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Commodities Briefing 17.Oct 2012

Posted on 17 October 2012 by VRS |  Email |Print

China’s economy is suffering as crisis in the developed economies begins to have a “knock-on effect” on the emerging markets, said Jonathan Whitehead, the global head of commodities markets at Societe Generale SA. (GLE).
“Clearly, China is suffering,” Whitehead said. “To what extent, we don’t know.” While outlook for commodities markets used to be defined by China’s economic growth, it now also largely depends on the developments in Europe, he said………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

According to the International Monetary Fund, Russia’s real GDP will expand by 3.7 % y/y in 2012, and by 3.8% next year. Growth continues to be revised down in response to the slowdown of world output. It seems that the new medium term growth rate is in the order of 4%, compared to 7% in the five oil boom years before the onset of the Great OECD Recession.
The real GDP of advanced economies is expected to increase by only 1.3 and 1.5% y/y in 2012 and 2013 which means Russia’s economic catching-up process is alive and well, certainly from a macro perspective………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

It turns out that the poster child for the European debt crisis is not actually poor at all. In fact, the truth is that the nation of Greece is sitting on absolutely massive untapped reserves of gold, oil and natural gas. If the Greeks were to fully exploit the natural resources that are literally right under their feet, they would no longer have any debt problems.
Fortunately, this recent economic crisis has spurred it to action and it is now projected that Greece will be the number one gold producer in Europe by 2016………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

On fundamentals, while the oil market continues to be fairly balanced, it points to market weakness in the months ahead, the National Commercial Bank said Monday in its October “Saudi Economic Review”.
It noted that the supply side continues to face shortfalls with the North Sea, in particular, seeing several cargoes delayed in October, adding that though the trade-weighted dollar had intensified its losses since last month, losing 2.17 percent YTD, “we expect to see a rangebound movement in the coming weeks.”……………………………………….Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Iranian government officials, such as Oil Minister Rostam Qasemi, can attend OPEC meetings without breaking European Union sanctions that restrict the movement of some senior individuals, according to a senior EU official, who declined to be identified citing policy rules.
The Organization of Petroleum Exporting Countries held a ministerial meeting in June in Vienna and will hold another in the Austrian capital on Dec. 12………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Iranian Foreign Ministry Spokesman Ramin Mehman-Parast stressed that the country is preparing the ground for the election of its nominee for the position of the secretary-general at the Organization of the Petroleum Exporting Countries (OPEC).
“We will mobilize all our possibilities to support our nominee for the post of OPEC secretary-general,” Mehman-Parast told reporters in Tehran on Tuesday………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

The European debt crisis has prompted nervous wealthy investors to build holdings of gold in Asia and demand that banks allocate them individual bullion bars, a Deutsche Bank executive said. “We’ve seen a huge pick-up in demand for physical (gold) holdings,” Raymond Key, global head of metals trading, told Reuters.
“People are geographically moving out of Europe and into Asia and private wealth is becoming more sophisticated around how to manage credit exposure to banks, wanting to hold allocated physical metal in the right regions,” he said in an interview………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Gold was supposed to be off to the races after Ben Bernanke announced that the Federal Reserve will unleash a third version of quantitative easing and continue supporting until U.S. unemployment figures improved.
This was supposed to be the cue for gold to race towards USD2,000 per troy ounce. But after an initial burst of euphoria, the market seems to have cooled down………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Out of the many crosscurrents affecting gold trading, one particular factor — the International Monetary Fund (IMF) has recently released a newly revised and much bleaker global-growth forecast.
Add to this the October 2012 meeting of the IMF and World Bank that revealed troubling news of increasing friction between countries like Germany and Spain, as well as worries for Greece’s slow economic recovery — and the market reacts by slowing down on trading, including metals like gold and silver………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

The recent correction in gold prices may not yet have run its course, but further falls may well attract institutional buying, said HSBC Holdings plc (HSBC) in a commodity snippet.
According to the British bank, yellow metal tumbled on Monday in response to strong US retail sales data, a firmer US dollar and liquidation by macro hedge funds………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

While many of us don’t like making price predictions, and certainly ones accompanied by a specific date, it’s hard to ignore the correlation between the U.S. monetary base and the gold price. That correlation says we’ll see $2,300 gold by January 2014.
There are plenty of long-term charts that show a connection between gold and various other forms of money (and credit). Most show that one outperforms until the other catches up. But let’s zero in on our current circumstances, namely the expansion of the U.S. monetary base since the financial crisis hit in 2008………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

BMO Capital Markets has raised its 2013 price forecasts for gold and silver by 14.7% and 11.4%, respectively. The European Central Bank’s intentions to purchase sovereign debt and a new round of quantitative easing by the Federal Reserve that suggests “continued negative real interest rates and appeal for precious metals as a store of value,” the Toronto based firm added.
BMO Research said that, it now expects the gold price to average $1,950 an ounce in 2013 and break the psychological barrier of $2,000 within the next year. Silver is expected to average $39 an ounce next year………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Although deficit funding has been fueling the latest precious metal’s rally, it is not hard to imagine the current CFTC investigation into manipulation in the silver market lasting 20 years, as it effectively acts as a yet another kind of price control.
The macro backdrop to this investigation includes ongoing currency wars, a depressed world economy, no real growth and a negative real interest rate policy. On the ground, the market is seeing the convergence of many factors, including a loss of confidence in and understanding of equities, as well as a general lack if incentive for the creation of jobs by businesses………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

With the commodity price boom over, miners have to slash costs to survive a tougher business environment after years of heady growth, Australia’s resources minister said on Tuesday.
A slowdown in top market China has curbed demand for resources from Australia, including its top two exports iron ore and coal, prompting the government to cut its mining export revenue forecast in the current fiscal year………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Plans are afoot to create exchange-traded funds specializing in diamonds, but advisers are warning that such investments are fraught with challenges and risks. Diamonds are more difficult to package and price in fund portfolios than other types of commodities such as gold and silver, portfolio managers point out.
“Unlike gold, diamonds trade in a very fractured private marketplace that is highly opaque and ripe with opportunities for pricing markups,” says Greg Peterson, investment research director at Ballentine Partners in Waltham, Mass., which manages $4 billion in assets………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Gold and silver prices have corrected a bit this month after the strong run in August and September on central bank stimulus, causing some traders to scale back on precious metal ETFs recently.
Holdings of bullion exchange traded funds fell by 213,228 ounces on Monday, due to an outflow from the largest gold ETF, SPDR Gold Shares, according to Reuters. The biggest silver ETF, iShares Silver Trust, logged an outflow of 290,558 ounces on Monday………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

The Greenhaven Continuous Commodity Index is a broad-based commodity exchange traded fund. The fund is unique because it equally allocates the same amount of exposure to 17 different commodities.
“Most broad commodities funds weight their portfolios by economic significance, a proxy for market cap, which results in an energy allocation that can go as high as 70%. When investors buy these energy-heavy funds, the returns of agriculture and metal commodities are diluted with a small relative weighting. Not so with GCC, which is more than 80% nonenergy commodities like corn, sugar, and platinum,” Abby Woodham wrote for Morningstar………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

The Forward Markets Commission (FMC), the commodity derivatives market regulator, is planning to soon allow market-making in illiquid commodities, to enhance depth in the futures market and provide equal opportunity for producers of all commodities.
Talking on the sidelines of FMC’s advisory committee meeting on Tuesday, Ramesh Abhishek, chairman, said, “Mem-bers were of the view that market-making should be allowed in illiquid commodities to enhance depth in the commodity futures market. We would take our view soon.”……………………………………….Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Goldman Sachs Group Inc said significantly lower revenues from commodities dragged down its trading businesses in the third quarter, singling out weak performance by an unit that had once been a pride of Wall Street’s biggest investment bank.
Goldman posted a profit for the quarter, saying trading of fixed income, currency and commodities done on behalf of its clients contributed nearly 30 percent more revenue compared with the second quarter………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Net revenues in Fixed Income, Currency and Commodities Client Execution were $2.22 billion, 28% higher than the third quarter of 2011. This increase reflected significantly higher net revenues in mortgages and higher net revenues in credit products, currencies and interest rate products, partially offset by significantly lower net revenues in commodities.
During the third quarter of 2012, Fixed Income, Currency and Commodities Client Execution operated in an environment generally characterized by tighter credit spreads, as certain central banks took steps to ease monetary policy; however, broad market concerns persisted and levels of activity generally remained low………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

The battle to save the euro turns on one question: Can large governments, notably Italy and Spain, get their debts under control? Because they are in a monetary union, they can’t take the easy way out by devaluing their currencies to make their obligations smaller and exports cheaper relative to those of other countries.
Instead, they have to make painful budget cuts and slash workers’ wages to restore their competitiveness — moves that, in the short term, can make their debts less manageable by eroding economic growth. If the belt-tightening proves too much to bear, or if markets lose faith in their ability to succeed, the euro area will break apart………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

There’s a lot of economic data on the calendar this week from different parts of the world and while many of them are important, G10 currencies will be at the mercy of China.
The U.S. Treasury was also supposed to kick things off Monday with its semi-annual report on exchange rates but on Friday, they said the report has been delayed because of the “need to assess progress following the G20 Finance Ministers and Central Bankers meeting on November 4th and 5th.”……………………………………….Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Palm oil prices may rebound “in the medium term” as consumer demand increases after prices dropped, Oil World said. World palm oil exports may total 42.57 million metric tons in the 2012-13 season that began Oct. 1, up 5.8 percent from 40.24 million tons a year earlier, the Hamburg-based researcher said today in an e-mailed report.
Combined exports of soybean oil, rapeseed oil and sunflower seed oil may be 19.12 million tons, 5.4 percent smaller than a year earlier, Oil World said………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

EU politicians have ignored European Commission efforts to hasten plans to bolster the bloc’s carbon trading scheme (ETS), in which prices have plunged under a burden of surplus allowances generated by recession, EU sources said on Tuesday.
That means one European Parliament vote, as part of the proposals to prop up the Emissions Trading Scheme (ETS), will not take place until February, after the start of the next phase of the market, which runs from 2013-2020………………………………………..Full Article: Source

Posted on 17 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 tons of carbon dioxide (CO2) in 2013, compared with this year’s target of 8 million tons………………………………………..Full Article: Source

Posted on 17 October 2012 by VRS |  Email |Print

Higher carbon prices in Europe would challenge Australia’s willingness to link its new greenhouse-gas market with the world’s largest as rising compliance costs hurt emitters, according to a lawyer.
By agreeing to link to the European Union market, Australia handed control of its carbon price to a bloc that has a more ambitious climate target than its own, Martijn Wilder, a partner at Baker & McKenzie LLP, the Sydney law firm, said………………………………………..Full Article: Source

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