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Commodities Briefing 19.Oct 2011

Posted on 19 October 2011 by VRS |  Email |Print

Fatih BirolInvestments totalling $38 trillion are needed to meet projected global energy demand through 2035, and unrest in the Middle East and North Africa may disrupt this spending, according to the International Energy Agency.
Energy supplies may be threatened if unrest in energy- producing countries curbs oil and gas projects, Fatih Birol, chief economist at the adviser to 28 industrialized nations, said at a press conference in Paris……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

Jill SommersTrading in commodities futures will be capped under a federal rule adopted Tuesday that seeks to clamp down on speculative trades, which some have blamed for driving up food and gas prices in the past year.
The Commodity Futures Trading Commission voted 3-2 to approve the rule, which doesn’t take effect until 2012. It was required under the financial regulatory overhaul……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

A divided Commodity Futures Trading Commission on Tuesday adopted new constraints on speculative Wall Street trading, a business that some regulators have blamed for inflating prices at the gas pump and the grocery store.
But the fight over the rule may continue if Wall Street, as expected, takes its complaints to the courts……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

The merciless arithmetic of investing in commodity producers is imposing itself on many a portfolio: Copper down a few percentage points; copper stocks cut in half. It’s nice when the swing works in your favour; when it’s conspiring against your wealth, it’s an agony not even the Marquis de Sade could dream up.
The bad news is that there’s good reason to think that commodity prices are ready to wither even more. Europe is a disaster, the U.S. is too, and China’s economy is cooling fast. Since resources are priced at the margin – that is, the last unit of demand sets the price – it doesn’t take much of a slowdown to trigger drastic price cuts……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

China’s falling steel and power output in September, coupled with a meagre increase in implied oil demand, show that a year-long monetary tightening campaign and economic woes in the West have begun to pinch.
A confluence of bearish factors in the fourth quarter, including a seasonal slowdown in domestic activity as well as worsening export growth, will combine to sap China’s demand for a raft of commodities, analysts said……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

No doubt the slowing of China’s economic growth rate in the third quarter will grab headlines, but a better picture of demand for commodities in the world’s biggest consumer is shown by data such as industrial production and retail sales.
But let’s get the drop in gross domestic product to 9.1 per cent year-on-year in the July to September period from 9.5 per cent in the second quarter out of the way first……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

“Super cycles are extended periods of historically high global growth, lasting a generation or more, driven by increasing trade, high rates of investment, urbanisation and technological innovation, characterised by the emergence of large, new economies, first seen in high catch-up growth rates across the emerging world.
The world economy may now enjoy its third super cycle, after the first 1870-1913 and the second 1946 - 1972. Note that the first super cycle which coincided with America’s industrialisation and Germany’s Gründerjahre was stopped in the tracks on the eve of World War I……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

Gold could fall below $1,500 an ounce in the near term, as bullion has underperformed other assets and appears to have lost its safe-haven appeal, CitiFX said on Tuesday.
The technical research arm of Citigroup said, however, it still expects the precious metal to rise above $2,000 an ounce after a correction, and it will eventually trade as high as $3,400 an ounce……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

Gold price is expected to average $1875/oz in Q4, 2011 as the physical gold demand continues to cushion prices before investment demand takes off. Even though the volumes have softened, gold bar premiums in Asia is pretty high, indicating the strong demand for physical gold.
-The G-20 nations asked Europe to formulate a plan to resolve the debt crisis within October 23. And this looks unlikely since many key issues are yet to be fully defined……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

The gold market is suffering “very real damage,” warns economist Dennis Gartman, who fears that the rally from September’s lows is “now under assault.”
“The rally was always disconcertingly tepid; that is, after a vicious decline such as that seen in late August until late September, the bounce, if the market is truly healthy, should have been even more vigorous. It was not, and indeed if anything it was tepid, quiet and placid,” the publisher of the Gartman letter said………………………………………Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

Gold and silver sales are sluggish nearly three weeks into India’s peak festival season but will likely pick up Thursday because of an auspicious occasion, traders said.
“Showrooms are empty because liquidity is tight and people don’t have savings,” Prithviraj Kothari, president of the Bombay Bullion Association said Tuesday. “We are waiting for customers, but only inventories have increased as people had stocked up in anticipation of the festival season.”………………………………………Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

As hot as the blast furnaces required to produce steel, China’s ever-expanding economy continues to fuel a seemingly insatiable demand for one of the building blocks of the modern world: iron ore. As a result, iron ore has once again been catapulted into the spotlight with prices surging to robust levels.
With China representing approximately 63% of the market, and India’s needs nipping at China’s heels, iron ore supplies can’t keep up with demand. Especially since these emerging superpowers have limited domestic supplies of iron……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

The Arab Spring has disrupted investment plans in oil and gas projects as some governments in the region have shifted their focus to meet increasing demands from their population, the International Energy Agency said on Tuesday.
As a result, this could in the next five years push oil prices higher, the IEA’s chief economist Fatih Birol said at a briefing on the sidelines of the agency’s two-day ministerial meeting……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

A reluctance to invest in energy infrastructure in Middle Eastern and North African countries, partially because of unrest in the region, could drive up oil prices, an economist warned Tuesday.
Fatih Birol, the chief economist for the International Energy Agency, said that $1.5 trillion dollars needs to be invested each year if the world is going to meet energy demands from now until 2035……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

The next meeting of the Organization of Petroleum Exporting Countries may debate how to accommodate returning Libyan crude, a top Iranian oil official said.
The gathering due Dec. 14 in Vienna is widely expected to be more peaceful than an acrimonious June meeting. But the remarks underscore that it could see some lively debate on the implications of a faster-than-expected Libyan recovery for other producers……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

The Ethiopian Commodities Exchange (ECX) is to offer 80 more full membership seats according to members. The seats will be offered to traders who have had limited membership rights so far. The additional seats will be sold in auction in November.
The auction will only be made open to those who have been involved in trading at the ECX……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

The prices of hydrocarbons, minerals and agricultural commodities have been on a veritable roller-coaster. While commodity prices are always more variable than those for manufactured goods and services, commodity markets over the past five years have seen extraordinary, almost unprecedented, volatility.
Countries that specialise in the export of oil, copper, iron ore, wheat, coffee, or other commodities have been booming, but they are highly vulnerable. US dollar commodity prices could plunge at any time, as a result of a new recession, an increase in real interest rates in the United States, fluctuations in climate, or random sector-specific factors……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

Speculators boosted their wagers on higher commodity prices for the first time in five weeks as increasing confidence that the global economy will avoid another recession spurred the biggest rally of the year.
Money managers boosted combined net-long positions across 18 US futures and options by 0.2% to 656,691 contracts in the week ended October 11, Commodity Futures Trading Commission data show……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

Goldman Sachs commodities business generated more revenue in the third quarter but treacherous markets forced it to slash risks, leading to overall losses at Wall Street’s top bank.
Goldman Sachs Group Inc’s Value at Risk (VaR) for commodities averaged $25 million per day in the third quarter versus $39 million in the second quarter and $29 million in the third quarter of 2010, financial results on Tuesday showed……………………………………….Full Article: Source

Posted on 19 October 2011 by VRS |  Email |Print

At a time when the world is facing its biggest sugar glut in at least four years, trade barriers mean the European Union is contending with a second consecutive annual shortage.
EU supply will fall 1.1 million tons short of demand in the 12 months ending in September, according to the Committee of European Sugar Users, whose members include Nestle SA, Unilever and Kraft Foods Inc. Global output will exceed usage by 5.32 million metric tons, Macquarie Group Ltd. predicts. As world sugar prices fell 23 percent in the past eight months, costs in the 27-nation bloc reached a two-year high……………………………………….Full Article: Source

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