Treasury secretary Martin Parkinson concedes his department has struggled to keep pace with a ‘‘tumultuous’’ decade for the Australian economy. Addressing an economists’ lunch in Sydney, Dr Parkinson said the difficulty Treasury and other economic forecasters had had was predicting the path of global commodity prices, the exchange rate and capital gains.
‘‘While our forecasts for the real economy have held up reasonably well, the same can’t be said of our price forecasts,’’ he told Australian Business Economists. Dr Parkinson said Treasury’s forecasts for employment and wages had been relatively accurate, which meant that for income tax, the largest source of government revenue, they had changed little since last year’s budget……………………………..Full Article: Source

Even as stocks continue their mostly uninterrupted path to higher ground, fund managers are holding relatively big amounts of cash while worrying about China and a commodities crash.
The latest survey from Bank of America Merrill Lynch shows that the biggest fear is a hard landing for China’s slowing economy, and the effect it would have on the global commodity trade. Commodity allocations have fallen to a four-year low while cash allocations held steady at 4.3 percent, a surprise considering how much equities have rallied…………………………………….Full Article: Source

Commodity prices have been falling since September, culminating in a rout over the past two weeks. That is a classic warning for the global economy. It is becoming ever clearer that the roaring boom in global equities since last summer has priced in an economic recovery that does not in fact exist.
The International Monetary Fund has had to nurse down its global growth forecasts yet again. We are still stuck in an old-fashioned trade depression, with pervasive over-capacity in manufacturing plant and a record global savings rate of 25pc of GDP…………………………………Full Article: Source

The sharp drop in gold prices in the past few trading days has overshadowed some general weakness in the commodity sector and coupled with lower-than-expected U.S. inflation data, some market watchers are beginning to talk about the possibility of deflation.
Gold rebounded slightly on Tuesday and Wednesday from the sharp drop in prices on Friday and Monday, but still remains 17% off the high for the year and 28% from the all-time high, based on the June Comex contract’s settlement Tuesday of $1,387.40 an ounce. But other commodity markets are also weaker for the year, including crude oil, down 5%; copper, down 10%; and corn, down 8%, all based on Tuesday’s settlements for the most-active futures contracts…………………………………Full Article: Source

Although the U.S. stock market has generated a healthy glow this year, the commodity complex appears to be entering into a growling bear market. Just consider these stats: After a sharp drop on April 15, gold has plunged nearly 20% since the year began and nearly 30% since hitting an all-time high of around $1,900 per ounce in the autumn of 2011.
West Texas crude oil has slipped from $97 per barrel to $87 in just the past two weeks. Copper has slid roughly 12% this year and is off roughly 27% since the summer of 2011 peak. If aluminum breaches the 80 cents per pound mark (it’s currently at 82 cents), it will see its lowest levels since the summer of 2009…………………………………….Full Article: Source

Citi Research has called an end to the supercycle for commodities but that shouldn’t come as a surprise given that it warned of a supercycle “sunset” back in March of last year. In a report dated Friday, Citi said it expects 2013 to be year in which “the death bells ring for the commodity supercycle after its duly noted sunset.” A supercycle refers to decades-long price movements.
The commodities sector saw broad losses on Monday, with gold futures logging their biggest one-day drop since the 1980s on Monday, and oil futures finishing at their lowest settlement level of the year………………………………………..Full Article: Source

The price of gold, as well as other commodities, could have farther to fall, Joe Terranova of Virtus Investment Partners said. “The commodities meltdown, I think, is going to continue,” he said. “And I think to figure out exactly if this is a moment where you step in and in essence buy a falling knife, you have to look back toward the past.”
On CNBC’s “Fast Money,” Terranova pointed to a high in gold back in September 2011. “That’s exactly when we had that deficit debacle in Washington, D.C.,” he said. “Gold should’ve gone higher at that point. It did not.”……………………………………….Full Article: Source

We just saw a rather ugly spate of data from China, and the result has been a bit of a selloff in markets, from Asia to the U.S. Not all stocks have been held back. Netflix, for instance, just had its price target raised at Goldman Sachs and rallied 5% to start the week. But commodity stocks as a whole are taking a beating. And don’t expect the pain to end anytime soon.
You see, industrial demand from China remains the single-biggest driver of pricing for a host of materials and commodities. Base metals, from steel to copper to aluminum, and energy commodities like oil and coal and natural gas are all getting brutalized by the China slowdown………………………………………..Full Article: Source

The sell-off in commodities is getting serious in early trading on Monday. Word of Chinese GDP coming in at 7.7% against 8% expectations last night is being blamed, but today isn’t the start of the selling.
Brent crude is down 3%, but was already 15% lower that where it traded in February. Copper is near 18-month lows, aluminum is near 3-year lows and silver is down double-digits today alone………………………………………..Full Article: Source

That’s a headline that should get your attention if you invest in commodities (or if you work at a publicly traded company that has any exposure to the commodity markets). With increasing evidence of a slowing global economy and increased selling of gold by central banks, commodities are vulnerable. While evidence suggests that the ENTIRE commodity market is experiencing unusual price deterioration right now, I want to focus on a distinct commodity segment: Commodities from Hell.
Get it? Commodities from Hell, ones that can generally be found underground such as gold (GLD), silver (SLV), coal (KOL), copper (JJC), steel (SLX), oil (OIL) and natural gas (UNG)………………………………………..Full Article: Source

Since the bailout deal was reached on Cyprus, the gold price has fallen. The decline suggests that gold is really in a weak position right now. I think the price is likely to fall further. Here’s why.
The major global stock markets are doing really well this year: the S&P 500 is up about 10 percent, U.K. stocks are up about 1 percent in dollar terms and Japanese stocks up about 10 percent. Even with all the problems in Europe, the Euro Stoxx index is down only about 2 percent in dollar terms. By contrast, gold and silver are down about 5 percent. Platinum and palladium have also outperformed gold and silver. In fact it’s hard to find any commonly held assets that have fallen as much as gold and silver………………………………………..Full Article: Source

Commodity markets are prone to bubbles, but like the ones in bathtubs, they don’t last. So concluded one of several interesting papers on commodity price fluctuations discussed at an International Monetary Fund seminar last week.
Researchers at the University of Illinois examined agricultural futures price data from 1970-2011 and found a spate of bubbles running through multiple markets. Sugar, soyabean and cotton markets underwent them with regularity………………………………………..Full Article: Source

As China’s economic growth fell to 7.8 per cent last year, its slowest pace in more than a decade, commensurate demand for commodities such as iron ore, copper and coal also slowed to single-digits, sending traders scrambling amid fears of a “hard landing” for the Chinese economy.
This year, though the “hard landing” has been averted, China’s anaemic demand growth for commodities is still sending ripples through the Chinese raw materials market, which had become accustomed to double-digit annual growth…………………………………….Full Article: Source

Commodities tumbled on Wednesday amid speculation a hedge fund had been forced to liquidate positions across metals and oil markets, and gold fell to more than a seven-month low on worries that the U.S. economic stimulus may soon dry up.
Already under pressure from ongoing concerns about global supply and demand, commodity markets tumbled in high volume trade just before 11 a.m. EST (1600 GMT), with oil and gasoline prices dropping about 2 percent each……………………………………Full Article: Source

A very common question always puzzles me as to how it can be answered as precisely as it is asked. At the beginning of every year analysts are popped a question, “How are commodity markets looking in the coming year?” Though the question is very simple the answer can’t be simple.
That’s because the commodity markets are a complex web of commodities driven by various segments of the economy and influenced by a wide array of fundamentals, from the weather to labour unrest, natural calamities to policy actions, and the health of the global economy and demand prospects. Let’s look at what could be in store for 2013………………………………………..Full Article: Source

High Brent crude prices could dent a global economic recovery while Europe’s economy holds the key to determining world oil demand in 2013, the chief economist of the International Energy Agency said on Thursday.
Brent crude hovered near $115 per barrel on Thursday, not far from a more than three-month high, as the U.S. Federal Reserve’s pledge to stick to its bond-buying stimulus plan and upbeat Euro zone data fuelled optimism about oil demand. ……………………………………….Full Article: Source

Edward Morse at Citi (via Business Insider) has made a bearish call on the commodity supercycle based on a slowing Chinese economy and re-balancing growth away from infrastructure spending toward the consumer.
I beg to differ. The secular commodity bull cycle is not ending this cycle, but in the next downturn. That’s because the new leadership are not reformers, and these “princelings” are showing little inclination to re-balance growth away from SOEs and big ticket projects, where many of the elites made their money, toward the household sector, which would benefit the Chinese economy longer term but would gore the CCP cadres’ ox………………………………………..Full Article: Source

Speculators lowered bullish wagers on commodities for the third straight week, the longest streak since April, as prices erased this year’s gain on mounting concern about slowing economic growth.
Hedge funds cut net-long positions across 18 US futures and options by 0.2% to 1.18 million contracts in the week ended October 23, the lowest since July 24, US Commodity Futures Trading Commission data show. Copper holdings fell the most in seven weeks, and sugar wagers dropped to a one-month low. Bullish bets on gold slumped the most in three months………………………………………..Full Article: Source

Booming growth in developing markets, coupled with inflationary money-printing in the U.S. and Europe, helped fuel a bull market in commodities for a dozen years. Today, though, Wall Street is flashing a yellow light: Commodity bugs had better scoot to avoid being squashed by the global slowdown.
“The secular bull market in commodities is done,” says Jeff Weniger, senior investment analyst at Harris Private Bank. “Finished. Kaput.” Don’t let the recent rise in prices for oil (partly caused by unrest in the Middle East) and corn (the drought in the Midwest) fool you………………………………………..Full Article: Source

China’s economy is suffering as crisis in the developed economies begins to have a “knock-on effect” on the emerging markets, said Jonathan Whitehead, the global head of commodities markets at Societe Generale SA. (GLE).
“Clearly, China is suffering,” Whitehead said. “To what extent, we don’t know.” While outlook for commodities markets used to be defined by China’s economic growth, it now also largely depends on the developments in Europe, he said………………………………………..Full Article: Source

Commodity prices appear vulnerable to risk aversion driven by rising Eurozone sovereign stress. The Fed’s Beige Book is in focus on the economic calendar. Commodities came under pressure overnight as broad-based risk aversion plays out across financial markets.
The MSCI Asia Pacific regional benchmark equity index fell 0.8 percent. Newswires cited guidance in the third-quarter earnings report from Alcoa Inc as the catalyst for the dour mood. While the leading aluminum producer’s results beat analysts’ estimates after adjusting for a handful of special items, its forward guidance warned of the dangers posed by a slowdown in China and carried a downgrade in the outlook for demand………………………………………..Full Article: Source

It could be due to mild dollar strength or outside market influence, but we’ve seen a number of declines in the commodity sector in recent weeks and months. I’m going to jump around to some of the major commodities, identify their moves of late and opine on whether they’re likely to continue heading south.
In the energy complex, crude oil has traded down from the $100-per-barrel level, shedding just over $10, or 10%. This move has happened within the last three weeks and, in my eyes, prices could see an additional $3 to $5 of deprecation before this leg is complete………………………………………..Full Article: Source

When investors aren’t worrying about euro-zone survival, employment growth in the U.S., what Israel may be planning for Iran or what Iran may be planning for the Strait of Hormuz, they worry about the end of the commodity boom.
As realization slowly dawns that even China isn’t insatiable, and that slowing old economies eventually mean slowing new economies too, the currencies that benefited most from rising commodity prices attract ever more jaundiced scrutiny. Every week another ‘is the game up for the Australian dollar?’ piece appears, with metronomic regularity, from one analyst’s cloister or another………………………………………..Full Article: Source

Commodities are on the upswing in early trade amid a broad-based advance in risk appetite as traders encouraged by yesterday’s release of an ambitious Spanish budget await a similar result from France. Sentiment-linked crude oil and copper prices are following shares higher while gold and silver are buoyed by ebbing haven demand for the US dollar.
Optimism may be fleeting however. Economists expect Paris will run a deficit equivalent to 4.6% percent of GDP this year, the highest among the core members of the euro zone. This means President Francois Hollande and company may be forced to press on with tax hikes and/or spending cuts, both of which would compound headwinds for already anemic growth………………………………………..Full Article: Source

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Commodities fell, heading for the first monthly decline since May, as discord over Europe’s debt crisis and fading business optimism in China pointed to a deeper slowdown that may reduce demand for energy, metals and grains.
The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 0.9 percent to settle at 657.68 at 4 p.m. New York time, led by cocoa, silver and aluminum. The gauge slid 4.4 percent last week, the most since June 1, and has dropped 2.6 percent this month………………………………………..Full Article: Source

Not to be left out, the Bank of Japan (BoJ) this week announced its own new version of monetary stimulus, although the move is relatively mild compared to the U.S. Federal Reserve’s QE3. The BoJ is increasing current asset purchases from 45 trillion yen to just 55 trillion yen (an increase equal to about $127 billion dollars).
Japan’s central bank is attempting to decrease the value of the yen, which has been rising since March. Unfortunately for Japanese exporters, the effect so far has been fleeting. In the first chart, you can see the overnight reaction to the easing announcement………………………………………..Full Article: Source

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The worst US drought in 50 years has sent commodity prices in grain and livestock to record highs, and in spite of a drop-back in prices, traders say volatility is to be expected for as much as another year. As of September 4, the soya bean price was up 32% and that for corn up 45% since the end of May.
The effects are not only being felt in ethanol production and livestock feed. According to farmers in the western states, large numbers of horses are dying as pastures are completely dry and ranchers cannot afford to buy hay at present prices. “People don’t realize how bad it is because horses are not part of the food chain, but the drought has resulted in a lot of animals just starving to death,” says one farmer………………………………………..Full Article: Source

Patrick Legland, global head- research, Societe Generale, explains that the slowdown in China will certainly have an adverse effect on commodities. He adds that though European economies reduced deficit significantly, the growth in GDP which is essential to reduce debt, remained anemic and negative.
Globally, the economic indicators have been poor. The PMI in Europe was very poor. Asia is very weak as well. Clearly investors are back in the doldrums on nickel due to economic inflows. So, right now there is certainly a break in the rally………………………………………..Full Article: Source

Financial investment is having a much greater impact on the prices of commodities like oil than underlying supply and demand of the commodity, causing price volatility and allowing prices to become removed from the fundamentals for long periods of time, according to a report by the United Nations Conference on Trade and Development.
This has effectively transformed commodity markets into financial markets and demands a “strong and prompt policy and regulatory response,” UNCTAD said……………………………………….Full Article: Source

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Governments should let regulators step into commodity markets to pop price bubbles, prevent crashes and combat powerful financial investors, a U.N. report showed on Tuesday, a day after a sudden oil price plunge baffled traders.
Financial players such as hedge funds and high-frequency traders are to blame for increased volatility in commodity prices and urgent action should be taken to increase transparency and boost regulators’ powers, the paper said………………………………………..Full Article: Source

Have Australians got it wrong by bemoaning what’s been called the end of the commodities boom, which may turn out to be another bit of good fortune for the nation known as the lucky country? The decision to cut capital spending by Fortescue Metals Group, probably the country’s most bullish iron ore miner, has been viewed as another nail, if not the final one, in the coffin of the once-in-a-generation resources extravaganza.
News that the economy expanded 3.7% in the year ended June 30 wasn’t enough to temper the feeling that Australia’s best days may be behind it, especially given the leverage of the economy to the now slowing Chinese giant………………………………………..Full Article: Source

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Just to get you into the right mood for what follows, here’s one forecast for commodity prices at the end of next year. Copper at $US5000 a tonne (against $US7635 at Tuesday’s close on the London Metal Exchange), lead $US1500/tonne ($US1995 on Tuesday), nickel $US13,500/tonne (US$15,950 now), tin $US17,500/tonne ($US19,625 now) and zinc down from $US1877/tonne on Tuesday to $US1450 in December next year.
The good news in these predictions from Capital Economics in London is that the declines as forecast would be nowhere near as bad as in the GFC, but that may be seen as scant comfort………………………………………Full Article: Source

For the past two years, as regular readers know, I have been bearish on hard commodities. Prices may have dropped substantially from their peaks during this time, but I don’t think the bear market is over. I think we still have a very long way to go.
There are four reasons why I expect prices to drop a lot more.　 First, during the last decade commodity producers were caught by surprise by the surge in demand.　 Their belated response was to ramp up production dramatically, but since there is a long lead-time between intention and supply, for the next several years we will continue to experience rapid growth in supply………………………………………Full Article: Source

Australia has rode out the economic crisis storm fairly well over the past few years, but will the recent decrease in commodities prices be its downfall? If we put aside for one moment the RBA’s use of the concept of trend growth -proof in itself that Australia has escaped many of the effects of the credit crunch era so far!- we see that she saw an expansion in her commodity sector in the first part of 2012.
Expanding into a possible slow down has its own dangers and regular readers of this blog will be aware that one of Australia’s main customers China is slowing down. Only this weekend we received news that even the official Chinese purchasing managers index is now showing a contraction………………………………………Full Article: Source

Barclays has made as much as half a billion pounds in two years from speculating on food staples such as wheat and soya, prompting allegations that banks are profiting handsomely from the global food crisis.
Barclays is the UK bank with the greatest involvement in food commodity trading and is one of the three biggest global players, along with the US banking giants Goldman Sachs and Morgan Stanley, research from the World Development Movement points out………………………………………..Full Article: Source

The global financial crisis created its fair share of villains. But it also produced a few superstars, those who saw the crash coming, bet accordingly and made a fortune.
People like Michael Burry, David Einhorn, and Canada’s own Prem Watsa saw their material and reputational worth skyrocket as a result of immensely contrarian investment decisions they made linked to the credit crisis………………………………………..Full Article: Source

Bioenergy companies and protein producers will be the main victims among EMEA corporates from record soft commodity prices, ratings company Fitch warned Tuesday.
The ratings agency attributes soaring prices to the worst U.S. drought in decades, which is ongoing, ravaging both the corn and soybean crops alike as they undergo a crucial pollination phase, when moisture has the greatest effect on eventual yields………………………………………..Full Article: Source

Stockpiles of the biggest crops will decline for a third year as drought parches fields across three continents, raising food-import costs already forecast by the United Nations to reach a near-record $1.24 trillion.
Combined inventories of corn, wheat, soybeans and rice will drop 1.8 percent to a four-year low before harvests in 2013, the U.S. Department of Agriculture estimates. Crops in the U.S., the biggest exporter, are in the worst condition since 1988, heat waves are battering European crops and India’s monsoon rainfall already is 20 percent below normal. The International Grains Council began July by forecasting record harvests. It ended with a prediction for a 2 percent drop in output………………………………………..Full Article: Source

The United States is the leading producer of corn and soybeans – two commodities that developing countries rely on. However, over the past two months, prices have risen sharply as the U.S. experiences its worst drought since the 1950s. A food policy expert says effectively responding to the drought can help prevent another global food crisis
More than half the United States is experiencing the dual problems of too little rain and temperatures that are too high. Shenggen Fan, head of the International Food Policy Research Institute, said that’s not only driving up prices, but contributing to price volatility as well………………………………………..Full Article: Source

China’s metal imports are likely to fall sharply in July as a seasonal lull in the construction season has coincided with a broad economic slowdown and a lack of opportunities to profit from trade arbitrage.
China is the world’s largest buyer of key industrial commodities and its order book is an important indicator of global demand. Customs officials will release July data Friday. Imports of iron ore, China’s largest class of metal imports by value, are likely to continue sliding after an 8.7% decline in June from May………………………………………..Full Article: Source

The world’s economy is passing through a low growth environment and this is in stark contrast to the first half of the last decade, when we had a global boom. Today, Europe is on the brink of recession, the US economy is growing at only 2% per year and it appears as though China is facing a major slowdown.
Given these circumstances, we are of the view that the prices of natural resources will struggle to retain last decade’s momentum. ……………………………………….Full Article: Source

Commodity prices are correcting lower in early European trade after Friday’s sharp rebound in risk appetite. Sentiment-linked crude oil and copper prices followed share prices higher while gold and silver found a de-facto boost as the safe-haven US Dollar retraced downward.
A quiet economic calendar in Europe turns traders’ attention to the US docket. Expectations call for narrow improvement in the Empire Manufacturing gauge - the first of July’s regional activity surveys to hit the tape - while Retail Sales snap a two-month losing streak to post a narrow gain in June………………………………………..Full Article: Source

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Commodity prices are trading sharply lower as risk aversion grips financial markets amid worries about slowing economic growth after minutes from June’s FOMC meeting failed to advance expectations of a QE3 program to be unveiled in the near term.
The Bank of Japan likewise disappointed on the stimulus front, opted to reshuffl e funds between the credit-loan and asset-purchase programs instead of expanding accommodative measures………………………………………..Full Article: Source

Commodity prices have fallen in the last few weeks; the S&P/GSCI, an index of commodity prices, is down by 10 per cent in US dollar terms since the end of April. Whether that’s good or bad for equities depends largely on your time horizon.
Theory linking shraes and commodities is ambiguous. The good news is that lower commodity prices raise the disposable incomes of commodity users; they are, in economic jargon, a positive supply shock. The bad news is that they can be a signal of weaker global demand for commodities and hence of weaker world output………………………………………..Full Article: Source

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Indications that China’s economy is beginning to flag more than expected could be a nasty thorn in the side of the commodities sector as hopes for the global economy weaken, analysts said.
China, the world’s largest consumer of industrial commodities like copper and iron ore and the second-thirstiest oil consumer after the U.S., has long been viewed as the white knight of the commodity markets………………………………………..Full Article: Source

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Commodities are now in a bear market – and they could have further to fall. Economic data last week from around the world have dampened the demand outlook for basic resources.
China’s export order sentiment is at its lowest point since the start of 2009, business activity in the eurozone has shrunk for five consecutive months and US manufacturing is growing at its slowest rate in 11 months………………………………………..Full Article: Source

Commodities continued their losing streak amid a worsening of the European situation and no cues on another stimulus package.
Commodities slumped after data showed that trade in Germany contracted and Spain’s credit rating was lowered. Even the rate cut in China, the world’s largest commodity consumer, was not enough to improve sentiment………………………………………..Full Article: Source

The recent hype surrounding commodity economies from Australia to Brazil has been stoked by outlandish rationales for why the spike in commodity prices over the last decade represented a permanent upward shift—a high-speed edition of the “new normal.”
The case for rising commodity prices builds from the assumption that demand from emerging markets will continue to rise as it did in the last decade, but that wave has already broken up. China, Brazil, India and Russia are slowing………………………………………..Full Article: Source

Through sustained rampant growth, China has forged itself a place as an economic powerhouse in the international community. Typifying this trend, the past 10 years saw annual real GDP growth in China consistently range between roughly 9% and 14%. However, few, if any, economies can sustain such growth forever.
Today, we believe China stands at the precipice of a major economic inflection………………………………………..Full Article: Source

Europe’s financial troubles have cast a pall across the commodities market, which trades basic materials that are used in everything from housing and vehicles to food.
Most commodities prices fell Wednesday after a fresh wave of poor economic news from Europe lent more weight to fears that the region’s slowdown will hurt future demand around the world………………………………………..Full Article: Source