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Commodities Briefing 25.Oct 2012

Posted on 25 October 2012 by VRS |  Email |Print

The commodity supercycle has further to go on increasing demand from China and emerging markets, according to Longview Economics Ltd. and economist Dambisa Moyo. Raw materials have been in a supercycle since 2001 and the average length of each phase since the late 1700s has been almost 21 years, Chris Watling, chief executive officer of London-based Longview Economics, said today at a World Commodities Week conference in the U.K. capital.
The Standard & Poor’s GSCI spot gauge of 24 commodities erased this year’s gain after entering a bull market in the third quarter………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Basel capital rules and regulatory reform stymie risk appetite of major banks in commodities. Higher capital requirements and regulatory reform are causing banks to dramatically curb their risk-taking in commodity and energy markets, according to market participants.
The value-at-risk figures reported by banks between the first quarter of 2011 and the second quarter of 2012 underline a trend of lower risk-taking in commodity and energy derivatives. Eight out of 11 major dealers surveyed by Energy Risk saw a drop in value-at-risk for their commodities businesses during this period………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

The price of oil rose on Wednesday after a survey of Chinese manufacturing suggested that a slowdown in the world’s second-largest economy might be stabilizing. Benchmark oil for December delivery was up 79 cents to $87.46 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped $1.98 to finish at a three-month low of $86.67 on Tuesday.
The fall on Tuesday was sparked by a slew of disappointing earnings and forecasts released Tuesday by US corporate giants. Revenue fell compared with a year ago at chemical maker DuPont, UPS and Xerox and others………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Appointing a secretary general to run OPEC’s Vienna headquarters should be easy. It never is. The job is technically an administrative one, but political rivalries between key producers have overshadowed the appointment process for years.
We’re talking primarily about OPEC kingpin Saudi Arabia and Iran, but with Iraq now having overtaken Iran to become the oil cartel’s second biggest producer, Baghdad may well turn more assertive about its right to the post in the future………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Although Iraq is expanding its energy sector and has become OPEC’s number-two oil exporter, it still does not have a national hydrocarbons law. To many, that law is essential to help unify northern and southern markets, reduce investor risks and attract the foreign capital and expertise needed for future energy development.
Still, Baghdad and Erbil have much to gain without a law, at least in the medium term. Legal and political ambiguity has allowed both sides to postpone decisions on key issues, consolidate power and leverage and profit financially from undisclosed revenues and ongoing investment………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Gold is likely to surpass $2,000 an ounce in early 2013 and average $1,850 for the year, although with periods of volatility, said Global Hunters Securities in an outlook released Wednesday.
The firm looks for the metal to peak at close to $2,300 in 2014, although it also anticipates that the average for that year will fall back to $1,750. GHS lists several factors supportive for gold………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

It was fascinating to read the comments of “Mr. Gold” Jim Sinclair this week about gold heading for $3,500 to $12,400-an-ounce as a result of a shift in spread management by the bullion banks. He used to run one so knows exactly when and why these banks are likely to slash their short positions and go fully long in the precious metal.
However, a consideration of the famous Dow:Gold ratio is also relevant here as a confirmation of where this price swing will go. Historically the ratio of the Dow Jones Index to the price of gold has in extremis swung to parity with one ounce of gold equal in value to the dollar-value of this index……………………………………….Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Gold prices could remain under pressure in the near term as the yellow metal fell under technical-chart support at $1,720 an ounce and was dragged down Tuesday by the weakness in risk assets, said (HSBC) in a commodity snippet.
Weakness in the euro, price declines in the industrial commodities and the platinum group metals because of lower-than-expected corporate earnings were all weighing on gold. If gold breaks $1,700, the next support level is $1,660, which is where gold held prior to Federal Reserve Chairman Ben Bernanke’s speech at the Fed symposium in Jackson Hole, said James Steel, analyst with HSBC………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Germany’s biggest bank Deutsche Bank raised its 2013 and 2014 forecasts for gold and silver, citing support from stimulus measures by central banks such as the United States Federal Reserve.
According to Deutsche Bank, the gold price could exceed to $2,200 a ounce in 2013. the bank lifted its 2013 gold price outlook by 3% to $2,113 per ounce and its 2014 forecast by y 11.1% to $2,000/oz. The German bank similarly advanced its 2013 price forecast on silver by 3% to $44/oz and its 2014 outlook by 11.1% to $40/oz………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Silver demand in China, the world’s second-largest user, may jump as much as 10 percent next year to a record as investors look to preserve wealth, according to Beijing Antaike Information Development Co.
Consumption may climb to as much as 7,700 metric tons, after gaining 6 percent to 8 percent in 2012, Shi Heqing, an analyst at Beijing Antaike, said in an interview on Oct. 22. About 33 percent of the country’s demand comes from jewelry and coins, with the rest from industrial use in photography, solar and electrical appliances, according to Antaike, which has researched metals for two decades………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Rare earth metal prices have fallen sharply since mid-2011, some declining by as much as 80% as expectations of rising supplies coincided with declining demand. More recently, prices have shown signs of stabilising.
Chinese restrictions on mine output and plans to stockpile materials, coupled with the increased likelihood of problems at mines outside China may mean rare earth metal prices are about to rise………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Copper has been characterized for the last couple of years as, at best, a market in balance and about to tip into deficit.
Of all the base metals, copper’s supply market has appeared the most constrained and the case for price support has most consistently rested on demand growth hitting limited supply elasticity. But as this chart from a recent Quarterly Metals Review by HSBC illustrates, the global market has not, as oft predicted, fallen into deficit in recent years………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Australian Resources Minister Martin Ferguson says the onset of an era of low commodities prices does not spell the end of the country’s China-backed mining boom. Ferguson said “Australia’s resources industry has many years of opportunities to come,” and that “there are few places better prepared for the Asian century than Australia.”
Ferguson said that declines in commodities prices which have severely hampered Australia’s leading mining concerns should be viewed in a positive light, and provide an opportunity for miners to enhance competitiveness and efficiency………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Interest in commodity investments has boomed in recent years, and billions of dollars have poured into the space, most noticeably in the form of exchange-traded products. With so many choices out there, it’s well worth taking the time to highlight special cases that may offer investors unique opportunities; the United States Commodity Index Fund (USCI) is one such fund.
Launched in August of 2010, USCI takes a more active rules-based approach to commodity investing. The fund is designed to track the SummerHaven Dynamic Commodity Index Total Return, an index that selects 14 of a possible 27 commodities each month………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Commodities market regulator Forward Markets Commission (FMC) has suggested reviewing of easy credit by banks and other institutions for trading in commodities like guar, in a bid to curb speculation. In the final report on ‘Analysis of price movement and trading in guar complex” submitted to the Consumer Affairs Ministry, FMC has suggested various measures to check speculators participation in guar trading.
The regulator in May had come out with an intial report on guar futures trade during February-March 2012 and had highlighted irregularities in guar futures trade. It had also found involvement of some entities in the sharp rally during the period………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Hong Kong’s central bank has intervened in financial markets again, weakening the value of its currency after it jumped in value.
This follows similar moves on Sunday and pushes the total cost of intervention in the past week to 14.3bn Hong Kong dollars ($1.85bn; £1.16bn). Hong Kong limits the amount its currency can gain or fall to help maintain market and export stability………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 0.4 percent to settle at 636.75 at 4 p.m. in New York. The measure dropped for the fourth straight session, the longest slump since mid-June.
The UBS Bloomberg CMCI gauge of 26 prices declined 0.2 percent to 1,566.89. Cotton fell, capping the biggest two-day slump since mid- August, on concern that supplies will remain ample as the slumping European economy crimps demand………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Responding to the decided chilling of the global economic backdrop, commodity prices have beaten a hasty retreat in recent weeks. Brent crude has dipped below USD 110 a barrel for the third time since QE3 was announced and is likely to test critical support at the 100d moving average of USD 107.67 before too long.
The copper price has dropped 7% since the Fed resorted to unbounded asset purchases in the middle of last month, the gold price is down near USD 1,700 after testing USD 1,800 earlier in October and the price for US hot-rolled steel coil has fallen 13% since the end of August………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

The landscape of the commodity markets competition on Wall Street could be in for a facelift, as the two familiar trading rivals Goldman Sachs and Morgan Stanley appear headed in opposite directions as both banks decide how they will deal with stiffened regulatory restrictions on trading under the Dodd-Frank Act.
For its part, Goldman Sachs squashed rumors Tuesday that the bank’s upper management was considering a sale of its commodities business. The Wall Street Journal reported that the bank had held “preliminary internal discussions” about potentially splitting off its commodities unit. Goldman reacted swiftly, asserting the reports were not true and that executives had never ‘seriously’ considered such a move………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Juerg Kiener, MD and CIO of Swiss Asia Capital (Singapore) Pte Ltd. announced that his firm had been granted its Singapore Capital Markets Services (CMS) licence. Jefferies Group, Inc. announced the same granting last week, for its Jefferies Bache Futures & Options business.
Kiener confirmed to Opalesque that Swiss Asia Capital is an independent fund manager in Singapore with an investment focus in Asia and the resources space. It is not part of Swiss Asia Holdings, another Asia-based investment firm. Swiss Asia Capital runs the SAC Global Energy and Mining fund, an open-ended fund domiciled in the Caymans which invests in global commodities markets, with a growing focus on the Asia Pacific region. Its portfolio has exposures in quoted and unquoted shares and physical precious metals………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

Surging demand for European Union wheat is reducing stockpiles to a 14-year low and driving prices in France, the biggest exporter, to a record premium over U.S. grain after drought withered supply from the Black Sea region.
EU licenses to ship wheat in the six weeks to Oct. 16 were 40 percent higher than a year ago, data from the 27-nation bloc show. French grain for March delivery now trades at a premium of 33 cents a bushel to Chicago futures, from a 78-cent discount in July………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

International Emissions Trading Association launches initiative to help countries and businesses preparing to implement emissions trading schemes. The International Emissions Trading Association (IETA) has today launched an initiative designed to ensure businesses are adequately prepared for the rollout of new carbon markets in countries around the world.
The new Business Partnership for Market Readiness (B-PMR) will run alongside the World Bank’s Partnership for Market Readiness initiative, which provides funding and technical assistance to help developing countries devise carbon trading schemes………………………………………..Full Article: Source

Posted on 25 October 2012 by VRS |  Email |Print

A key UN climate change official says Australia is a major player and an emerging global leader in cutting greenhouse gas emissions. Christiana Figueres, the executive secretary of the UN Framework Convention on Climate Change, said there was a misconception among many Australians that their nation was acting alone in combating the problem.
‘Nothing could be further from reality,’ she said in a speech at the Lowy Institute for International Policy in Sydney on Wednesday. ‘Every one of Australia’s top trading partners has something already in place.’……………………………………….Full Article: Source

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