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Commodities Briefing 07.Oct 2011

Posted on 07 October 2011 by VRS |  Email |Print

A federal agency that regulates commodities trading says it brought the most enforcement actions it has in its 37-year history during the budget year that ended Sept. 30. The actions by the Commodity Futures Trading Commission involved civil charges of manipulating prices, operating Ponzi schemes and other violations.
The CFTC said the total of 99 actions it filed in fiscal 2011 was 74 percent higher than the 57 it filed the previous fiscal year. The agency also said it obtained court orders imposing around $450 million in civil fines and restitution on companies and individuals. That compared with about $200 million in the previous year……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

A steep rise in production costs over the past few years, slimmer pipeline inventories than in 2008, plus a much greater degree of supply risk due to geopolitical and weather shocks all suggest there should be a much greater degree of fundamentals-driven price resilience in many commodity markets this time and that commodity investment indices should not fall nearly so far.
So, how will different commodities fare in possibly imminent crisis?………………………………………Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Amid the staggering sell-off in commodities, there is a light at the end of the tunnel for investors - assuming we don’t see another global financial crisis.
The pullback in everything from oil and coal to copper and agriculture runs counter to strong Asian demand growth and structurally short supplies for metals, food and fuels……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

One of the main narratives of the current global economic slowdown centres around how far commodity prices have fallen. U.S. crude was up around $110 (U.S.) per barrel, but is now back to $80. Copper was up to $4.60 per pound in February, and fell to $3.10 this month.
No doubt, the declines are sharp. That’s about a 28 per cent decline for oil, and around a 33 per cent drop for copper. But while those numbers sounds staggering on their own, they actually aren’t that shocking when put in a larger context……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Brent oil will struggle to recover from its longest slump since the 2008 financial crisis as a weakening global economy cuts growth in demand to the lowest level for any fourth quarter in the past three years.
Brent crude will trade an average 0.6 percent higher than current levels of about $103 a barrel during the final three months of the year, according to the mean prediction of 10 analysts whose third-quarter projections were the most accurate of 31 compiled by Bloomberg. Futures lost 8.6 percent in the third quarter, extending a 4.2 percent drop in the second……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Rapid growth in crude distillation (CDU) capacity additions especially in Asia Pacific would Lead to refining surplus of 500 thousand barrels per day which would put pressure on margins in this sector, according to an analysis by Bank of America-Merrill Lynch (BofAML).
In 2011, capacity addition expected is 630 thousand b/d which would rise to 2 mn b/d in 2012 outpacing demand by 500,000 b/d. IN 2013, the capacity will likely grow by 1.6 mn b/d, BofAML analysis said……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

A split between OPEC oil producers has resurfaced in recent days as economic risks and the return of Libyan output has sent oil prices under $100 a barrel and opened up a debate on just how low prices should go before OPEC takes action.
This week, the basket of average crude prices sold by members of the Organization of Petroleum Producing Countries and the Brent oil contract widely used by its clients both closed under $100 a barrel for the first time since February……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will keep shipment levels unchanged through most of this month as the economic slump constrains demand, according to tanker-tracker Oil Movements.
OPEC will export about 22.72 million barrels a day in the four weeks to Oct. 22, little changed from the 22.74 million a day shipped in the month to Sept. 24, the Halifax, England-based company said today in a report. Shipments usually rise at this time of year as refiners prepare to boost production of winter fuels. The figures exclude Ecuador and Angola……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Gold walked up the stairs and came down the elevator. And as chatter of a global recession rises, the ’safe haven’ may not be the place to be parking your funds, says BarCap.
How the mighty have fallen. From calls of $2,000 to $2,500 before the end of the year, gold pundits are scrambling to scale back their forecast for the yellow metal as talks of recession become more widespread……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

August and September saw unusual price volatility in gold and not just in the stock markets – with the MSCI world (developed market) index dropping about 15% and emerging markets indices falling over 25%.
Gold, the usual “hedge” during extreme financial turmoil, rose or fell by over 3% on eight occasions and declined 15% from peak to trough in the past two months alone – the sort of moves one might in former years have expected over the course of a full year. During this period, dollar assets have been favored by investors, rising 6% as the US 10-year Treasury yield has fallen by 88 basis points……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

August and September saw unusual price volatility in gold, not just in the stock markets with MSCI world (developed market) dropping about 15% and emerging markets indices falling over 25%.
Gold, the usual “hedge” during extreme financial turmoil rose or fell by over 3% on 8 occasions and declined 15% from peak to trough in the past 2 months alone - the sort of moves one might in former years have expected over the course of a full year. During this period, dollar assets have been favoured by investors, rising 6% and US 10-year Treasury yield falling by 88bp……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Spot gold prices firmed up by almost $8 this afternoon and were trading at $1,649.42 per ounce at 12.22pm UAE time in a range-bound market even as global equities moved up on hopes that the Eurozone’s efforts to prop up its ailing banks could work.
Despite a volatile spot market over the past couple of weeks, gold prices have not dipped below the $1,600-mark for any significant duration of time, suggesting that investors believe that that is a reasonable price-point for the yellow metal at this stage……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

The gold price went over $1,900 and looked as though it was going to mount $2,000, but since then has fallen back to $1,600 and is in the process of consolidating around the lower $1,600 area. It was expected that it would have moved a lot higher faster, but that hasn’t happened, yet.
In the face of Italy’s downgrade to A2 by the ratings Agency, Moody’s summary that, “There has been a profound loss of confidence in certain European sovereign debt markets, and Moody’s considers that this extremely weak market sentiment will likely persist. It is no longer a temporary problem that might be addressed through liquidity support, and several euro-area governments are increasingly affected by the loss of confidence.”………………………………………Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

It seems that there a perfect storm brewing for the metals and it has caused what most are calling a near term “corrective phase”. Both metals had been red-hot and setting new all-time highs.
By my view, one positive for the longer term picture surfaced in the trenches a couple of weeks ago when many big fund manager’s sentiment turned short-term negative. While there remains a ton of long-term bullishness, the near term will most likely remain on shaky ground according to a survey taken today of bullion dealers, investment banks, futures traders and technical analysts……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Now that Q4 is underway, investors are scrambling to find the right asset class for this rocky environment. Last quarter wreaked havoc on a number of investments and portfolios alike, as the global economy seems to be on a downward spiral.
Given the current environment, various investors have flocked to their favorite safe havens to wait out the storm. Gold is perhaps the most popular safe haven in troubled markets, though its actual use as a metal is relatively low. As such, there has been much speculation over whether or not the metal is overvalued, scaring a number investors out of gold and into another precious metal, silver……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Assets held in commodity exchange-traded funds (ETFs) fell in September as exchange-traded products continued to face volatile trading, according to National Stock Exchange data.
Assets held in commodity exchange-traded funds (ETFs) fell in September as exchange-traded products continued to face…………………………………………Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

U.S. sugar stockpiles are shrinking to the lowest in 37 years after rain and freezing weather damaged the beet crop, potentially reversing a price slump and forcing the government to ease import limits.
Farmers in Minnesota, the biggest beet grower, will reap 19 percent less than last year and output will drop in four more of the 10 biggest producing states, the U.S. Department of Agriculture estimates. Domestic prices may rise 10 percent to 41 cents a pound by year end, said Frank Jenkins, the president of Jenkins Sugar Group Inc., the largest U.S. raw-sugar broker……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

The worst declines since at least 2008 for emerging market currencies may have further to go as the debt and banking crisis in Europe buffets economies once resistant to the global slowdown.
European lending of $3.4 trillion to developing counterparts is almost triple that from U.S. and Japanese institutions combined, according to Bank for International Settlements data through March 2011. This leaves developing countries more vulnerable to Europe’s sovereign debt crisis than they were to the global credit meltdown in 2008, according to Royal Bank of Canada……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

The world is likely to have 20 large-scale carbon capture and storage (CCS) projects operating by 2020, according to the latest report from the Global CCS Institute.
The institute has identified eight large-scale integrated projects already operating and a further six under construction. Projects under construction include Boundary Dam in Canada – the second project to capture carbon dioxide (CO2) emitted by a power station. Another is the first project in the US to store CO2 in a deep saline formation, the Illinois Industrial Carbon Capture and Sequestration project……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

Gets legal green signal from top law officer, despite non-EU countries’ combined protest. For the international aviation industry, the skies just grew stormier. The advocate-general of the European Court of Justice (ECJ), an advisor to the European Union’s highest court, has said it is legal for the latter to include non-European airlines in its new carbon emissions trading scheme (ETS).
India has been leading the criticism from the international aviation industry on the move, which is pitting airlines against the EU in what some analysts fear may spark the next big trade war……………………………………….Full Article: Source

Posted on 07 October 2011 by VRS |  Email |Print

The federal government’s carbon tax will cost every Australian $40,000 in the period to 2050 and a cost-benefit analysis should be conducted before it passes into law, an opposition-dominated Senate committee says.
The select committee on the scrutiny of new taxes on Friday tabled a 361-page report in parliament looking at whether a carbon tax should be brought in at a time of uncertainty about the global economy and whether there will be a concerted international effort to cut carbon emissions……………………………………….Full Article: Source

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