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Commodities Briefing 05.Oct 2011

Posted on 05 October 2011 by VRS |  Email |Print

For much of the past decade, investing in raw materials has looked like a slam-dunk, as rising prices held out the prospect of big gains and the proliferation of exchange-traded funds made placing bets easier.
The trend of rising commodity prices in recent years helped fuel a belief that is now common among financial advisers and pension managers: that ordinary investors should have some slice of their long-term money parked in commodities……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Largely stable global commodity prices that ensure continued flow of investment into production will be in India’s long-term interest. In recent months, leading indicators have consistently signalled a slowdown in economic activity around the world, especially in the OECD region.
Concerns over the global economic slowdown, triggered primarily by the unresolved sovereign debt crisis in the Euro zone and twin deficits in the US, have resulted in sharp declines in commodity prices in recent weeks. Punters have rapidly liquidated their long positions fearing demand destruction. This has accelerated the price decline……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Hard times for manufacturing around the world suggest that recent falls in commodity prices have a sound fundamental basis and aren’t simply a function of risk aversion generated by financial crisis, according to one economic consultancy.
Capital Economics said the deterioration in global manufacturing confirmed in the September purchasing managers’ index data mean that underlying demand for commodities is weakening……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Commodity prices may advance 20 percent over the next year as growth in emerging markets offsets the impact of the sovereign-debt crisis in Europe and a slowdown in developed economies, according to Goldman Sachs Group Inc.
The bank reiterated an “overweight” recommendation on commodities over the next 12 months, while remaining “neutral” in the near term, analysts led by Jeffrey Currie wrote in a report today. Oil and copper forecasts for 2012 were reduced……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Goldman Sachs forecast that slumping commodity prices would rebound strongly in the next year as growth in demand from prospering emerging markets far outweighed the impact of the crisis in Western economies.
After the biggest quarterly decline in commodity prices since Lehman Brothers triggered a global meltdown in 2008, Goldman Sachs forecast that key manufacturing ingredients such as oil, aluminium, copper, nickel and zinc would jump in the coming months……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Investors make the same mistakes investing in anything. They use too much leverage. The great advantage of commodity investing is you can use enormous leverage. The great disaster of commodity investing is you can use enormous leverage.
Everybody in the world has a story about a brother-in-law who went broke investing in soybeans. But you don’t have to invest that way……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

The raw-materials rally that has driven investors to load up on gold, crude and wheat is also sparking interest in funds tied to relatively obscure commodities such as lithium, uranium and rare earths.
Investors have poured hundreds of millions of dollars into a handful of exchange-traded funds linked to those materials over the past year or so. But betting on these kinds of industrial building blocks presents some unusual challenges and risks……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

The sharp decline in metals and mining stocks reflects the weak appetite for risk among investors, but runs against strong Asian demand growth and structurally short supplies.
The commodity pullback has driven the S&P/TSX Mining Index down 33% in the past month alone, while mining currencies such as the Canadian dollar, Australian dollar and South African Rand have also weakened……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

With the September quarter complete analysts have revised commodity price forecasts lower for the most part, taking into account heightened market volatility and the impact on prices of the uncertainty being created by a weak growth outlook and ongoing sovereign debt issues.
As Natixis Commodity Markets points out, three months ago the key for commodity markets was how successful policy makers would be in navigating through these issues in a credible and effective manner……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Commodities declined, extending a slump to a 10-month low, on concern that demand for energy, metals and crops will decline as Europe’s escalating debt woes choke the global economy.
Goldman Sachs Group Inc. cut its global growth forecasts and predicted recessions in Germany and France. European governments hinted that bondholders may be saddled with bigger losses on Greek debt. The Standard & Poor’s GSCI index of raw materials has dropped 24 percent from a 32-month high in April……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Brent oil fell on Tuesday, closing below $100 a barrel for the first time since February, while copper ended at a 15-month low and gold dropped 3 percent, as mounting worries that Greece could default outweighed hopes for more Federal Reserve stimulus.
Many commodity prices bounced up off early lows when U.S. Federal Reserve Chairman Ben Bernanke told a Joint Economic-committee of Congress that the U.S. central bank was prepared to take steps to help an economic recovery that is “close to faltering.”………………………………………Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Goldman Sachs fell into line with other banks on Tuesday as it cut its 2012 Brent crude and copper price forecasts, on growing worries that the European financial crisis would restrain economic growth and curb global fuel demand.
The U.S. investment bank, known by some of its competitors as a ‘perma-bull’ for its relatively high commodity price forecasts, trimmed its 2012 Brent price estimate to $120 a barrel from $130 and cut its forecast for U.S. light crude, also known as WTI, to $109 from $123.50……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Oil prices can’t find a leg to stand on. Many of the key factors that drove oil to three-year highs in May — fears of growing Middle East tensions, rising Chinese demand, bullish views from investment banks and expectations of an aggressive U.S. stimulus plan — have been diminished.
Meanwhile, a looming financial crisis in Europe has spooked energy markets as it raises the specter of another global recession. As a result, oil prices have plunged……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

The average selling price for a range of crude oil grades produced by the Organization of Petroleum Exporting Countries has dipped below $100 a barrel for the first time since February, according to data posted on the group’s website Tuesday.
The average price of a basket of OPEC crudes fell to $99.65 a barrel on Oct. 3, $1.92 below the previous price posted on Sept. 30, OPEC’s website said. This is the lowest price since Feb. 18, when political turmoil began to affect oil production in North Africa, the website showed……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Iran’s oil minister will advise the members of the Organization of Petroleum Exporting Countries to maintain the current level of crude oil production at the group’s next meeting in Vienna on December 14.
“As the president of OPEC, Iran’s aim at the next meeting is to maintain the current production ceiling,” the IRNA news agency quoted Iranian Oil Minister Rostam Qasemi as saying on Tuesday……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Iran will ask OPEC to maintain its previous crude output target when the oil producer group meets on December 14 in Vienna in a bid to sustain oil prices at current “fair” levels, oil minister Rostam Ghasemi said Tuesday.
“Iran will call for retaining the current production ceiling at the next OPEC meeting in order to preserve a fair oil price,” Ghasemi was quoted as saying by oil ministry news service Shana……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Global subsidies for fossil fuel consumption are set to reach $660 billion in 2020 unless reforms are passed to effectively eliminate this form of state aid, the International Energy Agency (IEA) said on Tuesday.
“Governments and taxpayers spent about half a trillion dollars last year supporting the production and consumption of fossil fuels,” the energy watchdog to 28 industrialized countries said……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Analysts figure platinum will one day regain its historical premium to gold, meaning a long platinum/short gold spread-like position could end up being a “trade for the ages,” as one put it.
Still, the timing of such a trade is easier said than done, since market watchers also look for gold to maintain the upper hand for the foreseeable future. The yellow metal is holding up better than most commodities due to its role as a safe haven and alternative currency, while platinum has been hit by worries about industrial demand from the auto sector in a slowing economy……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Gold fell Tuesday as traders begin to doubt that prices can stay near the high they reached this summer. Credit Suisse analyst Ric Deverell released a report Tuesday saying commodities market has entered a “dangerous new phase.”
Deverell said this summer’s rally in gold seems to have been overheated. Gold has been overlooked as an investment in part because more traders want park their money in U.S. Treasury securities, which many consider as safe as gold and easier to cash in when needed, he wrote. The popularity of Treasurys took the wind out of gold’s rally this month, Deverell said……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Will India, world’s largest Gold consumer come up with a draconian new measure to deter people from buying gold and silver. The question has been on the air for sometimes after two European nations (Austria and France) took steps to restrict purchase of gold and other precious metals.
Many believes that India may come up with such a measure to check on climbing inflation,to keep the value of its currency and also to keep black marketeers and fraudsters away from the gold market……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Global gold hedges, or sales of future production, gained for a second straight quarter in the three months through June and are set to climb for the first year since 1999, according to Thomson Reuters GFMS.
The worldwide hedge book rose about 190,000 ounces to 5.07 million ounces in the second quarter, the first time hedging occurred in consecutive quarters since 2001, the London-based researcher said today in an e-mailed report. Hedging will continue in the current half, taking 2011 net additions to about 1 million ounces, it said……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

One of the most amazing things that has happened in the global capital markets in the past month is that gold and silver have turned into equities. You know, those precious metals that are supposed to be a store of value and a safe haven during troubled times?
They have morphed overnight from hard assets into paper ones, with the barbarous relic nose-diving $392 from $1,922, or 20%, in less than four weeks, while the white metal is off nearly $24, or 48% from its April $49.90 top……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Silver’s status as the “poor man’s gold is eroding, says Bart Melek, head of commodity strategy for TD Securities, who suggested upside is likely, but beating old price records will be hard.
“After silver’s dramatic decline in May and again in September, investors won’t likely see the metal as a viable hedge against market and systemic risk,” he advised Monday……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

International Steel prices have been under huge pressure as an uncertain economic outlook dampens consumer spending.
In Europe and North America, sales of stainless steel usually picks up in September when the consuming sectors return to work after the summer vacation. However, it has not been the case this year. This period is essentially important for the steel sector since sales usually cools down at the year end……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Hedge funds posted their worst returns in three years in the third quarter, and the fourth quarter appears to be off to an equally rocky start.
For hedge funds around the world, the average loss was 5.02 percent in the three months ended Sept. 28, according to Hedge Fund Monitor, a report compiled by analysts with Bank of America……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

When speculating in the foreign exchange market currencies are always traded in pairs, comparing the relative strength of one against another. For that reason it is important that we examine both sides of the trade to best identify the ideal currency pair to watch.
Ideally when purchasing a currency pair, we should aim to ‘go long’ that currency with positive economic data and/or that stands the best chances of appreciation, while at the same time selling short the other currency with negative news and/or has the best chance of moving lower……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

The Bangko Sentral ng Pilipinas (BSP) reiterated that the peso has maintained its price competitiveness against other currencies in the region despite weakening against the dollar in the past few days amid the worsening debt situation in Europe.
BSP Governor Amando M. Tetangco Jr. said the peso remained broadly competitive as its movements and volatility have been within the range of regional currencies……………………………………….Full Article: Source

Posted on 05 October 2011 by VRS |  Email |Print

Trade in European Union carbon permit futures contracts surged 65 percent to a record 1.52 billion metric tons on ICE Futures Europe in London last quarter, as prices neared their lowest in two-and-a-half years.
There were 926.2 million tons traded in the three months through September last year, according to aggregated carbon futures data from ICE, the biggest exchange for carbon trading. The value of trading advanced 13 percent in the most recent period to 16.4 billion euros ($21.6 billion), based on average benchmark 2011 prices……………………………………….Full Article: Source

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