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Commodities Briefing 20.May 2011

Posted on 20 May 2011 by VRS |  Email |Print

Jennifer DowtyBad weather — and plenty of it — is one factor behind soaring food prices. Can you make hay with farm stocks? Possibly. But be prepared to harvest your gains on a moment’s notice.
Farming has never been easy, and farming along the Mississippi and its tributaries has become a waterlogged nightmare. Millions of acres have been flooded so far, which means that harvests of many crops will fall short of previous estimates……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Simon JamesIndustry experts talk to Joanna Faith about how investors should position their portfolios in light of the commodities sell-off. Fund experts are urging investors not to run for the exits after the recent dramatic commodities sell-off which saw the sharpest one-day loss in more than two years.
The industry was reminded just how volatile the asset class can be when markets were rocked by a sharp correction that saw oil plummet by more than $7 a barrel, copper fall to a five-month low and silver nosedive……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

China’s economy has grown so much that even if it slows down its total demand for commodities will remain vast and keep prices high, according to Richard Davis, manager of BlackRock Commodities Income Investment Trust.
In our video interview Davis discussed the impact of speculators and also how the US government’s efforts to stimulate the US economy had contributed to the recent fall in commodity prices……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Tracking the causes of the commodities crash is starting to feel like peeling an onion. One layer gets pulled back only to reveal another, and then another — and then you start to cry. Last week we had UBS analysts blaming “extreme positioning short the dollar and long commodities.”
So peeling back another layer, you might ask, what triggered the dollar rally?………………………………………Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Commodity prices are likely to fall further in the next month or two before rebounding towards the end of the year as demand continues to grow, prompting MF Global to expand its presence in the sector, a senior company executive said.
Brokerage MF Global Holdings, with a market value of $1.4 billion, maintained its long-term bullish outlook for commodities and expected prices to rise 10-20 percent over the next 12 months from current levels due to a weaker dollar, rising global demand and gradual inventory tightening……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Investors remain bullish on commodities with more than half increasing their commodity allocation over the next 12 months, according to an annual survey of institutional investors conducted by Trust Securities, one ofthe GCC’S largest derivatives intermediaries.
The survey, which was conducted as the Japanese nuclear crisis and Middle East unrest unfolded, revealed that 85 per cent of investors expect flows to be at or above last year’s levels and almost half of them are seeking returns of over 10 per cent. (Press Release)

Posted on 20 May 2011 by VRS |  Email |Print

What about other commodities, especially gold, silver and crude. Is there a bubble there Of course. There are bubbles all over the place, but the question is when they will burst. Bubbles are beautiful. And many of these bubbles will continue to remain so because of the demand-supply situation in these commodity areas.
If you look at the growth rate in emerging markets, this year on the average including some basket cases are going to be growing at three times faster than Western Europe, the US and Japan. So obviously on a per capita income basis, although the per capita incomes are much less, emerging markets are moving at a very fast pace……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

The International Energy Agency warned Thursday that high oil prices are imperiling the global economy. The Paris-based energy watchdog, also called on oil-producing countries to increase supply before demand begins to rise during the peak summer months.
As global demand for energy typically increases from May to August, there is an “urgent” need for additional oil supplies to prevent further tightening of the market, IEA said……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

On June 8, the Organization of Petroleum Exporting Companies will hold a meeting in Vienna. The meeting may be chaired by Mahmoud Ahmadinejad, the president of Iran, a prospect that has some people in the West nervous. Today, the International Energy Agency issued a statement urging oil producers to make more oil available, lest prices balloon out of control.
“Additional increases in prices at this stage of the economic cycle risk derailing the global economic recovery,” the IEA statement reads, “and are neither in the interest of producing nor of consuming countries……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

The Iranian president, Mahmoud Ahmadinejad, is expected to lead next month’s OPEC conference in Vienna as he presses for higher oil prices to aid Iran’s struggling economy, while also seeking to protect and consolidate his power at home as he confronts a growing split with the nation’s supreme leader.
As chairman of the meeting on June 8, Mr. Ahmadinejad is likely to inject a bit of drama into the usually predictable proceedings, in which members of the 12-nation bloc generally follow Saudi Arabia’s lead in promoting moderate oil prices……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Wood fuel, one of the oldest energy sources on the planet, could become the newest commodity market if it can overcome supply limits and green concerns as demand grows for renewable energy.
Supply constraints are starting to put wood fuel into competition with the paper industry, experts say, in an uneasy reminder of existing tension between the food industry and companies making biofuels from food crops……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

The gold bears and doubters - and the silver bears in particular - have had great success in driving the prices of these two precious metals downwards but are we looking at more of the same to come, or perhaps consolidation and another take-off?
The pattern of price movements we are seeing currently, with strong upwards and downwards fluctuations for both metals, but particularly for the more volatile silver, suggest to this observer that, although there may be some more short term shocks in store………………………………………Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

The outlook for global gold demand remains robust throughout 2011 against a background of another strong quarter, the geographic and sectoral diversity of demand and strong fundamentals, the World Gold Council said . According to the Gold Demand Trends report for Q1 2011, demand for gold in the rest of 2011 will be driven by a number of key factors:
Prevailing global socio-economic conditions will continue to drive investment demand for gold……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world’s biggest purchasers of the metal.
China’s investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India’s modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of gold investment demand, compared with India’s 23%……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

China overtook India to become the largest market for gold bars and coins in the first quarter of this year, as rising inflation inspired a surge in bullion investment.
Chinese investors bought 93.5 tonnes of gold between ­January and March in the form of coins, bars and medallions, a 55 per cent increase from the previous quarter and more than double the level of a year earlier, according to data released by the World Gold Council on Thursday……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Investment demand was once again the major driver of gold demand growth during the first quarter of 2011 according to the World Gold Council’s Gold Demand Trends report for Q1 2011.
During the first quarter of the year, investment demand grew by 26% to 310.5 tonnes from 245.6 tonnes in the first quarter of 2010. But, while overall investment did well, the majority of the growth was seen in the market for bars and coins. ETFs and similar products saw net outflows of 56 tonnes ($2.5bn). Redemptions were concentrated in January……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Silver followers with an hour to spare - or those just interested in the junior precious metal - might benefit from listening to a round table discussion on You Tube, put together by silver guru David Morgan.
Admittedly all those involved are from the bullish side of the silver investment scene, but all the points made on the discussion constitute an imposing case for investment in the precious metal……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

The iron ore market has risen to “bubble” levels that will burst as new mines create oversupply of the steelmaking raw material, according to Baosteel Group Corp., China’s second-biggest mill.
“There is a bubble in this market, many are gambling,” making acquisitions and investment expensive, Chairman Xu Lejiang said in an interview in Shanghai, without saying when prices would drop. “Everyone who has money is rushing in to invest in iron ore.”………………………………………Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

Hong Kong’s new commodity exchange backed by China’s biggest bank and a Russian tycoon began trading Wednesday as the Asian city attempts to challenge established markets in Europe and the U.S.
Exchange officials said that Asian countries, especially China and India, have been driving demand for global commodities and the new exchange is aimed at helping traders in the region have a bigger say in setting prices……………………………………….Full Article: Source

Posted on 20 May 2011 by VRS |  Email |Print

These are derivative instruments traded on the stock exchange. The instrument has no independent value, with the same being ‘derived’ from the value of the underlying asset. The asset could be securities, commodities or currencies. Its value varies with the value of the underlying asset. The contract or the lot size is fixed. For example, a Nifty futures contract has 50 stocks.
What is a futures contract? This means you agree to buy or sell the underlying security at a ‘future’ date. If you buy the contract, you promise to pay the price at a specified time. If you sell it, you must transfer it to the buyer at a specified price in the future………………………………………Full Article: Source

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