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Commodities Briefing 22.Nov 2012

Posted on 22 November 2012 by VRS |  Email |Print

Big money is betting on gold, timber, and agriculture. 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 22 November 2012 by VRS |  Email |Print

Gold is mirroring a larger bout of investor disenchantment with commodities. The current trend could signal the end of the commodity supercycle, warns Citibank. Investors appear to be losing faith in the bull story for gold, says Ed Morse, Citibank ’s star analyst.
“Indeed, net long managed money positions on Comex have fallen by 33% since October 2 2012, not exactly a vote of confidence for further significant gold upside,” the renowned analyst said in a note to clients. “Perhaps only more concerted European policy moves with reference to managing Greece/Spain may provide Euro confidence, and thus gold upside.”……………………………………….Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Edward Morse at Citi (via Business Insider) has made a bearish call on the commodity supercycle based on a slowing Chinese economy and re-balancing growth away from infrastructure spending toward the consumer.
I beg to differ. The secular commodity bull cycle is not ending this cycle, but in the next downturn. That’s because the new leadership are not reformers, and these “princelings” are showing little inclination to re-balance growth away from SOEs and big ticket projects, where many of the elites made their money, toward the household sector, which would benefit the Chinese economy longer term but would gore the CCP cadres’ ox………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

While many wonder if the current softening commodities prices are a sign that the mineral industry is headed for a cyclical dip, there are others who maintain an optimistic outlook. One of the latter is Scotiabank’s VP of economics and commodity market specialist Patricia Mohr, who made her optimism clear in a keynote address to the Economic Club of Canada this week in Ottawa.
“Over the medium-term, the ‘emerging markets’ including China will remain supportive for commodity prices, notwithstanding this year’s slowdown,” she said………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

The International Energy Agency’s report ricocheted around the world last week, and nowhere more so than in Canada. The United States will become the world’s largest producer of oil by 2020, predicted the IEA, and North America will become a net oil exporter by 2030. So much for foolishness about the end of oil. So much for the comfortable assumption in Canada that the U.S. would always soak up every drop of oil we could export to them.
Hidden in the report, however, are two other implicit assumptions of immense importance for the future. First, for the first time since president Franklin D. Roosevelt made cozy with the Saud dynasty, the United States will not need, let alone be beholden to, oil-producing countries in the Middle East………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Proposal could break deadlock at climate talks over raising finances for poorer countries to adapt to global warming. The world’s largest oil-exporting countries have been asked to consider imposing a small carbon tax on oil as a way to break the deadlock over finance for poorer countries in the UN climate talks.
The Ecuador-led initiative, submitted to the Organisation of Petroleum Exporting Countries (Opec), could see a 3-5% tax levied on every barrel of oil exported to rich countries. This could potentially raise $40-60bn a year for the green climate fund, which is expected to be the principle route of funding for developing countries to adapt to climate change………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

One can also infer projections for spare capacity through 2016 from the OPEC report. OPEC estimated its spare capacity at a smidge less than 4 mb/d during 2011. (This number is slightly misleading for some purposes, since a good part of it couldn’t have been brought online quickly, but it’s the right number for the issue we’re looking at.)
OPEC estimates a gain of 1.2 mb/d in its production from 2011-16 but an increase in its liquids capacity of 5 mb/d over the same span. That means an increase in spare capacity of 3.8 mb/d, taking it to a whopping 7.8 mb/d………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

The IEA in late November published the 2012 edition of its flagship annual study, the World Energy Outlook, but with now-admitted “treading of a fine line”, between its mandate, and its recent and present policy interests, fantasies, or foibles.
The Agency (IEA) describes itself, in each issue of the WEO, as an “autonomous agency established in November 1974″ with its its primary mandate, which it says it continues to pursue, being two-fold: to promote oil supply security amongst its now-28 member countries through “collective response to physical disruptions in oil supply”, and also to provide “authoritative research and analysis on ways to ensure reliable, affordable and clean energy” for its exclusively OECD member countries………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Base metals prices may rise going into the year’s end, even as the macroeconomic outlook is cloudy. Copper’s rally on Monday on hopes that the U.S. might avert the “fiscal cliff” – the pending tax hikes and spending cuts that go into effect Jan. 1 if not reversed – might be a sign of further gains to come, market watchers said.
After falling much of October, base metals prices could be bottoming out, said Michael Turek, senior director on Newedge’s New York metals desk………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Global iron ore prices will decline in the long-term due to China’s economic slowdown and its struggling steel industry, insiders said on Tuesday. The volume of China’s online spot-trading platform for iron ore has been zero for the past four weeks as buyers and sellers sit on the sidelines.
“Traders expect a declining iron ore market, which is hitting volume,” said Dong Chaobin, president of the China Beijing International Mining Exchange, one of the organizers of the platform………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Global copper apparent usage, mine production and refined output advanced in the first eight months of this year, said International Copper Study Group (ICSG) in its November 2012 Copper Bulletin.
According to ICSG data, the global refined copper market balance for August 2012 showed a small production deficit of 8,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, August showed a production deficit of 23,000 t………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

The aluminium sector, which has seen price “laggardness” due to over production and stock building, is expected to witness an upturn in prices sooner than later, aluminium majors said.
“Aluminium demand has been on high growth but it is laggard on price … But we have every reason to be optimistic despite the current environment,” Hydro president and CEO Svein Richard Brandtzg said………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

When billionaire investors are buying gold, it probably means prices for the yellow metal are headed higher. Three well-known billionaire investors – George Soros, John Paulsen and Julian Robertson – have been adding heavily to their gold holdings this year.
Gold buying by some of the world’s most successful investors is a strong argument that gold prices, despite their impressive rise over the past several years, still have a long way to go………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Silver is outperforming gold as metals rise, said Barclays Capital in a daily commodity research note. According to the British bank, a break above $33 an ounce in silver signals further upside toward our targets near $33.90/$34.40.
“We are looking for a similar move above $1,739 in gold to confirm upside toward $1,755 and then $1,775, which shields our greater target near $1,800,” Barclays concluded………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

A new Thomson Reuters GFMS report, commissioned by the Silver Institute, forecasts a downturn in silver industrial demand this year to 454.4 million ounces, “although a recovery in 2013 will see these losses entirely recouped.
“…It should be of little surprise that use of silver in industrial applications slowed in 2012,” said the report. “Indeed the start of the year saw industrial offtake remain extremely weak in a number of key markets, following the steep drop of late-2011.”……………………………………….Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Are leveraged gold bull ETFs (Exchange Traded Funds) really investment vehicles for those seeking to hold gold? We will be using SPDR Gold Shares ETF (GLD) as the basis of comparison, as this previous article concluded that gold bullion ETFs are the best-performing gold investments.
Subsequent reader questions and my Instablog response about a 3x gold miner bull (NUGT) identified that this ETF underperformed the commodity ETF and the other alternatives………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Bargain shoppers have arrived early on Wall Street ahead of Black Friday, as last week’s brutal sell-off has left the marketplace scattered with ripe opportunities for seasoned veterans not shaken up from all of the volatility.
Renewed optimism from President Obama that Congress would strike a deal before we drive off the “fiscal cliff” has been a major catalyst behind this week’s bounce, while encouraging housing market data has also brought the bulls back to the equity front………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

CME Group said it received approval from a federal regulator to launch a data warehouse for certain derivatives, days after the Chicago exchange and clearinghouse operator filed a lawsuit against the same regulator.
The Commodity Futures Trading Commission approved CME Repository Service, a warehouse that will house the details of transactions in credit default swaps, interest rate swaps, commodities swaps and foreign exchange swaps. The service will be launched immediately, according to CME………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Global farm commodities supplier Olam International on Wednesday sued a US-based research firm and its founder for saying the company was in danger of collapse. In a filing with the Singapore Exchange after trading closed for the day, Olam said it “today initiated legal action in the High Court of Singapore against both Muddy Waters LLC and Carson Block”.
“The grounds are basically slander, libel and/or malicious falsehood,” Aditya Renjen, Olam’s general manager for investor relations, told AFP. He declined to respond when asked if Olam was seeking damages………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

Emerging market currencies broadly slumped Wednesday, dragged down by the euro-zone debt crisis, U.S. fiscal cliff concerns and Middle East tensions. The South African rand and Brazilian real dived sharply, while other emerging market currencies suffered as investors booked profits on recent gains.
These currencies have largely been held hostage by concerns over the looming U.S. year-end deadline to prevent a combination of spending cuts and tax rises. Meanwhile, the failure of euro-zone officials to reach an agreement Tuesday to disburse the next slice of bailout aid for Greece unnerved investors. Spain, meanwhile, remains another key source of jitters………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

International investors reduced their bets against the peso by $1.1 billion in two days to the lowest level in a month on Nov. 19, according to data published today by the central bank.
The peso was little changed at 477.95 per dollar at the close of trading in Santiago. International investors in the Chilean peso forwards market reduced their short position to $8 billion Nov. 19 from $9.1 billion Nov. 15. Chile’s two-year swap rate was 5.08 percent today, compared with 5 percent at the end of last week………………………………………..Full Article: Source

Posted on 22 November 2012 by VRS |  Email |Print

The UK government successfully completed the first auction of carbon allowances for phase III of the EU emissions trading scheme (ETS) yesterday, selling 6.5 million allowances at a clearing price of €6.62 a tonne.
The Department of Energy and Climate Change said the auction, which was handled by exchange specialist ICE Futures Europe, raised approximately £34m for the Exchequer and further cemented London’s position as the world’s leading carbon trading hub………………………………………..Full Article: Source

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