Commodity News
Commodity News
Power & Energy Commodity News > US energy sector presses CFTC for swaps guidance
London, 2 September 2010
A group of U.S. energy companies is pressing the U.S. futures regulator for guidance on how they can apply for a temporary exemption from new rules that will regulate over-the counter derivatives trading.
Commodity Portfolio Management News > Cocoa points to risk, reward on commodities frontier
London, 2 September 2010
As investors focus on frontier commodity markets in the search for superior returns, the explosive rise and sudden collapse in cocoa prices this summer should serve as a warning about the problem of managing large positions in markets with limited liquidity.
Read more: Cocoa points to risk, reward on commodities frontier
Commodity News > SMX completes first trading, clearing & settlement cycle
Singapore, 2 September 2010
Singapore Mercantile Exchange ( SMX), the first pan-Asian multi-product commodity and currency derivatives exchange, successfully completed its first trading, clearing and settlement cycle.
Read more: SMX completes first trading, clearing & settlement cycle
Technology & Commodity News > The New Risk Management—Data Management?
London, 2 September 2010
These days, risk management is high on most trading firms' agendas. That is risk management in both the broadest and narrowest sense. Increased oversight, regulation and both the rapid evolution and increasing speed of markets is driving this need.
Metals & Mining Commodity News > Analysts predict fresh record for copper
Source: Financial Times, 2nd September 2010
The price of copper hit a four-month high on Thursday morning as continued optimism about Chinese demand buoyed the red metal amid tightening physical supplies.
Commodity Portfolio Management News > Meat price surge fuels fears of food inflation
Source: Financial Times, 1st September 2010
Global meat prices have hit a 20-year high as robust demand from emerging countries has coincided with a drop in production by exporters such as the US and Australia, fuelling concerns about rising food inflation.
Power & Energy Commodity News > Miners discount as steel output falls
Source: Financial Times, 1st September 2010
The price of steelmaking commodities iron ore and coking coal will drop next quarter by 12 per cent and 7 per cent respectively as reduced steel production prompts miners Vale, Rio Tinto and BHP Billiton to offer discounts.
Power & Energy Commodity News > Mining companies discount as steel output falls
Source: Financial Times, 1st September 2010
The price of steelmaking commodities iron ore and coking coal will drop next quarter by 12 per cent and 7 per cent respectively as reduced steel production prompts mining companies Vale, Rio Tinto and BHP Billiton to offer discounts.
Environmental Markets & Commodities > CERs: Proposed sanctions against DOEs could lead to bullish market
Oslo, 1 September 2010
The upcoming Clean Development Mechanism ( CDM) Executive Board (EB) meeting agenda contains a proposal which, if adopted, could have serious financial implications for designated operational entities (DOEs) and for the supply of Certified Emission Reductions (CERs). The proposal, to place liability for the issuance of excess CERs firmly in the hands of DOEs, could result in constrained supply and increased demand for CERs, providing a strong bullish signal for the market, according to analysis by Point Carbon (a Thomson Reuters company) and the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets.
It could also mean that the DOE responsible for the validation, verification, or certification report of excess CERs would be liable and could be obliged to replenish these excess CERs with other CERs, or other carbon commodities, at considerable cost.
“This draft procedure, proposing the correction of significant deficiencies and the excess issuance of CERs, would be a very tough provision indeed, if adopted, as it not only targets situations where the DOE has wilfully caused the issuance of excess CERs or has caused it through gross negligence, but also less serious examples of negligence. It also appears that the procedures would be retroactive in the sense that a DOE could be forced to replenish CERs the EB decides it has incorrectly issued in the past”, says Kjetil Røine, Manager at Point Carbon and author of the analysis, who added, however, that the onus would be on the EB to prove that the DOEs’ work has “significant deficiencies” rather than the other way round.
The consequences for DOEs and for supply could be substantial if the procedures are approved. For example, so far, about 218 million CERs have been issued to HFC-23 projects, currently the projects attracting most controversy and subjected to the longest delays as they are scrutinised by the EB. Should 10% (or about 22 million) of already issued HFC-23 CERs be deemed as inappropriately issued, it would cost the DOEs in question up to EUR 150 million to replace these CERs at current sCER prices. In comparison, the operating profit in 2009 for DNV, one of the largest DOEs, was just short of EUR 150 million. DOEs need to have proper insurance in order to be accredited to validate or verify CDM projects.
If the EB agrees the proposals then it would form part of its recommendations to the COP/MOP in Cancun leaving it up to the COP to make a decision. If, then, the investigation of possible “significant deficiencies” is initiated and sanctions are indeed imposed on DOEs, this would likely exacerbate delays in both validation and verification in general because DOEs would become even more careful in their assessments. Some might even withdraw from the business altogether, perceiving the risks as higher than the rewards.
If a quantity of HFC-23 CERs is deemed excess CERs and must be replaced by other CERs, there would be the double effect of increasing supply constraints and increasing demand, at the same time. “In sum, the draft procedures for how to deal with excess CERs signal a strong EB resolve on such problems, which could put several DOEs in very serious financial trouble if implemented and could lead to both increased demand for CERs and constrained supply”, concludes Røine.
Ends --
Source: Point Carbon
Power & Energy Commodity News > Wheat sends food prices up
Rome, 1 September 2010
FAO Food Price Index climbs five percent in August: Surging wheat prices drove international food prices up five percent last month in the biggest month-on-month increase since November 2009, FAO announced.
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