Friday, August 22, 2008

Warren Buffett Cools off Speculators in Canadian Oil Sands Companies

With the lid being blown off the recent, secretive trip of Warren Buffett and Bill Gates to the Canadian Oil Sands, where they toured the Canadian Natural's C$9.3 billion ($8.9 billion) Horizon oil sands mining and synthetic crude processing operation, Warren Buffett made an appearance on CNBC's Squawk Box to make it clear he and Gates were only touring the facilities on a fact-finding mission, and weren't going to invest in the "Sands" at this time.

Oil Sands-related stocks on the Toronto Exchange surged on the news that Buffett and Gates had toured the area, with speculators bidding up a number of the oil stocks.

When Buffett made the announcement, the oil stocks plunged back to normal rates.

Thursday, August 21, 2008

Commodity News around the Network - Thursday, August 21, 2008

More Reasons to Free us from the Ethanol Devil

Aquiline Announces XPS Metallurgical Results Confirming High Silver Recoveries at Navidad's Loma De La Plata Zone

CBOT Corn Futures Surpass $6 First Time in Almost Three Weeks

Weaker U.S. Dollar, Increasing Global Tensions Drive Oil Up

Physical Demand for Gold Increases Ahead of Indian Religious Festivals

U.S. Dollar Falls Against Most Major Currencies on Geo-political Concerns and Rising Oil Prices

Wheat Climbs to Eight-week High On Weak Dollar, Surge in Crude Oil

Jim Rogers Says Commodities Should Come Back Strongly

Commodity expert Jim Rogers said in an interview today that he sees commodities continuing on their long-term upswing, in spite of the recent fall in prices, eyeing it as a temporary downturn.

"I don't see that it's the end of the bull market,'' the chairman of Rogers Holdings, said in an interview in Bangkok. ``Until either a lot of supply comes on stream or the economy collapses, the bull market will continue."

Rogers added that he's looking at base metals again as a possible commodity strategy, saying, "I haven't bought any for awhile."

According to Rogers, the only thing he sees interfering with the long-term bull market in commodities is if the supply increases in a big way, or the economy collapses. If neither happens, he's positive the bull market will continue on.

Rogers is especially bullish on agricultural commodities, and separately in the Chinese economy; specifically in power generation sectors, infrastructure, education and tourism.

Wednesday, August 20, 2008

Misguided U.S. Ethanol Subsidy Continues to Cause Food Prices to Soar

The corn-based ethanol subsidy in the U.S. continues to cause pain to consumers around the world as food prices will continue to rise for the foreseeable future, as chicken, beef and pork prices are projected to increase significantly.

U.S. lawmakers keep acting like nothing has gone wrong with the usual unintended consequences accompanying such ignorant initiatives.

Monday, August 11, 2008

Commodity News Around the Network

Arian Silver's Exploration Update-San Jose: Phase-1 Drill Results Summary; Phase-2 Drilling Progresses

High Desert Gold Plans to Drill the Bluebird Copper-Silver Property

Happy Corn Subsidy Pacific Ethanol: Company Gets Clobbered with High Corn Prices

Oil Drops Below $115 a Barrel

More Reasons to Drop the Ethanol Nonsense

Gold Plunges Below $820 an Ounce

ECB Launching U.S. dollar Liquidity-providing Operation

Wheat Growers Facing Tough Cost-Control Challenges in 2009

Is the Commodity Party Really Over?

Now that the long-awaited correction in commodities has arrived, the pundits are announcing the end of the bull commodity market, and traders are putting their money elsewhere.

A factor some are considering is the slowing worldwide economy, which many are attributing to the correction, asserting demand for commodities are dropping.

If demand were truly dropping, those making these assertions would be correct, but I don't think that's what's happening. Traders and investors know that commodities have been on an extraordinary run, and they pulled their money out to take advantage of that run, before or during the current correction.

The question to me is simply how long the correction will last, not if the bull commodity market is over. There's no way demand over the long haul will dissipate any time soon. We probably have close to a dozen years left before there's a true end to the bull commodity run, which is historically cyclical.

There's no doubt the strengthening of the U.S. dollar has had a significant impact on the commodity pullback as well, as the greenback has rebounded significantly recently, although it's questionable to how long that will last.

So with no real change in supply and demand in the foreseeable future, the oil supply remaining steady, and agricultural products in many cases at historical low levels, this has to be looked at as a temporary blip in the continuing commodity bull market.

Tuesday, August 5, 2008

Platinum, Crude Oil, Corn Drag Commodities Lower

Demand continues to be a big drag upon commodities, as slowing economic growth continues to hammer raw materials and agricultural products in a number of areas.

We talked about platinum and palladium last post, which is being directly impacted from the declining auto industry.

But cooler and wetter weather has also increased the outlook for corn, which has been plummeting since corn reached a record price of $7.30 a barrel on the CBOT Friday the 13th of 2008. Corn fell today to a four-month low of $5.3625 a bushel, a 3.5 percent drop.

With the World Bank predicting global growth for crude oil dropping from the 2007 levels of 3.7 percent to 2.7 percent this year, prices have been dropping, going as low as $188 a barrel.

Other commodities plunging have been rubber, which is now at a two-month low; palm oil; nickel, which fell to a two-year low ($17,450 a metric ton); and zinc, which is at its lowest since December 2005 ($1,730 a ton); and soybeans, which fell 3.4 percent to $12.51 a bushel.

Commodity-tracking indexes show investors took out $680 million out of commodities last week, a record sixth week in a row.

"I'm not saying the long-term upward trend for commodities is going to come down," Mark Mobius, who oversees about $40 billion in emerging-market equities at Templeton Asset Management Ltd. in Singapore, said in an interview. "But you're going to see this overreaction, or the higher prices that we've seen recently that are beyond the trend, come back down again."

Friday, August 1, 2008

Platinum, Palladium Fall on Auto Demand Concerns

Platinum fell by almost 7 percent today, and palladium followed the same pattern, falling by 6 percent, as high fuel prices continue to hamper demand in the auto sector.

Spot platinum fell to $1,644.50/1,664.50 an ounce at 1507 GMT from $1,749.50/1,769.50. Spot palladium fell to $363.50/371.50 an ounce from $379.50/387.50 on Thursday. It dropped to a seven-month low during the day to $356.00.

"Everybody expects car demand to be very low and the higher oil price will dampen it further," said Commerzbank analyst Eugen Weinberg.

It didn't help to hear the news in the industry that all the major auto companies plunged in sales during July. Nissan (NSANY) was able to grow by 8.5 percent, but that was because the $10,000 incentive included to buy its Titan pickup truck.

Manufacturing Contraction Hurting Commodities

Higher prices are causing consumers to hold back on spending, while slowing economic growth has ended with manufacturers ordering less industrial metals to make their products. The result is the worst monthly performance for commodities in 28 years in July.

The 10 percent plunge of the Reuters/Jefferies CRB Commodity Index of 19 commodities last month was the worst since March 1980, which was a recession year in the U.S. The index has fallen by 12 percent since July 2.

For the first time since it started being measured in 2005, China manufacturing has contracted, while the U.K. experienced its worst contraction in a decade during July. China is the largest consumer of industrial metals in the world.

Since the record attained on July 11 for crude oil, coming in at $147.27 a barrel, the commodity has fallen to $122.10 today in New York trading. That's attributed to higher prices slowing down demand.

"The growing prospect of demand destruction in the U.S., and potentially other parts of the world, combined with technical indicators that suggest it's time to sell, is keeping prices under pressure," said Christopher Bellew, senior broker at Bache Commodities Ltd. in London.

Leading a drop in metals prices were copper and aluminum, while in agricultural commodities corn, soybeans and rice all fell on the CBOT.