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Commodities Briefing 10.Nov 2011

Posted on 10 November 2011 by VRS |  Email |Print

Nelson LouieCommodities were broadly higher in October as macro-economic sentiment recovered for the month, which concluded with an EU summit agreement to require greater bank capital requirements and to increase the size of the region’s rescue fund.
Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management division, said, “The agreement reached by the EU summit temporarily improved investor sentiment which lent support to multiple asset classes, including commodities. While markets are likely to remain volatile as the details of the European deal are released and agreed upon by various members, short-term demand may be stimulated with most commodities trading at lower prices after the recent sell off. However, long-term fundamentals remain constructive for many key commodities.” (Press Release)

Posted on 10 November 2011 by VRS |  Email |Print

China’s oil refineries ran at lower rates in October, and output from steel mills and power plants also dropped, as a credit freeze bit into demand for industrial commodities in the world’s second-largest economy.
But the lackluster data should be considered against more sanguine economic indicators which showed October inflation falling sharply, factory output falling slightly and fixed asset investment still robust — allaying any fears that China economy is poised to slow down sharply amid a gloomy global outlook………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Contrary to conventional wisdom, the tradition of handing out sweets to cleverly disguised children during Halloween does not create enough demand to elicit supply shortages for sugar and other confectionery delights. Or does it?
There has long been a strong underlying cultural demand for the precious metal during the fall and winter in most developed and developing economies. Typically unencumbered by weather, the demand for gold’s annual cycle begins in September with the Indian harvest as farmers and workers put some of their earnings in gold, the traditional medium of saving and investment in most of rural India………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

The world’s leading energy thinktank has warned that oil prices could spiral above $150 (£93) a barrel in the short term if political unrest in Africa and the Middle East leads to inadequate investment over the coming years.
Despite a drop in the cost of crude on 9 November prompted by the deepening crisis in the eurozone, the Paris-based International Energy Agency, said the high cost of crude posed a threat to the global economy and said there was a risk of prices exceeding the previous peak of $147 a barrel seen in 2008………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Oil could hit $150 a barrel soon if investment in the Middle East and North Africa fails to rise with demand, the International Energy Agency (IEA) says. Prices have remained high throughout 2011, partly due to Libyan unrest.
“We are in the danger zone for the global economy at current levels,” said IEA economist Fatih Birol. The IEA also wants more investment in green technology, warning that the world is heading down an “insecure, inefficient and high-carbon” path………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Oil prices could surge to $175-200 per barrel if Israel attacks Iran’s nuclear facilities, leading to the closure of an important oil route, according to market observers. Tensions between the two arch foes have escalated after the International Atomic Energy Agency reported it had ‘credible’ evidence of Tehran’s nuclear weapons plan.
In a survey of oil traders, Washington D.C.-based Rapidan Group said that participants expected an $11 rise in the price of a barrel in the immediate aftermath of an Israeli attack………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Global oil demand is set to grow by 14.0 percent by 2035, pulled by China and emerging economies and the price could reach 120 dollars per barrel, the IEA said in its annual report on Wednesday.
“Without a bold change of policy direction, the world will lock itself into an insecure, inefficient and high-carbon energy system,” the International Energy Agency said………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

OPEC’s crude production rose in October as higher Libyan output offset cuts in Saudi Arabia, Nigeria and Venezuela, the group’s secretariat said.
The 11 members of the Organization of Petroleum Exporting Countries bound by quotas produced 27.27 million barrels a day in October, Vienna-based OPEC said today in its monthly oil market report. Production climbed from 27.18 million barrels in September, OPEC said, citing secondary sources for the data………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Spot market gold bullion prices rose sharply to $1,797 per ounce Wednesday lunchtime in London – over 3% higher than the same time a week earlier – as the European debt crisis intensified its grip on Italy. Silver bullion also rallied – though it remained just below $35 per ounce, where it started today’s London session.
Italian 10-year bond yields meantime breached 7.4%, following Wednesday morning’s announcement by clearing house LCH Clearnet SA that it will raise the amount of margin collateral Italian debt traders must posts against potential losses………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Last week, this reporter asked the question, have investors revoked gold’s safe haven status? And, in keeping with the volatility that has characterised the global political and economic spheres, the answer seems to change rather frequently.
HSBC analyst, James Steel, speaking on Mineweb.com’s Gold Weekly podcast, explained that “For a while, gold was trading more with risk instruments. That’s to say that as risk came off and equity markets for example weakened, gold would decline. And when risk appetite increased and equity markets rallied, gold tended to rally as well.”……………………………………….Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

This Halloween, one of the scariest horror stories imaginable befell many of us. MF Global, a major trader in commodities in derivatives, lost seven hundred million dollars over the weekend and filed for Chapter 11 bankruptcy.
Only a week prior, MF Global reported a $191.6 million quarterly loss as a result of trading on European government bonds. In response the company’s credit ranking dropped to low amounts………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Something that you often hear about gold, as a monetary asset, is that the supply of Gold – the amount of gold in the world – increases by about 2% each year due to Gold Mining activities, writes Nathan Lewis, of New World Economics.
We don’t really consume gold. Most of the gold that has ever been mined (the US Geological Survey estimates 85%) still exists today as bars, coins and jewellery. Even the small bit that is used in industry is often recycled………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

I received an urgent call from my friend at Fidelitrade this morning, a leading dealer in 1,000 ounce bars of gold and silver. He had just been cleaned out of the 1,000 ounce silver bars at $34,930 each, and there was nothing in the pipeline. What the hell was going on with silver?
I tried to calm him down with my usual measured, rational, global, cross asset class explanation, and made the following points:……………………………………….Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

The slamming of the rare earth stocks based on warnings that global growth is slowing and high prices are generating “demand destruction” is the reverse of the media hype that we had before.
It has had a negative effect on the valuations of rare earth juniors, in particular the ones that are still in the process of developing a new supply. Some advanced but early-stage companies are being punished on the down side because the leaders in the sector retreated significantly. It is very unfair………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

A little-known metal used in steelmaking could emerge as a game-changer for battery technology, raising the prospect of an investment boom like the one that lifted rare earths out of obscurity last year.
Electric cars fueled by vanadium could one day travel hundreds of miles on a six-minute charge, while renewable energy sources like wind and solar could use vanadium batteries to rival coal in terms of reliability. The technology could boost demand for the metal by more than 35 percent in the next two or three years, analysts say………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Lack of leadership continues to worsen the outlook for the global economy. Add to that recurring systemic risk and it’s easy to see why commodities recently underwent a pullback that makes the downside in equities seem tolerable.
If the remainder of 2011 resembles late 2008, renewed hope should materialize in the form of G-20 leaders rushing to the rescue. So, as an academic exercise, let’s look at 2008 and the first half of 2009 to get a sense for how things might play out………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

World wheat inventories will be 0.1 percent larger than forecast a month ago as producers in the former Soviet Union and Eastern Europe boost output, while U.S. supplies may decline, a government report showed.
Global stockpiles will total 202.6 million metric tons by the end of May, up from 202.37 million forecast in October, the U.S. Department of Agriculture said……………………………………….Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

The world is likely to build so many fossil-fuelled power stations, energy-guzzling factories and inefficient buildings in the next five years that it will become impossible to hold global warming to safe levels, and the last chance of combating dangerous climate change will be “lost for ever”, according to the most thorough analysis yet of world energy infrastructure.
Anything built from now on that produces carbon will do so for decades, and this “lock-in” effect will be the single factor most likely to produce irreversible climate change, the world’s foremost authority on energy economics has found………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

Without efforts to expand carbon capture and storage technology, the world is expected to see a major increase in emissions, OPEC said from Vienna.
The Organization of Petroleum Exporting Countries released its annual report from Vienna that predicted a 43-percent increase in global carbon dioxide emissions by 2035………………………………………..Full Article: Source

Posted on 10 November 2011 by VRS |  Email |Print

The expansion of New Zealand’s carbon trading scheme, the only national market outside Europe, will be slowed to minimise costs to the economy if the ruling National-led government is returned to power in elections at the end of the month.
The centre-right party said it will adopt recommendations of a review released mid-September, which will see the energy, transport and industrial sectors get until 2015, two years later than planned, before they pay the full cost of emissions of NZ$25 ($20.25) a tonne of carbon………………………………………..Full Article: Source

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