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Commodities Briefing 04.Oct 2012

Posted on 04 October 2012 by VRS |  Email |Print

Morgan Stanley is in talks to sell a majority stake in its commodities business to the Qatar Investment Authority, the Financial Times said, quoting people familiar with the deal. The investment bank had for the past few months been trying to sell a minority stake in the commodity business, which specialises in trading oil, gas and electricity.
A Morgan Stanley spokeswoman declined to comment on the report. The FT said selling the commodities business to Qatar’s sovereign wealth fund would allow traders in that unit to continue trading for their own books, which will be banned for banks under upcoming U.S. regulations such as the Volcker rule………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Mitch PetrickThe Carlyle Group this morning announced that it has acquired a 55% economic stake in Vermillion Asset Management, a $2.2 billion commodities hedge fund manager.
Mitch Petrick, Carlyle’s head of global market strategies, says that the deal is more partnership than acquisition, with Vermillion expected to maintain both its brand and its senior management. In terms of assets under management, however, all $2.2 billion is expected to be consolidated onto Carlyle’s balance sheet (something of particular import for publicly-traded PE firms, which often get judged more by analysts on AUM than on actual performance)………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Risk, rates, China, commodities. They are all key to the performance of the Australian dollar and they’re all pointing in the wrong direction. And given that this direction is unlikely to change for any of them, the Aussie could fall back under parity against the US dollar sooner rather than later.
The strength of the Australian economy has been in doubt for some time now. But hopes that the Chinese authorities would be able to achieve a soft landing there and that the major central banks would be able to stop the global economy from slowing have helped to keep sentiment relatively buoyant………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Oil markets seem to have defied logic in the second half of 2012. From late-June to mid-September, crude oil prices surged 28.9% despite an oversupplied market and cooling demand as the global economy slowed, supposedly on fears over a possible conflict between Israel and Iran.
Exactly as the Fed unleashed QE3, WTI peaked, and has since tumbled more than 12%, dropping 4.2% on Wednesday despite the pledge of unlimited liquidity from Bernanke, the ECB, and other major global central banks………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

A two-year investigation into whether the unregulated physical oil market is vulnerable to manipulation and needs tighter supervision looks set to end this week with a report that effectively endorses the current system, according to documents seen by The Wall Street Journal.
Responding to price volatility after the financial crisis that saw Brent crude climb to $144 a barrel in July 2008 and plunge a few months later to $35, the Group of 20 economically most developed nations in 2010 asked the International Organization of Securities Commissions to look at whether the physical oil market was at risk of manipulation and needed tighter regulation………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

About half of tonight’s debate will focus directly on the domestic economy, and you can hardly have that conversation these days without talking about energy policy.
To a large extent, our American angst about gas and oil prices dates back to an October event 39 years ago: The OPEC oil embargo. Since then, politicians have pledged never again………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

The price of gold hit a record high this past week in euro terms at about €1380. The record came after a number of actions by central banks around the world, trying to stimulate their respective economies. The actions, usually centered around money printing, once again had investors looking for refuge in gold.
Since the beginning of September, investors have bought about 75 tons of gold through exchange traded funds. Reuters says that gold ETFs, such as the largest gold ETF – the SPDR Gold Shares, are on track for their biggest quarterly inflows in over a year, of 3.285 million ounces. Finally, according to UBS, investors have also raised their bullish bets on gold futures to the highest level in more than a year………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Microsec has come out with its report on Gold and Silver. According to the research firm, gold and silver could resume their upward trend especially if the minutes of the FOMC meeting and Bernanke’s speech will contribute to the speculations that the Fed could consider additional monetary steps in the near future.
Gold edged down during last week by 0.26%; further, during said time the average price reached $1,767.8 /t. oz which is also 0.26% below the previous week’s average. Gold finished at $1,773 /t. oz. Silver also slipped on a weekly scale by 0.18%; further, the average rate decreased by 1.09% to reach $34.22/t oz compared to the previous week’s average rate………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

With governments all over the planet buying up gold over the past five years, it’s no wonder gold prices have risen 142% since 2008. Central banks bought 254.2 tons in the first half of 2012 and may add close to 500 tons for all of 2012, the World Gold Council said last month.
According to the International Monetary Fund (IMF), Russia added 18.6 metric tons of gold in July. South Korea bought 16 tons — a 30% increase. Kazakhstan increased their bullion reserves for a 12th consecutive month. Turkey, Ukraine and the Kyrgyz Republic also joined the party. And the buying continued in August, albeit at a more moderate pace, the IMF confirmed………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Gold prices are forecast to rise above $2,200 an ounce in 2013, supported by central bank stimulus action, said a German-based bank on Tuesday.
Energy and industrial metals could get a leg up next year because of policy actions, even though fundamentals are poor because of a weak growth outlook, Deutsche Bank said in a research note. The bank also said supply constraints in South Africa could support platinum………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Silver prices are expected to average $44 an ounce in 2013, said Deutsche Bank in a quarterly commodity research note.
Deutsche Bank raises its 2013 silver prices forecast by 3% from their previous estimate. Their 2012 fourth-quarter average estimate for silver is $37 an ounce, also down 2.6% from their previous forecast………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

With traders focused on gold and oil these days, it’s easy to overlook the prospects for other commodities. But Viktoria Palushaj, market analyst at investment firm CitrinGroup in Birmingham, Mich., points out that platinum prices have seen a “strong resurrection” recently. Platinum “offers the potential for long-term gains as the United States economic recovery endures, and other global economies work to find their footing.”
Platinum for January delivery closed at $1,694.10 an ounce on Wednesday, up 0.4% on the Comex division of the New York Mercantile Exchange. Futures prices up around 21% year to date………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

A global nickel surplus may expand for a third year to the highest level since 2008 as supply from new mining projects outweighs China’s demand growth, Japan’s top producer said.
Supply will likely exceed demand by 60,000 metric tons in 2013, said Toru Higo, Sumitomo Metal Mining Co.’s general manager of nickel sales and raw materials. Supply outstripped demand by 40,000 tons this year and 22,000 tons in 2011, he said………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Iron ore, the commodity most leveraged to China’s growth and Australia’s biggest export earner, is heading for the longest bear market in 20 years.
Vale SA, Rio Tinto Group and BHP Billiton Ltd., which control about two-thirds of seaborne iron ore supply, are spending about $47 billion on new and bigger iron ore mines from Brazil to Australia. The new cargoes are set to reach the global market just as China changes gear to lower growth expectations, following what may become its weakest performance since 1990………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Although most might think of coffee as their breakfast-time drink of choice (or in most cases, necessity), its popularity as a lucrative financial instrument has surged in recent years.
This soft commodity is well known around the world as a staple of many diets. While coffee’s uses are quite limited outside of the consumption scope, the massive demand for this product has allowed it to become one of the most active futures contracts on the market……………………………………….Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Growth in Exchange Traded Funds has slowed in the last few years but in the year to end September 2012 they still increased 16% to reach $5.7 billion, according to the ASX. This FUM is equivalent to about 9% of indexed Australian equities, based on separate research by Rainmaker, but only about 0.5% of stock market capitalisation.
There are five major ETF providers, StateStreet with 48% of the market, iShares with 23%, Vanguard with 9%, and BetaShares and Russell with 3% each. Other providers control only 14% of the market, showing how handling ETFs is a sophisticated service that only a few providers can master, let alone draw sustainable scale and profit from………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Through the end of September, 2012 has by and large been another solid year for commodities. Measuring commodity performance can be a little tricky though, as many commodity ETFs and ETNs hold various contracts throughout the year and roll those contracts according to their investment mandate. What that means is that ETF/ETN performance can vary from the underlying commodities.
While many regular investors do find that commodity futures offer certain advantages as investment options, a large number look to get their exposure through ETFs and ETNs, and it is the performance of these vehicles that we will use as proxies for this article………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Both the European Central Bank and the U.S. Federal Reserve have announced open-ended bond-buying programs; it’s unprecedented! The market as a whole has reacted well to that news and is concluding that inflation will be the order of the day.
We’re not talking about consumer inflation, but the price of core commodities — gold, oil, copper and the like. We’re not interested in the commodities themselves, but in the stocks that will benefit from higher prices. And on that front, there are now many enticing options in the space………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Exchange operators CME Group and ICE Futures U.S. said on Wednesday they would stick with their existing position limits regimes after a court threw out the U.S. Commodity Futures Trading Commission’s (CFTC) new rule to curb commodity market speculation.
CME Group and ICE, a subsidiary of IntercontinentalExchange Inc, had proposed revisions to their own position limit rules to bring them in line with the changes mandated by the CFTC. Those changes were due to come into effect on Oct. 12, but the rule was thrown out by the U.S. District Court of Columbia on Friday following a lengthy challenge by Wall Street banks………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

“It’s our currency and your problem,” U.S. Treasury Secretary John Connally famously said of the dollar in 1971. More than 40 years later, China is doing something about it.
Fed up with what it sees as Washington’s malign neglect of the dollar, China is busily promoting the cross-border use of its own currency, the yuan, also known as the renminbi, in trade and investment………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

As international sanctions against Iran have tightened, the value of the Iranian currency has plummeted. Ferdowsi Street in central Tehran is named after Ferdowsi, a poet who millennia ago compiled the Epic of Persian Kings and their eternal, mythical battle with evil.
The road is home to a long row of small shops where three types of money traders operate: “illegal” street money-changers, licensed exchange bureaux and, last but by no means least, big traders who move and shake the market with a phone call from their drab offices in the back alleys………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Agricultural commodities harvested in winter, including soybean and castor seed, hit the lower circuit in futures trade on commodity exchanges, on hopes of a bumper crop this season and cues from global markets.
Harvesting of summer sown crop has begun, with estimates of a record output, especially for the soybean crop, the largest in the oilseed basket. The revival in the monsoon rains in early August raised hopes of a better kharif crop, compared to previous estimates………………………………………..Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

Given all of the turmoil in markets this year, we have seen a number of investors change their positions on statements made in the past. Jim Rogers, for example, has now stated that he is looking into investing in Russia after snubbing the country for his entire investing life.
But there is one thing that Rogers is still as bullish as ever on, agricultural commodities. It has been no secret that he has been a fan of these hard assets for quite some time, but a recent interview shows that he still loves these commodities and is as bullish as ever……………………………………….Full Article: Source

Posted on 04 October 2012 by VRS |  Email |Print

While heavily invested asset classes like commodities and equities remain volatile, one Australian fund is poised to benefit from the fact it isn’t correlated to global markets.
Blue Sky Water Fund — which invests in permanent rights to Australia’s scarce water supplies — has begun deploying some of the capital raised from its debut fund, which is hoping to grow to $300 million. The fund will be open-ended and investors will be able to redeem on a quarterly basis………………………………………..Full Article: Source

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