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Commodities Briefing 25.Mar 2011

Posted on 25 March 2011 by VRS |  Email |Print

You don’t have to scour the front pages for long to find a bullish commodity story. The bombing of Libya and political unrest in the broader Middle East and North Africa region increases fears over oil-supply security and pushes up the price of crude.
Oil topped $106 a barrel Thursday before pulling back, with crude for May delivery settling down 15 cents a barrel at $105.60 on the New York Mercantile Exchange. The futures contract closed Wednesday at its highest level since Sept. 26, 2008……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

The “Fed didn’t do it crowd” has been floating this chart around the web. It purports to prove that commodities inflation is due to industrial demand and not to Fed money printing. But they left something out. “What’s that?” you ask. Why, they left out Fed money printing of course!
I don’t have the data for world industrial production. I will assume that the above chart is truthful and that the correlation it shows is accurate. In fact, I am sure that it is accurate. The only problem is that it attributes cause and effect while ignoring the root cause……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

All of the sudden it looks like commodities and world industrial production have little to no correlation. What’s the conclusion? Don’t believe everything you see – especially when it comes from an outfit whose job it is to protect Fed policy at any cost.
Of course, this doesn’t mean that all of the conclusions based on the original chart are wrong. Indeed, demand really is having an important impact on prices……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Senior traders at Morgan Stanley predict that revenues from commodities will rebound this year by 50% – a shot in the arm for a host of investment banks that piled into the sector before a difficult 2010.
Glenn Schorr, a senior economist at Nomura in New York, recently travelled to London and met with Robert Rooney, head of interest rate currency and credit for Europe, the Middle East and Africa at Morgan Stanley, and Colin Bryce, the banks head of institutional sales and trading in Emea and its co-head of global commodities……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Threatened by Middle East unrest, reduced fuel supply could have very serious implications. Can surging oil prices imperil global economic recovery? That’s a question increasingly the focus of debate among market strategists. Continued instability in oil-producing states saw Brent crude hit $116 this week, an increase of over 20 per cent since January and well over double the levels recorded just two years ago.
The spike saw oil prices close more than three standard deviations above their 50-day moving average recently, something unseen since oil began its multiyear bull run in 1999……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Crude oil prices moved above $106 a barrel again Thursday before retreating, as a confluence of war, natural disasters and Japan’s nuclear problems unnerved investors.
The benchmark U.S. contract, West Texas Intermediate, dropped 15 cents, or 0.55%, to settle at $105.60 a barrel for May delivery. In early trading, the price peaked at $106.69……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will cut oil shipments to their lowest level since October as civil war halts exports from Libya, according to tanker-tracker Oil Movements.
Shipments will fall to 23.03 million barrels a day in the four weeks to April 9, down 1.8 percent from 23.46 million in the period to March 12, the consultant said………………………………………Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Base metals like aluminium, zinc, nickel and copper, which started to inch upwards, may continue to remain bullish in the long term as market feels that demand from Japan will start flowing in shortly for reconstructing the country.
Along with Japan, a steady flow of demand for copper is expected to come from Brazil, which is building infrastructure for the 2014 World Cup and 2016 Olympic Games……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

The latest Commodity Companion from the team at RBS has recently been released. This is a hefty tome, redolent with figures and forecasts, covers not only the base and precious metals, but important steel components and the major elements of the energy complex.
The study highlights how many commodities in 2010 enjoyed their strongest consumption growth in decades as a result of the synchronised recovery in world growth……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Kazakhstan plans to join the race to supply rare earth metals to a global market squeezed by Chinese export cuts when it launches a project with Japanese trader Sumitomo Corp to treat uranium tailings in 2012.
Summit Atom Rare Earth Co, co-owned by Kazakh state uranium miner Kazatomprom, plans to start producing 1,500 tonnes a year of rare earth oxides, Kazatomprom said in a written reply to questions……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

The monopoly held on China’s iron ore supply by a small number of international companies will be “thoroughly” broken up by 2015 as increased investment in the sector boosts global production, according to an expert in China’s mining industry.
“The surging price of iron ore since 2003 has attracted a huge amount of investment in the sector, and there will soon be a concentrated release of capacity, breaking the monopoly a few big companies hold,” Wu Rongqing, chief engineer of the industry development department at the China Mining Association, said………………………………………Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Emerging markets ETFs are outperforming as Asian stocks ended generally higher Thursday powered by resource-sector companies. South Korea’s Kospi rose 1.2%, Taiwan’s Taiex finished ahead by 0.4% and India’s Sensex improved by 0.7%.
Across emerging markets, metals and commodities-related stocks are being supported by rising gold, silver and copper prices……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Figuring out the best investment plays on the recent commodity boom we’ve been seeing isn’t an open and shut case. There are many different factors to consider; apart from the “what” (what metals should I be investing in?), the “why” (are metals a safe bet with all the volatility surrounding them?) is just as important.
Think of the “tail” risks, as some analysts call them, that the world has on its plate right now: first the massive European credit downgrades of the national economies of Greece/Portugal/Ireland etc., then the domino effect of Middle Eastern revolt, then the horrific quake and tsunami in Japan……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Gold hit its second new record high on the trot at the London Gold Fix on Thursday morning, hitting $1441.25 per ounce for US investors as the dollar held flat on the forex market, and US crude oil rose.
New York’s stock markets opened the day 0.5% higher. Silver bullion jumped to fresh 31-year highs above $37.85 per ounce. The ratio of gold to silver prices “is now convincingly through the 1998 weekly low” notes the London dealing team at Japanese conglomerate Mitsui……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Hong Kong Exchanges & Clearing Ltd. may introduce products based on the raw materials that China consumes the most, said Chief Executive Officer Charles Li.
“We’re talking about providing solutions for people that use commodities,” said Li in a speech today to the Hong Kong Investment Funds Association. “China needs to develop those capabilities. It needs to have those pricing inflows in the global scheme in all the major areas where China is a big consumer.”………………………………………Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Increased demand from Japan will lead to “robust growth” in iron ore futures contracts at the Indian Commodity Exchange (ICEX), its chief executive said on Thursday, spurring volumes by up to 20 percent in 2011/12.
Rajnikant Patel, ICEX managing director and chief executive, told Reuters that as Japan rebuilds its disaster-hit infrastructure, Indian hedgers supplying to that country would drive up iron ore futures volumes……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

CBOE Holdings Inc. (CBOE) and NYSE Euronext may create venues for derivatives that now trade over the counter to capitalize on proposed rules designed to bring more transparency to the $583 trillion market.
The exchange operators may form swap-trading platforms for privately negotiated derivatives that the government plans to move onto regulated trading systems or exchanges that will provide public data about prices and transactions, according to interviews with company executives over the last week……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

As Europe’s carbon registries slowly reopen after the more vulnerable among them were hacked in January, a new exchange – the African Carbon Exchange (ACX) – was soft-launched here on Thursday.
Like any soft launch, this one is still testing its wings. The trading platform, for example, was demonstrated for reporters but won’t be open for trading until security concerns are worked out – a point that may be moot since it has only one registered member, Carbon Self………………………………………..Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Californian carbon cap-and-trade scheme suffers legal set-back on road to 2012 start date. The California Air Resources Board (ARB), the body responsible for designing California’s carbon cap-and-trade scheme, has said it will appeal last week’s ruling by the San Francisco Superior Court that threatens to delay the start of the scheme.
The San Francisco Superior Court ruled on Friday that the ARB did not properly research alternatives to cap-and-trade……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

The dollar hovered near a 15-month low against a basket of currencies and was in sight of a 29-year trough against the Australian dollar as a bounce in equities suggested that risk appetite was on the mend.
The euro dipped briefly after Standard & Poor’s downgraded Portugal’s credit ratings by two notches to BBB and warned it could cut it again by one notch as early as next week……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Sterling fell to its lowest this year against a basket of currencies on Thursday, driven by sharp falls against a firmer euro in the wake of weak UK retail sales data and a warning by Moody’s on risks to economic growth.
Trade-weighted sterling =GBP fell as low as 79.6, its lowest since December 31, 2010……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Lingering speculation that Brazil could introduce more capital controls or taxes to hold down its currency is creating some uncertainty for international investors trying to read the government’s next moves in foreign exchange markets.
As part of its effort to prevent the real from appreciating too much, Brazilian policymakers in October imposed taxes on types of foreign investment flows. With the real still stronger than it was a year ago, investors and analysts see the possibility of fresh moves like a tax on so-called global bonds, which are launched overseas by Brazilian companies and denominated in hard currencies like the dollar……………………………………….Full Article: Source

Posted on 25 March 2011 by VRS |  Email |Print

Emerging economies in Asia have seen their currencies appreciate this year on strong economic growth, a trend that analysts say is likely to continue.
To cope with extremely high levels of inflation in Asia, investors are expecting Asian banks to raise interest rates - a move that may attract more debt capital, leading to appreciation in the region’s currencies……………………………………….Full Article: Source

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