TORONTO, July 26, 2012 /CNW/ - Scotiabank's Commodity Price Index dropped by a sharp 3.7 per cent month over month (m/m) in June, the seventh consecutive monthly decline. The All Items Index fell 19.0 per cent below the near-term high in April 2011 - just prior to the advent of international concern over excessive Euro Zone sovereign debt - though the correction remains less than half the 46 per cent slide in the second half of 2008.
"A sharp loss of business confidence worldwide - linked to Euro Zone financial strains and slowing world growth - led investors to shift from riskier assets such as commodities and equities into the security and liquidity of U.S. Treasury securities," said Patricia Mohr, Vice-President, Economics and Commodity Market Specialist, at Scotiabank. "Oil prices - which often trade on global growth expectations rather than industry developments - were particularly dampened by poor confidence."
Concern over a slowdown in China - with Gross Domestic Product (GDP) decelerating to 7.6 per cent in the second quarter of 2012 from 8.1 per cent in the first quarter and 9.3 per cent in 2011 - also took a toll - particularly on industrial metal prices.
However, the decline in Scotiabank's Commodity Price Index in June may represent a near-term bottom, with commodity prices rallying back in July. Several positive proposals at the June 28-29, 2012 European Union Summit to shore up Euro Zone financial markets temporarily lifted sentiment for riskier assets, though uncertainty remains. China has also recently shifted to a more aggressive pro-growth monetary and fiscal policy.
The Agricultural Index edged up by 0.3 per cent m/m in June and promises to strengthen further in July. U.S. corn (a feed grain and sweetener) and soybean prices (an oil seed) soared to all-time record highs in mid-July amid the driest and hottest weather conditions in the U.S. Midwest since the '80s, when U.S. President Ronald Reagan was in office. These developments will have major implications for international food prices later this year, with the U.S. by far the world's top exporter of corn (normally accounting for more than 50 per cent and, even this year, 40 per cent of world trade).
"Record U.S. soybean prices have pushed up canola at the Port of Vancouver to a record high - Cdn$671 per tonne to date in July," said Ms. Mohr. "With relatively favourable growing conditions on the Canadian Prairies this year, canola will likely emerge as a $10 billion crop alongside record output and prices in 2012-13. Though dry conditions will constrain Southern Ontario's corn and soybean crops, Canada's overall grain and oilseed revenue could also be a record this autumn."
The Scotiabank Oil and Gas Index retreated sharply in June (-9.0 per cent m/m). While the discount on both light, sweet (-US$3.72) and Western Canadian Select (WCS) heavy crude oil (-US$16.03) relative to West Texas Intermediate (WTI).oil narrowed in June, actual prices fell to US$78 per barrel and US$66 respectively, as international oil prices lost ground.
However, Brent and WTI oil prices have rallied back to US$104 and US$89 respectively in mid-July, with geopolitical tensions ratcheting up in the Middle East. The European Union imposed a full embargo on Iranian oil imports on July 1, 2012 and the United States implemented sanctions on June 28, 2012.
Debate is stepping up on a new energy policy for Canada. On the proposed Northern Gateway Pipeline, the B.C. provincial government has set out five prerequisites for support of heavy oil pipeline development across B.C. and tanker traffic on the coast. Western Canada's oil output is expected to grow by about one million barrels per day (mb/d) from 2.7 mb/d in 2011 to 3.6-3.8 mb/d by 2015 (from oil sands production as well as tight oil and conventional light and heavy oil).
"In my view, developing adequate transportation infrastructure, in a timely way, to tap the fast growing markets of Asia is vital for Canada's oil patch and the Canadian economy," said Ms. Mohr.
Metals and Minerals also dropped by 1.2 per cent m/m in June, with broad-based declines in base metals, iron ore, steel additives (cobalt and molybdenum) and uranium - only partly offset by an edging up in gold prices.
On a more positive note, tightness in the global market for premium-grade hard coking coal will boost contract prices for Western Canada to a lucrative US$225 per tonne (FOB Vancouver) in the July-to-September quarter - up seven per cent from US$211 in the quarter just ended. World steel production has only edged up this year (+0.8 per cent), pointing to limited growth in underlying coking coal demand. However, force majeure by the Billiton Mitsubishi Alliance (BMA) mines in Queensland from April to mid-July has substantially tightened supplies.
Gold prices, at US$1,601 per ounce in late July, have held up well, but have failed to advance this year. Traders are awaiting further 'quantitative easing' by the U.S. Federal Reserve or the European Central Bank (ECB).
The Forest Products Index was largely flat in June, though lumber and Oriented Strand Board (OSB) prices remain well above year-ago levels. A significant strengthening in lumber prices is expected in 2013, as a slowly improving U.S. housing market hits a wall of limited North American supply.
Scotiabank Economics provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.
WASHINGTON - President Barack Obama's nominee for commerce secretary was questioned briefly about her ties to a subprime mortgage lender that failed in 2001 and her role as a beneficiary of family offshore trusts in the Bahamas, but those were minor bumps in an otherwise smooth Senate confirmation hearing Thursday.
Chicago billionaire business executive and philanthropist Penny Pritzker is a longtime Obama friend who raised hundreds of thousands of dollars for both of his presidential campaigns.
NEW YORK, N.Y. - Sears Holdings Corp. reported a steeper-than-expected loss for its first quarter with the beleaguered retailer blaming a cooler spring for falling sales.
The operator of Sears and Kmart stores also said it's considering strategic options for its service-agreement business, such as selling it off, to raise cash. Service agreements are when customers pay an extra fee when buying an appliance and the company agrees to fix or replace it if it breaks within a certain time.
TORONTO - Toronto and U.S. stock markets racked up losses Thursday amid a contraction in Chinese manufacturing that drove Tokyo's Nikkei index down to levels not seen in more than two years.
The S&P/TSX composite index fell 94.14 points to 12,658.09, while the Canadian dollar rose 0.73 of a cent to 97.14 cents US.
OAKLAND, Calif. - Internet radio company Pandora Media Inc. reported higher-than-expected revenue in the latest quarter, with losses in line with analysts' forecasts, as the number of subscribers who pay for ad-free listening more than doubled to exceed 2.5 million.
The company predicted that it may break even in the current quarter after adjusting for one-time costs. Its stock jumped in after-hours trading.
MONTREAL - Genivar has unveiled a strategic plan to more than double its size even as the big consulting engineering firm acknowledged that ethical lapses have undermined employee morale.
"Unfortunately, we can't change the past but we can learn and come out of it stronger," CEO Pierre Shoiry told shareholders Thursday at the company's annual meeting.
CALGARY - A TransCanada executive says the experience with the Keystone XL pipeline project has made the company more cautious about future cross-border endeavours.
Alex Pourbaix (por-BAY') says he knew it would be a challenge when TransCanada embarked on the Keystone project.
WASHINGTON - House members writing a bipartisan immigration bill said Thursday they had patched over a dispute that threatened their efforts, even as they and the rest of Congress prepared to return home for a weeklong recess where many could confront voters' questions on the issue.
The eight lawmakers in the House immigration group have struggled for months to come to agreement on a sweeping bill that would have a chance in the GOP-controlled House while satisfying Democrats' objectives.
WASHINGTON - Dismissing a veto threat from President Barack Obama, lawmakers in the House passed legislation that links student loan rates to the ups and downs of the financial markets in a vote largely along party lines.
The Republican-backed bill would allow students to dodge a scheduled rate hike for students with new subsidized Stafford loans next month, but rates could rise in coming years. Democrats largely opposed the measure — which they branded the "Making College More Expensive Act" — while the Republican chairman of the Education Committee labeled the legislation a starting point for negotiations with the Senate and White House.
Struggling wireless carrier Mobilicity has taken the first step in the process of being acquired by Telus in a $380-million deal that will ultimately need federal government approval.
Debtholders of Mobilicity approved a plan on Thursday to sell the company to Telus Corp., which will go to court for approval of the deal early next week.
TORONTO - The Canadian dollar closed at 97.14 cents U-S, up 73-100ths from Wednesday's close.
The S-and-P/T-S-X composite index lost 94.41 points to 12,658.09.
WASHINGTON - A Canada-U.S. trade war is apparently looming as Ottawa threatens "retaliatory measures" against the United States in a continuing dispute over meat labelling.
The U.S. government announced new regulations Thursday on "country-of-origin labelling" (COOL) that would track beef and hogs from livestock right through the meat processing and distribution systems.
SAN FRANCISCO - Few have explored the remote volcanic islands of the Galapagos archipelago, an otherworldly landscape inhabited by the world's largest tortoises and other fantastical creatures that inspired Charles Darwin's theory of evolution.
Soon it will take only the click of a mouse or finger swipe on a tablet to explore some of the Galapagos Islands' most remote areas, surrounding waters and unique creatures.
NEW YORK, N.Y. - After years of struggling, Gap is back in style.
Gap Inc., which owns the Gap, Old Navy and Banana Republic clothing chains, reported on Thursday a 43 per cent increase in its fiscal first-quarter net income, as the company continues to reap benefits from the turnaround plan that it began early last year. The company, based in San Francisco, also reiterated its full-year earnings outlook.
DENVER - Hobby Lobby Stores Inc. is challenging the part of the federal health care law that requires for-profit companies to offer employees health coverage that includes products the business owners find morally objectionable, such as certain types of contraception.
Few large American employers have weighed in on this because it's a nonissue for them. A survey by the Kaiser Family Foundation found 85 per cent already offered such coverage before the Obama administration mandated it as part of its health care overhaul last year.
NEW BRUNSWICK, N.J. - Johnson & Johnson is developing what could eventually be game-changing treatments for depression and pain, and it's aiming to apply for approval of more than 10 new medicines by 2017, executives said Thursday during a review of the health care giant's medicine business.
The depression drug, a chemical cousin of the powerful anesthetic ketamine, appears to bring relief from crippling depression in just a day — rather than the four to eight weeks needed for existing pills, which don't work for many patients.
NEW YORK, N.Y. - Some of the country's largest retailers, including Target Corp. and Macy's Inc., on Thursday filed a lawsuit against MasterCard and Visa, rejecting a settlement reached last year over alleged fee-fixing.
A larger group of 19 trade associations and retail companies originally filed suit against the card processing companies in 2005, claiming that they conspired to fix the fees they charge stores for handling payments made with credit cards.
CHICAGO - An 87-year-old grandmother took on billionaire Donald Trump. And on Thursday — she lost.
Jurors sided with the real estate mogul-turned-TV showman in a weeklong civil trial focused on Jacqueline Goldberg's claim that Trump cheated her in a condo bait-and-switch scheme.
PARIS - International Monetary Fund chief Christine Lagarde faced hours of questioning at a special Paris court Thursday over her role in the 400 million euro ($520 million) pay-off to a controversial businessman when she was France's finance minister.
The court hearing threatens to sully the reputations of both Lagarde and France. The payment was made to well-connected entrepreneur Bernard Tapie as part of a private arbitration process to settle a dispute with state-owned bank Credit Lyonnais over the botched sale of Adidas in the 1990s. It is seen by many in France as an example of the cozy relationship between big money and big power in France.
NEW YORK, N.Y. - McDonald's once again faced criticism that it's a purveyor of junk food that markets to children at its annual shareholder meeting Thursday.
The world's biggest hamburger chain has been looking to keep up with changing tastes as people increasingly opt for foods they feel are fresh or healthy. Customers can now order egg whites in its breakfast sandwiches, for example. McDonald's also recently introduced chicken wraps to go after people in their 20s and 30s looking for better-for-you options.
Leonard Marsh, the co-founder of the Snapple beverage brand, has died at age 80.
The Dr. Pepper Snapple Group Inc. of Plano, Texas, which now owns Snapple, on Thursday confirmed Marsh's death. He died Tuesday at his home in Manhasset, N.Y., The New York Times reported.
TORONTO - Maybe offering straight cash for a blood donation is a no-no, but research suggests that other incentives like free T-shirts and gift cards can boost donor rates without compromising the safety of the blood supply.
Writing Thursday in the journal Science, an international team of economists says Canada and other countries that prohibit monetary incentives to blood donors may want to rethink that position, based on recent research.
MONTREAL - A witness at Quebec's corruption inquiry has described how his car was once blown up when he ran afoul of an asphalt cartel.
Gilles Theberge was a director at Sintra, a construction company that was one of four partners in a cartel that controlled the supply of asphalt around Montreal.
CALGARY - A TransCanada executive says the experience with the Keystone XL pipeline project has made the company more cautious about future cross-border endeavours.
Alex Pourbaix (por-BAY') says he knew it would be a challenge when TransCanada embarked on the Keystone project.
OTTAWA - Importers of popular electronics such as big-screen TVs and MP3 players are ramping up their fight against federal tariff changes, accusing the government of misleading them by offering tariff breaks that it planned to claw back later.
Importers of televisions are already on the hook for about $16 million in retroactive duties from 2011 after last year's crackdown on a particular tariff exemption that has become a political football.
WASHINGTON - A Canada-U.S. trade war is apparently looming as Ottawa threatens "retaliatory measures" against the United States in a continuing dispute over meat labelling.
The U.S. government announced new regulations Thursday on "country-of-origin labelling" (COOL) that would track beef and hogs from livestock right through the meat processing and distribution systems.
TORONTO - The chief of staff to embattled Mayor Rob Ford was escorted by security from city hall premises Thursday amid swirling allegations the mayor had been caught on videotape smoking crack cocaine.
Mark Towhey, one of Ford's closest advisers whose background is in crisis management, refused to explain his sudden departure after more than a year in the position.
BRIDGEWATER, N.S. - The mother of a teenage boy who was kidnapped and sexually assaulted for days says she was overwhelmed to see her son's abuser in court, admitting she wanted him to suffer after hearing him plead guilty to the charges.
With her hands shaking and emotion straining her voice, the woman said outside court that her 16-year-old son is trying to put behind him the days of captivity and abuse inflicted on him last September in a home in rural Nova Scotia.
TROIS-RIVIERES, Que. - A woman is recovering following a bizarre accident in which she was run over three times by her own car.
Trois-Rivieres, Que., police say the newspaper delivery woman was making her rounds this week and jumping in and out of her car frequently to drop copies of Le Nouvelliste on subscribers' doorsteps.
MONTREAL - A huge boil-water advisory, affecting 1.3 million people in Montreal, will be maintained until at least later Thursday evening.
City officials say the advisory will be in effect until after 9:30 p.m., to allow for the completion of tests. An update will be issued later.
OTTAWA - The Senate has turned over documents to the Mounties to help their investigation into improper expense claims.
Senate Speaker Noel Kinsella says the RCMP's sensitive and international investigations unit is examining the claims of senators Mike Duffy, Mac Harb and Patrick Brazeau.
Note to readers: CORRECTS name of RCMP unit
CALI, Colombia - Canada's many forays into free-trade talks across the globe are not the ineffective scatter-gun approach described by critics, but an effort to set up "gateways" to the world's biggest trading blocs, says International Trade Minister Ed Fast.
"There's a lot of misunderstanding of what we're doing," Fast said in an interview in a cool and quiet corridor at the lush country club where he and Prime Minister Stephen Harper are observing Latin American economic integration talks.
TORONTO - A man charged in an alleged plot to attack a Via Rail passenger train says he wants to be represented by a lawyer who agrees the Qu'ran should be used as a "reference" in his case.
Chiheb Esseghaier appeared in a Toronto court by video link from jail Thursday morning and said he has made an application for representation by legal aid, but is seeking a lawyer who can co-operate with his need to use the Muslim religious text in his defence.
Note to readers: This is a corrected story. An earlier version indicated the allegations specified a plot involving a bomb, but police have not provided such specific details of the alleged plot.
SASKATOON - The Health Council of Canada says the federal government isn't doing enough to keep pace with changing health-care needs in the country.
The council released its 2013 progress report on health-care renewal in Saskatoon on Thursday.
NELSON, B.C. - We will find out later today what the Regional District of Central Kootenay plans for the landslide-devastated community of Johnsons Landing, on the shores of Kootenay Lake, in southeast B.C.
A final report will be released at 3 p.m., examining the causes of the landslide and any continuing danger in the region.
CALGARY - A Calgary agency named after a one-time NHL player who brought to light the sex crimes of former junior hockey coach Graham James has officially opened.
The Sheldon Kennedy Child Advocacy Centre offers all kinds of support services to young abuse victims to save them from having to deal with several different agencies.
MONTREAL - Three people have been arrested and charged in an ongoing RCMP investigation into a multimillion-dollar corruption scheme at the Canada Revenue Agency.
The charges are being laid against a chartered accountant and two former employees at the federal agency's Montreal office.
HAMILTON - A second suspect in the death of Tim Bosma, a Hamilton father who took two men on a test drive and never returned, appeared briefly in court Thursday and was charged with first-degree murder.
Mark Smich, 25, of Oakville, Ont., was led in shackles into a Hamilton courtroom Thursday morning and turned his back to the public gallery for the duration of his appearance.
Note to readers: This is a corrected story. An earlier version had an incorrect date for one of Smich's previous convictions.
OTTAWA - A Japanese-based forestry company has won a long-running tax battle with Ottawa over how reforestation obligations should be handled when harvest rights are sold.
The Supreme Court of Canada ruled 9-0 on Thursday that passing on future liabilities for land reclamation cannot be considered taxable at the time of the sale.
OTTAWA - The Supreme Court of Canada won't hear an appeal from a former lieutenant-governor of Quebec who claimed royal immunity from criminal charges.
Lise Thibault, who held the provincial vice-regal post between 1997 and 2007, is charged with fraud and breach of trust in relation to hundreds of thousands of dollars in expense claims.
TORONTO - Toronto police say no charges will be laid in the case of a woman whose purse was taken after she jumped to her death at a subway station.
Police say they interviewed the suspect they had been seeking and it became clear she was dealing with mental health issues. She had been seen on security video.
DENVER - The Colorado Avalanche name Patrick Roy head coach and vice-president of hockey operations.
More to come.
MONTREAL - Having Alessandro Nesta back on the field this week was a welcome sight for the Montreal Impact.
The former Italian international defender has battled a nagging adductor injury since the third game of the Major League Soccer season, but looks ready to play again.
SASKATOON - Saskatoon Blades defenceman Dalton Thrower has played his last game at the MasterCard Memorial Cup.
The Canadian Hockey League has suspended Thrower for the rest of the tournament for his check to the head on Portland Winterhawks forward Taylor Leier.
Note to readers: This is a corrected story. A previous version had an incorrect date.
POLSA, Italy - Vincenzo Nibali won the individual mountain time trial in the 18th stage of the Giro d'Italia on Thursday to extend his overall lead.
The Italian finished in 44 minutes, 29 seconds on the 20.6-kilometre (12.8-mile) uphill route from Mori to Polsa in northern Italy for his first stage victory in this year's race. Samuel Sanchez was 58 seconds behind, while Damiano Caruso was third, 1:20 behind Nibali.
PARIS - Used to be the French Open was the scene for clay-court specialists and surprise champions.
Scan the list of past winners and runners-up. There's Gaston Gaudio and Albert Costa, Guillermo Coria and Martin Verkerk, Andres Gomez and Mariano Puerta. Not so much a "Who's Who." More like a "Who's He?"
TORONTO - Toronto FC midfielder Jonathan Osorio has earned his first call-up to the Canadian national team.
The 20-year-old from Toronto is one of 18 players summoned by interim coach Colin Miller for a May 28 friendly against Costa Rica at Edmonton's Commonwealth Stadium.
TORONTO - Toronto FC is hurting ahead of Saturday's away game with the New England Revolution.
Manager Ryan Nelsen says the injured list includes Justin Braun, Danny Califf, Bobby Convey, Richard Eckersley, Stefan Frei and Darel Russell.
LONDON - Wrestling's governing body has "reacted well" and made the necessary changes to give the sport a chance of saving its place in the Olympics, IOC President Jacques Rogge said.
In an interview with The Associated Press, Rogge said FILA has tackled the issues that led the IOC executive board in February to remove wrestling from the list of core sports for the 2020 Games.
CALGARY - Star Canadian running back Jon Cornish wants to work on his pass routes this season but his coach will be smiling if he just continues doing what he did last year.
Cornish helped get the Calgary Stampeders to the Grey Cup, although both he and the team stumbled in the championship game. The Stampeders dropped a 35-22 decision to the Argonauts in Toronto.
GENEVA - An independent panel will examine allegations that cycling's governing body was complicit in Lance Armstrong's doping, UCI President Pat McQuaid said Thursday.
Senior UCI and World Anti-Doping Agency officials will meet in Russia next week to discuss potential appointments to a three-member expert panel, McQuaid told The Associated Press.
VIRGINIA WATER, England - The head of the European golf tour apologized for using the term "colored" during a live television interview Thursday in which he was reacting to the spat between Tiger Woods and Sergio Garcia.
European Tour CEO George O'Grady said that "most of Sergio's friends are colored athletes in the United States."
MONACO, Monaco - Finishing fastest in both of Thursday's practice sessions for the Monaco Grand Prix isn't enough to get Nico Rosberg too excited. He knows Mercedes has yet to prove it can last the pace on race day.
The German driver clocked a time of 1 minute, 14.759 seconds to finish .318 in front of teammate Lewis Hamilton and .437 ahead of Ferrari driver Fernando Alonso in the second session. The times were generally faster than in the first session.
BUDAPEST, Hungary - Hungarian prosecutors have indicted a Singaporean businessman known as Dan Tan and 44 Hungarians suspected of being involved in an international match-fixing conspiracy.
Chief Prosecutor Imre Keresztes said in a statement Thursday that 32 local and international matches are thought to have been manipulated by the suspects, including former and current players, referees, team owners, an agent and a coach.
JOHANNESBURG - Oscar Pistorius and Caster Semenya were left off a list of athletes to be given funding ahead of the 2016 Rio Games because neither is currently training or competing, the South African Olympic Committee said Thursday.
Pistorius, a double-amputee runner who competed at the London Games, was not on the high performance list for the next Olympics and Paralympics after his decision to stay away from competition for the rest of the year to focus on defending himself against a murder charge for the shooting death of his girlfriend in February.
SASKATOON - Dale Hunter watched from the sidelines as his London Knights fell just short in last season's MasterCard Memorial Cup final.
Having just finished an up-and-down stint behind an NHL bench with the Washington Capitals, Hunter sat in the stands in Shawinigan, Que., as the host Cataractes defeated London 2-1 in a memorable Canadian Hockey League championship game.
MANCHESTER, England - Rio Ferdinand has signed a new one-year contract with Manchester United that will take him into a 12th season at Old Trafford.
The 34-year-old defender retired from international football last week to concentrate on his club career.
MIAMI - LeBron James caught the inbounds pass, changed direction and immediately attacked the rim.
There was no one in his way.
SASKATOON - After watching his bloodied linemate helped from the ice, Chase De Leo did all he could to make one of his best friends feel a little better — help the Portland Winterhawks make the semifinal at the MasterCard Memorial Cup.
De Leo gave Portland the lead for good in the third and the Winterhawks scored three times in the period to defeat the Saskatoon Blades 4-2 in the tournament's final round-robin game.
OTTAWA - Paul MacLean’s few words spoke volumes about what he thought of his team’s performance in their 7-3 loss to the Pittsburgh Penguins in Game 4 Wednesday night.
In a most uncharacteristic move, the Ottawa Senators coach didn’t take a single question in his post-game scrum. Instead, he held up the score sheet and said: “I think everything’s right here. It’s 7-3. See you in Pittsburgh. We’re going to Pittsburgh and we’re coming to play. Have a good night.”