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Commodities Briefing 23.Mar 2011

Posted on 23 March 2011 by VRS |  Email |Print

Crude oil and grains will be the top commodity performers this year as investors bet on supply disruptions, a Barclays Capital survey shows. Twenty-eight percent of investors polled this month said oil will gain the most this year, followed by corn and wheat, Barclays Capital said.
Gold, which gained 30 percent last year, may be “losing its shine” and ranked the worst performer for this year after natural gas, the bank said……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

The latest Barclays Capital survey of commodity investor attitudes has been undertaken at a time of almost unprecedented geopolitical turmoil in the MENA region, high levels of macroeconomic uncertainty and extremely volatile energy markets as a result of the Japanese earthquake.
It shows that despite difficult market conditions, historically high price levels and even after two years of exceptionally strong demand for commodity investments, enthusiasm for the asset class remains firm………………………………………Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Analysts said oil prices could go as high as US$120 a barrel on continued unrest in the Middle East, driven by supply concerns and increasing demand from Japan. The reconstruction in Japan is also expected to drive up the cost of copper and other base metals.
But despite the risks to growth from rising commodity prices, inflation will remain the top concern for Asian central banks……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Indian market has shown a greater level of resilience and steady performance despite facing issues like aggressive oil rates and inflation creating a volatile environment for the indices. In fact, crude prices have been ruling the movements of all emerging markets and in the view of analysts; it is going to be difficult to nail down crude completely.
Jyotivardhan Jaipuria, head of research at the Bank of America Merrill Lynch, said that emerging markets like India will start performing once commodities like crude start cooling off……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Grain is likely to hold its own in the battle against more glamorous mineral commodities according to National Australia Bank’s (NAB) head of Australian economics and commodities, Rob Brooker.
Speaking at last week’s Grain Logistics conference in Melbourne, Mr Brooker said in spite of the high Australian dollar, Aussie croppers had cause for optimism moving into the winter planting season……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Unrest in the Middle East usually means supply-side problems for oil, and the current month-long conflict raging in Libya is no exception. Although Libya is only the 17th-largest oil-producing country in the world, the country remains an important supply hub, as it holds Africa’s largest crude reserves.
As a net exporter of oil, Libya sold around 1.3 million barrels per day (bpd) globally last year, and as recently as January, it produced 1.59 million bpd for domestic use and export……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Some OPEC members may see oil prices peaking at $120 a barrel but in some parts of the U.S. it’s already there or higher. The Iraqi Oil Minister said Monday that $120 oil is an “acceptable price” that will not hinder global growth. But many analysts disagree, saying $120 is the breaking point for consumers, which would halt the recovery.
Even before escalating tensions in the Middle East and North Africa made headlines, which sent oil prices back above $100 a barrel, several investment firms, including BlackRock, acknowledged oil prices would likely rise to $120 or higher this year……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

OPEC believes the oil price is approaching $120 per barrel but unlikely to go higher, a level that is “acceptable” and will not hinder global growth, Iraqi oil minister Abdul-Kareem Luaibi said on Tuesday.
“Global oil prices are moving towards $120 a barrel. We consider this an acceptable price that will not harm global growth,” Luaibi told a news conference in Baghdad. “We think the price will not exceed $120 per barrel.”………………………………………Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Will this really be - as the politicians promise - a quick and contained strike? Or like Homer’s eponymous epic, will it turn into a 10-year struggle before reaching a conclusion?
Libya produces just 2pc of global oil output and 1pc of gas. Analysts argue that the market has already priced in a total loss of Libyan output so any improvement on this should be positive for the oil price……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Although WTI crude oil has bounced back to $100 a barrel today, hedge funds have begun to decrease exposure over fears that the Japanese earthquake will cut demand, at least in the short term.
Following the devastating earthquake in Japan on March 11, the latest data from the US Commodity Futures Trading Commission shows the largest weekly decline in long positions since May 2010. From March 8 to March 15, hedge fund net long positions in oil decreased 13%……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Russia is set to double its crude oil supply to earthquake-devastated Japan this year to some 18 million tonnes as a part of an energy aid package, top Russian energy official Igor Sechin said on Tuesday.
Russiais rolling out several proposals to help Japan, which is suffering from the world’s worst nuclear crisis in a quarter of a century, including an offer to increase shipments of liquefied natural gas (LNG) and coal……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Market fundamentals are the main driving force behind fluctuations in the price of crude oil and natural gas, the International Energy Agency said from Vienna.
The crisis in Libya closed oil production in one of Africa’s top oil-producing nations. The onset of the crisis in early March helped push crude oil and gasoline prices to post-recession highs despite efforts from Saudi Arabia and other crude producers to make up for shortfalls……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Options traders climbed back aboard the rare-earths bandwagon, dismissing worries that Japan’s earthquake would hamper demand for the sought-after minerals and thus the stocks of companies in the sector.
Options traders staged a rush of bullish activity targeting Molycorp and Rare Element Resources after Molycorp’s chief executive told conference-goers in Toronto that prices are “significantly higher than we anticipated” and that Japan’s quake didn’t impact sales in that country, according to a Reuters report……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Tight global iron ore supplies could be stretched even further by a massive rebuilding effort in Japan while equipment shortages will prevent miners from ramping up production, global miner Rio Tinto said.
The damage from the massive earthquake and tsunami in Japan on March 11 had widespread implications for the global mining sector, Sam Walsh, Rio Tinto’s iron ore division chief, told an industry conference on Tuesday……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Gold Fields, the world’s fourth-largest listed gold miner, said on Tuesday rising commodity prices were putting cost pressures on gold miners even as the price of the precious metal itself climbed.
“We are concerned about what we’ve seen on the commodities front,” Chief Executive Nick Holland told the Reuters mining summit, citing oil’s recent rally but also other rising costs for key things such as timber and steel……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Gold appetite in India, which imported a record quantity of the metal last year, is likely to fall in 2011 by 16 per cent, as near-record prices dent demand in the world’s largest consumer, resulting in a positive impact on banks’ deposit growth, Morgan Stanley said.
“We believe that the current account deficit can surprise on the downside with positive implications on growth,” said Ridham Desai, Head of India Research at Morgan Stanley, in a report on Tuesday……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Projecting the future price of precious metals is a difficult and likely futile task. Gold bugs seem to insist that there is always room for further appreciation regardless of how far prices have risen recently. Conversely, others proclaim that gold has been in a 6,000-year bubble.
The right answer is likely somewhere in the middle, but finding one on an intrinsic valuation basis is virtually impossible. There are no future interest or dividend payments to project and discount, so we’ll just have to rely on the madness of men……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

With the recent volatility in the market, what is an exchange traded fund (ETF) investor to do? Oil prices go up, then down, then up again. Same with other sectors and asset classes.
You are concerned about what’s happening in Japan and the Middle East and your emotions tell you one thing for your investments and your head tells you another. Having a discipline with investing can make times like these a little easier……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

ETF Securities assets in exchange traded funds (ETFs) listed in the U.S. have passed $4 billion in assets under management. William Rhind, Head of Sales & Marketing for ETFS Marketing sees continued demand in commodity based ETFs from both financial advisors and self-directed investors.
ETFS has 18 new ETFs in registration with the SEC, but since most are commodities based and some using derivative construction, it may be a while before they are available to investors. Included are plans to launch an ETF representing a basket of industrial metals; aluminum, lead, nickel, tin and zinc……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Surging prices in energy and other commodity markets demonstrate the need for strong oversight and enforcement of derivatives markets, U.S. Commodity Futures Trading Commission Chairman Gary Gensler said Tuesday.
Mr. Gensler told the European Parliament’s Economic and Monetary Affairs Committee that the U.S. “strongly supports” giving regulators power to prevent and prosecute attempts to manipulate markets……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Effective oversight of the $583 trillion global swaps market hinges on cooperation between regulators drafting new rules in the U.S. and Europe, Commodity Futures Trading Commission chairman Gary Gensler said.
“Effective reform cannot be accomplished by one nation alone,” Gensler said in a speech to lawmakers at the European Parliament in Brussels today……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Dozens of Democratic senators are fighting Republican efforts to slash the budget of the nation’s regulator of commodities trading, arguing that “reckless” cuts could allow gasoline prices to skyrocket.
The Republican-led House of Representatives passed a federal spending plan in February that would cut the Commodity Futures Trading Commission’s already-slim budget by a third……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

The U.S. dollar will remain a safe haven despite the fiscal and monetary concerns that have dogged it, as a credible global alternative has yet to emerge, economist Nouriel Roubini said Tuesday.
A raging debate is underway among economists who say the dollar’s status as a reserve currency is under assault. A burgeoning fiscal deficit that teeters perilously close to 10% of U.S. gross domestic product and a current-account deficit exceeding 3% of GDP have diminished the U.S. currency’s allure……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

Soaring Yen Another Disaster for Japan. The appreciating yen created a huge problem for the Bank of Japan. At the post-WWII high of 76 yen to the dollar, Japanese exporters couldn’t make any money.
For example, Honda Motor (HMC) estimates that it loses 17 billion yen in earnings for each one-yen appreciation in the currency against the US dollar. So the infusion of yen, designed to stabilize Japan’s financial system and save its economy, instead threatened to wreck that economy……………………………………….Full Article: Source

Posted on 23 March 2011 by VRS |  Email |Print

As a leading investment banker put it: “Carbon is getting more and more difficult. A significant amount of the business that is done in the carbon space should shift”, which when translated from finance talk to human language means that the loose “consensus” on creating a global carbon tax, without calling it a tax and trading around this new asset has likely cracked beyond repair.
The smart money is now beating a retreat from playing with carbon finance assets, and remaining players in the carbon market are seeking any way out they can find, as turnover on emissions markets goes only one way – down……………………………………….Full Article: Source

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