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Commodities Briefing 11.Oct 2011

Posted on 11 October 2011 by VRS |  Email |Print

Gary GenslerHundreds of economists including scholars from Oxford University and the University of California, Berkeley, are asking the Group of 20 nations to impose limits on speculative positions in food commodities to curb volatility in crop prices.
“With around 1 billion people enduring chronic hunger worldwide, action is urgently needed to curb excessive speculation and its effects on global food prices,” according to a letter signed by 461 economists and sent to finance ministers from the G-20, which includes the world’s richest nations. The letter, dated today, was posted on Oxfam America’s website……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Even as most of the illusions that defined the global economic boom of the last decade have faded, the assumption that commodity prices will continue to rise over a prolonged period still has the power to capture investor imagination even after the latest correction.
I call this illusion, commodity.com. It has some striking similarities to the dotcom mania for tech stocks that gripped the world a decade ago. At the height of the dotcom era, tech stocks were drawing 30% of all the money invested in global equity markets……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

In the past month, the popular SPDR Gold Trust (GLD) has seen its net asset value drop nearly 14%. Along those same lines, the iShares Silver Trust (SLV) has fallen around 24%. And the broad PowerShares DB Commodity Index Fund (DBC), which tracks everything from industrial and precious metals to agricultural and energy futures, has slipped almost 12%.
But many money managers — including mutual fund skippers and independent advisors — are saying now might be an opportune time for those not invested in the field to consider wading in……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Ever since Winthorpe and Billy Ray Valentine bankrupted the millionaire Duke Brothers with one day of trading in orange juice futures in the movie, “Trading Places,” I have held the same fear of commodities as most regular investors.
It’s too volatile and will break you in a heartbeat. Despite Mortimer and Randolph’s experience, one only needs to look at standard deviation, the common measure of volatility, relative to equities to see this isn’t the case……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Thermal (or steam) coal, natural gas and nuclear energy are the primary sources of fuel used to generate electricity in the U.S. According to the EIA, 45% of the electricity generated in 2010 came from coal-fired power plants.
A common definition of a commodity is that it’s easily substitutable. Over the past few years, natural gas has made serious inroads at the expense of coal in the country’s generation mix. However, in order for a meaningful amount of switching from to continue, our country needs more natural gas and nuclear power plants to be built……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

The iron ore bull market is likely to draw to a close in 2015 when high-cost Chinese production is displaced by cheaper imports, Wood Mackenzie’s principal iron ore market analyst Paul Gray said yesterday at an iron ore conference in Stockholm.
“By 2015, most ultra-high cost Chinese domestic ore should be displaced by lower-cost seaborne imports,” Mr Gray said……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

The cost of hauling coal, iron ore and grains by sea rose to its highest this year as a five-month rout in raw-material prices spurred demand from consumers seeking to build stockpiles.
The Baltic Dry Index, a measure of charter costs for four classes of vessel, gained 1.6 percent to 2,032 points today, according to the London-based Baltic Exchange, which publishes rates for more than 50 maritime routes……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

The Bovespa index rose the most in two months as prospects for a solution to Europe’s debt crisis lifted commodity prices and improved the outlook for Brazil’s largest companies.
Vale SA, the world’s largest iron-ore producer, advanced after metals reversed losses. Oil companies OGX Petroleo & Gas Participacoes SA and Petroleo Brasileiro SA followed crude higher. Lojas Renner SA, Brazil’s biggest publicly traded clothing retailer, paced advances for companies that depend on domestic demand even after economists raised their 2012 Brazil inflation forecasts……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Global economic concerns have sparked a precipitous drop in metals prices in recent months, which will likely result in dismal quarterly profits for mining companies and steelmakers.
Stagnant economies in developed countries are crimping demand for metals such as aluminum, used in making cars and aircraft, and for copper, used in electrical wiring for new buildings. Steel, too, is seeing weak demand from the construction industry, which accounts for half its business……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Industrial metals rose Monday on optimism that Europe is making progress toward containing its debt crisis.
The leaders of Germany and France agreed over the weekend to finalize an overall response to the region’s debt crisis by the end of the month. That helped ease worries that a freeze-up of Europe’s financial system could trigger a global economic slowdown and decrease demand for basic materials……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Gold will reach $2,000 in the next three to six months, according to the chief investment officer of one of this year’s most successful hedge funds.
Tony Hall of Duet Commodities Fund Ltd., which has returned more than 30 percent this year, told Bloomberg Television that gold’s price decline last month does not mark a change in the metal’s overall trend……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

The Precious Metals continue to trade in much enlarged trading ranges, but they have held important levels and have consolidated reasonably well. The industrial Precious Metals were the biggest losers in the early part of the week as more uncertainties over the state of the Chinese economy came to the surface.
China itself was closed last week because of “Golden Week” and the markets will find out next week about the level of physical support for Precious Metals……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Strong physical Gold demand from Asia amidst the backdrop of European debt crisis is expected to average gold prices at around $1875/ounce, says Barclays Capital in a research report. $1600 levels may prove to be a strong support and cushion from which prices might shoot up.
-Moody’s downgraded Italy’s credit rating from Aa2 to A2. Long-term funding risks in the Euro zone nations have increased. Bullish………………………………………Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

In recent weeks, gold experienced a correction and has been trading sideways in the $1600 to $1700 range. Other commodity prices have declined more dramatically, leading some investors to believe that gold is headed for a bigger fall. However, many analysts believe that numerous bullish factors will push gold prices higher.
First, investors are still looking for safe havens, particularly safe havens that provide a decent rate of return……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Those Arab members of the Organization of Petroleum Exporting Countries which have increased their oil output in recent months to compensate Libya’s production cut, should reduce their output because the global market is oversupplied, Iran OPEC governor said.
Mohammad-Ali Khatibi told the Mehr news agency on Monday that secretary general of OPEC has offered the Arab members of OPEC to cut their oil output, because the gradual return of Libyan oil production was bolstering oil supplies……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Oil production from members of the Organization of the Petroleum Exporting Countries fell by 130,000 barrels per day to 30 million barrels per day in September, according to a Platts survey of OPEC and oil industry officials and analysts released Monday.
Output declines from Saudi Arabia and Nigeria, along with smaller dips from the United Arab Emirates, Kuwait and Iran, more than offset increases totaling 150,000 barrels per day from Angola, Libya and Iraq, the survey showed……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Oil prices jumped 3 percent Monday as fears of another recession retreated. Prices rose Monday after France and Germany agreed to put more capital into European banks. The move by the eurozone’s two biggest nations helped ease concerns that major banks in Europe and elsewhere would be brought down by the region’s debt crisis.
Benchmark crude rose $2.43, or 3 percent, to end the day at $85.41 per barrel in New York. Brent crude, which is used to price many international kinds of oil, rose $3.07 to finish at $108.95 in London……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

The world’s entire population can have electricity and cleaner stoves by 2030 if $48 billion is invested each year, the International Energy Agency said in its first estimate of the cost to end energy poverty.
The sum is about the same as the combined annual capital spend of Europe’s two biggest oil companies, Royal Dutch Shell Plc and BP Plc, and five times the $9.1 billion that was invested in 2009 to boost energy access in developing nations……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

The latest report from the International Energy Agency (IEA) is classic good news/bad news: The good news: By 2030, it’s possible to bring energy to the 1.3 billion people who don’t have electricity, and the 2.7 billion who don’t have clean cooking facilities … most of whom are in sub-Saharan Africa or developing regions of Asia.
The bad news: Doing so, according to IEA executive director Maria van der Hoeven is “just a question of mustering the political will.”………………………………………Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Assets in U.S. based exchange-traded funds (ETFs) fell below the $1 trillion mark in September, the lowest level since November 2010, according to a new report from Birinyi Associates.
Market pullback during the period caused overall assets to fall 8.3 percent to $972 billion. However, a net $4.5 billion in new money was added to a variety of ETFs in September……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

Vanguard founder Jack Bogle says there’s a good possibility that private commodity exchange-traded funds (ETFs) couldn’t deliver the underlying physical commodities if their investors demanded they do so.
“The commodities part of the public ETF market is not that large,” Bogle told CNBC. “It’s only a small portion of the public market.”………………………………………Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

When it comes to managing their finances amid the stock market’s wild swings, instead of stashing cash under their mattresses investors are starting to think more like hedge fund managers.
A slew of “alternative” mutual funds has cropped up, enabling individual investors to dabble in short, ultra-short, long-short, market-neutral and other strategies once reserved largely for hedge funds and other institutional investors……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

European Union (EU) got an unique opportunity to reform the EU’s Common Agricultural Policy (CAP) and to utilize the fund in better ways as the higher commodity price has made the farmers less dependent on government support.
According to the new report by the Organisation for Economic Co-operation and Development (OECD), the European support to farmers has gone down substantially over the past 20 years. Farmers earned 22% of total annual receipts from government support in 2008-10, down from 39% annually over the 1986-88……………………………………….Full Article: Source

Posted on 11 October 2011 by VRS |  Email |Print

The European sovereign debt crisis that’s spread from Greece to Italy and is roiling the region’s banks now has another potential victim: energy policy.
European Union emission permits, needed by polluters from utilities to cement makers for each ton of the carbon dioxide they put in the atmosphere, slumped to their lowest price in 2 1/2 years on Oct 4. An auction of permits by Greece, trying to avoid the euro area’s first default, worsened a glut of the allowances, UBS AG analyst Per Lekander said last week……………………………………….Full Article: Source

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