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Commodities Briefing 24.Mar 2011

Posted on 24 March 2011 by VRS |  Email |Print

Investors remain bullish about investing in commodities, with more than 80% either maintaining or increasing their investment in commodities over the last 12 months, Barclays Capital said in its annual survey of institutional investors Wednesday.
Crude oil was the top pick among investors as the commodity likely to perform the strongest in 2011, while natural gas was voted the weakest. Gold, a favorite in previous years, was voted the second commodity most likely to perform the worst in 2011, according to the survey……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Commodity investors will favour oil and grains and snub gold this year as food inflation and concerns about unrest in the Middle East outweigh sovereign debt problems, a Barclays Capital annual investor survey showed.
The survey, which the bank has been publishing for the past seven years and which compiles views of over 100 commodity investors, showed that over 80 percent of respondents expect direct investment in commodities to be USD 60-USD 70 billion or more in 2011……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Investors need not look to Asia or other emerging markets for higher returns these days. Record price levels are being recorded daily in the commodity markets, and although most experts agree that current trends are unsustainable, the recent pullback in prices does not even qualify as a “correction” from most market perspectives.
The simple fact is that there are not enough raw materials, whether hard or soft commodity by nature, to meet increasing global demand. Since major contract prices are tied to the value of the U.S. Dollar, a major portion of the recent run up can also be attributed to the weakening of our national currency……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Labor has been warned it should be tightening the fiscal settings in the budget, or risk “squandering” the benefits from the once-in-a-generation commodities boom. The Treasury has already forecast the budget will improve from a $41 billion deficit this financial year to a $13bn black hole in 2011-2012.
It was predicted in the Mid-year Economic and Fiscal Outlook that the budget would return to the black in 2012-2013 with a $3.1bn surplus that would rise to $3.3bn the following year……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

How will we pay for $4 gasoline and $8 wheat? What will keep our bond portfolios from being shredded by Ben Bernanke’s printing press?
Owning commodities is one way to defend against a run-up in inflation. I assume you know all about gold bullion funds. Here I will dissect three lesser-known commodity plays: an industrial metal fund, a futures fund and a commodity-linked note……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

The impact on Japan’s economy and the copper industry, both domestic and global, is an evolving situation. The potential outcome changes by the day due to strong aftershocks and developments at the nuclear facilities on the east coast.
Only when the reactors at Fukushima have stabilised will it be possible to make more specific forecasts. These, then, are our overall thoughts, perhaps more philosophical, against a background of the millions of words which have been written on the subject……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Gold prices could get as high as $1,550 in the next few months but, this would represent a cyclical peak for the yellow metal.
Speaking to Mineweb.com’s Gold Weekly podcast, CPM MD, Jeffrey Christian said, that despite all the political turmoil in global markets many investors are beginning to look out for a cyclical high to the gold price……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

The price of gold may hit $5,000 per ounce, nearly three times current levels, in three to four years, as demand from sovereign states, central banks and exchange-traded funds (ETFs) rises, the chairman of two Canadian gold mining companies said.
“Gold is used as insurance for bad governments,” Rob McEwen, chairman and chief executive of Minera Andes Inc and US Gold Corp , told Reuters on the sidelines of the Mines and Money conference in Hong Kong on Wednesday……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

The Organization of Petroleum Exporting Counties’ ambiguity in its responses to global oil price and supply movements is a risk to the stability of the crude oil market, a think tank said.
The London Center for Global Energy Studies, writing in its monthly report, also warned OPEC’s stance may hurt both the producer group and world economic recovery……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

The recent uprising in North Africa and the Middle East (MENA) region, which culminated in an UN sanctioned military acton against Libya, suggests that the eventual break-up of the ‘Organization of the Petroleum Exporting Countries’ (OPEC) could be near.
OPEC is an organization consists of twelve oil exporting countries, namely, Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela . The organization is considered a cartel, while some are more progressive than others, the majority of OPEC members are governed by essentially autocratic system of governments……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Iraqi oil minister Abdul Kareem Luaibi said yesterday that Organisation of the Petroleum Exporting Countries (OPEC) believed that oil price was approaching $120 per barrel but was not likely to go higher, a level that was “acceptable” and which would not hinder global growth.
“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 USD 120 per barrel.”………………………………………Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

The IQ Global Agribusiness Small Cap ETF began trading this week; an exchange traded fund (ETF) that represents the smaller companies involved in agribusiness. Neil Anderson for Mutual Fund Wire reports that Adam Patti, CEO of Index IQ, describes the timing of the launch in lock step with volatile food prices.
February saw the largest jump yet in food prices, up 3.9%, the largest since 1974. The changing supply and demand food chain represents the opportunity for the small cap companies, specializing in agribusiness, to generate significant growth………………………………………Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Hedge funds cut their bullish bets on commodities by the most for any week since June as Japan’s nuclear crisis threatened the global economic recovery. In the week ended March 15, an index of managed-money net-long positions, or wagers on rising prices, in 18 commodities tumbled 14% from a week earlier to 1.27 million US futures and options contracts, government data compiled by Bloomberg show.
That’s the biggest drop since the week ended June 29, and the smallest net-long holdings since early August……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Kenya needs to consolidate its separate agricultural exchanges to increase the commodities traded and attract new ones, but it needs a new law to achieve that.
Supporters of reform say consolidation of the exchanges would lead to a four-fold growth in the turnover of the sector which underpins the economy of east African’s largest economy, contributing about 25 percent to its gross domestic product……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

The latest departures follow a round last September, when another 15 staff from the bank’s commodities division, grouped under its global banking and markets division, left.
At the time, it was also reported that BofA would lay off less than 5 percent of its investment banking staff, with the cuts being the first significant organised reduction in the division’s workforce since BofA bought investment bank Merrill Lynch in January 2009 during the financial crisis……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

The Group of Seven intervention to drive down the yen has created conditions ideal for the Japanese yen to become the preferred funding currency, and this could boost growth-linked currencies like the Australian dollar.
In their first joint intervention since 2000, G-7 rich countries sold the yen JPY= on Friday after it spiked to record highs of 76.25 per dollar and threatened to deal a blow to the export-reliant Japanese economy that was just picking up from a lull when the earthquake and tsunami struck……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

After the catastrophic earthquake, the tsunami, and the nuclear-reactor scares, the Japanese currency ironically strengthened quite sharply. In response, the Bank of Japan and other major central banks last week launched a coordinated “intervention” into the currency markets in order to intentionally weaken the yen.
In this article I’ll explain why the yen strengthened in the first place, and the problems with the central-bank maneuvers……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

There’s been plenty of spilled pixels over the potential for the dollar to lose its status as the reserve currency.
Quick refresher: Being the reserve currency basically means the dollar is the currency institutions, most importantly foreign central banks, prefer to hold. The Journal’s David Wessel once put it this way: The reserve currency is the currency that foreign governments trust so much that they hold their extra money in it……………………………………….Full Article: Source

Posted on 24 March 2011 by VRS |  Email |Print

Global wheat production rose by 3.4 per cent this year to 676 million tons, but the increase is still below the bumper harvests in 2008 and 2009, the UN Food and Agriculture Organization (FAO) said in the March edition of its food situation report released Thursday.
Wheat planting in many countries has increased or is expected to rise this year in response to strong prices, while yield recoveries are forecast in areas that were affected by drought in 2010, the Russian Federation in particular, according the FAO Crop Prospects and Food Situation report……………………………………….Full Article: Source

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