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Commodities Briefing - Archive | September, 2013

The death of the commodity super-cycle is premature

Posted on 30 September 2013 by VRS  |  Email |Print

Commodities may no longer be the asset class of choice for investors, but the idea that the resources “super-cycle” has run its course is simply wrong, argues global advisory heavyweight McKinsey & Company in its latest survey on the sector.
Equally misguided, according to the consultancy firm’s research arm, is the argument that recent declines in prices for a range of commodities – from copper to iron ore and oil – mark the beginning of a downward trend………………………………………..Full Article: Source

Global growth prospects hold key to markets

Posted on 30 September 2013 by VRS  |  Email |Print

Global commodity markets are at a crossroads. On the one side is a high road to expanded demand and improved price performance, while on the other is a low-road to tepid demand conditions and range-bound or falling prices.
It is as yet uncertain which direction the market will take. Monetary policy of major economies and global growth prospects will continue to impact commodity markets. Continued sluggishness in global economic growth despite some pick-up signals suggests that the recent jump in prices of oil and some base metals such as copper may not sustain unless the growth momentum gathers pace decisively………………………………………..Full Article: Source

Commodities,global economy not yet on a firm recovery path: Barclays

Posted on 30 September 2013 by VRS  |  Email |Print

Commodity benchmarks are on course in Q3, 2013 to the biggest quarterly gains in a year however, Barclays cautions that it is not due to any real recovery in the global economy. Commodity returns were boosted with the easing of a number of potentially negative factors and the emergence of the some idiosyncratic risks in specific markets such as oil, rather than any convincing evidence of a sustained improvement in the demand environment.
“With the list of issues and events that could potentially wrong-foot investors now a little shorter and positioning much cleaner, we see outcomes for commodity markets in Q4 tied to three key themes,” Barclays said:……………………………………….Full Article: Source

Commodity markets take good news in its stride

Posted on 30 September 2013 by VRS  |  Email |Print

What does China’s factory sector growing at its strongest pace in six months have in common with the US Federal Reserve’s decision to keep buying bonds? Both failed to boost commodity prices much.
The flash HSBC Purchasing Managers’ Index (PMI) rose to 51.2 in September from August’s 50.1, the highest level since March and strengthening the view that economic growth in the world’s largest commodity consumer is regaining momentum. The improvement came days after the Fed surprised market watchers by keeping its bond purchases at $85 billion (Dh312 billion) a month, judging that it is still too early to taper monetary stimulus, given the nascent economic recovery in the US………………………………………..Full Article: Source

Commodities: What goes up…

Posted on 30 September 2013 by VRS  |  Email |Print

Are commodities over-valued? There are two schools of thought on the subject, one that says constrained supply and surging demand from emerging markets is the key driver of price, and the other that suggests high prices are a consequence of market speculation (boosted by cheap money).
McKinsey’s annual commodity report, released on Thursday, gives succour to the latter group. The chart below shows average commodity prices since 1980, combining metal, food, energy and raw material prices. Average prices are about 12 per cent down on their 2008 peak – but they are still more than double what they were in 1980. The commodity super-cycle “isn’t dead”, it suggests………………………………………..Full Article: Source

More regulatory angst over physical commodities and banks

Posted on 30 September 2013 by VRS  |  Email |Print

Should Goldman Sachs stay in physical commodities? Once the controversy really got hot, JPMorgan wasted no time in announcing that it would exit the business of physically storing metals commodities. The issue is alive for other banks, notably Goldman Sachs, which has taken its lumps over its controversial Metro warehousing facility in Detroit.
Reuters notes that regulators have some big decisions to make. First, the Federal Reserve must decide whether former investment banks Goldman Sachs and Morgan Stanley will “be allowed to continue owning and operating physical assets like oil pipelines and metal warehouses.” ……………………………………….Full Article: Source

Oil drops on easing tensions over Syria, Iran

Posted on 30 September 2013 by VRS  |  Email |Print

Global oil prices sank last week on receding tensions over Iran and Syria, while coffee struck another three-year low on the back of plentiful supplies, dealers said.
Sentiment was also hit by the US budget impasse, with lawmakers unable to reach agreement over a budget just days before a deadline kicks in that could see parts of the federal government shut down………………………………………..Full Article: Source

Iran oil-export revival needs more than Obama phone call

Posted on 30 September 2013 by VRS  |  Email |Print

U.S. President Barack Obama and Iran’s Hassan Rouhani must build on their weekend phone call to convince crude traders that a thaw in relations will open the way to increased oil exports. While the historic conversation Sept. 27 will probably limit gains in prices, any “long-term” declines for crude will depend on the success of negotiations aimed at curbing the Persian Gulf nation’s ability to enrich uranium, according to Nomura Holdings Inc.
For Citigroup Inc., the differences between the two nations are likely to weigh on talks even as some countries, such as India, seek to boost imports from Iran………………………………………..Full Article: Source

Are product spreads useful for forecasting price of oil?

Posted on 30 September 2013 by VRS  |  Email |Print

Petroleum products such as gasoline and heating oil are produced by refining crude oil. Many oil market analysts believe that the prices for these petroleum products contain useful information about the future evolution of the price of crude oil.
In particular, changes in the product price spread – defined as the extent to which today’s price of gasoline or heating oil deviates from today’s price of crude oil – is widely viewed as a predictor of changes in the price of crude oil………………………………………..Full Article: Source

Gold bulls raise wagers most in month on stimulus: Commodities

Posted on 30 September 2013 by VRS  |  Email |Print

Hedge funds’ combined holdings in gold futures rose the most this month as continued U.S. monetary stimulus spurred investors to sell short contracts and sent prices toward the first quarterly advance in a year.
The net-long position in bullion jumped 12 percent to 78,654 futures and options in the week ended Sept. 24, the most since Aug. 27, U.S. Commodity Futures Trading Commission data show. Long wagers gained 1.8 percent and short bets fell 17 percent, the biggest drop in four weeks. Combined net-long holdings across 18 U.S.-traded commodities climbed 1.7 percent, the first gain in September………………………………………..Full Article: Source

Gods forbid: Temples guard their gold from government

Posted on 30 September 2013 by VRS  |  Email |Print

Hindu temples are resisting divulging their gold holdings - perhaps nearly half the amount held in Fort Knox - amid mistrust of the motives of authorities who are trying to cut a hefty import bill that is hurting the economy.
The central bank, which has already taken steps that have slowed to a trickle the incoming supplies that have exacerbated India’s current account deficit, has sent letters to some of the country’s richest temples asking for details of their gold. It says the inquiries are simply data collection, but Hindu groups are up in arms………………………………………..Full Article: Source

Lower gold price spurs rush to buy bullion

Posted on 30 September 2013 by VRS  |  Email |Print

Falling gold prices in recent months have encouraged bargain hunters across Asia to buy more of the precious metal. Gold has traditionally been bought in India and China as insurance against currency fluctuations and inflation.
Perth Mint, which produces 10 per cent of the world’s gold bullion, has been keeping a close watch on gold price movements. The miner’s analysis and strategy manager Bron Suchecki told Radio Australia that it was overwhelmed with interest from Asian buyers when gold had a massive correction early this year………………………………………..Full Article: Source

Silver to outperform Gold in 2014: Bank of America Merrill Lynch

Posted on 30 September 2013 by VRS  |  Email |Print

Bank of America Merrill Lynch has cut its average gold and silver price forecasts for next year as United States monetary policy starts to normalize. The bank expected silver to outperform gold next year.
Gold Price Forecast: The American bank has trimmed its average gold price forecast by 17% and is expecting to see an average price of $1,294 an ounce in next year. According to the bank, a gradual increase of U.S. real interest rates should be accompanied by lower gold prices in 2014, a key reason behind the reduction of price forecasts………………………………………..Full Article: Source

Silver price pushing on a string

Posted on 30 September 2013 by VRS  |  Email |Print

Little in the way of news has transpired in the past week that could have an impact on the silver market. The main stage has been set for some time, regarding all the known factors affecting silver, to date. There is no need to review any of them, at this point.
What can be noted is that the CFTC has reached the conclusion that the “alleged” manipulation by JPMorgan in the silver market, well documented and presented to the CFTC by Andrew Macguire, was much ado about nothing.. Just like lackey Eric Holder, chief law [un]enforcement official a the Dept of [no]Justice, has not been able to uncover any wrongdoing by Wall Street over the past 5 years, the CFTC ran into the same “bad luck” during its two-year investigation………………………………………..Full Article: Source

Balance sheet liquefaction and the race for precious metals

Posted on 30 September 2013 by VRS  |  Email |Print

The Fed seems to be stuck because of housing market weakness and its associated mortgage backed securities. The repo market appears to be where the stress is most threatening, though hidden from view. These trillion dollar daily transactions are the lifeblood of world financial markets.
Furthermore, the size of global financial markets has become so large that their downfall would severely threaten the underlying economy………………………………………..Full Article: Source

All that glitters is … copper?

Posted on 30 September 2013 by VRS  |  Email |Print

Over the past year, gold has lost a quarter of its value, and though it’s bounced off its most recent lows, it remains depressed. A big price surge last month had investors hoping a new bull rally was upon us, and then again a few weeks ago after Federal Reserve Chairman Bernanke’s “no taper” speech, it was off to the races.
But the rallies were short-lived, and gold is down again around the $1,330-per-ounce level again………………………………………..Full Article: Source

iShares to close 15 equity and commodity ETFs

Posted on 30 September 2013 by VRS  |  Email |Print

iShares has announced the closure of 15 equity and commodity exchange traded funds (ETFs) due to low investor demand for the funds. The group acquired Credit Suisse’s ETF business in July this year and has begun integrating its funds.
The funds include eight iShares funds and seven legacy Credit Suisse ETFs. The group said the combination of the two fund lines resulted in 10 identical exposures. iShares has harmonised the pricing for these to ensure holders in each range are treated equally………………………………………..Full Article: Source

Is the euro the next currency battleground?

Posted on 30 September 2013 by VRS  |  Email |Print

If the Federal Reserve’s unprecedented quantitative easing program started a currency war, the euro may offer the next battleground. The euro zone’s policy makers are set to launch the next salvo in a move to push down euro’s value, said Jens Nordvig, global head of foreign-exchange strategy at Nomura and the author of “The Fall of the Euro.”
In 2010, Brazil’s Finance Minister Guido Mantega popularized the phrase “currency wars” after developed nations, such as the U.S. and the euro zone, rolled out a series of easing measures to bolster their exports by weakening their currencies, which pushed up emerging market currencies………………………………………..Full Article: Source

China yaun, renminbi: Soon to be a world reserve currency?

Posted on 30 September 2013 by VRS  |  Email |Print

But whether the Chinese RMB will become a reserve currency is an entirely different question. Of course it will, over time, but the question has always been when. There are some preconditions required for reserve currency status.
Quietly, apart from anything that might happen to the US dollar, China is working to meet those conditions. Rather than wallowing in concerns about China’s actions, we might opt for a more thoughtful and constructive response: to welcome the RMB to the reserve currency club and hope that it gets here soon………………………………………..Full Article: Source

Why rupee-dollar levels do not depict the true value of India’s currency

Posted on 30 September 2013 by VRS  |  Email |Print

Headlines such as “The rupee has appreciated or depreciated 30 paise against the dollar…” appear on a daily basis. Such reports on currency invariably attribute the reasons for currency movement to a government decision, uncertainty in markets, or perhaps even a controversy.
This piece is about knowing the actual value of the rupee. In India, the de facto way to measure the rupee’s value is to compare it to the US dollar. When was the last time you heard of the rupee being valued against the Japanese Yen, despite the fact that Japan has the 3rd largest economy in the world?……………………………………….Full Article: Source

Carbon markets less exciting than a hole in one but big drivers

Posted on 30 September 2013 by VRS  |  Email |Print

Last week I tried to grab some time with my family during the school holidays and sneak out to the golf course to get away from the rollercoaster that is this country’s carbon politics and robust climate debate. Whether it was the best week to pick is debatable.
In Europe, hundreds of the world’s top scientists and government officials worked on the latest report by the Intergovernmental Panel on Climate Change. On Friday evening they strengthened their warning the world is warming and that activities like the burning of coal, oil and gas are causing it………………………………………..Full Article: Source

Fed tapering to hurt commodity markets: Nouriel Roubini

Posted on 27 September 2013 by VRS  |  Email |Print

There are a number of factors as to why the commodity super cycle is probably over. First of all, China is slowing down. Their growth rate might be as low as 6% or 7%. Additionally, we have a slow recovery in advanced economies and since there the monetary policy is going to be tightened, however, gradual.

The Fed eventually is going to start tapering, would eventually go away from zero policy rates and that increase in short and long rates is going to soften commodity prices as well. The dollar is going to strengthen over time because economic growth in the US is going to outperform the one in other advanced economies. The Fed is going to exit faster than other central banks………………………………………..Full Article: Source

The safer way to cash in on a commodities rebound

Posted on 27 September 2013 by VRS  |  Email |Print

Ben Yearsley, head of investment research at Charles Stanley Direct, explains why he’s drawn to the Investec Enhanced Natural Resources fund for his commodities exposure. Commodities are an inherently risky place to put your money. They were one of the “must have” investments a decade ago, but have seemingly been in the “must avoid” category in the last few years.
Most commodities, especially industrial metals such as copper, appear intrinsically linked to the appetite of emerging markets; when China does well, commodities have performed strongly, when China wobbles, commodity prices and related share prices fall sharply. So, what are the prospects today?……………………………………….Full Article: Source

Commodity supercycle is ‘alive and well’: McKinsey & Co.

Posted on 27 September 2013 by VRS  |  Email |Print

Recent declines in commodity prices have raised the idea that the so-called commodity supercycle is over, but not everyone believes that. Month to date futures prices, based on the most-active contracts, for gold have lost around 5%, silver’s down over 7%. Oil and natural-gas futures have lost around 4%.
But “despite recent falls, commodity prices are still near their levels of early to mid-2008, just before the global financial crisis hit,” said analysts at McKinsey & Company, in a recent research note………………………………………..Full Article: Source

Warren Buffett’s commodity stock picks

Posted on 27 September 2013 by VRS  |  Email |Print

Warren Buffett — the Oracle of Omaha — is one of the world’s most renowned investors, heralded for his simple yet effective valuation methods. As such, followers of the legendary investor pay close attention when Buffett places big bets, and they hope that by following his stock picks, they will cash in on Buffett’s guru-like instincts.
In the commodity space, however, Buffett has been quite vocal about his aversion to certain commodities — namely gold . However, Buffett does have meaningful exposure to commodity producers that are involved in a wide array of industries, including oil and gas, solar power, and agriculture………………………………………..Full Article: Source

Why heavy institutional positions in the commodities market is cause for worry

Posted on 27 September 2013 by VRS  |  Email |Print

Why is the US Federal Reserve looking into reviewing whether Goldman Sachs (GS), JPMorgan (JPM) and other banks can hold physical commodities such as gas, aluminum and the infrastructure in which to store them?
Because of facts like these: a Euromoney article reports that according to the Aluminum Association, the US aluminum supply totaled 18.3 billion pounds (8.3 million tons) in 2009, with industry sources putting Goldman Sachs holding some 25% of it………………………………………..Full Article: Source

OPEC to boost exports before refinery halts, Oil Movements says

Posted on 27 September 2013 by VRS  |  Email |Print

The Organization of Petroleum Exporting Countries will increase crude shipments by 1 percent next month as they maximize flows before refineries are shut for maintenance, according to tanker tracker Oil Movements.
OPEC, which supplies about 40 percent of the world’s oil, will raise exports by 230,000 barrels a day to about 23.9 million a day in the four weeks to Oct. 12 compared with the period to Sept. 14, the researcher said today in a report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

For oil and gas producers, it’s all about assets

Posted on 27 September 2013 by VRS  |  Email |Print

The industry is focusing on liquid-rich plays, but some gassier regions offer solid returns, asserts Joel Musante, senior research analyst for oil and gas exploration and production with Euro Pacific Capital. With oil trading over $100 per barrel, liquids-rich plays are most attractive.
Prices may pull back, even though the surge in merger and acquisition activity suggests that some companies might believe that these price levels are here to stay. Ultimately, producers must consider development costs as well as product types and margins to enhance returns………………………………………..Full Article: Source

Iran reappoints Kazempour as OPEC governor

Posted on 27 September 2013 by VRS  |  Email |Print

Iran has named a veteran oil official as its representative on OPEC’s board of governors, the latest former incumbent to return to a senior oil post under new president Hassan Rouhani.
The appointment of Hossein Kazempour Ardebili as Iran’s OPEC governor was confirmed this week by the Organization of the Petroleum Exporting Countries (OPEC) on its website………………………………………..Full Article: Source

Lower gold price spurs rush to buy bullion

Posted on 27 September 2013 by VRS  |  Email |Print

Falling gold prices in recent months have encouraged bargain hunters across Asia to buy more of the precious metal. Gold has traditionally been bought in India and China as insurance against currency fluctuations and inflation.
Perth Mint, which produces 10 per cent of the world’s gold bullion, has been keeping a close watch on gold price movements. The miner’s analysis and strategy manager Bron Suchecki told Radio Australia that it was overwhelmed with interest from Asian buyers when gold had a massive correction early this year………………………………………..Full Article: Source

Gold bugs bitten again by precious metals rout

Posted on 27 September 2013 by VRS  |  Email |Print

Here’s a market trend you can almost bank on: Whenever gold prices jump, gold experts come out of the woodwork telling their fervent followers to buy more bullion because gold prices are heading to the moon! It’s a pattern that’s repeated itself multiple times over the past two years. It’s also toxic advice that’s been dead wrong.
In fact, the rallies in gold prices have been brief, but just long enough to fool the gullible masses into believing that prices are still going up………………………………………..Full Article: Source

Gold and silver prices: Mapping short term volatility

Posted on 27 September 2013 by VRS  |  Email |Print

After years of paying attention to the price action and not the mainstream market commentary — thanks in large part to Ted Butler and GATA — here are some of the dominate forces that currently seem to be determining price movements in the precious metals:Downside Probability.
Jobs data comes out every few weeks. This almost always puts downside pressure on the market, with about a 90% probability. Also, presidential press conferences tend to have a 70% downside probability. The powers that suppress the precious metals prices cannot have metals surging while the president speaks………………………………………..Full Article: Source

China set to splurge on rare earths

Posted on 27 September 2013 by VRS  |  Email |Print

China, the world’s stronghold of rare earths, is set to go on a splurging spree in October for the precious elements. Six of China’s large rare earths producers have been reported likely to purchase large amounts of the minerals next month.
These companies include Baotou Steel Rare Earth Hi-Tech Co; China Minmetal Rare Earth Co Ltd; China Nonferrous Metal Industry’s Foreign Engineering and Construction Co Ltd; Chinalco Rare Earth Jiangsu Co Ltd; Rising Nonferrous Metals Co Ltd and Ganzhou Rare Earth Mineral Industry Co Ltd………………………………………..Full Article: Source

Exchange-traded funds, commodities and notes

Posted on 27 September 2013 by VRS  |  Email |Print

An exchange-traded fund (ETF) is an index-tracking fund that trades on a stock exchange and are generally used to track the performance of a specific market index. They change in value throughout the trading day as they mimic the performance of their designated index.
According to Morningstar’s European passive fund analyst team, it is important to know that ETFs are only a part - albeit the biggest part - of a broader family now commonly referred to as exchanged-traded products (ETPs)………………………………………..Full Article: Source

ETF assets up $224 bln this year

Posted on 27 September 2013 by VRS  |  Email |Print

U.S.-listed ETF assets have climbed $224 billion this year due to price appreciation and net inflows of $133 billion, according to ConvergEx Group. There are more than 1,500 exchange traded products listed on domestic exchanges with total assets of $1.6 trillion. Meanwhile, aggregate daily volume in ETF trading is up 10% from last year, to $63 billion daily.
“The success of ETFs in gathering assets continued in the third quarter of 2013, and with just a few days to go inflows total $59 billion,” said Nicholas Colas, chief market strategist at ConvergEx Group, in a note Thursday………………………………………..Full Article: Source

Commodity trading advisors, puzzled by Fed, head for third year of losses

Posted on 27 September 2013 by VRS  |  Email |Print

Long-term trend-following hedge funds are heading for a third straight year of losses unless the commodity and financial markets they trade in settle into a more predictable pattern, which does not seem likely given the Federal Reserve’s mixed signals on the U.S. economic stimulus.
Known generically as “managed futures”, or Commodity Trading Advisors (CTAs), many trend followers were whipsawed in the first half by market gyrations over whether the Fed would cut its bond buying this year. More volatility seems likely; last week, the Fed said it needed more time to decide………………………………………..Full Article: Source

RBI focus still on currency stability

Posted on 27 September 2013 by VRS  |  Email |Print

Reserve Bank of India governor Raghuram Rajan’s maiden monetary policy announcement has evoked contrary responses. India’s financial markets and a section of the business community have reacted adversely to his decision to increase the repo rate in his policy statement.
This is understandable. Dr. Rajan had been in favour of lowering interest rates during his brief stint at the Finance Ministry. That and the terrific buzz that accompanied his assumption of office had led to expectations in some quarters that a rate cut was likely………………………………………..Full Article: Source

ADB report reveals risks to E. Asia’s local currency bonds

Posted on 27 September 2013 by VRS  |  Email |Print

East Asia’s local currency bond markets are still expanding, but risks to the outlook are rising given the prospects of a tighter US monetary policy, slower economic growth in Asia and persistent capital outflows, according to the latest Asia Bond Monitor quarterly from the Asian Development Bank (ADB).
“Asia’s bond markets and its borrowers are better placed to stand up to this latest round of global volatility than they were in 1997-1998 but tough times certainly lie ahead,” ADB office of regional economic integration head Iwan J. Azis said in an official release………………………………………..Full Article: Source

Brazil: Agriculture Vs industry: Leave well alone

Posted on 27 September 2013 by VRS  |  Email |Print

The story of how Brazil’s vast central and north-eastern crop belt was won starts in 1973, when Brazil’s military regime decided to centralise agronomy research and set up the Brazilian agricultural research corporation, Embrapa.
It sent 1,200 bright young scientists abroad to study. When they returned and were set to work, they achieved something of a miracle: they made the cerrado bloom. Until then, Brazil’s savannah with its acid, nutrient-poor soil had been thought impossible to cultivate. It turned out that deep tilling, huge quantities of lime and fertiliser and fast-growing crops bred to suit the local conditions could coax a rich harvest from it………………………………………..Full Article: Source

Carbon markets need global regulator to spur climate funding

Posted on 27 September 2013 by VRS  |  Email |Print

United Nations envoys meeting in November should appoint a regulator to link carbon markets emerging from China to California and stimulate investment in emission-reduction projects, according to a carbon lobby group.
A global overseer would coordinate markets and boost private-sector confidence in efforts to cut greenhouse gas, said Anthony Hobley, president of the Climate Markets & Investment Association, whose members include JPMorgan Chase & Co. and Cargill Inc. More than 50 jurisdictions have set up or are considering carbon markets, UN and World Bank data show………………………………………..Full Article: Source

European nations pledge limited support to ailing UN carbon scheme

Posted on 27 September 2013 by VRS  |  Email |Print

A handful of European governments have thrown the U.N.’s main market to cut greenhouse gas emissions a lifeline by pledging to finance emission reduction projects that are viewed by the private sector as unprofitable.
Great Britain, Germany, Sweden, Norway and Belgium plan to pay more than current market prices for carbon credits known as Certified Emission Reductions (CERs) from emission reductions projects registered under the Clean Development Mechanism (CDM) in the world’s least developed countries………………………………………..Full Article: Source

Commodities, global economy not yet on a firm recovery path: Barclays

Posted on 27 September 2013 by VRS  |  Email |Print

Commodity benchmarks are on course in Q3, 2013 to the biggest quarterly gains in a year however, Barclays cautions that it is not due to any real recovery in the global economy. Commodity returns were boosted with the easing of a number of potentially negative factors and the emergence of the some idiosyncratic risks in specific markets such as oil, rather than any convincing evidence of a sustained improvement in the demand environment.
“With the list of issues and events that could potentially wrong-foot investors now a little shorter and positioning much cleaner, we see outcomes for commodity markets in Q4 tied to three key themes,” Barclays said:……………………………………….Full Article: Source

Commodities ‘super cycle’ is seen enduring by McKinsey

Posted on 26 September 2013 by VRS  |  Email |Print

Commodity supply constraints and demand from emerging markets mean it’s premature to talk about the death of the super cycle that brought a longer-than-average period of rising prices, McKinsey & Co. said.
Energy, metal and agricultural prices that more than doubled since 2000 are still close to highs reached before the financial crisis, even after commodities from gold to wheat dropped into bear markets, McKinsey said………………………………………..Full Article: Source

Too soon to say commodity super cycle over: McKinsey

Posted on 26 September 2013 by VRS  |  Email |Print

Too much emphasis has been placed on Chinese demand for historically strong prices of industrial metals and not enough on rising mining costs, the McKinsey Global Institute (MGI) said in a report on Thursday.
The institute, the research arm of consultancy McKinsey & Company, also said it was too soon to call an end to the so-called super-cycle of commodities that sent prices soaring after 2000. “Despite recent declines, on average commodity prices are still almost at their levels in 2008 when the global financial crisis began. Talk about the death of the super-cycle appears premature,” the report said………………………………………..Full Article: Source

What next for commodities?

Posted on 26 September 2013 by VRS  |  Email |Print

Since bottoming in June, the JPMorgan Natural Resources fund is up 18%. Although we are still more than 50% off our highs in 2011, this does signal that some sort of recovery is underway. Commodity prices are bottoming across the energy, precious and base metals sub-sectors in which we invest. This is encouraging generalist investors to reappraise the sector for the first time in two years.
At the stock level, we are finally coming to the end of a two-year earnings downgrades cycle in this sector. Glencore Xstrata (GLEN), one of the largest holdings in the portfolio, has been subject to consistent earnings downgrades throughout this period because of continual falls in commodity prices………………………………………..Full Article: Source

The gold rush for commodities isn’t over yet

Posted on 26 September 2013 by VRS  |  Email |Print

We’ve been here before, haven’t we? Perhaps the clamour of Cassandra-like voices was not so great in 2011 when Spear’s previously wrote about the supposedly imminent demise of the commodities super-cycle, but it was nonetheless already a clamour. The past nine months or so have heard that clamour amplified several times over.
The Financial Times declared that the super-cycle was dead at the end of June, only to declare about ten days later that rumours of its death were greatly exaggerated. Most recently, the Wall Street Journal reported that the broad consensus of analysts and investors has called the end of the super-cycle………………………………………..Full Article: Source

BHP sees supply pressure on commodities, slower steel demand

Posted on 26 September 2013 by VRS  |  Email |Print

BHP Billiton , the world’s biggest mining company, on Wednesday said global commodities markets were being undermined by rising supplies of raw materials and warned the outlook for steel demand in Asia was expected to moderate.
“We maintain a positive outlook over the long term as the fundamentals of wealth creation, demographics and urbanisation continue to create demand for commodities across Asia and other markets,” BHP Chairman Jac Nasser said in the company’s fiscal 2013 annual report………………………………………..Full Article: Source

The “commodity supercycle” likely over: Roubini (Video)

Posted on 26 September 2013 by VRS  |  Email |Print

“A fragile global economy does not bode well for commodity prices. That’s the opinion of Dr. Nouriel Roubini of Roubini Global Economics. Good to see you once again.” “A pleasure being here with you.”
Outline for me, if you will, your thoughts about commodity prices. Basically, there’s going to be enough slowdown including emerging markets that will put a lid on prices from this point?……………………………………….Full Article: Source

Investing in commodities FAQ

Posted on 26 September 2013 by VRS  |  Email |Print

Commodity investments can provide higher returns than alternative investments – but the risks are higher and investors need to be familiar with the different markets. What are commodities? Commodities are tangible investments rather than intangibles like bonds or stocks. The sector splits into four markets.
Energy – like coal, oil or gas. Metals and minerals – like copper, iron ore or nickel. Precious metals – like gold, silver or platinum. Agricultural commodities – like wheat, forestry or fertilizers……………………………………….Full Article: Source

Peak oil demand: Peak oil didn’t go away, it just changed its name

Posted on 26 September 2013 by VRS  |  Email |Print

A new phrase has entered our energy lexicon—peak oil demand. The essential idea: prophets of doom who warned about a looming global petroleum shortfall (“peak oil”) were wrong; instead of a downturn in supply, we’re instead seeing the shrinkage of demand for oil. A non-problem just solved itself! Nothing to see, folks; move along.
What’s wrong with this framing of our energy situation? Plenty. To understand what and why, it’s helpful to start with a sense of who’s crooning the “peak demand” tune: it’s long-time peak oil critics like Daniel Yergin—the oil industry spokesman who, throughout the past decade of soaring oil prices, repeatedly assured the public that prices were going to fall back to historic levels……………………………………….Full Article: Source

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