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Commodities Briefing 21.Nov 2012

Posted on 21 November 2012 by VRS |  Email |Print

The commodity super-cycle is over, warns a new report from Citigroup’s Global Commodities Strategy Group. The message here is bold and clear—forget the era of easy money and long only investing. Welcome to a brave new world for commodity investors, “The New Abnormal.”
Replete with references to global climate change and China’s transforming economy, the analysts paint a picture of increasing supply, changing demand and plenty of opportunity for savvy investors………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Despite a reduced demand for commodities in the current tumultuous global economy, emerging economies, including China, would support commodity prices and Canada’s potential role as a significant mining jurisdiction. Scotiabank VP of economics and commodity market specialist Patricia Mohr provided a bullish outlook on minerals and metals prices over the long term, despite this year’s slowdown.
Mohr looked at the fundamental drivers of the mining business, and in particular the role of China and ‘emerging markets’ as consumers of minerals and metals products. While China is in transition to lower-trend growth, further industrialisation, modernisation and urbanisation would continue to drive demand for metals………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Xstrata shareholders have rubber-stamped the takeover of the mining group by commodities trader Glencore to create a $70 billion industry giant. Glencore and Xstrata shareholders approved the transaction at two separate meetings in Zug on Tuesday. Completion of the deal is still subject to approvals by regulators including the European Commission.
The merger will create an international powerhouse company that will control both the extraction of many raw materials – particularly minerals – and their distribution around the globe………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Commodities have enjoyed several strong years thanks to emerging market growth and increased demand around the world. As analysts continue to tout hard assets like gold and timber, investing demand for this asset class has continued to rise.
It is now recommended that investors set aside anywhere from 5%-10% of their assets for commodity exposure. But while these investments have been fruitful for the past few years, a number of institutions have begin to build a bearish sentiment for the future of the commodity space………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

EU grains closed firmer, consolidating from recent losses with Nov 12 London wheat up GBP1.75/tonne to GBP216.75/tonne, May 13 up GBP1.00/tonne to GBP221.75/tonne and new crop Nov 13 GBP0.25/tonne steadier at GBP187.75/tonne. Jan 13 Paris milling wheat added EUR1.00/tonne to close at EUR270.25/tonne.
Fund money continues to exit commodities in general as we nervously approach year end against a backdrop of concerns over the US “fiscal cliff” and escalating tensions in the Middle East………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

BlackRock suggests the boom is not completely over - just more tricky to negotiate. Supply from new mines is still hitting world markets and metals inventories have been building up in the face of weak demand, with copper the exception.
BlackRock expects most metals will likely be in surplus for a while, pressuring prices. However, eventually demand will return, especially from China. Wood Mackenzie expects a turnaround in 2016, when demand for copper, zinc, lead and nickel will start outpacing production from existing mines………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Oil fell more than 2 percent on Tuesday, retreating from a one-month peak as investors took risk premium out of the market after a Hamas official announced that militants from the Gaza Strip and Israel had agreed to a ceasefire brokered by Egypt.
Gold also fell, erasing early gains after better-than-expected U.S. housing data, while grains firmed amid concerns about tight supplies. Corn prices rose for the third day in a row, hitting their highest level in more than a week………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

The Organisation of Petroleum Exporting Countries (Opec) recently issued its annual World Oil Outlook and while the report may not please Opec producers, it might not overly displease them either.
Right at the beginning, Opec says “Ongoing geopolitical tensions, continuing excessive speculation in oil markets, a fragile financial and banking system, an anaemic economic recovery despite the extraordinary fiscal and monetary support, persistent high unemployment and social unrest in a number of countries have all made 2012 a challenging year for oil producers and consumers everywhere.”……………………………………..Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Voices urging the Organization of Petroleum Exporting Countries to comply with its production ceiling are growing louder within the group as price fears mount, with some delegates from both sides of the Persian Gulf concurring OPEC should act against oversupply.
In a rare display of agreement, three OPEC delegates–from Iran and Gulf Arab countries–said the group should deal with excess amounts of oil in the market when it meets next month. “OPEC is producing at least 500,000 barrels a day more than needed so it would actually need to respect its ceiling, not increase it,” one delegate from the region said………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Coal, the longtime king of America’s energy supply and a leading agent of climate change, is in rapid decline in the U.S. Four years ago it produced 50 percent of our electricity; by the end of the decade that may drop closer to 30 percent.
Another 353 coal plants may be as good as dead. But don’t write the obituary yet — coal is booming in India and China will continue to do so for decades to come………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

The famous, billionaire investor George Soros has just recently invested millions of dollars into gold bullion, leaving other investors wary of his view of the US economic recovery; Forbes Magazine however, advises not to follow in his footsteps.
Soros and a fellow investor, John Paulson, have accumulated the largest combined private gold bullion reserve in history. Paulson owns 21.8 million shares in the SPDR Gold Trust, equal to 66 tonnes of gold; more than the reserves owned by Brazil. Soros owns $219 million dollars’ worth of Gold Stock, having increased his holdings by 49% in the third quarter of this year alone………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Investors who dreamed of a record year for gold prices have had little to cheer about thus far in 2012. After touching an all-time high of more than $1,920 US an ounce in September 2011, bullion has struggled to regain that lofty level since. Even after Monday’s surge of nearly $20 an ounce, gold is still about $190 or nearly 10 per cent below last year’s record peak.
Meanwhile, many leading gold stocks have taken a beating as rising costs, construction delays and operating snafus have hammered producers’ profit margins………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Industrial demand for silver should rise in both 2013 and 2014, due to improving outlooks for the auto industry and the manufacturing sector, after it declined this year, GFMS, a metals research firm and Thomson Reuters unit, said on Tuesday.
Silver’s use in industrial applications is expected to gain nearly 7 percent to 484 million ounces in 2013 and an additional 6 percent to a record 511.6 million ounces in 2014, GFMS said in a report Thursday for the Silver Institute, a trade group………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

The Swedish investment bank SEB said that it favors platinum and palladium ahead of gold and silver next year, although it cautions that the platinum group metals markets are smaller and less predictable than gold.
The supply outlook for the PGMs remains “gloomy,” which “may prove problematic if the global recovery were to gather momentum,” said SEB in a commodity research note………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

World crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 126 million tonnes (Mt) in October 2012, an increase of 1.3% compared to October 2011.
China’s crude steel production for October 2012 was 59.1 Mt, up by 6.0% compared to October 2011. Elsewhere in Asia, Japan produced 8.8 Mt of crude steel in October 2012, a decrease of -6.7% compared to the same month last year………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

A global financial services firm Morgan Stanley said that copper in 2013 will have a higher annual average price versus 2012, saying it disagrees with the growing market perception of a looming supply glut that will detrimentally affect the red metal price.
Copper prices closed above $7,800 per tonne on the London Metal Exchange for the first time in over two weeks on Monday with $200 added to the previous close as markets bought riskier assets………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Iron ore has run from $86 per ton to $122 per ton, with expectations that prices will hold at this elevated level. Senior resource analyst at Mine Life Pty in Sydney Gavin Wendt told Bloomberg Network that “prices will stay about where they are now until 2013.”
The Street never priced in $86 a ton, but the markets did. There is more to this trade despite the decent bounce in iron ore players like Rio Tinto (RIO) and Vale (VALE). The move is not limited to just iron ore names — more diversified names have benefited from the move in iron ore, like Teck Resources (TCK) and BHP Billiton (BHP)………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

A new group of exhange-traded notes is designed to improve on an initial attempt to track commodity guru Jim Rogers’s international commodity indexes. After a two-week delay because of Hurricane Sandy, the five new “enhanced” ETNs based on Rogers’ RICI indexes opened for trading on the New York Stock Exchange’s NYSE Arca platform earlier this month.
Sponsored by the Royal Bank of Scotland (RBS), the group includes one broad-based, multicommodity ETN (RGRC), and four ETNs on specific segments: agriculture (RGRA); energy (RGRE); precious metals (RGRP); and industrial metals (RGRI)………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

The base metals sector and its related metals and mining sector have a history of moving higher from November to May each year. What are the prospects for this year?
According to Thackray’s 2012 Investor’s Guide, the Metals and Mining sector has two periods of seasonal strength during the year: from November 19th to January 5th and from January 23rd to May 5th. The former period is the better of the two. Average gain per period during the past 22 periods was 8.1 per cent. The trade was profitable in 17 of the past 22 periods………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Emerging market currencies were mostly stronger, with investors turning optimistic that the U.S. fiscal cliff will be avoided.
Still, until the budget problems threatening the fiscal cliff are resolved and there’s also a debt solution in Europe, emerging market currencies are expected to trade choppily. “Emerging markets are not that attractive in general ahead of the fiscal cliff,” said Jose Wynne, head of North America foreign-exchange research at Barclays……………………………………..Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

How can you force firms to cut down their carbon emissions? Put a price on them. That’s the idea behind carbon trading, which got a boost last week when California launched the world’s second-largest carbon market. Other new and improved trading systems are springing up around the globe and could eventually work together.
We need to cut greenhouse gas emissions as efficiently as possible to prevent dangerous climate change. So, the argument for carbon trading goes, we should be able to trade the right to emit: firms that cut emissions can profit by selling emissions permits to those that do not………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Carbon trading schemes are fast sprouting across the planet as a market-based way of addressing rising greenhouse gas emissions. But advocates should be prepared for powerful business backlashes, Chang-beom Kim, the South Korean ambassador to the EU, warned a Brussels round table of business leaders and envoys on 19 November.
“Local business communities who are coming back to their capitals will see a lot of backlash [ranging] from resistance and hesitation and even sometimes negative lobbying and blackmailing, whatever measures we could envision,” he said………………………………………Full Article: Source

Posted on 21 November 2012 by VRS |  Email |Print

Report reveals steel and cement giants are buying cheap carbon credits abroad in order to avoid cutting their own emissions.
Some of the companies that have complained loudest about the European Union’s environmental measures are using the EU’s emissions trading scheme (ETS) to give money to rivals in other countries instead of cutting their own greenhouse gas emissions, it has emerged………………………………………Full Article: Source

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