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Commodities Briefing 23.Nov 2011

Posted on 23 November 2011 by VRS |  Email |Print

Gary GenslerSome of the world’s biggest financial firms are locked in a battle over the control of large banks in the $300 trillion market for privately traded derivatives in the United States. The fight pits dealers such as JPMorgan, Morgan Stanley and Deutsche Bank against much of the rest of the financial industry.
At the heart of the dispute is a set of seemingly obscure rules that, however esoteric, may help decide the winners and losers in the industry, an opaque market blamed as a major contributor to the 2008 financial crisis………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Total assets under management in commodities reached $412 billion in October, just $39 billion short of the all-time records set in April, said Barclays Capital in a research note.
During October, the focus of market participants was yet again squarely on EU policymakers, on the US, where a slowdown in activity heightened fears of a double-dip recession, and on China, where a slowdown in Europe and possibly the US was seen as increasing risks of a hard landing………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

The U.S. congressional supercommittee’s failure to come up with a deficit reduction deal has prompted JPMorgan to downgrade its outlook on commodities. Colin Fenton, the investment bank’s head of global commodities research and strategy, warned clients that markets must now price the risk of more credit rating cuts for the United States.
“The primary implication is damage to confidence in the United States’ seriousness of purpose and the cost of that attitude,” he said in a report on Tuesday evening………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

China’s appetite for commodities continued in October, with imports positive across the energy, metals and agriculture segments. Expectations of easing in monetary policy have led to further improvement in its appetite.
Along with Chinese imports of commodities, funds’ investments in commodities worldwide have also been increasing. According to data compiled by Barclays Capital, “Total commodity assets under management (AUM) continued to pull ahead and experienced another large month-on-month increase, taking AUM to $412 billion, just $39 billion short of the all-time high reached in April this year.” It is interesting to note that commodity funds’ AUM had shrunk in September………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

A clearing Exchange that looks increasingly reluctant to honour its vow of guaranteeing safety of transactions, a political system where politicians pile on cash based on their position in their country and the first victim of all the crony capitalism that ebbs through the power corridors of the US – private wealth is disappearing into the hands of the few.
Crony capitalism is a term describing a capitalist economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favouritism in the distribution of legal permits, government grants, special tax breaks, and so forth - wikipedia……………………………………….Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Oil prices rose in choppy trading on Tuesday as efforts to strengthen sanctions on Iran and regional unrest hiked the geopolitical fear premium and offset worries about global economic growth.
The euro rallied against the dollar and helped boost dollar-denominated oil after the International Monetary Fund beefed up its lending instruments and introduced a new six-month liquidity line designed to help countries at risk from the euro zone debt crisis………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

With debt crises either side of the Atlantic, Europe flirting with recession and Libyan oilfields returning to production, it is tempting to be bearish on oil.
Tempting but risky. Despite all the financial and economic gloom, 2011 has been a record year for oil with Brent crude at its highest-ever average above $110 per barrel, and few analysts forecast a big drop in price, even those who expect an economic slowdown………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

The global oil market is balanced and prices are “comfortable,” OPEC Secretary-General Abdullah al-Badri said on Tuesday.
The oil exporter group is due to meet in Vienna on December 14 to discuss production levels and the outlook for demand, with the eurozone crisis and tension over OPEC member Iran’s nuclear programme tugging prices in opposite directions………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

The world’s biggest oil producers are signaling they want OPEC to stick to existing crude-output quotas, as prices have remained lofty.
The statements by top oil officials from Saudi Arabia and Iraq and by OPEC’s secretary general this week represent a shift in stance. As recently as September, the Organization of Petroleum Exporting Countries hinted in an oil-market report that some members could reduce production if the debt problems plaguing Europe create ripple effects that cut demand and if Libya rapidly resumes exports………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

OPEC will likely decide to cut oil output at its Dec. 14 meeting in Vienna as global oil demand is expected to decline next year, Iraq’s oil minister said on Tuesday, a view in line with fellow member Iran but one which runs counter to mainstream expectations.
Industry observers say a cut in output is unlikely to find support among the Gulf Arab OPEC members while oil prices remain well above $100 a barrel………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

High oil prices for a longer period of time could endanger the global economic recovery, the executive director of the Paris-based International Energy Agency, Maria van der Hoeven, said Tuesday.
“If prices are for a long time at a relatively high level they then will endanger the economic recovery, especially in the poor countries and the emerging countries,” van der Hoeven told a conference in Saudi Arabia’s capital Riyadh………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Global copper demand remains firm despite fears of an economic slowdown and key consumer China is likely to raise imports again in November, Aurubis, Europe’s biggest copper producer, said on Tuesday.
“The general view that demand is suffering due to economic concerns does not seem to fit with the inventory trend in the metal exchange warehouses,” Aurubis said in a report. “Copper production does not meet the requirements.”……………………………………….Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Gold is a rare metallic element with a chemical symbol, Au. The word is short for the Latin word for gold, ‘Aurum’, meaning ‘Glowing Dawn’. It has several properties that have made it very useful to mankind over the years. Why is gold special?
Gold is a unique asset based on few basic characteristics. First, it is primarily a monetary asset, and partly a commodity. As much as two thirds of gold’s total accumulated holdings relate to monetary asset holdings which include the central bank reserves, private investments, and high-caratage jewelry bought primarily in developing countries as a vehicle for savings…………………………………………Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Gold futures rebounded from four-week lows on Tuesday as relative calm in other markets and a weaker dollar drew buyers back to the precious metal. The most actively traded gold contract, for December delivery, rose $23.80, or 1.4%, to settle at $1,702.40 a troy ounce on the Comex division of the New York Mercantile Exchange.
Futures on Monday settled below the $1,700 mark for the first time since late October, as investors moved to cash amid worries about a potential credit crunch in the euro zone……………………………………….Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Silver is often called gold’s ugly sister because historically it presents itself as a very volatile metal, price-wise. Silver demand is typically determined by two main influences. First, silver as a store of value, much like gold. Second, silver is valued as an industrial metal.
Right now, there’s a lot of concern about demand for silver as an industrial metal, about the lack of demand for silver for industrial fabrication. The interplay between these two demand uses contribute to its price volatility………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Monday’s near-$50 loss in gold elicited some modest physical buying in the Asian markets but the evening hours were still showing plenty of nervousness in the market with occasional dips to levels as low as $1,665 per ounce.
Attempts to patch some of the price damage with a corrective rebound were manifest in the early morning hours as well as at the opening of trading action in New York. The precious metals complex exhibited mixed prices however, as gold and platinum advanced, and as silver and palladium did not initially join the gainers’ club………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

This isn’t your father’s bull market in gold. It most certainly ain’t your grandfather’s either. Getting a handle on gold investing amid the Great Depression was all about the same three T’s as it had been for centuries – teeth, trinkets and terror.
But freed from fixed-price control as the last vestige of the Gold Standard collapsed, the gold market then morphed by the end of the 1970s into KFC – a finger-lickin’ combination of Krugerrands, futures, and those “certificates of confiscation” that were government bonds paying way less than inflation………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

It has been a good year for gold exchange traded funds (ETFs). With assets under management almost tripling at the end of October, following the festival season of Diwali, from the year ago period, financial planners across India are advising their clients to add gold ETFs to their portfolio.
Clients have been advised that the strong investment demand will continue well into the new year. Data shows that even as sales of real gold has plunged 26% in the quarter ended September, given the high price of gold, ETFs have nearly tripled………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Hong Kong Exchanges & Clearing Ltd., the world’s biggest bourse by market value, aims to introduce commodities trading, Chief Executive Officer Charles Li said in Hong Kong today, without giving a timetable.
China is the biggest consumer and producer of many commodities and Hong Kong should help in setting prices, Li said today at a forum in the city. China is the world’s No. 1 copper consumer, and the second-largest gold buyer after India………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

The commodity exchange works like a stock market because the seller offers a price and if the buyer is comfortable with it, a deal is sealed. Unlike spot markets where middlemen control the information and distort the price, the middlemen at the commodity exchange act as brokers and they are fully licensed by the regulator.
“The purpose of these exchanges is to guarantee availability of the product and helping in the process of price discovery,” explains Robert Mathu, the executive director of the Capital Markets Authority (CMA). “The second role is to transfer the true value of the farmer’s produce directly to the farmer. Having a commodity exchange helps to alleviate poverty, and improve the welfare of the producers.”……………………………………….Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

The rupee continued its free fall and touched a nadir of 52.73 against the dollar, before recovering a little to close at 52.32, amid indications from RBI and the government that there was little that authorities could do to prop up the currency.
The Indian currency closed 16 paise lower compared to Tuesday’s close which was a record low. The steep fall on Monday morning trade was due to heavy dollar demand from oil companies. Expectations of a further decline are also prompting importers to buy dollars, dealers said………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

The rupee on Tuesday touched an all-time low of 52.73 to the dollar, and speculation is rife that it could slide further for two reasons. Given the strong demand for the dollar globally (because of the turmoil in the eurozone), the greenback is expected to climb further vis-a-vis most other currencies. Specifically to India, foreign institutional investors are in no hurry to invest in our equity market due to a combination of domestic and global concerns.
Thankfully, FIIs have not sold shares aggressively despite the weakness in both the rupee as well as equities. But should the rupee slide further for whatever reason, it could trigger a vicious circle wherein FIIs would start pulling out money from shares, which in turn would weaken the rupee, and in turn spark more selling from other foreign investors………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

New Zealand’s dollar rose from the lowest level since March versus the U.S. dollar as raw-materials prices advanced for the first time in four days.
The currency, nicknamed the kiwi, was also supported after a report showed credit-card spending in the nation rose last month. The Australian currency advanced for the first time in seven days versus the yen before HSBC Holdings Plc releases a gauge of Chinese manufacturing for November………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

In a sign of the tough times facing the carbon sector, the Carbon Markets and Investors’ Association last month dropped the word “carbon” from its name.
The group, which represents more than 50 firms that finance and invest in emissions reduction, is now the Climate Markets and Investors’ Association (CMIA)………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

Fitch Ratings said, in a just published comment, that that Indian companies may face a decline in revenue from certified emission reductions (CER)/carbon credits post 2012.
CER prices have fallen recently due to several factors: The ongoing eurozone debt crisis; potentially lower acceptance of CERs after 2012; and the lower probability of developed and industrialised countries agreeing to binding commitments after the first commitment period of the Kyoto Protocol (ending December 2012)………………………………………..Full Article: Source

Posted on 23 November 2011 by VRS |  Email |Print

China’s top economic planner confirmed on Tuesday that it has approved a pilot greenhouse gas emission rights trading scheme in seven provincial regions in an effort to encourage carbon emission reductions.
The municipalities and provinces given the green-light include Beijing, Tianjin, Shanghai, Chongqing, Shenzhen, Hubei and Guangdong, an official with the National Development and Reform Commission (NDRC) told Xinhua under the condition of anonymity………………………………………..Full Article: Source

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