What happened to commodities investments this year? Fracking has drilled a hole in the sector, and the gold bugs have taken flight. It was supposed to be different. This year was to be the start of the Great Rotation, where stocks started in a big rally (that happened) and bonds were due for a drastic pruning as the Federal Reserve started raising interest rates (that didn’t).
Those inflation hedges – energy and precious metals – were supposed to start paying off as an expanding economy and years of easy money revived inflation. Again, not yet………………………………………..Full Article: Source

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Lower demand, rising prices and higher inventories may see a drop in oil prices in the remaining part of this year and in 2014, the Bank of America Merrill Lynch has said. The Bank of America Merrill Lynch has cut down its global oil demand growth this year due to “slightly weaker than expected consumption in Europe and China”.
In a report released yesterday BOAML said lower global oil demand, rising supplies and higher inventories are “a cocktail for lower prices”………………………………………..Full Article: Source

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Iraq is due to start pumping crude from two of its largest oil fields within weeks, creating a possible obstacle to future efforts by OPEC to curb supplies in the event of a drop in prices. The Gulf state plans to start production at Majnoon within days, followed by Gharraf in July and West Qurna-2 by year-end, lifting capacity by 400,000 barrels a day, Oil Minister Abdul Kareem al-Luaibi told reporters in Vienna today before an Organization of Petroleum Exporting Countries meeting tomorrow.
The nation, OPEC’s biggest producer after Saudi Arabia, currently pumps 3.125 million barrels a day, he said, without specifying output capacity………………………………………..Full Article: Source

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Gold demand in China, the world’s largest consumer after India, may slow in the second half of this year after surging in April, said Zhang Bingnan, secretary-general of the China Gold Association.
“The kind of frenzied buying in late April and early May won’t be repeated,” Zhang said. Some of the jewelry demand earmarked for festivals or weddings later this year may have been brought forward to April and May after prices fell, he said………………………………………..Full Article: Source

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Latin America is disappointing investors, economists and businesses with slower-than-forecast growth as waning commodity prices and strong currencies hit nations that failed to diversify and become more competitive.
The five biggest investment-grade markets in the region — magnets for foreign capital as rich countries stalled –expanded below projections or show signs of weakness. Mexico’s and Brazil’s gross domestic product missed estimates in a Bloomberg survey. Economists polled by Brazil’s central bank cut the country’s 2013 outlook this week for the second time in seven days, anticipating the worst three-year period in a decade………………………………………..Full Article: Source

Like other big commodities producers in Latin America, Brazil’s economy grew less than expected in the first quarter, hit by falling commodities prices amid lackluster global growth. But unlike most of its neighbors in the region, Brazil’s economy is proving far less resilient to the downturn in commodities.
Why? Just a week ago, Brazilian Finance Minister Guido Mantega said the government’s “anti-cyclical” spending boosts investment and stimulates growth. He suggested Latin America’s biggest economy would expand around 3.5% this year, recovering from a 0.9% expansion last year. On Wednesday, though, he conceded that Brasilia will now have to revise downward that forecast………………………………………..Full Article: Source

OPEC has decided to ax a key committee that monitored its members’ compliance with oil production targets and made recommendations on output policy, people familiar with the matter told The Wall Street Journal Wednesday.
The Vienna-based secretariat of the Organization of the Petroleum Exporting Countries will now be responsible for monitoring members’ production levels, instead of the Ministerial Monitoring Sub-Committee, or MMSC, the people said………………………………………..Full Article: Source

The International Energy Agency now expects that the United States will account for nearly 33% of all oil production growth over the next five years. This news has been unsettling to several members of OPEC that are worried about the increase in supply outstripping the growth in demand. If this comes to fruition, which most consumers are hoping for, benchmark prices for Brent crude oil could drop below $100 per barrel.
Thanks to up and coming plays like the Bakken and the Eagle Ford, quite a few companies have been building some noticeable momentum. If their pace is maintained, OPEC countries like Algeria and Nigeria could be hit hard by price reductions while Saudi Arabia remains happy with the current production levels of the organization………………………………………..Full Article: Source

China’s demand for silver fell hard in April. But is that all there is…? Analysts at Barclays (BCS) recently noted that silver imports were down 28% in the month of April year on year.
But in an article reporting that news, the author makes it sound like demand was also off significantly for unwrought silver, for silver powder, and for jewelry manufacturing as well. Only if you take a myopic view would such assumptions be correct………………………………………..Full Article: Source

The start of the week was generally “risk-on”, so industrial commodities fared quite well. But concerns about waning demand out of China still linger over the sector. A useful sentiment gauge is prices for steel reinforcement bar (rebar) – a product that clearly tracks construction expectations.
On Monday the October rebar futures contract in Shanghai slid to a six-month low of Rmb3,491 ($570) a metric ton, according to Bloomberg data……………………………………Full Article: Source

OPEC’s best adherence to its production ceiling in 18 months is failing to buoy the outlook for crude oil prices, raising pressure on the group to pare supplies amid burgeoning U.S. output. While all but one of 20 analysts in a Bloomberg survey predict the 12-member organization will maintain its target of 30 million barrels a day at its May 31 meeting in Vienna, most say OPEC needs to conform better with the limit to keep supply from overwhelming demand.
Societe Generale SA says the necessary reduction could be “substantial.” The Centre for Global Energy Studies says prices may tumble without output curbs……………………………………Full Article: Source

Lower prices for commodities from cotton to copper are helping U.S. businesses by reducing their raw-material costs and buoying consumers by keeping a lid on prices paid. Copper, used in many goods including electronics, is off nearly 10% this year. Silver, which has various industrial uses, has tumbled more than 25%, and wheat is down more than 10%.
While lower commodity prices are bad for producers and countries reliant on exporting raw materials, they are good for Alabama Chanin, a Florence, Ala., maker of high-end clothing. Cotton prices are up a bit this year, but they are down about 50% since a surge two years ago. The cost of organic cotton—a niche product that Alabama Chanin uses exclusively in its wares—has roughly tracked that price movement…………………………………..Full Article: Source

The global steel market is oversupplied and miners are going to feel the pinch. Demand is, at best, subdued and steel production has been ramping up, especially in China. Last week, the World Steel Association said that production in April was 132m tonnes, an increase of 1.2pc year on year. “This growth is almost solely attributable to China, where 6.8pc more steel was produced in April than in the same period last year,” Commerzbank noted.
Most key producing regions reduced output, so China’s market share of worldwide steel production climbed to 49.8pc. “The global steel market remains clearly oversupplied,” Commerzbank added, “which should block any marked increase in steel prices.”………………………………….Full Article: Source

Venezuela will support holding the Organization of the Petroleum Exporting Countries’ production ceiling but is open to a reduction if members find that it would help maintain the South American country’s base price of $100 a barrel at the cartel’s meeting this week in Vienna, Oil Minister Rafael Ramirez said Monday.
“We have an agreed level of production of 30 million barrels a day which we think can be maintained to keep the price at $100 per barrel. If some view comes out of the discussions that this could affect or lower the price, we are for a cut in production,” Mr. Ramirez told reporters at the Caracas headquarters of state energy monopoly Petroleos de Venezuela SA…………………………………..Full Article: Source

The natural ratio of the occurrence of silver to gold in the ground is typically estimated at roughly nine ounces of silver to one ounce of gold, and yet the recent trading price ratio of 62 to one is almost seven times higher.
After contemplating this curious anomaly, one is left wondering if comparisons between gold and silver may be as fruitful as comparing silver investment demand and silver industrial demand…………………………………..Full Article: Source

Germany’s DZ Bank is to end speculation in food commodities, following a move taken by several other German banks, a letter from the bank showed on Monday. The move was announced by DZ Bank director Lars Hille in a letter to German pressure group Foodwatch seen by Reuters on Monday.
Groups such as Oxfam and Foodwatch have said such trading is responsible for pushing up international food prices and exacerbating famine in poor countries. A series of other German banks, including Commerzbank , DekaBank and Landesbank Baden-Wurttemberg, have stopped trading in agricultural commodities in the past year…………………………………..Full Article: Source

The past week or three have been, to say the least, disappointing for precious metals investors. Gold and silver have continued to step downwards towards new interim lows as money continues to move from bullion (or at least from paper variations of it) to the general stock markets which have been continuing to perform well.
All this despite, so we hear, continuing high demand for physical gold and silver from Asian markets in particular. But this physical metal demand growth seems to be being more than countered by some strange precious metals sales patterns – the latest of which saw silver plunge 10% in 4 minutes on a big computer sell order – from a single client according to a major Japanese bank – at a light trading time……………………………..Full Article: Source

Former top commodities traders from Deutsche Bank are in talks with U.S. private equity group Riverstone to set up a $0.5-1.0 billion venture that will both invest and trade in commodities.
The venture, which will put money into assets ranging from energy producers to pipelines and refineries, is a rare foray by a private equity firm into commodities at a time when banks are curbing exposure due to tighter regulations and stagnant prices……………………………..Full Article: Source

Silver prices have slumped to their lowest level since September 2010 and gold prices are down 18% year-to-date leading many market observers to declare that the super-rally in commodities is over.
Jim Rogers, the legendary investor and Chairman of Rogers Holdings, says the commodities bull market continues. He calls the latest slump in prices a correction. “I still don’t see massive new supply coming into the market which will keep prices down,” he said……………………………….Full Article: Source

Turkey and Egypt have agreed with Iran’s proposal to form an international petrochemical association similar to the Organization of Petroleum Exporting Countries (OPEC).
“On the sidelines of the petrochemical conference of the D8 group of countries, Turkey and Egypt, as the two biggest producers of petrochemical products and engineering polymers in the Middle East, agreed to Iran’s oil proposals,” National Iranian Petrochemical Organization (NIPO) Managing Director Abdolhossein Bayat said, Press TV reported………………………………..Full Article: Source

The famous Danish physicist Niels Bohr once humorously observed, “Predictions are very difficult, especially about the future.” And so, as the world considers yet another rosy oil supply forecast, this time from the Paris-based International Energy Agency (IEA), it is worth reviewing the agency’s record.
Back in the year 2000, the IEA divined that by 2010, liquid fuel production worldwide would reach 95.8 million barrels per day (mbpd). The actual 2010 number was 87.1 mbpd. The agency further forecast an average daily oil price of $28.25 per barrel (adjusted for inflation). The actual average daily price of oil traded on the New York Mercantile Exchange in 2010 was $79.61………………………………..Full Article: Source

For more than a decade, the biggest question in energy has been whether production could keep pace with the rapidly escalating demand from emerging markets. It did, barely, thanks to crude prices that have quadrupled over that span.
The question now, though, is whether the still fast-growing Asian crude demand can keep pace with the even faster-growing production gains in North America, driven by the boom in US tight “shale” oil and increasing exploitation of the Canadian oil sands………………………………..Full Article: Source

It won’t be long before the essential raw minerals and commodities of the planet’s Far North such as rare earths, oil and gas get gobbled up by the industrialists. On Wednesday, the Arctic Council granted China, India, Italy, Japan, Republic of Korea and Singapore new Observer States status. Essentially, the six nations gained rightful entry to listen in on meetings of the council, as well as propose and finance policies.
Observers, however, do not have powers related to decision making within the council. “Many of the applicants wrote that they wanted to become observers because they are interested in arctic science,” Swedish Arctic Council Chairman Gustaf Lind said………………………………………..Full Article: Source

LNG prices have fallen on weak demand and high stocks Spot LNG prices in Asia have retreated sharply to $14/MMBtu after reaching a 4-year high of almost $20 in February. Tightness in global LNG markets evaporated as gas demand in North East Asia eased seasonally after the winter and cyclically on rising economic headwinds.
On top of that, supply from top exporters like Nigeria and Norway recovered. Thus gas storage built to healthy levels, with Japanese gas stocks now at a record seasonal high. Japan now prefers to destock and LNG imports contracted compared to last year in the first quarter………………………………………..Full Article: Source

Gold investors are just not feeling the love, once again left to wonder why gold prices are going down. The yellow metal dipped again Thursday, with gold for June delivery ending down $10 at $1,386.10 an ounce. It was the sixth consecutive trading day of declines and marked a four-week low for the metal.
With equity markets continuing to log record highs, and economic data showing some signs of improvement, safe haven gold looks nothing like its moniker. Fueling gold’s recent rout is not one thing; it’s a combination of things………………………………………..Full Article: Source

The kind of leverage that billionaire investor George Soros has on the psyche of investors is beyond comparison. When he buys gold investors too, when he sells gold investors too. Actions of George Soros heralds the fortunes of gold; in other words, gold’s future is wedded to Soros’ investment decisions. At least that is how it is in the present conditions.
Soros Fund Management LLC cut short its holdings in the world’s largest investment fund, the SPDR Gold Trust by 12% to 530,900 shares as of March 31. This when compared to higher amounts in investment in the fund three months earlier………………………………………..Full Article: Source

Singapore-listed commodity firms Olam International Ltd, Noble Group Ltd and Wilmar International Ltd are cutting capital expenditure, making more selective acquisitions and seeking partnerships to weather volatile markets.
While the more cautious approach could lead to slower earnings growth, investors are likely to welcome the leaner balance sheets and reduced funding risk as China’s demand for commodities from iron ore to palm oil weakens………………………………………..Full Article: Source

The spring swoon may not hit the stock market this year – nothing, it seems, can hit the stock market this year – but it’s visible in the real world. Three data points this morning, as well as Europe’s ongoing morass, show that all is not well outside Wall Street.
The news has hit the commodities complex, gold fell under the $1,400 mark, as investors extrapolated the lower demand for commodities implied by the reports. The dollar’s rise of late hasn’t helped matters (as commodities are priced in dollars). The stock market seems to have shaken it all off rather quickly — the Dow’s up 61 points as of this writing — which given the market’s mindset these days, isn’t terribly surprising…………………………………….Full Article: Source

The commodity axis has shifted, according to the latest International Energy Agency’s (IEA) semi-annual review of the oil market. North America’s shale oil boom is about to revolutionize the oil market, threatening OPEC’s grip on commodities.
The IEA expects US oil production to grow by 3.9 million barrels of oil per day from 2012 to 2018, significantly faster than the 1.75 million barrels per day of growth forecast for OPEC producers…………………………………….Full Article: Source

For decades the physical oil market has been the unregulated preserve of a few powerful companies. But in the wake of the Libor scandal, it is subject to intense scrutiny.
Energy companies including BP, Royal Dutch Shell and Statoil, the majors raided by the European Commission on Tuesday in a probe into possible price rigging, have long dominated the trade. A handful of large commodity trading houses, hedge funds and investment banks are the other big participants…………………………………….Full Article: Source

Agricultural commodities offer by far the worst prospects for returns in a raw materials sector which itself looks a poor rival – for now - to the potential offered by shares, Goldman Sachs said.
The investment bank, highlighting this year’s significant outperformance of shares over commodities after a decade close correlation, termed this divergence a “return to a more normal state of affairs”, in which assets were more prone to idiosyncratic price drivers…………………………………….Full Article: Source

Stocks are up because of rampant QE, which is squeezing investor flows out of bond markets and into equities. And the reason we’ve got rampant QE is the continued lack of near-term economic recovery globally, which is manifestly bad for industrial commodities.
Julian Jessop at Capital Economics notes that industrial metals are particularly sensitive to Chinese growth prospects and it seems noteworthy that Shanghai is one stock market that is not rising at present………………………………………..Full Article: Source

Prolonged low inflation has sent commodities allocations among fund managers to a four-year low, according to a new survey. A quarter of respondents to the Bank of America Merrill Lynch’s monthly poll on manager sentiment said a commodity collapse is the number one tail risk, an increase from 18% in April.
The panel of 231 managers, with a combined £432bn of assets under management worldwide, have responded to the perceived threat by reducing allocations to commodities and emerging markets and upping their weighting to bonds………………………………………Full Article: Source

China will probably commission additional storage sites for its strategic petroleum reserve this year, boosting crude demand even as construction work on the program takes longer than expected, according to the International Energy Agency.
The nation, the world’s second-biggest crude consumer, will add 245 million barrels of capacity in the second phase of its emergency stockpile plan, the Paris-based IEA said in its Medium-Term Oil Market Report……………………………………..Full Article: Source

The US will account for a third of new oil supplies over the next five years, more than previously expected, according to the International Energy Agency, illustrating the impact of the shale revolution.
In its medium-term review of the oil market, the industrialised countries’ energy watchdog sharply raised its forecast for North American oil production from six months ago and slightly cut its forecast for capacity additions from the Opec oil cartel………………………………………Full Article: Source

Iran’s oil minister says the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) will mainly focus on the situation of the global oil market.
Rostam Qasemi said on Monday that the OPEC member states would also address the production ceiling of the organization during the meeting, which will be held later in May. The Iranian oil minister made the remarks on the sidelines of the 10th Iran Petrochemical Forum (IPF) in the capital, Tehran………………………………………Full Article: Source

Rising U.S. shale oil production will help meet most of the world’s new oil demand in the next five years, even if the global economy picks up steam, leaving little room for OPEC to lift output without risking lower prices, the West’s energy agency said.
The prediction by the International Energy Agency (IEA) came in its closely watched semi-annual report, which analyses mid-term global oil supply and demand trends………………………………………Full Article: Source

Gold lost its sheen on the auspicious Akshaya Tritiya day by falling nearly Rs 400 but retail purchase got a boost with jewellers saying sales recording at least 15 percent growth.
Delhi, Mumbai and Coimbatore witnessed maximum buying on Akshaya Tritiya day, considered to be an auspicious day for buying gold and silver. Trading in Gold ETFs also rose by 14 percent to Rs 691 crore on NSE Monday………………………………………Full Article: Source

The main fundamental drivers of the commodities supercycle are still in force and recent commodity price weaknesses are more related to business-cycle fluctuations and short-term commodity-specific supply increases than a change in structural fundamentals.
Resource-intensive economic growth in emerging markets, led by urbanisation and industrialisation, has been the main force behind the rise in commodity demand and prices in the past 10 years. This process is expected to continue for the next 10 to 20 years………………………………………..Full Article: Source

Iran is unhappy with the current oil prices, its oil minister said Monday, hinting at a proposal for the OPEC to lower its output to compensate for a drop in crude prices. “Iran’s suggestion has always been to reduce OPEC production ceiling,” Rostam Qasemi told reporters at a petrochemical conference in Tehran.
The Organisation of the Petroleum Exporting Countries last week boosted production to 30.21 million barrels a day in April from 29.93 million in March maintaining a flat forecast of global demand………………………………………..Full Article: Source

Hedge funds increased bets on lower gold prices after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc. (BLK), the world’s biggest money manager, said it’s still bullish.
Speculators held 67,374 so-called short contracts on May 7, 6.4 percent more than a week earlier, U.S. Commodity Futures Trading Commission data show. The net-long position dropped 10 percent to 49,260 futures and options. Net-bullish wagers across 18 U.S.-traded raw materials climbed 5.8 percent to 582,265, with gains for cocoa, cotton and hogs…………………………………..Full Article: Source

The net long money held by hedge funds and other big speculators in commodities is back to a six-week high, moving on from April’s market tumble, as traders piled into oil and oversold crops like coffee, cocoa and corn, trade data showed on Friday.
But hedge funds are not bullish on all commodities, sharply paring their bets on soybeans and natural gas for the week ended Tuesday amid expectations of a bumper soy crop and warmer U.S. weather that reduces the need for gas-driven heating…………………………………..Full Article: Source

Gold attracts investment capital when other asset classes fail to deliver. So now equities have clearly regained their appeal after more than a decade of what finance professionals would rather we called “sub-optimal” returns, gold investing has lost its urgency for money managers.
Indeed, it’s become a neat little “short” to trade against whilst picking the next winner in the S&P’s all-time high dash. More telling than equities, however, gold’s 20% drop in real terms since the top of summer 2011 has coincided with an upturn in real interest rates. You might not have noticed it…………………………………..Full Article: Source

After a recent article I wrote about the potential of a silver bubble, I got a question about the behavior of JPMorgan Chase with regard to the silver market, specifically the allegation that the bank was actively involved in manipulating the silver market through a sizable short position. The basis of the question seemed to be a request to bring forth the issue and address how silver was trading as a result of JPMorgan’s activity and within the context of the global economy in general.
As of last December, the last major complaint against the bank was dismissed in a federal court, as well as by the Commodity Futures Trading Commission. That doesn’t mean that no wrongdoing occurred, but it does suggest that insufficient evidence exists to take the matter forward…………………………………..Full Article: Source

Platinum and palladium markets may witness deficits in 2013 and continue with the trend in 2014 as the challenging mine supply backdrop overshadows the modest recovery in demand anticipated for later in the year, stated London based Barclays in its recent market analysis.
Although the bank does not expect that the production losses to the magnitude suffered last year. Given the pick-up in recycling toward the end of last year, Barclays sees scope for supply to be revised up from the preliminary estimates released in November…………………………………..Full Article: Source

Commodity super-cycle that began in 1990’s is far from over and it will continue to be driven by resource intensive urbanisation, industrialisation in emerging countries, according to an analysis by ETF Securities Ltd. It said that analysts have shown a tendency to confuse short term correction in prices denoting end of super cycle while such cycles have to be defined over a larger time frame extending to three to four decades.
ETFS said that the world has seen four major super cycles in the past 160 years with bull cycles ranging from 30-40 years and the immediate two previous super cycles were driven by growth in USA (1870-1913) and post war Japan from 1946-1973…………………………………..Full Article: Source

Archer Daniels Midland is the first commodities trading house to be enmeshed in the US anti-bribery law. It may not be the last.
The American company last week disclosed it had set aside $25m to cover potential penalties for violations of the Foreign Corrupt Practices Act (FCPA), the law that the US Department of Justice and Securities and Exchange Commission have in recent years started aggressively enforcing………………………………….Full Article: Source

The Iraqi and Libyan governments said they would help Egypt cope with its economic crisis by offering up crude oil exports. The Egyptian government of President Mohamed Morsi is trying to right the economic ship more than two years after the country’s revolution.
Conflict in Libya and Iraq, meanwhile, has raised questions about their ability to make post-war oil gains. With OPEC members forced to make adjustments to U.S. oil production gains, it may be that retraction isn’t just an economic issue anymore…………………………………Full Article: Source

The results of Thomson Reuters GFMS’ Platinum & Palladium Survey 2013 are in, and the news looks good for palladium investors. According to the precious metals consultancy, palladium recorded its highest deficit in 11 years in 2012. Specifically, supply of the metal fell to 8.19 million ounces, a 4-percent decline, while usage grew 5 percent, hitting 9.32 million ounces. That created a 1.12-million ounce gap between supply and demand, a sizeable increase over 2011′s 279,000-ounce deficit.
Residual deficit for the year (calculated by taking Russian stockpile sales and ETF demand into account) came in at 1.16 million ounces, down from a residual surplus of 1.05 million ounces in 2011………………………………….Full Article: Source

Emerging Asian currencies such as the Malaysian ringgit have come back with a vengeance, and their gains might not be done yet. The Malaysian ringgit has gained more than 2% against the dollar so far this month, after the country’s ruling coalition led by Prime Minister Najib Razak won recent national elections.
The South Korean won has advanced more than 1.5% so far this quarter, as geopolitical tensions with North Korea eased and investors jumped to buy the won at more-attractive levels………………………………….Full Article: Source