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Commodities Briefing 13.Dec 2011

Posted on 13 December 2011 by VRS |  Email |Print

Nelson LouieCommodities were slightly lower in November as macroeconomic sentiment continued to favor broad-based risk reduction and a stronger US Dollar for the majority of the month.
Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management division, said, “The end of November featured an improvement in the macroeconomic landscape amid shifts in central bank policy and some improved economic readings. While macroeconomic concerns are likely to continue to operate as headwinds, fundamentals remain strong for many key commodities. For example, petroleum markets remain very tight, with resilient demand and the potential for significant supply disruptions, while the Agriculture sector also remains vulnerable to supply shocks. Industrial Metals may rebound if extreme macroeconomic risk subsides.” (Press Release)

Posted on 13 December 2011 by VRS |  Email |Print

Scott GardnerCommodities fell to a two-week low on mounting concern that the European debt crisis will spread after Moody’s Investors Service said it will review ratings for countries in the region.
The Standard & Poor’s GSCI index of 24 raw materials declined 1.3 percent to close at 638.93 at 3:44 p.m. New York time, led by metals. Earlier, the gauge touched 636.8, the lowest since Nov. 25. The measure has dropped 16 percent from a 32-month high in April………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Commodity markets are more familiar territory for individual investors than they once were. But are they the sort of territory into which investors should venture right now? The answer depends partly on whether the commodities boom is over or merely having another brief interruption.
The sector depends heavily on China’s appetite for metals - it consumes half of the world’s annual iron ore production, and more than a third of most base metals…………………………………………Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Falling commodity prices and growing demand for imports saw Australia’s trade surplus narrow in October. The trade surplus narrowed to $1.595 billion in October compared to $2.249 billion for the previous month, figures released by the Australian Bureau of Statistics on Monday showed.
The October figure was below economists’ predictions of a $2 billion surplus. Nomura chief economist Stephen Roberts said the weaker than expected result reflected a drop in commodity prices………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Volatility will continue in commodities and equities but commodities will continue to outperform other asset classes. The markets will be impacted by the Eurozone crisis, US financial crisis, already the United Nations has signaled a global recessionary threat in 2012-13.
Recently, central banks in China and some European countries have lowered their interest rates, focusing on growth, which augurs well for commodities………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

The absence of a global legally binding agreement on climate change, along with a rethink on nuclear energy, risks a failure to arrest catastrophic temperature rises, the International Energy Authority’s chief economist says.
IEA chief economist Fatih Birol said the pact agreed in Durban on the weekend was good news because it was supported by and signed by all governments that need to be involved………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

OPEC on Monday targeted a new 30-million barrel-a-day production deal aimed at healing the rift left by a bad-tempered failure to reach an output agreement when it last met in June.
At stake for the Organization of the Petroleum Exporting Countries when it meets on Wednesday is a credible policy going into a year when a sluggish global economy could undermine fuel demand and send oil prices tumbling from over $107 a barrel now………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Kuwait’s oil minister said there is no need to change OPEC’s crude output or production quotas as the group’s ministers prepare to meet in Vienna on Dec. 14.
“I don’t think there is any need to change either production or quota because now the market is stable,” Mohammad al-Busairy told Bloomberg News as he left for Vienna from Kuwait. “Most of the countries in OPEC agree there is no need to change anything about the quota or the production.”……………………………………….Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Iran will urge other OPEC members at a ministerial meeting on Wednesday to accommodate an eventual return of Libyan crude output to pre-war levels, saying failure to do so will boost inventories and lower prices next year.
Iran’s OPEC governor Mohammad Ali Khatibi told the official IRNA news agency that oil ministers of the Organization of the Petroleum Exporting Countries meeting in Vienna would discuss such an adjustment………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Saudi Oil Minister Ali al-Naimi on Monday refused to be drawn on the outcome of this week’s OPEC output meeting, but said he was happy with the kingdom’s crude output level of over 10 million barrels per day.
“We (OPEC) haven’t met yet so we will tell you what will happen when we meet” on Wednesday in Vienna, Naimi told reporters on arrival in the Austrian capital, speaking on behalf of OPEC’s biggest crude producer………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

The International Energy Agency (IEA) said a boost in Saudi oil output would provide welcome relief from the threat that high fuel prices pose to efforts to revive the global economy.
The IEA has warned that benchmark Brent oil prices over $100 a barrel are a threat to the global economy. Brent traded at over $108 a barrel on Monday………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Despite having a rather stable performance last week, gold and silver are declining sharply Monday. Gold fell below a key support level at $1,680, while silver dipped below $31. There are several global factors contributing to the decline in precious metals today.
A European summit deal to tighten fiscal rules in the euro zone failed to restore financial market confidence after Britain blocked a major treaty change, forcing euro-zone countries to negotiate a fiscal accord outside the European Union without the support of Europe’s second-largest economy………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Gold prices have been caught between soft physical demand, the relative strength of the dollar, and muted risk appetite. Physical demand responded to lower prices but has failed to provide a solid floor while investment demand has strengthened with ETP holdings close to record levels and central bank net buying continues.
Indeed, the macro picture remains conducive for further price gains next year, given negative real interest rates and fears over inflationary pressures………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Gold futures slumped below $1,700 for the first time in two weeks as a stronger dollar and downbeat comments from credit ratings firms stoked disappointment over the European Union’s summit.
The most actively traded contract, for February delivery, was recently down $45.30, or 2.6%, at $1,671.50 a troy ounce on the Comex division of the New York Mercantile Exchange………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

New research by New Frontier Advisors confirms gold’s unique role as a diversifier and foundation asset in the portfolios of euro-based investors, especially at a time of heightened currency and investment risk.
The report, ‘Gold as a strategic asset for European investors’, commissioned by the World Gold Council, explores gold as a strategic asset across five sets of asset allocation studies, including four using historical data spanning 1986 to 2010, and one using the 1999 to 2010 time frame………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

As the financial markets negotiate a battlefield of rising European debt, high inflation and the fear of a double-dip recession, investors have been left in a bit of a no-man’s land. Sectors across the board have taken a hammering, and even the safe-haven allure of the commodities market has faltered.
Despite the bloodbath, analysts and fund managers alike have remained bullish on the sector, arguing that precious metals have performed well during times of economic distress, including the 2008/09 financial crisis. But how you get in on the game is a matter of preference………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

In a bid to replace the Mining Act of 1957, India’s Mines Ministry tabled the new Mining Bill in Parliament proposing that coal miners share 26% of the profit and non-coal miners’ 100% of the royalty annually with project affected people.
Mining Minister Dinsha Patel said the Bill would ensure that mining projects would not get scuttled by the local population as has been happening in the past. Displaced persons have been seeking adequate compensation and have stalled projects of companies like Korean steelmaker Posco and ArcelorMittal………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Commodity and currency-based ETFs are gaining popularity as investors disappointed with poor returns on traditional investments like stocks and bonds look to diversify their holdings.
According to a new report from research firm Aite Group, assets under management in commodity ETFs hit $118 billion at the end of October, up dramatically from slightly more than $1 billion in 2004. Currency-based ETFs, meanwhile, grew eightfold, from less than $1 billion at the end of 2006 to just under $8 billion at the end of October. Together, they represent about 12% of the overall ETF assets under management, according to Aite………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Benedicte Gravrand, Opalesque Geneva: A2CT2, a Geneva-based commodity CTA shop, has just celebrated the 6th anniversary of its flagship, the Commodity Absolute Return Fund (CARF).
The first share class of the Fund, CARF A, is an unlevered alpha strategy. It was down 1.92% in October and up 3.23% YTD, annualising +5.3% since inception (and 8.3% since March’10, when the managers started balancing sectors). By comparison, the Goldman Sachs Commodity Index returned +9.75% in October and -0.46% YTD and the Newedge CTA index lost on all counts with -3.64% for the month and -4.98% YTD…………………………………………Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Tin producers from Indonesia, the world’s largest exporter, are backing the start of a physical contract in the country to try to establish an alternative to the benchmark on the London Metal Exchange.
The Indonesia Commodity & Derivatives Exchange, which trades palm oil and gold, plans to introduce the new contract next week, offered in lots of 5 metric tons and priced in dollars, according to a statement today. Trade will start Dec. 15, according to Megain Widjaja, exchange chief executive………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

The Singapore Mercantile Exchange (SMX) will launch five contracts for Indian-origin commodity products next year, Chief Executive Officer Vaidyalingam Hariharan said.
“We will launch 10 to 13 contracts, which will include some of the successful Indian-origin commodity contracts such as cotton, gold and silver,” Hariharan — who took charge of the Financial Technologies Group-owned SMX as CEO today after holding the role for more than six months on an interim basis — told PTI………………………………………..Full Article: Source

Posted on 13 December 2011 by VRS |  Email |Print

Money manager Bill Brennan spends most of his waking hours thinking about something most Americans take for granted: water.
It may be the most essential of all commodities because without it none of us would be alive. But as an investment, water has had neither the glitter of gold nor the allure of oil………………………………………..Full Article: Source

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