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Commodities Briefing 04.Oct 2010

Posted on 04 October 2010 by VRS |  Email |Print

From Bloomberg: Hedge funds cut bullish bets on natural gas by the most since August as storms steered clear of production in the Gulf of Mexico and weak demand boosted a U.S. stockpile surplus.

Hedge funds and other large speculators reduced wagers on rising prices by 25 percent in the seven days ended Sept. 28, according to the weekly Commitments of Traders report from the Commodity Futures Trading Commission. Natural gas declined 2.1 percent that week……………………………………Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Seekingalpha.com: Commentators claim that commodity prices have recently risen because of the expectation that the Fed seems about open the money taps much further. Until unemployment diminishes and credit supply recovers, the real economy will not be able to absorb a lot of additionally created liquidity. Therefore, this extra money will largely flow to the financial markets.

In the past years, investors have increasingly regarded commodities as a normal part of a properly diversified portfolio. So if more money becomes available to the financial markets this will not just put upward pressure on stocks but also on commodity prices…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Hellenicshippingnews.com: Banks and trading houses have persuaded many pension funds and other investors to buy into commodity and energy markets, arguing they can offer an attractive hedge against inflation, diversification and big returns in rising markets.
But many have lost money with such passive investments, holding long positions in range-bound or falling markets and hit by the cost of rolling over contracts in over-supplied markets. Enter VOC and a host of other, commodity-focused hedge funds that make money trading positions within and between commodities, called “relative-value” or “long-short” spreads…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Tvnz.co.nz: The ANZ commodity price index rose for the first time in four months in September, with a 2.9 percent increase which took it to less than 1 percent below its all time high recorded in May. The largest lift in commodity prices last month was for wool, up 12 percent to hit a 14-year high.

“The lift in wool prices is likely to be attributable to higher prices for cotton (of which wool is a competing fibre) and renewed demand from Middle East and European markets, which has coincided with a run down in wool inventories globally,” ANZ economist Steve Edwards said…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Thehindubusinessline.com: The third quarter of 2010 that just went by was interesting for the performance of agricultural markets followed by base metals and precious metals. Although energy commodities found the going tough, characterised by sideways trading, especially with crude struggling to hold on to its $ mid-70s mark, oil closed the quarter on a strong note with last two days witnessing price spurts.

The fourth quarter has begun and the picture for commodity markets in general remains constructive. The quarter usually witnesses strong growth, trade and consumption of a range of commodities…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Bloomberg: Gold, little changed, may decline after reaching a record on five consecutive days last week on investor demand for an alternative to the weakening dollar. Silver traded near a 30-year high.

Gold for immediate delivery dropped as much as 0.2 percent to $1,316.35 an ounce after advancing to a record $1,320.70 on Oct. 1. Bullion rose 1.8 percent last week, the third straight weekly advance…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Nwsource.com: Gold exchange-traded funds (ETFs) are starting to seem like the tonic that fast-talking, traveling salesmen used to sell off the back of trucks in olden days.

If you have a financial pain or fear, gold funds are supposed to be the cure-all. Worried about recession? This fund is for you. Fear inflation? That’s covered, too. Think government spending will lead the dollar and euro to ruin? Find security in a gold fund. Want to make money fast? Lately, that’s been perceived as a no-brainer…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Indiainfoline.com: China is all set to emerge as the global leader in gold with the country easing its laws to help import of the yellow metal. This will have a major impact on the global bullion trade as Chinese investors turn to the open market to satisfy their hunger for the metal.
Chinese gold demand is expected to show at least single digit percent growth this year at a time when high prices are curbing buying in other major markets like India. This is likely to mean the shortfall between Chinese supply and demand which stood at 144 tonnes last year increases even further…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Telegraph: Silver prices have risen 31pc in 2010 to a 30-year high, outperforming gold, equities and most base metals. On Tuesday, the gold-silver ratio dropped below 60 for the first time in 11 months.

The gold-silver ratio is simply the number of ounces of silver it takes to buy one ounce of gold. The silver price is currently $22.11 and the gold price is $1,317, so the silver ratio now stands at 59.6…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Commodityonline.com: Manufacturers in developing nations like India will have to struggle in the coming days to keep their steel business intact. According to a UK-based consultancy, construction activity has resumed in India due to the upcoming festival season which is expected to increase demand.
However, steelmakers have raised prices in September due to escalating production costs surrounding construction projects, which is problematic for customers as they are not in a stable position to afford the price hikes…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Bloomberg: Oil may rise to the second-highest annual level on record next year on demand from China, India and Brazil, upsetting OPEC and threatening the nascent recovery in developed countries.

West Texas Intermediate crude, the U.S. benchmark grade, will average $85 in 2011, compared with $77.70 this year, according to the median of 23 analyst forecasts in a Bloomberg News survey, the highest price for any year except for $99.75 in 2008. Goldman Sachs Group Inc., which correctly predicted a year ago that oil would reach $85 a barrel by the end of 2009, said oil’s mean price will be $100 next year…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Seekingalpha.com: Oil is heading to US$200 per barrel. This isn’t speculation but hard fact. But forewarned is forearmed, and with this price expected within the next five years, investors have plenty of time to position themselves.

We recently have been talking about tools that investors can use to navigate the economic landscape. The gold-to-oil ratio is one such tool, but another popular compass is the oil-to-natural gas ratio…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Nytimes.com: The failure to reach a meaningful resolution on global climate change talks in Copenhagen last December left many advocates of climate action badly disheartened.
But international negotiators have hardly given up. This week, U.N. climate talks are taking place in Tianjin, China, which could help prepare for climate discussions in Cancun, Mexico, at the end of the year. Another round of negotiations is scheduled for South Africa next year…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From WSJ: Things are getting rough for some companies that sponsor exchange-traded funds. On the surface, ETFs seem to be showing solid growth. Since the banner year of 2007—when 270 new ETFs hit the market—more than 100 new funds have been introduced annually. What’s more, the funds as a whole are continuing to attract investors.

Yet there’s another trend at work that’s offsetting some of that growth. Some companies, particularly smaller entrants to the field, haven’t been able to pull in enough investor money to break even on their funds—so they’re pulling the plug on their portfolios…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From WSJ: Foreign-currency exposure has put many international-stock funds on a roller coaster this year. Those gyrations serve as a vivid reminder to investors that buying an international fund isn’t just a bet on the companies the fund holds, but on the local currencies as well, unless the fund hedges its currency exposure back into U.S. dollars.

In the first half of the year, the euro fell about 15% against the dollar, thanks to the European debt crisis. That contributed to the average 14.6% drop in Europe-focused funds and average 11.7% drop in broad international-stock funds, as tracked by Lipper Inc…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From WSJ: The likelihood of further “quantitative easing” in the U.S. has cast a shadow on currency markets that is likely to continue to encumber the dollar in the near term. But the prospect of further Japanese intervention will also haunt the market, limiting investors’ moves in sessions to come as central-bank policy and actions take center stage.

“It’s very easy to be negative on each of the four [major currencies] for their own reasons,” said Adam Cole, global head of foreign-exchange strategy at RBC Capital Markets in London…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Bloomberg: The top foreign-exchange forecaster says the Japanese government’s current approach to reining in the yen by intervening in currency markets will fail.

“Any attempt to drive the yen lower with intervention is unlikely to succeed unless it is backed up with much-more- aggressive easing measures from the Bank of Japan,” says Shaun Osborne, 47, chief currency strategist at TD Securities Inc. in Toronto…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Reuters: U.S. corn futures, which sank nearly 11 percent last week, could come under more pressure this week if a government report on Friday does not make deep cuts to its estimate of this year’s production, analysts said.

Funds, which had built up a record net long position in Chicago Board of Trade corn futures, were heavy sellers last week as the U.S. Department of Agriculture said corn stocks were nearly 300 million bushels more than trade expectations…………………………………….Full Article: Source

Posted on 04 October 2010 by VRS |  Email |Print

From Fundstrategy.co.uk: There is a sobering fact for investors excited by the prospects for agribusiness, amid talk of soaring demand from voracious, urbanising and soon-to-be meat-eating emerging markets. The real price of food has not risen for a century, judged by trading statistics for corn and wheat prices in America.

Over that period we have seen the world’s population double and double again. So if another billion or two mouths want feeding, don’t assume food prices will rocket. Look at Russia, the world’s biggest country by land mass, which is hopelessly inefficient in both the production and distribution of food. Lifting Russia (and its satellites, such as Ukraine) to the standards and intensity of production in western Europe could be as revolutionary to global food prices as was opening China to manufacturing…………………………………….Full Article: Source

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