> closed at $2,248 a tonne from $2,263 on Tuesday and a three-week high at $2,313.75 set earlier on Wednesday. Zinc stocks jumped 15,650 tonnes to hit a four-year high at 449,375 tonnes. Warehouses in New Orleans was the destination for a large chunk of this stock, according to LME data. The news had little immediate impact on the metal used to galvanize steel, but traders are watching the trend. Tin hit <MSN3> $15,300, the highest since late October. It closed at $15,195 from $14,950 on Tuesday. Metal Prices at 1945 GMT Metal Last Change Pct Move End 2008 Ytd Pct move COMEX Cu 310.75 0.35 +0.11 139.50 122.76 LME Alum 2053.00 23.00 +1.13 1535.00 33.75 LME Cu 6857.50 2.50 +0.04 3060.00 124.10 LME Lead 2385.00 -5.00 -0.21 999.00 138.74 LME Nickel 17150.00 350.00 +2.08 11700.00 46.58 LME Tin 15050.00 300.00 +2.03 10700.00 40.65 LME Zinc 2255.00 -24.00 +1.05 1208.00 86.67 SHFE Alu 15515.00 130.00 +0.84 11540.00 34.45 SHFE Cu* 53940.00 740.00 +1.39 23840.00 126.26 SHFE Zin 17835.00 295.00 +1.68 10120.00 76.24 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Michael Taylor in London; editing by Marguerita Choy)

Nov 13, 2009
via Global Investing

When is a speculator not a speculator?


A lot of fuss is made about the dangers of speculators in commodity markets. But who is a speculator and who isn’t is based on a definition drawn up in the early part of the last century in the United States. The definition is no longer valid and anybody looking at those reports should be wary of drawing any firm conclusions.For a start the word “speculator” with negative connotations is applied to pension funds, which invest over the long term to provide retirement income for many people around the world. Hedge funds are normally speculators but if they have hold the physical commodity then they can say they are commercial hedgers. Taking this theme a little further many natural resource companies run their Treasuries as profit making centres, which encourages them to trade the commodities they produce.The London Metal Exchange has said it won’t go down the route the CFTC has and publish a weekly report detailing speculative long and short positions because there is no clear definition.The CFTC bowing to popular pressure has continued to provide these weekly reports detailing long and short speculative positions, which ultimately could be misleading and make scapegoats of all investors whatever their ilk.

Nov 13, 2009

Who is and isn’t a speculator in commodity markets?

LONDON (Reuters) – The distinction between speculative and commercial positions in commodity futures is often blurred and can be misleading.

That was the answer from fund managers to a question on whether the London Metal Exchange should, as the U.S. Commodity Futures Trading Commission does, issue a weekly Commitments of Traders (COT) report on futures holdings.

Nov 11, 2009
via Global Investing

Competition for rare earth metals


China’s dominant position in the arena of rare earth metals used in new technology such as batteries for hybrid cars and magnetic motors could be eroded by an Australian listed company – Greenland Mineral and Energy. The company is planning to list in London next year, pending the resolution of a couple of issues.Greenland Minerals and Energy thinks it probably has access to the world’s largest depositis of rare earth metals and uranium — used to make nuclear energy.Global consumption of rare earths last year is estimated at 135,000 tonnes or $1.5-$2.0 billion in 2008. Demand is forecast to grow by 65 percent by 2012 from 2008 levels.

Nov 6, 2009

Prospect of central bank buying buoys gold

LONDON (Reuters) – Gold rose on Friday, boosted by the prospect of central banks buying the precious metal to diversify their reserves and as the market waited for key economic data from the United State.

Spot gold was bid at $1,094.55 a troy ounce at 5:31 a.m. EST from $1,089.55 late in New York on Thursday. The precious metal earlier this week hit a record high of $1,097.25 an ounce, a gain of more than 25 percent this year.