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Commodities Briefing 16.Nov 2011

Posted on 16 November 2011 by VRS |  Email |Print

The value of privately traded derivatives in force globally rose 18% during the first half, reaching $708 trillion by the end of June, according to figures released yesterday by the Bank for International Settlements.
This marks the fourth biggest six month increase on record, and it comes as the over the counter derivatives market is facing a regulatory overhaul that will change the way trades are executed and processed……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

D. SubbaraoDespite the turmoil in Europe and the prospect of slowing growth in emerging markets, commodity prices have remained high. The Thomson Reuters/Jefferies CRB Commodity index, although has fallen from the highs it reached earlier this year, is still higher than what it was a year ago.
And despite the slowdown in global manufacturing as evident from the Purchasing Managers’ indices of various countries, crude oil prices remain high. For instance, the price of Brent crude is higher than it was at the beginning of the year, or indeed, for some time during June-July……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Goldman Sachs maintained its overweight recommendation for commodities over the next 12 months, despite the European debt crisis.

“Confidence in this view has been reinforced by the recent shift in policy in China towards a looser stance, which will likely help support economic growth and, in turn, commodity demand,” Goldman said in a note to clients……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Fund managers are moving their assets into emerging market and US equities as 72% expect a eurozone recession in the next year. Commodities also picked up the pace as there was renewed confidence in energy and materials investment at the start of November, driven by positive sentiment towards emerging markets.

However, regional gloom didn’t taint the global outlook, as investors are feeling more confident that a possible recession will be confined to the eurozone. Nearly a third (31%) of fund managers surveyed said the world economy will avoid a recession, up from 25% in October……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Fund managers have ditched a negative stance on commodities amid “increased faith” in China’s economy, a huge consumer of raw materials, and despite growing fears of deflation.

Portfolio managers, who last month were at their most bearish on commodities for nearly two years, returned to a neutral position on the asset class, a survey by BofA Merrill Lynch said……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Gold’s positive momentum continued last week with Gold recording a 1.8% gain. Gold has now risen three weeks in a row and looks set to record a second monthly gain after October’s monthly gain with Credit Suisse expecting a $1800/oz break in the coming days.

Gold remains up 25% year to date in US dollars and (22% in Euros and British pounds) and thus the recent correction and consolidation was a healthy development that took the short term froth out of the market and has now left the gold market with stronger foundations……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Gold touched a new all-time high in India in Rupee terms, although not in dollars as the rupee has fallen back sharply against the Greenback. converting to US dollars the price rose $0.59 to $578.60 per 10 grams, driven by heavy purchases across the country for the ongoing marriage season. Silver followed suit and gained $2.96 to $1,145 per kilo given the increased offtake by industrial units and jewellery retailers.

India is the world’s biggest buyer of bullion and traders insist the country’s wedding and festival season has boosted prices every year since 2002. …………………………………….Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

George Soros, the fund manager who made over $1bn betting against the pound in 1992, has called gold ”the ultimate bubble”, writes Michael Rankin. Precious metals are seldom out of the news. From updates on the latest price movements to yet another daytime TV advert or internet pop up, offering cash for gold.

Gold and silver have been used as a store of value for thousands of years. Until 1971 the value of the US dollar was linked to gold, whilst in the UK silver coins contained real silver until 1947……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Silver exports from China, the world’s largest, are expected to drop this year as domestic demand from investors is expected to surge. And, in a market that has seen significant price volatility, these reduced exports could bolster prices of the white metal, say analysts. On Monday, December silver lost 65.8 cents to close at $34.024 an ounce in New York. The metal has advanced 10% this year.

According to a statement from China’s ministry of commerce, the 2012 export quotas for silver from the Asian country have also been reduced by 5%. This amounts to a cut of 283 tonnes in its 2012 silver export quotas from 5,670 tonnes in 2011……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Despite growing demand in most sectors, both platinum and palladium are expected to end 2011 in surplus but platinum demand is forecast to decline in 2012 and remain in surplus while the more industrially-driven palladium market will rise, resulting in a deficit next year.
Those are among the conclusions of the “Platinum 2011 Interim Review” issued Tuesday by platinum group metals specialist Johnson Matthey PLC. Gross demand for platinum is forecast to rise 2% to 8.08 million ounces in 2011, close to pre-recession levels……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Copper prices are softer despite a tight supply situation as the market focuses on the macroeconomic outlook, said Commerzbank in a research note.

“While workers at the world’s third-largest copper mine, Grasberg in Indonesia, have voted in favor of extending the strike for the third month now, negative investor sentiment is keeping the pressure on prices,” the bank added……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

The intensification of sovereign debt concerns has fuelled fears in the base metals markets of a repeat of 2008, said Barclays Capital in a research note. But although there are some similarities, there are also a number of important differences between then and now in supply trends, inventories and price action.

On the supply side, in the run up to the 2008 crisis, producers were maximizing throughput and, as a result, when buying suddenly froze, large production adjustments were needed to bring supply back into line with demand……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Oil prices climbed to near $100 per barrel Tuesday on encouraging news about the U.S. economy. Benchmark crude rose $1.23 to end the day at $99.37 per barrel in New York. The benchmark price hasn’t been that high since July 26. Brent crude, which is used to price many foreign oil varieties, climbed 50 cents to finish at $112.39 per barrel in London.

Prices jumped after the Commerce Department said that retail sales rose in October for the fifth straight month. Consumer spending increased for electronics, appliances, hardware and building supplies. Sales also rose at grocery stores, bars and restaurants and health care stores……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

OPEC crude supply should reflect the level of expected demand for the group’s oil, which is currently more than 30 million b/d, a senior Gulf source said Tuesday.

“I think OPEC supply should reflect the call on OPEC oil,” the source said when asked about expectations for action by OPEC ministers when they meet in Vienna on December 14. Asked to give a figure, he said: “What we are producing now, 30 million b/d-plus.”…………………………………….Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

The Organisation of Petroleum Exporting Countries will watch market developments closely and will be able to work well together as long as there is ‘no outside influence’, Iran’s OPEC governor said on Tuesday.

OPEC, at its last meeting in June, failed to reach consensus on an output deal to contain crude oil prices and scheduled to meet again in early December……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Short-term pressures on oil markets may be eased by slower economic growth and by the expected return of Libyan oil to the market, but trends on both the oil demand and supply sides maintain pressure on prices.
We assume that the average IEA crude oil import price remains high, approaching $120/barrel (in year-2010 dollars) in 2035 (over $210/barrel in nominal terms) in the New Policies Scenario although, in practice, price volatility is likely to remain…………………………………….Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Precious metal exchange-traded product funds attracted the most financial inflows of all commodity exchange-traded fund products in the third quarter of 2011, ETF Securities said Monday in its Global Commodity ETP Quarterly report. ETF Securities provides a number of precious metals exchange-traded product funds, such as the ETFS Physical Gold fund.

During the third quarter, inflows to precious metal ETPs rose by $7.2 billion compared with the previous quarter, the largest quarterly increase since Q2 2010, when the European sovereign debt crisis first made the news……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Exchange-traded funds, or ETFs, have been around since 1993, but in the past few years they’ve been winning over individual investors in a big way.

Because most ETFs are passively managed, an ETF is essentially an index fund that trades like a stock. There are now more than 1,000 ETFs to choose from in the U.S marketplace, according to the Investment Company Institute, and investors are jumping on the ETF bandwagon in droves. But should you?…………………………………….Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

The Japanese central bank, the Bank of Japan (BoJ), has been locked in a seemingly futile battle to weaken its currency, the yen. A strong yen is seen as damaging to Japanese exporters by reducing their competitiveness overseas and eroding the value of repatriated earnings. But despite its past failures, it is likely that the BoJ will intervene again. The question for traders is when, and by how much?

On 31 October, the BoJ intervened to weaken the yen for the third time this year, with finance minister Jun Azumi declaring that he would continue to intervene until he was satisfied. It is estimated that the initial move cost the BoJ ¥40 trillion (£327bn), and a further trillion in the three days following that……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

Emerging-market currencies weakened Tuesday as investors remained focused on the euro-zone’s escalating sovereign debt crisis, though emerging-market sovereign debt was little changed.

Despite positive economic data from the U.S. that marginally helped lift U.S. equities and global commodities, emerging-market currencies were unable to take advantage of any increase in risk appetite. Emerging European currencies, along with the highly risk-sensitive South African rand, suffered the heaviest losses as rising yields in European government bonds overshadowed higher-than-expected October retail sales in the U.S……………………………………..Full Article: Source

Posted on 16 November 2011 by VRS |  Email |Print

The Regional Greenhouse Gas Initiative, a 10-state program that has been testing a carbon dioxide cap-and-trade system, may be in trouble, with New Jersey planning to drop out and other states considering doing the same.

But a new study says the program has saved money for consumers, stimulated job growth and kept money in local economies in the states that signed up……………………………………..Full Article: Source

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