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Commodities Briefing 30.Oct 2012

Posted on 30 October 2012 by VRS |  Email |Print

Speculators lowered bullish wagers on commodities for the third straight week, the longest streak since April, as prices erased this year’s gain on mounting concern about slowing economic growth.
Hedge funds cut net-long positions across 18 US futures and options by 0.2% to 1.18 million contracts in the week ended October 23, the lowest since July 24, US Commodity Futures Trading Commission data show. Copper holdings fell the most in seven weeks, and sugar wagers dropped to a one-month low. Bullish bets on gold slumped the most in three months………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Booming growth in developing markets, coupled with inflationary money-printing in the U.S. and Europe, helped fuel a bull market in commodities for a dozen years. Today, though, Wall Street is flashing a yellow light: Commodity bugs had better scoot to avoid being squashed by the global slowdown.
“The secular bull market in commodities is done,” says Jeff Weniger, senior investment analyst at Harris Private Bank. “Finished. Kaput.” Don’t let the recent rise in prices for oil (partly caused by unrest in the Middle East) and corn (the drought in the Midwest) fool you………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

China’s appetite for commodities continues to grow and, with the steady recovery in the U.S. economy, should support prices for raw materials such as iron ore and copper, portfolio managers for BlackRock Inc.’s natural resources equity team said Tuesday.
Catherine Raw, co-manager of BlackRock’s BGF World Mining Fund, told reporters in Australia that slower growth in China’s economy still translates into strong commodities demand but that this hasn’t been reflected in share prices for the mining industry. At the same time, the euro zone crisis is currently less of a concern, and the U.S. economy has performed better than some people had expected early in the year, she said………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

According to Capital Economics, commodity prices are likely to remain under downward pressure in the months ahead. “In particular, by the end of next year we expect the price of Brent crude oil to have dropped back to around $85 per barrel and that of copper to $6,000 per tonne,” says CE.
It also noted that grain prices should continue their recent correction, and that corn and soybeans are dropping; “we expect wheat prices to drop back as well,” was said in a research note. “In summary, higher food price inflation should not be a concern for long.”……………………………………….Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Strong oil prices will ally with high production to boost OPEC’s crude export earnings to an all-time high of more than $one trillion in 2012 after breaking a historical record in 2011, according to official US figures The income will boost the cumulative15-year oil export earnings of the 12-nation Organization of Petroleum Exporting Countries to a whopping $6.7 trillion since 1998.
More than half the income has been achieved during 2008-2012 when oil prices were at their highest level and the organization was pumping at nearly capacity………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

The world produced more oil in October as Libya, Iraq and Saudi Arabia pumped more crude and the United States continued to draw more oil from its vast shale reserves, the U.S. Energy.
Information Administration said in a bimonthly report. The report is required by the Iran sanctions law President Barack Obama signed last year, Reuters reported, quoting a copy it obtained ahead of publication. The United States and European Union have applied new sanctions to Iran aimed at slashing oil revenue and pressuring it to stop efforts to enrich uranium to levels that could be used in weapons………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Oil price forecasts are notoriously unreliable, making life difficult for energy market participants attempting to manage their risks. Alexander Osipovich explores the reasons why analysts struggle to predict future prices
Oil analysts face a thankless task. Their forecasts for the price of crude are closely watched by traders, risk managers and the public at large. Yet research shows their predictions are usually inaccurate, and some critics scorn the idea that oil prices can be forecast at all………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

The International Energy Agency has focused its generally bullish outlook for global renewables growth on hydropower this week, with the publication of a report suggesting that global hydroelectricity production could double by 2050, preventing annual emissions of up to 3 billion tonnes of CO2 from fossil-fuel plants.
The report, Technology Roadmap: Hydropower, released on Monday by the IEA and the Ministry of Mines and Energy of the Federative Republic of Brazil, challenges the notion that the world’s hydroelectric resources have peaked, arguing instead that emerging economies – with the right policies in place – have significant potential to generate renewable power from large hydro plants………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Suddenly the calm is over and the storm is upon us, at least in the Northeast USA if not yet in financial markets. That said the trouble brewing in those markets looks about to turn into a once-in-100-year storm too.
US political instability is a frightening prospect but that looms large with a very close race for the White House and uncertainty over the composition of the legislature after the elections on Nov. 6. The automatic austerity of the US “fiscal cliff” on Jan. 1 is far from being automatically avoided and markets loathe this sort of uncertainty………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Gold traders are the most bullish in three weeks as investors’ bullion holdings rose to a record on mounting speculation that central banks will add stimulus to bolster economic growth.
Fourteen of 26 analysts surveyed by Bloomberg expect prices to rise next week, nine were bearish and three were neutral. Investors boosted holdings in exchange-traded products (ETP) to an all-time high of 2,585.1 tonne last week, valued at $142.4 billion, data compiled by Bloomberg show. Hedge funds’ bets on a rally are near the biggest in more than a year, according to US Commodity Futures Trading Commission data………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Investing for income has become a popular strategy in recent years, as low rate environments and paltry yields have made a steady stream of income a coveted luxury. Similarly, investing in gold and silver has been surging in popularity as the years have gone on.
Investors worried about inflation and a weakening economy have flocked to these precious metals in order to protect their portfolios. But what many investors do not know, is that they can combine these two worlds……………………………………….Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Gold prices held near $ 1,710 an ounce as concerns over the global growth outlook supported demand for the metal as a store of value, but losses in the broader financial markets kept a lid on gains.
Resilience above $ 1,700 an ounce, a level gold repeatedly tested last week, has reassured buyers who had feared a deeper correction after it fell to a more than six-week low at $ 1,698.39 on Oct. 24, analysts said………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Gold looks to be holding the $1,700 support level fairly well, despite concerns by some that a sharper fall is needed to see investors jump back into the market. Part of the reason for this is the strength seen recently in physical demand, particularly from Asia but, analysts caution that this demand might not be as consistent as it has been historically.
According to UBS’s Precious metals daily note, while physical demand is looking somewhat rejuvenated of late, it’s not a consistent trend………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Speculative traders continue to reduce bullish positions in U.S. precious and base metals futures and options, according to U.S. government data released late Friday.
In both the disaggregated and legacy weekly commitment of traders reports issued by the Commodity Futures Trading Commission, the managed-money and speculative non-commercial accounts decreased their net-long positions across the board, for the second week in a row in some cases………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Hedge funds are siding with analysts predicting decade-high palladium prices even as investors cut holdings in exchange-traded products backed by this year’s worst-performing precious metal.
The funds’ wagers on a rally more than doubled since August as ETP holdings slumped to a seven-month low, data compiled by Bloomberg show. Prices for the metal used mostly in catalytic converters will average $800 an ounce in the third quarter, 34 percent more than now and the highest since 2001, based on the median of 13 analyst estimates………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Assets in commodity ETPs rose to an all-time high of $207bn in Quarter 3 2012 on the back of surging demand for gold ETPs. This came as aggressive moves by the US Fed and the European Central Bank to ease monetary policy increased investor demand for hedges against further currency debasement.
Gold ETP assets rose to a new record of $151bn, an increase of $23bn during the quarter - the largest quarterly rise since Quarter 2 2010. Silver ETPs also saw a large increase in assets, with assets under management in silver ETPs rising $5bn to $20bn………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Computer-driven hedge funds are headed for their worst monthly performance since the start of the credit crunch after making losing bets in dozens of markets including bonds, currencies and commodities.
Many of the funds, known as managed futures or commodity trading advisors (CTAs), came into October with “risk on” trades, such as long positions on equities and commodities, and a short position on the U.S. dollar………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

The European Parliament’s vote on the EU’s proposed Market in Financial Instruments Directive and Market in Financial Instruments Regulation could restrict choice for investors and push more commodities trade toward exchanges, financial trading association the International Swaps and Derivatives Association warned Monday.
EU lawmakers voted on Friday to back the EU legislation intended to curb speculation in commodity derivatives trading, including the use of position limits, but with several amendments. ISDA said many of these changes were welcome but expressed concern over some……………………………………….Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Increasing capital requirements and other regulatory constraints are cutting the headcount and risk-taking ability of banks in commodity and energy derivatives. Might this diminished role pave the way for less regulated participants to take their place?
Investment bankers admit they are unlikely objects of sympathy. Since the financial crisis, bankers have been subject to an overwhelming degree of popular criticism, possibly only approaching the level of hatred afforded to arms manufacturers, large pharmaceutical companies and the tobacco industry. In response to the critical public mood, politicians have set in train a variety of regulatory reforms that will make it harder for banks to compete in commodity and energy derivatives………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

After a strong gain in August, Scotiabank’s Commodity Price Index continued to rally in September.
“Easier monetary policy and liquidity injections by the European Central Bank, the Fed and the Bank of Japan boosted investor and business confidence in September,” says Patricia Mohr, vice president, and economics and commodity market Specialist at Scotiabank………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

The high New Zealand dollar is hitting some parts of the economy, but it is not necessarily that overblown, with “fair value” at US74c to US76c, according to a report by ASB Bank.
And based on the bank’s view of recovering commodity prices in the coming year, it suggests the currency is likely to stay at about US77c in the near future, according to ASB’s latest quarterly forecasts………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

The global economy seems to be on a one way path to eventual destruction as interest continues to accumulate on the massive word-wide debt. Budget and trade deficits keep growing, but unfortunately without an engine for real and sustainable growth.
Furthermore, the amount of interest keeps rising, while raising interest rates is not an option like it was to fight the notable inflation of the late 70’s after the Dollar was taken off the gold standard by Nixon earlier in that decade………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

A global platform for carbon trading may be in place this decade, an official at one of the world’s major environmental think tanks said. China’s emissions trading system, which is likely to be the world’s second-largest carbon market by 2015, may be a major player if it is connected to the proposed world system, said Andrew Steer, president of the World Resources Institute.
The institute in Washington is a non-partisan organization that promotes policies to protect the global environment………………………………………..Full Article: Source

Posted on 30 October 2012 by VRS |  Email |Print

Policy uncertainty around the longevity of carbon-reduction policies hasn’t prevented carbon trading firm CO2 Group from notching its eighth consecutive year of growth. Net earnings for the year to September 30 more than tripled to $4.9 million from a year earlier, with sales surging 81 per cent to $64 million, the company reported.
Andrew Grant, CO2’s chief executive, said the company had diversified its operations to limit fall-out from policy changes, such as the federal opposition’s pledge to eliminate a price on carbon if it wins power………………………………………..Full Article: Source

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