Sunday, June 21, 2009

Silver Prices Going Up - Miners Respond

Silver prices going up

With numerous elements coming together at the right time, silver prices have been going up, and over the long term that should continue.

Those high silver prices have some Colorado miners hoping to rekindle the state's silver trade.

Several miners are working around the Poor Man silver mine in Idaho Springs. Silver prices are up, with futures in silver going up 27 percent just last month. Silver is now trading at about $15.60 an ounce.

The silver boom is caused by economic uncertainty and the fact that silver is used in solar panels. Some miners who lead tours of old Colorado gold mines say they're also poking around abandoned silver mines looking for new veins of silver.

The Denver Post reported Saturday that several people have filed applications with Colorado to explore or reactivate silver mines.

One of them is Al Mosch. His day job is leading gold-mine tours of the Phoenix Mine in Idaho Springs, but on his time off he pokes around the old silver site.

"I did some serious work in here in the 1980s when silver was at $12," Mosch said. "It crashed to $4 and stayed that way for many years. I just shut it down then."

His son, David, a former Colorado School of Mines professor, prospected a multimillion-dollar gold claim that put him in People magazine in 1975 at age 14. Al Mosch still has a claim in the silver mine, and David Mosch is working on new technology to extract silver.

"If he's successful," Al Mosch told the newspaper, "we could reopen a lot of these old claims."

The United States is the eighth-largest silver producer in the world. Most silver produced is used for industrial applications such as battery-making, or photography, or jewelry crafting, with alternative-energy uses on the rise.

Another silver prospector, Tom Treadwell, is working to clear some 30 tons of mud and debris left in Poor Man's main shaft. He said the enjoys looking for a new vein of silver to revive the state's silver mining industry.

Silver prices going up

Ethanol Will Raise Food Prices, Harm Environment


As usual, the U.S. government is turning a blind eye to the truth and facts, and continues down the disastrous path of subsidizing ethanol, which will continue to cause huge problems in the near and distant future.

The U.S. government's plan to increase its ethanol mandate will mean higher food prices and more harm to the environment, according to an impact study conducted for two groups that oppose the increase.

"We continue to believe the government's excessive support of the mature corn-based ethanol industry is simply wrong, since it means burning food for fuel," spokesman Gary Mickelson of Tyson Foods Inc. of Springdale said in a statement after Bill Lapp, an agricultural analyst, released his study.

"This policy has contributed to higher corn prices, which have led to increased input costs for food makers — including independent livestock producers — and higher food prices for consumers," Mickelson said.

Corn is a major expense to poultry and beef producers, who want to reduce costs. Ethanol is a fuel additive distilled from plants. That distilling is a major market for corn that corn growers want to increase.

The federal government has a mandate that 10 percent of the fuel coming out of commercial gasoline pumps must be ethanol blended into the gasoline. The Environmental Protection Agency is considering a rule to increase that mandate to 15 percent. The government also maintains a tariff of 54 cents a gallon on imported ethanol.

A recent study from the Food and Agriculture Policy Research Institute at the University of Missouri determined approval of 15-percent ethanol blends would increase corn prices by just $0.04 per bushel, ethanol advocates said in response to Lapp's study.

Increasing the ethanol mandate to 15 percent would require planting as much as 111 million acres of corn, according to Lapp's study. Ethanol would use almost half of the corn crop harvested by 2015. The Grocery Manufacturers Association commissioned the study. The U.S. corn acreage in 2008 was about 85 million acres, U.S. Department of Agriculture figures show.

"Corn and soybean meal are major production costs in the poultry industry, representing 47% of the cost of growing a chicken in 2008," Mickelson said. "Tyson's annual corn and soybean meal expenditures almost doubled from fiscal 2006 to fiscal 2008 and ethanol was a significant reason for the increase."

These arguments have been heard before, the pro-ethanol Renewable Fuels Association replied.

"Time and again, American farmers have answered the need for food, feed and renewable fuel," said association President Bob Dinneen in a statement. "Yet, time and again well-heeled groups seeking to derail the expansion of ethanol are trying to pull the wool over our eyes.

"Many will recall last summer's effort to finger ethanol as skyrocketing oil prices, a weak dollar, speculation, droughts, and global demand drove grain and food prices higher," Dinneen's statement said. "At the time, the U.S. Department of Agriculture, Texas A&M University , and scores of other reputable analysts found such claims to be biased, overblown and outrageous. Even the Congressional Budget Office has looked at the issue and found that energy prices had 3 times the impact on the rising price of food than was the increased use of ethanol. Despite being thoroughly refuted last summer and lacking credibility on the issue, these groups are back at it again."

The ethanol industry is struggling even at its current 10 percent mandate. The fall in fuel prices from last year's record highs has severely hurt ethanol interests, industry figures show.

Ethanol's chief use in the United States is for a fuel additive. Ethanol in gasoline reduces carbon emissions and the price of gasoline, advocates say. However, ethanol plants are hard-pressed to make a profit when fuel prices are as low as they are now, according to industry figures -- even though gasoline prices remain higher than $2.50 a gallon at the pump.

At least 10 ethanol companies have sought Chapter 11 bankruptcy protection in the past year, Bloomberg Business News reports. Valero Energy Corp., the nation's largest independent oil refiner, became an ethanol plant owner in April by buying up seven Midwestern ethanol plants for pennies on the dollar compared to the original investment, Associated Press reports.

"You are going to see this become a trend ... especially with the government wanting to go green," Daniel Flynn, an analyst who follows the renewable fuels industry for Chicago-based Alaron Trading, told Associated Press about the Valero buy. "There are a lot of these ethanol plants hanging by a hair. This could be the perfect time for the big companies to step in."

The U.S. Energy Department reported last week that gasoline supplies climbed 3.39 million barrels to 205 million in the week ended June 12, the largest increase since Jan. 16, Bloomberg reported.

"If you're not eating that much hamburger, you're not using as much Hamburger Helper," Peyton Feltus, president of Randolph Risk Management in Dallas, told Bloomberg. "Until demand shows a sustainable increase, we can't hold these prices up" for ethanol, he said.

Ethanol advocates received another setback earlier this month when a U.S. House panel allowed the federal Environmental Protection Agency to take a wider look at the commodity's environmental impact.

The House Appropriations Committee defeated, 29-30, an amendment to bar the Environmental Protection Agency from using so-called indirect land-use change when measuring greenhouse gases from biofuels, Reuters news service reported.

The United States is the world's major supplier of corn. Critics of ethanol claim that the environment is damaged as other nations have to put more land into farming to produce food as more U.S. corn goes to ethanol. The legislation would allow the EPA to study the question and determine if this increase in farm acreage worldwide offsets or at least mitigates ethanol's environmental benefit.

"There is a huge negative effect here," said Rep. Jo Ann Emerson, R-Missouri, who said an unfair EPA rule "could stop U.S. ethanol production in its tracks."

Scale of Consumption

Corn can produce about 200 gallons of ethanol per acre. If all the corn acreage in the United States were converted to fuel production with corn ethanol, the nation could produce 10 billion gallons of ethanol, the equivalent of about 8 billion gallons of gasoline per year, or about half a million barrels per day. The U.S. consumed about 20 million barrels of crude per day in 2007.


Friday, June 5, 2009

Gold News | Kinbaruri Gold Investment Deal with Glen Eagle Cancelled

Gold News

The proposed investment deal between Kinbauri Gold Corp and Gold Eagle Resources has been halted, as Kinbauri Gold said they didn't feel comfortable with the funding arrangements by Glen Eagle, and believed there wasn't enough funding available to make the deal happen.

Glen Eagle had in April offered to invest C$32 million in Kinbauri for a 45 percent stake in Kinbauri Espana unit -- which holds interests in the El Valle/Carles gold and copper project in northwestern Spain.

Separately, Glen Eagle said it believes that Kinbauri's termination is a breach of their deal and is considering its options.

Kinbauri, which is also the target of a takeover bid from Toronto-based Orvana Minerals Corp (ORV.TO), said it has decided to allow the matter to be determined in a court at the same time as the application brought by its shareholder Jaguar Financial Corp, scheduled to be heard on June 17.

Last month, Jaguar Financial, which owns 9 percent of Kinbauri, had approached the court, after Kinbauri rejected Orvana's offer of 55 Canadian cents a share as its deal with Glen Eagle was on the verge of completion.

In a statement on Friday, Kinbauri said a special committee continues to evaluate the takeover bid from Orvana Minerals, consider other alternatives and will make a recommendation to the board in the near future.

Gold News

Ethanol News | House for E-trading Agriculture and Ethanol Extended by CME

Ethanol News

CME Group Inc announced on Friday it would expand electronic trading of agricultural contracts by 75 minutes, effective July 1, in a move aimed at further boosting business on that platform.

"It allows customers based in Europe more time to trade during trading hours that are most convenient for them," said CME Group spokesperson Mary Haffenberg.

CME said it would extend electronic trading on July 1 by one hour and 15 minutes to 7:15 a.m. CDT (1215 GMT). Electronic trading currently begins at 6 p.m. (2300 GMT) and ends at 6 a.m. (1100 GMT).

The longer hours will be for contracts including corn, wheat, soybeans and ethanol.

"They're trying to capture more business. There are markets open that time of the day and they are meeting the competition," a trader said.

A number of traders said it was another step by the CME, the world's largest derivatives exchange, to eventually offer electronic trading 24 hours a day.

"The exchange thinks it will expand volume, and it might, but I don't think by a lot. But it's another step in their quest toward 24-hour trading," another trader said.

A CME trading floor source said the reason the CME will stop trading at 7:15 a.m. is because of the monthly release of sensitive U.S. Department of Agriculture crop information at 7:30 a.m. CDT.

Ethanol News

Wheat | Durum Wheat Prices Rising Slower than Spring Wheat

Wheat Prices

Durum wheat hasn't followed the trend of its spring wheat counterpart, as it lages behind the higher prices spring wheat have brought so far this year.

Though some local cash durum prices have risen slightly they have not risen at the same level as spring wheat.

“Unfortunately durum hasn't enjoyed the same price increases as hard red spring wheat,” Olson said. “In fact, durum cash prices around the state are less than hard red spring wheat prices in some cases.”

Local cash bids for durum are anywhere from $6.75 to $7.25, which is just slightly higher than a couple weeks ago.

One of the major reasons spring wheat prices have appreciated so much recently is because planting is so far behind the usual pace. And although durum planting is also behind the normal pace, it is not as far behind as spring wheat.

In North Dakota, 69 percent of the durum crop has been planted compared to an average of 77 percent - just eight percentage points behind. Spring wheat in North Dakota, on the other hand, is 79 percent complete versus an average of 95 percent - a difference of 16 percent.

In one week, durum planting progress jumped by over 40 percent due to the good planting conditions the week of May 18-24.

In Montana, about 70 percent of the durum crop has been planted. That compares to an 84 percent average.

Olson pointed out that emergence for durum is also behind due to cooler than normal conditions this spring, but the recent warmer temperatures should help promote emergence and crop development.

The U.S. desert southwest durum crop is getting ripe and harvest is expected to begin soon.

“Right now about half the crop is mature,” Olson said. “There doesn't appear to be any major issues with that crop and we're expecting to see both good quality and good yields.”

To the north, Canadian producers are also experiencing a late planting season, but they have other concerns as well.

“In Canada there's actually some concerns that it's getting too dry in some of the major durum producing regions, so that obviously could impact planted acres and production,” Olson said.

In Europe, the only production concern is that wet weather and poor crop conditions have cut the estimate for durum production in italy from 147 million bushels to 127 million. North Africa has seen “near perfect growing conditions” so their production will be well above last year's levels, according to Olson.

U.S. durum exports lately haven't been overly supportive for prices either.

Wheat Prices

Thursday, June 4, 2009

Wheat News | Wheat Inventories in India to Remain Huge


Wheat inventories in India are likely to remain large given the expectation of another bumper crop this year and limited export opportunities, said the Food and Agriculture Organization (FAO) of the United Nation in its latest report.

Inventory in India, another major producer and stockholder, is forecast to remain unchanged at a five-year high of 17.8 million tonnes. But another bumper year for wheat in 2010 may increase the inventory further, said the report. The forecast assumes significance as the country has not opened wheat for exports despite excessive supplies in the domestic market.

Since, the United Progressive Alliance government has been formed without any alliance pressure and most importantly, the inflation remains under control, trade sources estimate the government may allow wheat exports in near future primarily because of global trade deficit.

FAO’s first forecast for wheat trade in 2009-10 stands at 114 million tonnes, down as much as 8 per cent, or 10 million tonnes from the estimated 2008-09 record volume.

Wheat export was suspended in May 2007 to control inflation that shot up over 13 per cent. The government also suspended futures trading in wheat due to the fear of price rise on traders’ speculation.

Meanwhile, FAO has estimated India’s wheat production to decline marginally by one per cent to 77.6 million tonnes in 2009 on favourable climatic condition throughout the season.

The specialised agency of the United Nations, which leads international efforts to defeat hunger, has forecast global wheat output to decline by 4 per cent to 655.8 million tonnes in 2009 compared with 684.6 million tonnes in the previous year.

The agency estimates total course grains’ output to remain rangebound at 37.8 million tonnes this calendar year compared with 38 million tonnes in the last year.

But, the global coarse grains production is likely to decline by 4 per cent at 1,098.5 million tonnes this year compared with 1,142.3 million tonnes in the previous year.

The 2008 paddy season has just been completed with the harvesting of secondary crops in Asia. Boosted by excellent results of these crops, global paddy production is now estimated at 689 million tonnes, equivalent to 460 million tonnes of milled rice, well above earlier expectations and 4.3 per cent more than in 2007.

But the sector’s attention is now turning to the 2009 season, which is already well advanced in all but the critically important south-eastern Asian region, where farmers are awaiting the imminent arrival of the monsoon rains to plant their crops.

Preliminary information on plantings and crop development over the 2009 season has been favourable. As a result and assuming a normal rainfall pattern in Asia in the coming months, world production in 2009 could gain a further 1 per cent and reach 696 million tonnes (465 million tonnes, milled equivalent), FAO said.

The relatively moderate increase expected in 2009 reflects less attractive prospects for producer returns. However, in spite of financial constraints, many governments have maintained their support to the sector through input subsidies, investment programmes and direct price incentives, which, barring any major setback, is likely to sustain production growth.

Trade sources estimate India’s rice output to remain rangebound at 147 million tons in 2009 provided monsoon arrives in time and distributed evenly.


Corn News | Corn Production and Ending Stocks Projections Lowered by Analysts

Corn News

Ahead of the soon to be released USDA supply and demand report, McHenry, Illinois based analysts Allendale Inc. expect the Ag Department to lower its production and new crop ending stocks estimates for corn.

Allendale sees 2009/10 corn stocks at 1.015 billion bushels and production at 11.935 billion bushels because of delayed planting. Allendale also sees the USDA cutting the average yield estimate by 2 bushels per acre. In May, the USDA put corn production at 12.090 billion bushels and new crop stocks at 1.145 billion bushels. Allendale pegs old crop corn ending stocks at 1.610 billion bushels, up 10 million from May.

Allendale expects USDA to leave the soybean production guess unchanged from May at 3.195 billion bushels, but sees old crop stocks at 99 million bushels due to strong demand; the USDA's May 2008/09 ending stocks estimate was 130 million bushels. Also, Allendale sees 2009/10 soybean stocks at 243 million bushels, compared to 230 million in May's update.

2009 U.S. wheat production is projected at 1.993 billion bushels, compared to May's estimate of 2.026 billion. Winter wheat is placed at 1.492 billion bushels, with hard red at 864 million, soft red at 417 million and white winter at 211 million. In May, the USDA had wheat production at a total of 2.026 billion bushels, with the winter crop at 1.502 billion, hard red at 871 million, soft red at 422 million and white at 208 million.

The USDA will also be issuing updated world supply and demand figures. The reports are due out Wednesday, June 10 at 7:30 AM Central.

Corn News

Silver News | ETF Securities Has Record 20 Million Ounces of Silver to Back Up ETF Commodity

Silver News

ETF Securities said on Thursday the amount of metal it holds to back its silver exchange-traded commodity rose to a record 20.064 million ounces on June 3, while its palladium holdings also hit an all-time high.

ETFS Physical Silver (PHAG.L) has added 2.3 million ounces or 12.7 percent to its holdings in the last month, according to data released by the company.

Holdings of its ETFS Physical Palladium product meanwhile rose 13,677 ounces on Wednesday, lifting them 4.7 percent to a record 304,635 ounces.

Exchange-traded funds, which issue securities backed by physical stocks of a particular metal, have represented a major source of demand for precious metals in recent years.

Silver News

Ethanol News | EPA Report Says Ethanol Harder on Climate than Gasoline - Politicians Throw Fit

Ethanol News

There is so much proof that the ethanol debacle needs to end, that even the report by the EPA that ethanol is worse on the environment than gasoline hasn't stopped politicians trying to get taxpayer dollars into their states from thowing a tantrum.

We’ve entered another ugly battle in the ethanol wars. The EPA released an analysis last month purporting that corn-based ethanol is actually worse for the climate than gasoline on a lifecycle basis, and the California Air Resources Board (CARB) released a ruling that will effectively exclude corn-based ethanol from California’s Renewable Fuels Standard for that reason.

The ethanol industry and its supporters are livid (who cares). House Agriculture Chairman Collin Peterson (D-MN), a longtime ethanol supporter, threw a fit during a recent hearing and now is threatening to block climate legislation over the new rules. "I don't care,” he exclaimed during a hearing over EPA’s draft rule, “Even if you fix this. I don't trust anybody anymore -- I’ve had it." Ethanol opponents are cheering the agencies' decisions and urging them to look at ethanol under worst-case scenarios.

What is sad about this spat is that while everyone is arguing over whether ethanol is bad, no one is talking about how to make it better. The worst impacts of ethanol occur far from Iowa or Washington in the forests that are burned down to respond to added demand for cropland.

Deforestation results in almost 20 percent of global greenhouse gas emissions, and it will not be solved through tired finger pointing. This problem is hard but solvable if we focus on the systemic drivers of slash-and-burn agriculture.

A quick primer on the latest wrinkle from the EPA and CARB: Both reached damning conclusions about the impact of ethanol based on complex economic modeling, but the basic logic behind their analysis is simple:

• Using farmland for ethanol diverts land from being used for food production, driving up price and demand
• Higher prices and demand encourage farmers in the developing world to plant more crops
• Developing world farmers clear and burn forests so they can plant more crops
• Clearing forest for cropland releases a tremendous amount of greenhouse gas
• Thus, devoting cropland to ethanol production leads to increases in greenhouse gas emissions

The ethanol industry and its supporters don’t dispute this logic, but claim two problems with the agencies’ approach: (1) The science behind this economic modeling is too new and imprecise, and (2) biofuels are being held to a much tougher standard than other climate solutions. Their opponents hold that the science is sound, and that other low-carbon technologies simply don't have these massive "indirect land-use" problems.

Yet this debate is just so much fiddling while Rome (or maybe Indonesia) burns. The crux of the problem is not in how we measure the impact of ethanol, it is that developing world farmers clear and burn forests so they can plant more crops. Ethanol is just one of the pressures that speed the disastrous destruction of these forests. The rest is just an accounting exercise.

Farmers in the developing world burn forests because it is the most economical, and often only, choice they have. They often can’t afford fertilizers, equipment or high-yield seeds. They have limited access to informational tools like education, soil tests and precision agriculture technology that would allow them to produce more crops in the same place. Without these resources, the only choice is to find new land.

Moreover, there is little or no barrier to slash-and-burn agriculture. Logging roads often give farmers access to virgin forests. Not enough forests are protected, and where they are, many governments lack the resources or the will to enforce conservation laws.

The solutions to these problems are not easy, but models exist. Technology transfer and economic development programs can increase crop yields and reduce the real costs of agricultural technology. A global agreement on REDD (reduced emissions from deforestation and degradation) could protect forests and provide payments from a global trust fund as an alternative to chopping trees down.

In order to reduce the lifecycle impact of ethanol, the industry needs to do more than cry foul on these regulations. It needs to be engaged in finding solutions to reduce the pressure to clear land for agriculture. A forward-thinking producer would be lobbying for global forest protection and working with partners in the agricultural industry to support technology transfer to the rural poor.

Meanwhile, ethanol's detractors need to admit that producers can't bear this burden alone, and that failing to compromise with such a politically powerful industry will lead only to delay and more poorly designed policies.

Here's a modest proposal: Congress lets the ethanol industry off the hook for its indirect upstream effects, and the industry agrees that some of its massive subsidies be diverted to programs that protect forests and give farmers options beyond burning them down. Putting more resources toward these programs will not only protect forests from the indirect effects of ethanol, but also the threats of logging, development or other future pressures on agricultural growth.

We will see many more of these fights in the coming years as industries, activists and policymakers argue over who has to bear the burden for indirect, unanticipated environmental and social damages. We need a systemic approach that tackles the problems on the ground, instead of shifting the blame around.

Noam Ross is a senior analyst at GreenOrder, an LRN Company. GreenOrder is a strategy and management consulting firm that has helped leading companies turn sustainability into business value since 2000.

Of course there aren't any climate problems in the first place, and to listen to Ross attempt to apply logic, confusion and reason to the made-up crisis, just shows how far many will go when decisions and conclusions take money out of their greedy pockets.

Ethanol News

Gold News | Gold Prices Rise As Investors Look to Increasing Demand

Gold News

Optimism about the economy showed through in the commodities markets recently as investors sent prices for gold, oil and grains higher on the belief that demand for basic materials will soon rebound. I think they're right, although no one can predict the timing of any market.

There is "a general feeling that maybe we're starting to stabilize here in terms of the economy," said Stephen Platt, an analyst with Archer Financial Services in Chicago. "There is some hope that the demand might come back."

Surprisingly positive data on the jobs market renewed hopes that the economy is recovering. The Labor Department said Thursday that the number of unemployed workers continuing to receive benefits unexpectedly dropped last week for the first time in 20 weeks. New jobless claims also declined, falling to 621,000 from 625,000, nearly matching analysts' estimates.

Unemployment has been one of the most closely watched gauges of the economy's health throughout the recession. Rising job losses affect vast areas of the economy, including consumer spending, retail sales and the housing market. The report came a day ahead of the government's crucial tally of monthly job losses.

A slightly weaker dollar also helped spur buying of commodities, particularly gold and oil. A weaker dollar makes both gold and oil attractive investments. By buying gold, investors insulate themselves from the risks of inflation, while oil becomes cheaper for foreign buyers when the dollar falls.

On Thursday, the dollar traded mostly lower against other major currencies as central banks in Europe made the decision to keep their benchmark interest rates at historically low levels, signaling a cautious stance on the economy.

Low interest rates are a tool governments often use to revitalize the economy by lowering borrowing costs, but they can also undermine a country's currency. The Federal Reserve also has kept its benchmark interest rate very low — near zero — as it works to boost the U.S. economy, which has put pressure on the dollar.

The dollar has declined steadily since early March as the outlook on the economy improves. This leads investors to look for more traditionally risky assets like stocks in which to park their money.

Gold for August delivery rose $16.70 to $982.30 an ounce on the New York Mercantile Exchange, erasing nearly all of the previous day's 2 percent loss.

Other metals also rose. July silver jumped 58.5 cents to $15.8950 an ounce, while July copper futures added 8.9 cents to $2.3010 a pound.

Gold News

Oil Business and News | American Energy Resources to Begin Drilling in New Oil Reserve

Oil Business and News

Declining consumer demand has taken a toll on many in the oil and gas industry.

Reports the oil refiner Valero Energy is expecting a second quarter loss because of the lackluster demand.

Earlier in the year when the price of oil settled near $35 per barrel many oil and gas services companies had to forgo new investments because of the low price and weak demand. Oil is now hovering near $68 a barrel with MarketWatch reporting a Goldman Sachs estimate that oil prices will hit $85 by year end.

But one Colorado-based oil and gas exploration company is moving forward with a new project.

American Energy Resources announced plans to drill from a newly discovered secondary oil reserve in Lane County, Kansas. The well is known as Doyle's Dome #7 and is expected to produce over 200 barrels a day and remain active for 25 years or longer.

"This is the second largest well American Energy Resources has ever drilled," said Don Allen, president and founder of American Energy Resources. "Our use of 3-D seismic mapping technology allows the company to hit 'sweet spots' with multiple pay zones."

Oil Business and News