Thursday Commodities Roundup

Story #1) Crude Oil Rises on Speculation of More Cuts by OPEC Nations

Oct. 5 (Bloomberg) -- Crude oil rose from a seven-month low on speculation that the Organization of Petroleum Exporting Countries will collectively cut production.

OPEC will reduce supply by 1 million barrels a day, with Saudi Arabia, the group's largest exporter, cutting 300,000 barrels, Reuters reported. All OPEC nations except Iraq, which is exempt from group quotas, and Indonesia, will take part, the news agency reported.

Read the rest at… http://tinyurl.com/orahh

My take: – A cut of one million barrels a day would have an impact on the market, but the Kuwaitis are denying it, so who knows? Perhaps the trouble in Nigeria is troubling traders as well.ig

XX UPDATE: CNBC reports that Nigeria's oil minister says OPEC may hold an emergency meeting. Hot damn!

XX EXTRA UPDATE: The emergency meeting is on October 18. You mean Kuwait was lying to us? I guess they were still trying to dump their crude oil puts (LOL!).

Story #2) Gold nervously steady as funds shift to stocks

LONDON (Reuters) - Gold traded in a tight range above the previous day's 15-week low and platinum touched its lowest in nearly six months on Thursday, as investors were hesitant to make big moves because of general nervousness in the market.

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"Technicals look weak, but we are also seeing a lot of physical buying, especially after gold dipped below $600," the trader said. "The long-term trend still looks bullish."

Read the rest here: http://tinyurl.com/o63uw

My take: As I write this, gold is up $9.30, but that’s due to the rise in oil. Gold IS finding support at its June lows. But it is in a downtrend, and has work to do before it can break to the upside. Will that involve revisiting the March lows?

There is physical buying coming into the market. And it’s from India, which is the biggest gold market on the planet, so that’s bullish. However, I’ve heard from traders that there is also physical selling coming into the market. And that means one thing – that Central Banks are unloading again.

We all breathed a sigh of relief when Europe's central banks sold just 393 metric tonnes of gold against the full quota of 500 tonnes in the second year of an agreement that regulates bullion sales. That agreement ended late last month. But then a new agreement begins, and apparently some of the Central Banks are starting it by selling. We don’t know how much gold they’ll unload. It may already be over; it may go on for weeks. One thing we do know is that the pace of gold selling by Central Banks has decreased as time goes on -- The banks sold the full quota of 2,000 tonnes during five years of the first agreement, 497.2 tonnes in the first year of the current pact, and 393 tonnes the second year.

XX UPDATE: Hold the presses: Gold jewelry sales in China are soaring. Shenzhen, an economic zone in China's Guangdong province, sold $310 million U.S. dollars worth of jewellery to Hong Kong, up 7.7 percent and $25.27 million worth of jewellery to the US during the first eight months of this year, representing a 10.8 per cent increase on the same period in 2005.

My take: These sales could be a harbinger for how gold sales are going in China.

I’m thinking the gold correction has just about exhausted itself. One bullish sign is that hedge funds are already out. Where is the hot money now? Read on…

3) DJ CBOT Corn Review: Rallies Sharply On Wheat,Soy,Technicals

CHICAGO (Dow Jones)--Chicago Board of Trade corn futures settled sharply higher in active trading Wednesday, rallying late in the session as wheat exploded to the upside and soybean futures ended with strong gains, floor sources said.

Read the rest at… http://tinyurl.com/luqjv

My take: El Nino is hammering the Australian and Chinese wheat crops, so the US grain market is getting red hot. Funds are already piling in. Is this the next big trend, or just part of a larger commodity bull market? I think anyone who is writing oil and metal off at this point is potentially missing out on a major snap-back; one that is coming soon.

Check out my new gold and energy blog at MoneyAndMarkets.com