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Commodities Briefing - Archive | March, 2013

Fundamentals and behaviour in commodity prices: Kemp

Posted on 28 March 2013 by VRS  |  Email |Print

Fundamental changes in supply and demand account for less than a third of short-term movements in commodity futures prices, according to an authoritative new study by researchers at UNCTAD and the Swiss Federal Institute of Technology.
Reflexive trading, when prices respond to past price changes rather than new information about fundamentals, now accounts for 60 to 70 percent of price moves in the main futures contracts, up from less than 40 percent before 2005………………………………………..Full Article: Source

A tale of two ‘doomsdays’: gold and the global economy

Posted on 28 March 2013 by VRS  |  Email |Print

A “doomsday scenario” drop to $1,000/ounce would “make half the gold industry worthless,” according to Bank of America Merrill Lynch. Despite recent hiccups in gold’s long bull run, gold is currently hovering at roughly $1,600 per troy ounce.
Gold stocks, however, have been unable to match the precious metal in performance over the past couple of years as “rising costs, expensive acquisitions and paltry dividends” have pushed investors away, wrote Tatyana Shumsky of the Wall Street Journal on Monday………………………………………..Full Article: Source

Swiss stop short of tightening commodities trading rules

Posted on 28 March 2013 by VRS  |  Email |Print

A Swiss government investigation into the country’s $20 billion commodities sector has stopped short of proposing any new or tighter rules on trading companies as it seeks to prevent departures to Asian finance centres.
The long-awaited report published on Wednesday said that the sector’s 500 or so companies and about 10,000 employees contributed roughly 3.5 percent of Switzerland’s GDP and that the country needs to regulate the sector without chasing them away. Switzerland, home to commodities giants such as Glencore and Cargill, commissioned the report last year after left-wing politicians said that the traditionally secretive sector exposed the country to risks to its reputation………………………………………..Full Article: Source

Swiss says commodity traders should voluntarily disclose more

Posted on 28 March 2013 by VRS  |  Email |Print

Switzerland rejected calls for tougher regulation of commodity traders, including Vitol SA, Glencore International Plc and Trafigura Beheer BV, in favor of a voluntary industry code.
“Switzerland generally prefers voluntary standards, which are supported and upheld by businesses, to laws,” Economy Minister Johann Schneider-Ammann told reporters today in the Swiss capital, Bern. “It’s important that we make sure the framework in Switzerland isn’t less attractive than elsewhere.”……………………………………….Full Article: Source

Oil demand may peak before decade is over

Posted on 28 March 2013 by VRS  |  Email |Print

Global oil demand isn’t the runaway train we have been led to believe, analysts at Citi said Wednesday. Punching holes in this theory are the push to replace oil with cheaper natural gas and steady improvements in fuel efficiency. The combination “is enough to mean that oil demand growth may be topping out much sooner than the market expects,” Citi said.
Several groups, including the International Energy Agency, have called for oil demand to rise through 2035 and beyond. The IEA recently said it expects global oil demand to reach 99.7 million barrels a day in 2035, up from 87.4 million in 2011………………………………………..Full Article: Source

Economic indicators boost oil prices

Posted on 28 March 2013 by VRS  |  Email |Print

Oil prices increased Mar. 26 with crude up 1.4% to its highest close in a month on the New York market, buoyed by improved US economic data and near-resolution of the Cyprus crisis. Natural gas climbed 2.8% with cooler weather.
“Brent performance, although less spectacular, was nevertheless good,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. The price spread between Brent and West Texas Intermediate ended the day near $13/bbl………………………………………..Full Article: Source

Predicting brent crude oil: The special, magnetic $111 mark

Posted on 28 March 2013 by VRS  |  Email |Print

The oil market has become somewhat stuck in terms of the dynamics of both prices and quantities. Indeed, had an analyst stated on the last day of 2010 that, until further notice, their predictions were that Brent crude oil would average $111 per barrel, that global demand would grow by 1% and that at the global level non-OPEC supply would struggle to grow, then that analyst would still be happy with their predictions today.
Since the start of 2011, there has been a long parade of $111 prices and 1% demand growth rates. Rounded to the nearest dollar, Brent averaged $111 per barrel in 2011, $112 per barrel in 2012 and, thus far in 2013, it has averaged $113 per barrel………………………………………..Full Article: Source

New Chinese pricing mechanism likely to cut hoarding of oil products: traders

Posted on 28 March 2013 by VRS  |  Email |Print

Chinese traders on Wednesday welcomed the government’s oil product pricing reforms, saying more frequent price adjustments would allow gasoline and gasoil supply in the domestic market to better match demand.
The National Development and Reform Commission said Tuesday that it was making changes to the way it sets regulated retail prices of oil products, mainly gasoline, gasoil and kerosene. Price changes will now be made every 10 days in line with crude oil price fluctuations………………………………………..Full Article: Source

Gold headed for worst quarterly run since 2001 amid weak demand

Posted on 28 March 2013 by VRS  |  Email |Print

Gold headed for a second quarterly loss as holdings in exchange-traded products fell by the most on record and the dollar climbed on prospects for a U.S. recovery, eroding the metal’s allure as an alternative investment.
Bullion for immediate delivery traded little changed at $1,605.97 an ounce at 10:48 a.m. in Seoul from $1,605.25 yesterday. Prices have fallen 4.1 percent this quarter in the first back-to-back quarterly losses since 2001. The metal touched $1,555.55 on Feb. 21, the cheapest since July 2012………………………………………..Full Article: Source

Gold price “could fall this year for first time since 2001″

Posted on 28 March 2013 by VRS  |  Email |Print

The average dollar gold price this year may be lower than that of the previous year for the first time since 2001, according to a leading precious metals analyst. Jeffrey Christian, managing director of precious metals consultancy CPM Group in New York, says gold may average $1565 an ounce over the course of 2013, compared to $1668.75 last year.
“The global economy is likely to muddle along,” says a statement from CPM, which launched its ‘Gold Yearbook 2013′ this week, adding that “present [positive] sentiment has reduced the urgency [felt by investors to buy gold].”……………………………………….Full Article: Source

Central Banks’ gold purchases in 2012 most since 1964

Posted on 28 March 2013 by VRS  |  Email |Print

According to the International Monetary Fund (IMF), in February, the central bank of Mongolia increased its gold bullion reserves to its highest level since August of 2008. The country has been purchasing gold bullion for three consecutive months—its reserves have increased from 1.5 metric tons to 5.8 tons, or about 287%. (Source: Bloomberg, March 26, 2013.)
Similarly, the central bank of Russia has been purchasing gold bullion. It bought seven tons of the yellow metal in February to bring its total gold bullion holdings to 796.9 tons. Turkey, the country which has started to use gold bullion as collateral, increased its reserves by 5.7 tons in February, bringing its total holdings to 375.7 tons……………………………………….Full Article: Source

Central Banks are buying more gold than ever — Shouldn’t you be too?

Posted on 28 March 2013 by VRS  |  Email |Print

Bloomberg reported recently that Russia is now the world’s biggest gold buyer, its central bank having added 570 tonnes (18.3 million troy ounces) over the past decade. At $1,650/ounce, that’s $30.1 billion worth of gold.
Russia isn’t alone, of course. Central banks as a group have been net buyers of gold for at least two years now. But the 2012 data trickling out shows that the amount of tonnage being added is breaking records. Based on current data, the net increase in central bank gold buying for 2012 was 14.8 million troy ounces - and that’s before the final 2012 figures are in for all countries………………………………………..Full Article: Source

Even another Cyprus-style crisis can’t save gold

Posted on 28 March 2013 by VRS  |  Email |Print

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

Are precious metals due for a rebound?

Posted on 28 March 2013 by VRS  |  Email |Print

Gold will post its first consecutive quarterly loss since 2001. And since mid-2011 gold has been a money loser. If you’re perplexed by that, keep reading. Even silver – which has been a star performer over the past few years - has followed gold prices lower. Will precious metals rebound?
Mixed Performance: The precious metals market consists of four key metals: gold, silver, platinum, and palladium. Thus far this year, exchange-traded products (ETPs) linked to gold and silver have fallen 5.18% and 7.25% respectively. Conversely, platinum and palladium have outperformed on a relative basis………………………………………..Full Article: Source

Why China Nickel prices are not moving up

Posted on 28 March 2013 by VRS  |  Email |Print

Nickel prices in China have not moved up due to more than ample supply with expectations that Nickel Pig Iron (NPI) production would be higher, states a recent analysis by London based Barclays.
However, nickel demand in China has been improving with increased buying from the stainless sector, galvanizing and batteries, the report added………………………………………..Full Article: Source

Four billion reasons REEs and graphite will make you money

Posted on 28 March 2013 by VRS  |  Email |Print

According to Goldman Sachs, in 2011 China added $1.3 trillion to global growth. This is the equivalent of adding an economy the size of Greece to the global economy every 12.5 weeks or an economy the size of Australia over the course of the year. In 2012, if you look at all four BRIC (Brazil, Russia, India and China) economies combined, they added $2.2 trillion to global growth.
This is the equivalent of one economy the size of Italy — the eighth-largest economy in the world — over the course of the year. I looked at broad economic data in the U.S., the Eurozone and China, such as industrial production, consumer spending and debt-to-GDP ratios, to present a vision of where we are in the economic cycle………………………………………..Full Article: Source

Global Mining: Opportunities in the era of global slowdown

Posted on 28 March 2013 by VRS  |  Email |Print

In the era of global slowdown, shareholders of mining companies are demanding more of discipline when it comes to capital expenditure.
This is largely attributed to a change of heart amongst share holders who feel that falling commodity prices may hurt profits of miners. In the same breath, one should add that supply is behaving exactly the same way as one should expect in a subdued price environment………………………………………..Full Article: Source

3 commodity sector ETFs set to surge higher

Posted on 28 March 2013 by VRS  |  Email |Print

As the broad markets are approaching their all-time highs, investors are gaining confidence over the riskier asset classes. As such, equities and equity ETFs are showing heavy inflows this year on the heels of improving global economic conditions.
In this backdrop, commodities like gold, agriculture and industrial metals have experienced some weakness due to a lack of investor interest and a strong dollar. The fears of a deepening euro zone crisis of late has also taken a toll on these commodities, hurting demand for raw materials, further adding to their woes………………………………………..Full Article: Source

Water ETFs to play infrastructure needs

Posted on 28 March 2013 by VRS  |  Email |Print

Water is reaching super-commodity status as it is always in demand and we rely upon a constant supply. As water infrastructure systems continue to age, the case for a water-focused exchange traded fund gets stronger, within a properly diversified portfolio.
“There are estimated to be between 700,000 and 800,000 miles of public sewer mains in the U.S., and over one million miles of drinking water systems, with pipes over 100 years old, meaning they are either past or nearing the end of their useful life, according to a ASCE report. Pipes represent the largest capital investment, accounting for 80%-85% of all wastewater systems investment requirements in the U.S.,” S&P Capital wrote in a recent note. ……………………………………….Full Article: Source

Water ETFs to play infrastructure needs

Posted on 28 March 2013 by VRS  |  Email |Print

Water is reaching super-commodity status as it is always in demand and we rely upon a constant supply. As water infrastructure systems continue to age, the case for a water-focused exchange traded fund gets stronger, within a properly diversified portfolio.
“There are estimated to be between 700,000 and 800,000 miles of public sewer mains in the U.S., and over one million miles of drinking water systems, with pipes over 100 years old, meaning they are either past or nearing the end of their useful life, according to a ASCE report. Pipes represent the largest capital investment, accounting for 80%-85% of all wastewater systems investment requirements in the U.S.,” S&P Capital wrote in a recent note. ……………………………………….Full Article: Source

Niche commodity funds beat markets as Jamison doubles assets

Posted on 28 March 2013 by VRS  |  Email |Print

Commodity and macro markets trader Stephen Jamison has closed his macro commodity fund to new investors after nearly doubling its capital to $1.5 billion last year, making it one of the biggest players in that niche market.
Jamison Capital Partners took the action for its Koppenberg Macro Commodity Fund just four years after its launch with $125 million under management, a source familiar with the New York-based company said………………………………………..Full Article: Source

Louis Dreyfus Commodities says 2012 profit its largest ever

Posted on 28 March 2013 by VRS  |  Email |Print

Louis Dreyfus Commodities, one of the world’s largest agricultural traders, on Wednesday reported its largest-ever annual profit on robust global demand for food products and historically high crop prices after a severe U.S. drought.
The privately held company said in an annual report that net earnings jumped 25 percent to $1.1 billion in 2012, excluding a $93 million loss in BioSev, the company’s ring-fenced Brazilian sugarcane milling business which suffered from low cane yields and low ethanol prices………………………………………..Full Article: Source

Demolishing some myths about the single currency

Posted on 28 March 2013 by VRS  |  Email |Print

The introduction of capital controls in Cyprus is a textbook example of shutting the stable door after the horse has bolted. Rich Russians and wealthy Cypriots knew the crisis was coming and have had the best part of a fortnight to spirit their money out of the country since it broke, even assuming they did not do so beforehand.
The restrictions will intensify the slump Cyprus faces while not removing the risk of bank runs when branches finally open for businesson Thursday. What’s more, the controls severely damage the credibility of the euro………………………………………..Full Article: Source

Peru intensifies currency fight

Posted on 28 March 2013 by VRS  |  Email |Print

For the eighth time in 10 months, Peru’s central bank has raised deposit requirements on dollar-denominated accounts to stem the flow of hot money into its fast-growing economy and dampen currency appreciation.
With the sol approaching a 16-year high, Peru’s central bank said that as of April 1, the reserve ratio will rise 0.25 percentage points. The bank, which has ruled out Brazilian-style capital controls, has also been aggressively buying dollars in the spot market to slow the trajectory of the sol………………………………………..Full Article: Source

GCC ‘single currency to further strengthen economic stability’

Posted on 28 March 2013 by VRS  |  Email |Print

A senior foreign exchange analyst attending the 4th Saudi Money Expo and Conference 2013 has predicted a rise in global gold prices in 2014.
Peter Rosenstreich, chief FX Analyst and associate director of Swissquote Bank SA, speaking to Arab News on the sidelines of the conference yesterday, said: “Currently the relationship between inflation and gold prices is no longer there. Therefore, without that connection people really don’t have a reason to trade gold. If we start seeing global inflation rising at the end of 2013, we will tell investors to start buying gold again to offset inflation, which would make gold prices to rise.”……………………………………….Full Article: Source

World water crisis could lead to big investing opportunity

Posted on 28 March 2013 by VRS  |  Email |Print

When you turn on the faucet of your kitchen sink or bathroom shower, it’s easy to forget that behind the water is a really big business. From finding a clean source, to purifying it, and getting it into your home, there are plenty of ways to profit from good old H2O. And the demand for safe, clean water in every corner of the world has never been higher.
We were reminded of its importance last week with the United Nation’s 20th annual World Water Day. Connecticut Water Services (CTWS) marked the occasion by ringing the closing bell at the Nasdaq marketsite. ……………………………………….Full Article: Source

A challenging year ahead for miners: PwC report

Posted on 27 March 2013 by VRS  |  Email |Print

After a slow and cautious 2012, mining M&A activity is expected to continue at a moderate and equally cautious pace in 2013 as metal prices stabilise and companies bet on a continued rise in commodity demand from countries such as China, according to the latest Mining Deals report by PwC.
It is also expected that this year, mega-mergers will be placed on the shelf while mining companies seek to prove that they are being prudent with shareholder dollars and are able to realise positive results on significant acquisitions made in the past few years………………………………………..Full Article: Source

Gold goes under $1,600

Posted on 27 March 2013 by VRS  |  Email |Print

Gold futures prices fell below $1,600 a troy ounce Tuesday for the first time since the Cyprus crisis erupted, as worries about the euro-zone member eased and as U.S. data pointed to economic recovery. A report showing increased gold purchases by the world’s central banks in February helped cushion the fall in futures prices.
The most actively traded contract, for April delivery, fell $8.80, or 0.6%, to settle at $1,595.70 a troy ounce on the Comex division of the New York Mercantile Exchange. The thinly traded March contract also ended 0.6% lower, at $1,595.80. This was gold’s first close below $1,600 since March 15, though futures prices had slipped below this psychologically important level in Monday’s trading………………………………………..Full Article: Source

Gold heads for worst quarterly run since 2001 on U.S. economy

Posted on 27 March 2013 by VRS  |  Email |Print

Gold, trading little changed after dropping for three days, headed for the first back-to-back quarterly losses since 2001 as signs that the U.S. economy is recovering cut demand for the metal as a store of wealth.
Gold for immediate delivery was at $1,599.46 an ounce at 9:50 a.m. in Singapore from $1,600.05 yesterday. Prices have lost 4.5 percent this quarter as holdings in exchange-traded products fell 6.8 percent, the most on record. Bullion for June delivery gained 0.2 percent to $1,599.80 an ounce on the Comex………………………………………..Full Article: Source

Gold price seen lower in 2013 as investors’ demand drops: CPM

Posted on 27 March 2013 by VRS  |  Email |Print

The average price of gold is expected to fall in 2013 for the first time in 11 years as fading fears of catastrophic market events prompt investors to scale back bullion purchases, commodities research and consultant CPM Group said. In its report released on Tuesday, the New York firm said it expects net buying by gold investors to drop for a second consecutive year and weigh on bullion prices, even though gold fabrication and central-bank demand will rise this year.
CPM Group did not put a figure on gold’s overall percentage price fall. In 2012, the price of gold rose 6 percent from 2011 to an average around $1,670 an ounce, it said………………………………………..Full Article: Source

‘Investment demand in gold to drop 3pct in 2013′

Posted on 27 March 2013 by VRS  |  Email |Print

The average price of gold is expected to fall in 2013 for the first time in 11 years, as fears of catastrophic market events fade, prompting investors to scale back bullion purchases, commodities research and consultant CPM Group said.
In its report released today, the New York firm said it expects net buying by gold investors to drop for a second consecutive year and weigh on bullion prices, even though gold fabrication and central-bank demand will rise this year. CPM Group did not put a figure on gold’s overall percentage price fall. In 2012, the price of the yellow metal rose six per cent from 2011 to an average around $1,670 an ounce, it said………………………………………..Full Article: Source

If gold prices continue falling, half the industry could be worthless

Posted on 27 March 2013 by VRS  |  Email |Print

Gold prices have fallen dramatically in recent months, and the industry as a whole could be in trouble. In fact, if the prices fall as low as $1,000 per ounce, half the industry could be worth absolutely nothing. Hedge funds have apparently lost their interest in gold, starting in the fourth quarter of last year.
Last year was the 12th consecutive year of increases for gold prices, although at this point, gold equities are at historically low valuations………………………………………..Full Article: Source

Gold prices likely to be range bound in second quarter – BNP Paribas

Posted on 27 March 2013 by VRS  |  Email |Print

Gold prices are likely to stay within a range in the second quarter, given that the market has not reacted as expected to certain news events and that technical chart indicators are neutral, said a metals strategist at a French bank. The banking crisis in Cyprus and continued loose monetary policy by the Federal Reserve should have supported gold, but “instead the gold price only reacted mildly,” said Anne-Laure Tremblay, precious metals strategist at BNP Paribas.
“At face value, gold should have attracted safe-haven demand from greater risk aversion and the suggestion that Cyprus’ solution could be deployed in other eurozone member countries,” she said, but added that gold prices haven’t reflected this………………………………………..Full Article: Source

The best way to buy silver

Posted on 27 March 2013 by VRS  |  Email |Print

Given all the uncertainty in the global economy - debt issues, easing programs, unemployment, etc. - many investors have taken comfort in owning precious metals. Designed to protect against inflation and ambiguity in the markets, the asset class contains much appeal.
As such, gold, silver and even platinum and palladium have now become portfolio staples. While there is much debate over whether or not, investors should even own precious metals at all, there is a much bigger debate a-brewing. Just how should they get that exposure?……………………………………….Full Article: Source

Lithium investing: A visual guide

Posted on 27 March 2013 by VRS  |  Email |Print

In the commodity world, lithium is a rising star as its use and prevalence has skyrocketed in recent years. Thanks to a wealth of new technologies, lithium is slowly becoming a staple metal for a number of products and industries.
As one of the lightest metals out there, lithium is used widely in pharmaceuticals, ceramics, aluminum, and a number of clean technology processes. Given its wide spread, it should be no surprise that the commodity has also grown as an investment in recent years………………………………………..Full Article: Source

Will Cyprus affect your precious-metals portfolio?

Posted on 27 March 2013 by VRS  |  Email |Print

While the deal reached over the weekend to restructure the critical debt situation in Cyprus has been met with wildly disparate opinions from across the eurozone, it’s creating new standards that will affect both EU countries and the global economy.
As is so often the case when considering the global macroeconomic results of a situation like this one, the results are working to create competing forces within certain markets. Precious metals, including gold and silver, tend to be bolstered by weak economic conditions. Conversely, however, the turmoil in Europe is positive for the U.S. dollar — this is ultimately bearish for metals………………………………………..Full Article: Source

Copper gains as U.S. manufacturing, housing recovers

Posted on 27 March 2013 by VRS  |  Email |Print

Copper rose in London on signs that manufacturing and housing are gaining in the U.S., the world’s second-biggest buyer of the metal used in wires and pipes.
Orders for U.S. durable goods climbed more than forecast in February on demand for automobiles and commercial aircraft, a Commerce Department report showed today. In January, the S&P/Case-Shiller index of property values in 20 cities climbed 8.1 percent, the most since June 2006. The increase exceeded the 7.9 percent median forecast in a Bloomberg survey………………………………………..Full Article: Source

Russia, South Africa seek to create OPEC-style platinum bloc

Posted on 27 March 2013 by VRS  |  Email |Print

Russia and South Africa, which together control about 80 percent of the world’s reserves of platinum group metals, plan to create a trading bloc similar to OPEC to control the flow of exports.
“Our goal is to coordinate our actions accordingly to expand the markets for realization of these metals,” Russian Natural Resources Minister Sergey Donskoy said yesterday in an interview at a summit of leaders from Brazil, Russia, India and South Africa in Durban. “The price depends on the structure of the market and we will form the structure of the market.”……………………………………….Full Article: Source

China’s exploitation of Latin American natural resources raises concern

Posted on 27 March 2013 by VRS  |  Email |Print

Economic benefits countered by environmental damage and fears over lopsided nature of trade relations with Beijing. Amazonian forest cleared in Ecuador, a mountain levelled in Peru, the Cerrado savannah converted to soy fields in Brazil and oil fields under development in Venezuela’s Orinoco belt.
These recent reports of environmental degradation in Latin America may be thousands of miles apart in different countries and for different products, but they have a common cause: growing Chinese demand for regional commodities………………………………………..Full Article: Source

China oil price overhaul is more market driven

Posted on 27 March 2013 by VRS  |  Email |Print

China will start a more flexible system for pricing domestic fuel from Wednesday - the first major revamp in four years - to help avoid shortages and tame consumption. The new scheme should reverse years of losses for China’s oil refiners, analysts said, by increasing the link with world crude prices and scrapping a rigid formula for altering prices for oil products, such as gasoline and diesel.
“This is a big milestone for the energy industry and big win for the refiners as the new scheme should lead to more market-driven prices, which will lead to improved profitability in the sector,” said Gordon Kwan, head of energy research at Mirae Aseet Securities in Hong Kong………………………………………..Full Article: Source

China shortens oil pricing period

Posted on 27 March 2013 by VRS  |  Email |Print

China will adjust the prices of oil products every 10 working days to better reflect changes in the global oil market, the National Development and Reform Commission (NDRC) announced on Tuesday. Previously, domestic fuel prices were adjusted when prices for Brent, Dubai and Cinta crude changed by more than 4 percent over 22 working days.
The new pricing system also cancels the 4-percent floating band for oil price changes and adjusts the varieties of crude used to calculate the price changes for domestic oil products, the commission said at a press conference………………………………………..Full Article: Source

3 commodity ETFs still going higher

Posted on 27 March 2013 by VRS  |  Email |Print

As the broad markets are approaching their all-time highs, investors are gaining confidence over the riskier asset classes. As such, equities and equity ETFs are showing heavy inflows this year on the heels of improving global economic conditions.
In this backdrop, commodities like gold, agriculture and industrial metals have experienced some weakness due to a lack of investor interest and a strong dollar. The fears of a deepening euro zone crisis of late has also taken a toll on these commodities, hurting demand for raw materials, further adding to their woes………………………………………..Full Article: Source

Commodities trading rule calls rejected

Posted on 27 March 2013 by VRS  |  Email |Print

Switzerland has sought to ­protect its central role in the commodities trading industry, rejecting calls for stringent regulation in the sector and opting instead to launch a consultation over a set of voluntary principles for the industry.
The Swiss government will publish on Wednesday a long-awaited report on the commodities industry, which includes groups such as Glencore, Vitol and Cargill with big offices in cities such as Geneva, Zug and Lugano. The report will stop short of calling for strict mandatory regulation, as campaigners have demanded, instead proposing a wide-ranging consultation about transparency and human rights, according to three people familiar with the discussions………………………………………..Full Article: Source

Read this before investing in commodities

Posted on 27 March 2013 by VRS  |  Email |Print

Wall Street’s commodity trading revenues stand at just half of what they were in 2008. And the buying and selling of grains, metals, energy and other goods now accounts for a thin 6.5% slice of the overall trading revenue pie — down from 30% five years ago.
Banks used to rake in billions, not just from commissions but from their own trading book. Now, position limits and other regulations put in place by the Dodd-Frank Wall Street Reform Act have reined in those profits. Some companies have exited the business altogether. ……………………………………….Full Article: Source

China and Brazil sign $30bln currency swap agreement

Posted on 27 March 2013 by VRS  |  Email |Print

China and Brazil have signed a currency swap deal, designed to safeguard against future global financial crises. The pact, first announced last year, will allow their central banks to swap local currencies worth up to 190bn yuan or 60bn reais ($30bn; £20bn).
Officials said this will ensure smooth bilateral trade, regardless of global financial conditions. Along with being the world’s second-largest economy, China is also Brazil’s biggest trading partner………………………………………..Full Article: Source

Bubbles in food prices

Posted on 27 March 2013 by VRS  |  Email |Print

A thoughtful new paper from researchers at the University of Illinois marks a significant step forward in research on how commodity futures prices are formed. Until recently, the academic and policy debate about futures price formation has been locked in an acrimonious and polarized standoff between market fundamentalists, who insist all price moves reflect supply and demand fundamentals, and those writers who blame speculators for every rise in food and fuel prices.
Both views tend to be colored by the policy outcomes researchers favor. Anti-poverty campaigners focus on the role of speculation because they want governments to impose more controls on the cost of food and fuel. Free-market economists stress the role of fundamentals to deny governments any ammunition to meddle………………………………………..Full Article: Source

China, Australia join hands in global carbon challenge

Posted on 27 March 2013 by VRS  |  Email |Print

As the world watches China take the lead on a national carbon-pricing scheme, experts from Australia’s prestigious University of New South Wales (UNSW) will begin work with leading Chinese universities in a landmark collaboration to be announced in Sydney this week.
The collaboration will be announced at the Australia China Climate Change Forum at UNSW on March 27. It will be attended by senior Australian government officials and their Chinese counterparts. The forum will unite policy and technical experts in emissions reduction as well as representatives of major industries and businesses from both sides of a growing sphere of Sino-Australian cooperation………………………………………..Full Article: Source

After Cyprus, commodities struggle for direction

Posted on 26 March 2013 by VRS  |  Email |Print

The Cyprus bailout deal left commodities traders scratching their heads. On Monday gold fell, silver rose, and key industrial metals and energy commodities were mixed. The news that dominated trading talk was that Cyprus reached an agreement that it will allow it to get emergency bailout loans from other European countries. But traders weren’t sure what happens next.
Normally an agreement like that would give stocks and industrial metals a lift, because it eliminates the immediate fear of a country’s disorderly breakdown. But Monday, stocks across Europe and the U.S. fell. So did copper and palladium, which can gauge how investors feel about the economy since they’re closely tied to manufacturing and industry………………………………………..Full Article: Source

Five Brics nations are intricately linked through commodities

Posted on 26 March 2013 by VRS  |  Email |Print

The Brics (Brazil, Russia, India, China and South Africa) Summit in Durban this week generally sparks intense debate and interest in the body’s changing role on the international stage. There are many obvious links between the Brics nations that may form the foundation for these debates.
For example, China is the largest and India the third-largest economy in Asia (after Japan). South Africa is the largest economy in Africa, while Brazil holds the same title in South America. These economies also share the common thread that they are emerging markets with all the usual opportunities and challenges associated with economies in this stage of development………………………………………..Full Article: Source

Commodity booms, busts and bubbles

Posted on 26 March 2013 by VRS  |  Email |Print

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

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