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Commodities Briefing 27.May 2011

Posted on 27 May 2011 by VRS |  Email |Print

Global food output may be hurt as climate change brings more extreme weather over the next decade, with China likely set for harsher droughts and North America getting heavier rain, said the World Meteorological Organization.
“Extreme events will become more intense in the future, especially the heat waves and extreme precipitations,” Omar Baddour, a division chief at the United Nations’ agency, said in a phone interview from Geneva. “That, combined with less rainfall in some regions like the Mediterranean region and China, will affect crop production and agriculture.”………………………………………Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

Monthly inflows to commodity-based products and mutual funds dipped to just $1.3 billion in April, just before commodities suffered their biggest correction since 2008, Lipper data showed on Thursday.
Net inflows to U.S.-regulated “commodity products” slid from $4.1 billion in March as investors exited some energy and broad index funds and focused on precious metals amid a rally in gold, according to the data tracking funds investing in physical commodities or derivatives, not corporate securities……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

As fears of a downturn in commodity prices fade, so too are fears that the Aussie’s rally is over. Only a couple of weeks ago, the world looked like a different place. The price of silver was diving 35% and a two-and-a-half year rally in most commodity prices appeared to be at an end.
The fact that the Chinese economy was slowing down, the U.S. economy was remaining weak, and central banks in many other countries were starting to raise interest rates, just reinforced the impression that as the global recovery weakened, so would demand for commodities……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

Group of Eight leaders said a strengthening global economy will pave the way to cuts in the debt built up in the recession that followed the 2008 financial crisis.
Europe vowed to fight its fiscal woes with “determination,” while President Barack Obama promised a “clear and credible” U.S. deficit-reduction strategy. Japan was allowed to put off savings measures until its economy rebounds from the March earthquake and tsunami……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

After a brief respite in the last six weeks, crude oil, along with other commodities, regained their footing after declining by approximately 5 percent since April 29. The move down was precipitated by resurgent concerns regarding the debt crisis in Europe. Investors lost their appetite for risk and as a result exited most asset classes.
This flight from risk dragged down even the S& P 500 (SPY) by 3.2 percent from the highest level that the index had seen in about three years. However, flash forward to present day and a recovery appears to be on the way……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

A few weeks back we highlighted the strong link between GDP growth and oil consumption by showing you how oil consumption per capita has risen in selected countries as per capita incomes rise.
Specifically, we noted the potential for China’s oil consumption – already the second-largest oil consumer in the world – to catch up on a per capita basis with other Asian countries such as Taiwan and South Korea……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

You know, a guy could get suspicious. Goldman Sachs reversed its commodity stance this week, particularly on oil and copper, a mere six weeks after reporting the huge headwinds of demand destruction, declining China growth and moderating Middle East and North Africa strife.
From setting a Brent crude target of $105 dollars, the London commodity team led by Jeff Currie has reversed course and set three-, six- and 12-month targets on crude of $115, $120 and $130 respectively……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

OPEC will raise exports by 1.6 percent through to the middle of June as refiners in the U.S. and Europe boost operating rates to meet summer demand for gasoline, according to tanker-tracker Oil Movements.
The Organization of Petroleum Exporting Countries, responsible for 40 percent of global supplies, will ship 23.11 million barrels a day in the four weeks to June 11, up from 22.74 million barrels a day in the period to May 14, the consultant said today in a report……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

Copper, gold, iron ore and coal will lead a rally in commodities over the next two to three years as demand for raw materials from China and India outpaces supplies, according to Standard Chartered Plc.
“There is a lag between the supply and the demand and that’s going to drive these commodities higher over the next three years,” Ashish Mittal, the bank’s global head of commodity sales, said in an interview in Mumbai. “During the global financial crisis a lot of investments got postponed.”………………………………………Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

HSBC Holdings PLC, Europe’s biggest bank, said that it’s bullish about the gold market despite price fluctuations earlier this month. The bank predicts concerns over geopolitical risks, loose monetary policy and a fiscal deficit in the United States, are likely to rekindle a rally in gold price.
HSBC expects the gold price to average a high of $1,525 an ounce this year, up from an earlier forecast of $1,450. The forecast for 2012 has been raised to $1,500 an ounce from $1,300……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

Chinese demand for gold bars and coins as private investments could push bullion imports above 400 tonnes in 2011, leading global consultancy GFMS said on Friday.
Increased appetite for silver investment products too, combined with a forecast 16 percent annual growth in industrial demand, means China’s total silver consumption could outstrip domestic supply this year, said Philip Kalpwijk, executive chairman of GFMS……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

Precious metal prices moved higher yesterday, with Comex gold for delivery in May moving up by 0.2%, or $3.40, to $1,526.60 per troy ounce. Silver was an even stronger performer, with the May Comex silver contract moving 4.2% higher to settle at $37.640 – a $1.519 gain.
The commodity sector was helped by a lackluster showing from the US dollar, which seems to have stalled following its gains in recent weeks……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

During the recent climb and collapse in silver prices various commodity exchanges increased margin requirements repeatedly. Supporters applauded the move and said exchanges should have acted sooner, while opponents cried market manipulation. As a result the overall margin issue has become somewhat politicized. At MalHess Analytics we don’t do politics, but we do like looking at numbers.
Futures margin requirements exist because the exchanges guarantee all trades, so they want market participants to put up collateral against future losses……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

The silver market is still reeling from its fall from $50 to $34 over a very short time. The move was driven by at least one investor selling around 1,000 tonnes of silver over a two week period. Silver had climbed quickly from around $25.
The charts supported a rise to $29, but as silver went higher, it climbed out of technical range into new territory. All the time thereafter it was vulnerable to a selloff back to support around that level……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

An investor bet today that the iShares Silver Trust (SLV) exchange-traded fund will decline, using options with a strike price 17 percent below current levels, while wagering it won’t drop below $25 a share by July.
More than 222,000 puts changed hands on the ETF at 12:30 p.m., with the July $25 bearish contracts the most-active in the U.S. today after more than 100,000 traded at 9:54 a.m. in New York, according to Bloomberg data……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

China’s biggest rare earth producer, Baotou Steel Rare Earth (Group) Hi Tech , has won local government approval to start an exchange to trade the increasingly lucrative metals used in many high-tech goods, state media reported on Friday.
The regional government of Inner Mongolia, where the Shanghai-listed company’s mining and processing operations are based, gave the “green light to the establishment of a rare earth exchange in the city of Baotou,”………………………………………Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

Too much metal is being thrown away when it could be recycled, wasting an opportunity to save energy and risking shortages in materials used for new green technologies, a UN report warned Thursday.
In a landmark study, the first to outline the extent to which metals are collected, the UN Environment Programme (UNEP) found that less than one third of about 60 metals studied are recycled to any significant degree……………………………………….Full Article: Source

Posted on 27 May 2011 by VRS |  Email |Print

For those living in developed nations, water is not often thought of as scarce. However in several countries such as China, India, Brazil and most of the frontier markets in the Middle East and Africa, water shortages are a severe problem.
The ocean may cover two-thirds of the world’s surface, but only 1% of the world’s water supply can be used as either drinking water or irrigation. Population growth in China, India and Africa has strained water supplies to break-point levels. Over 31 countries have some form of water stress, and 25 more are expected to join these ranks by 2030……………………………………….Full Article: Source

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