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Commodities Briefing 16.Oct 2012

Posted on 16 October 2012 by VRS |  Email |Print

The continued strong support for commodity trading company loans underscores the enduring appeal of a sector that in a market dominated by club loans and self-arranged deals represents the last bastion of truly syndicated loans. More important, the sector has become a significant source of business for lenders in a year of depressed loan volumes.
However, in response to more challenging times, which have seen many international banks under pressure to deleverage, commodity traders have begun to strategically target specific pools of liquidity around the globe to diversify away from an over-reliance on their existing relationship bank groups………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Commodities traders need to be large and diverse, but still nimble, to flourish in the rockier times ahead, Richard Elman, chairman of Hong Kong-based Noble Group Ltd, said on Monday.
As prices for some commodities lose steam, Noble has chosen a cross-commodity approach, rather than focusing on one area, Elman said at a key note speech in London marking the start of the industry wide London Metal Exchange (LME) week. “We think that’s key to surviving in the new, more challenging world,” Elman said………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Commerzbank’s head of fundamental global commodities research predicts all speculative capital will ultimately leave the world’s agricultural markets, as some blame it for hiking prices of grains by one quarter this year alone.
Spot prices of grains, as measured by the S&P GSCI Grain spot index, have risen by 26.5% so far this year. Commerzbank’s Eugen Weinberg said a veto on speculation will not solve the problem of high prices, but a moratorium will happen, nevertheless………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

A new “field guide” to global commodities is the latest entrant in the growing collection of sustainable investment tools and finance initiatives. “In biophysical terms, humanity has never been moving faster nor further from sustainability than it is now,” warn Stanford biologists Paul Ehrlich and Gretchen Daily, and Paul Kareiva from the Nature Conservancy, in a paper published in the journal Nature’s special Rio+20 issue in June.
And while their central message is a dire one indeed, the authors focus on three areas that, if properly addressed, can achieve sustainability: population, equity and natural capital………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Qatar, the Persian Gulf country seeking to reduce its dependence on gas reserves, is weighing a potential stake in Morgan Stanley (MS)’s commodities unit, Prime Minister Sheikh Hamad bin Jassim Al Thani said.
“We need a few weeks to look at the details, but we are looking at it seriously,” he told reporters today in Doha in response to a question about Qatar’s interest………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

In response to Bank of Canada Deputy Governor Timothy Lane’s speech about the systemic importance of major global commodity trading firms (GCTFs), the FT’s Javier Blas asks: “Has Glencore become ‘too big to fail’?”
And I answer: Hell no. I will write much more on this subject- much more- when a few things clear. For now, a few of my reasons:……………………………………….Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

The ongoing controversy over oil price benchmark for budget 2013 has attracted international attention with Standard Chartered Bank urging Nigeria to retain the $75 oil benchmark as submitted by President Goodluck Jonathan.
Mr Razia Khan, the Regional Head of Research of the bank, who gave the advice in a confidential briefing obtained by the Nigerian Tribune, expressed fears that a higher benchmark posed serious threat to the Nigerian economy. The economist also expressed worries about the budgeted oil output of 2.5 million barrels per day due to what he called lack of exact figures and data on investment and output in the nation‘s oil sector………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Oil prices could fall over the next five years as supply grows and demand languishes, a new report forecasts. Expanding production from North America and shift in demand to Asia behind new dynamic for oil prices.
Start with demand. Ever since the Arab oil embargo of the early 1970s, oil has flowed from OPEC and other developing nations to the developed world, whose energy demands kept rising………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Analysts at Canaccord Genuity believe the apparent supply demand balance in the oil markets is a result of “non-recurring” demand.
“In our view, the preponderance of this imbalance the first half of the year was absorbed by non-recurring storage that includes the Chinese SPR (80 Mmbbls), Saudi Arabian stocking prior to the institution of Iranian sanctions (40 Mmbbls) and Iranian floating storage (20 Mmbbls),” said an analysts at Canaccord………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Despite challenges, Iraq’s energy sector holds the key to the country’s future prosperity and can make a major contribution to the stability and security of global energy markets, the International Energy Agency said Oct. 9.
A comprehensive review of the energy sector indicates that Iraq will make by far the largest contribution to global oil supply growth in coming decades, IEA said. Current production of 3 million b/d will more than double by 2020 and expand further to more than 8 million b/d by 2035………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

A quote from a Swiss gold refiner/trader puts the case for gold as sound money very succinctly and coupled with the suggestion that it is a Giffen good, bodes well for further price rises.
The title of this article is very much a truism which says much about the position gold has held as an international standard for many centuries and why, ultimately, it will hold its position as the monetary yardstick against which all global currencies in this fiat money world will ultimately be measured, and fail to pass muster………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Gold Bullion traded in a narrow range below $1750 per ounce during Monday morning’s London session, after recovering some ground lost in Asian trading. “We traded through lots of stop [losses] this morning,” said one trader in Singapore, after gold began the week by dropping more than ten Dollars to $1742 per ounce, its lowest level in nearly three weeks.
Like gold, Silver Bullion fell in Monday’s Asian session, touching a five-week low before climbing to $33.33 per ounce by lunchtime in London………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Gold has potential to break all time high of $1,921an ounce during December this year, according to Saxo Bank, a Danish investment bank.
According to the bank, gold investments through Exchange Traded Funds reached a new record during the week with more than 200 tons added since the rally resumed in mid-August once the price moved above $1,625an ounce………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

India’s gold imports in 2012 is estimated to drop by around 25% from last year as high prices, poor liquidity, high inflation and a hike in customs duty has dampened buying sentiment, a member of a trade body said on Monday.
“Gold has been hit in every way. There is a liquidity crisis because of high interest rates and the monsoon was not very good in some states (so purchasing power will be low),” said Prithviraj Kothari, a member of Bombay Bullion Association, a body representing bullion traders, manufacturers and retailers. “The whole cycle of investment has slackened. The equity market and real estate are both slow so it is affecting gold.”……………………………………….Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

The stock market faces another major financial crisis that will crush stocks and boost gold prices, says Robert Wiedemer, who foresaw the 2008 meltdown. He and the co-authors of New York Times best-seller “Aftershock” have released a sequel published by Wiley in September.
In “The Aftershock Investor,” Wiedemer explains why he sees a “multiasset bubble collapse” looming and which ETFs investors must buy now to protect their money from the coming “chaos.” Wiedemer serves as managing director of Absolute Investment Management in Bethesda, Md., with $300 million in assets under management………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Gold’s inability to push above $1,800 an ounce and test old highs is starting to look “costly after all,” at least in the short term, say technical analysts with TD Securities. “The strong rejection of $1,800-plus levels—reflected in the bearish key reversal day (new high, lower low and lower close) that formed on Oct. 5th–suggests a firm cap in place for now in gold,” TDS says.
“Trend strength indictors are flipping over to bearish from a short-term point of view, suggesting that the correction lower may have further to run lower.” Retracement support derived from the $1,530-$1,800 rally since mid-year is providing some underpinning for now, with the initial 23.6% Fibonacci retracement converging with a minor congestion area in the $1,730-35 region, TDS says………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Silver prices kicked off October reaching a six-month high near $35 an ounce as investor interest has been rekindled in the white metal. Renewed investor affection for the precious metal in the past few months is in sharp contrast to investor interest in silver over the last year and a half. Many precious metals investors had largely stayed away from silver in that time frame after some had got caught up in its volatility. Silver had touched a 30-year high in April 2011 before plunging 35% in just a few short weeks.
Silver has climbed 35% from its June low just above the $26 an ounce level. This performance made it the top performing star in the commodity universe for the third quarter, with hints of more fireworks to come………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Silver has been outperforming gold but with greater volatility. In India, the country’s largest commodity bourse, Multi Commodity Exchange of India (MCX) which launched a 1 kilo Silver futures contract at the start of October, has witnessed a bull run.
Officials say retail investors have shown high interest in the new offering as it enables them to take delivery of 1 kilo silver bar at lower margins, as compared to the earlier 30 kilo bars. Though the exact number of investors who have opted for the new contract was not immediately available, MCX officials said the timing of the new offering was ripe………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Goldman Sachs, one of Wall Street’s leading commodities trading banks, stuck to its bullish 2013 copper price forecast amid the cautious mood among traders at the start of London Metal Exchange week.
The investment bank reiterated its forecast for the red metal – that it would to hit $9,000 a tonne over the next six months, 11 per cent higher than at present. Copper remained the bank’s “most preferred base metals exposure,” said Max Layton, Goldman’s metals analyst………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Reviewing the remarkable growth in China’s demand for commodities and its domestic production during the last decade is always eye opening, with the steel industry standing out as the prime example. In 2011, China produced 61% of the world’s total steel output, and consumed most of that production domestically.
This is even more astounding given China’s domestic iron ore supply meets only 40% of domestic demand. In order to delve deeper into the stainless steel industry one must examine ferrochrome, a main ingredient used in steel production. In 2011, China consumed 3.5 million tons of high carbon ferrochrome, more than half of which was produced domestically………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Funds increased their net bullish positions in precious metals futures and options contracts traded on Comex division of the New York Mercantile Exchange and the Nymex, making it eight straight weeks of gains for gold and platinum group metals, according to U.S. government data released Friday.
For the week ended Oct. 9, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report bumped up their net-long positions precious metals in both the legacy and disaggregated reports. Activity for copper was mixed………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Hong Kong Exchanges and Clearing Ltd.’s deal to buy the London Metal Exchange will lead to new commodity offerings and provide the best opportunity for exposure to Chinese growth and liberalization, Hong Kong Exchanges’ Chief Executive Charles Li said Monday.
The London Metal Exchange is primarily a marketplace for base metals such as copper and aluminum. The Hong Kong Exchanges group, or HKEx, is one of the world’s largest exchange owners by market capitalization……………………………………….Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

Commodity prices are moving lower overnight as the US dollar pushes broadly higher, applying de-facto downward pressure to assets denominated in terms of the benchmark currency. While single catalyst for the advance is not readily apparent, a pickup in haven demand for the greenback seems reasonable as traders cast a worried eye toward the week ahead.
The third-quarter corporate earnings reporting season gathers pace over the coming days – 84 members of the S&P 500 are due to release results – and traders appear increasingly concerned that companies’ guidance will point to a deepening slowdown in global growth………………………………………..Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

At 1200 AEDT on Tuesday, the currency was trading at 102.63 US cents, up from 102.23 US cents. RBC currency strategist Michael Turner said the Australian dollar had followed other currencies higher overnight.
“The euro was very well supported overnight,” he said. “The story overnight was that Spain was coming very close to asking for a bailout, so there was appetite for the US dollar, and the Aussie dollar followed on the back of that.”……………………………………….Full Article: Source

Posted on 16 October 2012 by VRS |  Email |Print

South Korea on Monday doubled its target for reducing carbon dioxide emissions next year, as it moves towards the introduction of a nationwide cap-and-trade system in 2015. The economy ministry said the country would aim to reduce greenhouse gas emissions by 17.2 million tonnes of carbon dioxide (CO2) in 2013, compared with this year’s target of eight million tonnes.
The new target, which is equivalent to three percent of expected total emissions in 2013, is aimed at 377 entities in the industrial and power sectors of Asia’s fourth-largest economy………………………………………..Full Article: Source

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