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No beating about the bush.
• Iron ore prices touched a four-month high in June following higher demand from China even though a final decision on long-term contract prices remained unresolved between Australian suppliers and Chinese buyers.
• The National Commodity & Derivatives Exchange (NCDEX) may divest a part of its equity in the NCDEX Spot Exchange (NSPOT), its wholly- owned subsidiary. NSPOT facilitates trade in sugar, pepper, chana, gold and silver and proposes to launch guar seed, bajra, safflower, sunflower seed and oil in the near future. The divestment is intended to raise funds to finance the mandi modernisation project (MMP) of NSPOT.
• The Forward Markets Commission has allowed commodity exchanges to permit traders to take fresh positions till the date of expiry in futures contracts of some internationally-linked commodities. The move is likely to help better price discovery as these contracts are closely linked to global benchmarks and inability to take fresh positions ahead of expiry often leads to brokers missing out on the hedging opportunity.
The Organisation of Petroleum Exporting Countries (OPEC) increased crude oil production by 300,000 barrels per day to 28.39 million barrels per day in May 2009. According to John Kingston, global director at Platts, a leading provider of energy information globally, “with the recent increases in crude oil prices, the drumbeat that we’re on our way back to $100-per-barrel-oil has been growing louder”. However, the surge in output shows that OPEC has a lot of productive capacity that it can bring on the market relatively quickly, and that should certainly prove a hurdle to any move back to three-digit oil prices, feels Kingston. Crude prices have been rising steadily since mid-February and have touched $72 a barrel. The International Energy Agency (IEA) has increased its estimate for oil demand by 120,000 barrels per day to 83.3 million barrels per day in May 2009. Another factor that has been helping crude prices is the increase in China’s industrial output. The Chinese industrial output grew 8.9% in May 2009 compared with the same period last year. Being one of the largest consumers of crude, a higher demand from that countru is likely to keep prices of the commodity on the higher side.
• A few days after the government allowed trading in wheat futures again, the Forward Markets Commission (FMC) has banned trading in sugar futures till December 31 fearing that it could create inflationary pressures on the commodity. The FMC blow comes even before a new government has come to power and taken charge. In fact, after the ban on wheat was lifted, the market was expecting that the ban on tur and urad too would be lifted.
• According to the International Energy Agency, an energy advisor to 28 industrialized countries, more than 50 major oil and gas projects have been deferred or cancelled because of the global economic crisis since October. The IEA estimated that spending on oil and gas exploration and production will total around $375 billion this year, down about $100 billion, or 21%, from a year ago.
• World crude steel production for the 66 countries reporting to the World Steel Association was 89 million metric tons (mmt) in April. This is 23.6% lower than in April 2008. Production for the first four months of 2009 was 354 mmt, a 22.7% decrease over the same period of 2008.