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Commodities Briefing 30.Nov 2012

Posted on 30 November 2012 by VRS |  Email |Print

UN conference on trade and development (UNCTAD) says trade in futures contracts causes the most damage. The United Nations has laid the finger of blame for food price rises on trading in agricultural commodities, but says it is the trade in futures contracts – an agreement to buy at a set price sometime in the future – rather than the actual food stocks that causes the most damage.
David Bicchetti, associate economic officer at UN conference on trade and development (UNCTAD), said “enormous, humongous” amounts of money are traded on commodities that don’t actually exist. “Over $400bn [of paper money] is traded – that’s 20-30 times the physical production of the commodity.”……………………………………….Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Global food prices remained stable, though close to 2008 record levels, the World Bank said on Thursday, as it warned that a “new norm” of costlier food was setting in and threatening to increase hunger and malnutrition in the world’s poorer regions.
In an update of its quarterly “Food Price Watch” report, the World Bank said the absence of “panic policies,” such as food export restrictions, had helped stabilize commodity prices since price spikes in July………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

The super-cycle that drove a huge boom in commodity investment over the last decade is well and truly over, according to UBS’s Mark Rider. The Australian head of investment strategy, who has also worked for the Reserve Bank of Australia as head of economic activity and forecasting, says that the combined forces of supply and demand which contributed to the sector’s explosion over the last decade are now driving prices lower.
“On the demand side, China is settling into a more moderate pace of economic growth, while developed economies struggle with deleveraging headwinds,” he said………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Since Election Day, when the correction in equities started accelerating in earnest, commoditieshave outperformed stocks. Today let’s look at why this trend looks set to continue, and an easy way to potentially capture commodities’ next move.
Commodities enjoyed a nice rally last week, rising 2 percent on improving fiscal-cliff sentiment, a weaker U.S. dollar and dovish comments by multiple Federal Reserve governors, including Ben Bernanke. As of Monday’s close, commodities were 1 percent higher than the Election Day close, while equities remain multiple percentage points lower………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Most commodity prices rose Thursday as back-and-forth negotiations continued over the U.S. budget. Gold, industrial metals, oil and soybeans ended higher on the day. Natural gas, wheat and corn fell.
Investors hope the Obama administration and Congress can agree on a new budget by the end of the year, preventing automatic cuts to government spending and steep tax increases from going into effect………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

A political crisis in Egypt heralds a new phase of instability in the Middle East that will keep worries about oil supplies from the region intact putting upward pressure on prices, commodities analysts said.
A controversial decree by Egypt’s President Mohamed Mursi has plunged the country into a crisis and ensured that tensions in the Middle East will remain firmly in focus just as last week’s ceasefire between Israel and Hamas ended eight days of fighting in the Gaza strip and bought some relief to investors………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Oil prices are expected to fall slightly over the next year as high production feeds softening demand at a time of slowing global economic growth, a poll shows.
An oil price survey of 29 analysts forecasts North Sea Brent crude oil will average $107.50 per barrel in 2013, down $1.30 from the forecast in the October poll and compared with an average of around $111.90 so far in 2012. Five analysts now expect Brent to average less than $100 in 2013, compared with three in last month’s poll………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

High oil stockpiles, slowing demand growth and a fragile world economy would normally give OPEC reason to consider supply cuts when it meets next month.
But with turmoil in the Middle East keeping the price of oil well into triple digits, OPEC delegates say the 12-member group is expected to stick with an output target of 30 million barrels per day agreed a year ago………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Opec crude oil output has declined in November to its lowest since January because of disruptions to Nigerian output and reduced supplies from Angola and Libya, a Reuters survey found.
Supply from the 12-member Organisation of the Petroleum Exporting Countries has averaged 31.06m barrels per day (b/d), down from 31.15m b/d in October, the survey of sources at oil companies, Opec officials and analysts found………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Britain is considering exempting industrial users from extra costs arising from landmark energy reforms announced on Thursday while consumers face higher bills as the country replaces ageing capacity with low-carbon power.
Britain’s Energy Bill, introduced to parliament on Thursday, aims to ensure the EU’s second-largest economy can keep the lights on and diversify its energy mix in view of legally binding carbon targets………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Considering this year’s rather volatile performance, one thing can be agreed upon by almost all investors – commodity investing is essentially a crap shoot. This year’s unprecedented summer drought and escalated geopolitical tensions in the Middle East have wreaked havoc on commodity markets, leaving some lucky investors with profitable returns and others with steep losses.
Overall, however, commodities have been experiencing a steady uptrend for quite some time, as global demand has continuously inched higher despite the recent economic slowdown. In a recent statement, global head of commodities research at Citigroup Edward Morse warned that the “commodity super-cycle” is over and that “no longer will a pure long-only strategy bring the returns expected in 2002 to 2008, nor will conditions approximating those of the last decade return anytime soon”……………………………………….Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

No two bull markets are ever the same, and gold is no exception. During the last secular gold bull market in the 1970s, gold rose from $35 in 1968 all the way to $200 by late 1974.
Then the unthinkable happened. Between late 1974 and mid-1976, gold prices were cut in half, dropping from about $200 to $100. At the time, many gold investors sold out in disgust, never to return. But then a funny thing occurred. Gold prices started to climb again, rising from $100 in mid-1976 all the way to $800 by January 1980………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

As a result of significant investor demand for silver as an alternative investment metal in the current uncertain global economic environment, precious metals consultancy GFMS on Thursday said the price for the white metal could top $50/oz in 2013.
During a webcast to present the preliminary findings of the ‘GFMS Inetrim Silver Report’, global head of metal analytics Phillip Klapwijk pointed to strong investment demand, albeit in a small market, and the rising intertwined gold price would lift the price of silver to between $33/oz and $47/oz, with a 25% probability for significantly higher prices………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

We may be on the verge of another major breakout as the precious metals market may be once again pricing in the next Keynesian move.
We are approaching the end of the year where investors are facing a confluence of mixed signals such as tax loss selling, fiscal cliff discussions, the Greek bailout, future Fed actions and Middle Eastern geopolitical turmoil. Short term shakeouts like yesterday’s early morning drop in precious metals should be expected………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Over the past two years, a number of issuers like iShares and JP Morgan have filed for a physical copper ETF; something investors have been wanting for quite some time.
At first glance, it seems like a solid idea; after all, GLD and SLV are two of the most popular ETFs in the world, and each of them offers physical exposure to their respective metals. But despite the popularity of the physical structure, it may not make much sense for this industrial metal to be adopted into such an ETF……………………………………….Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Holding to true seasonal tendencies, select retail stocks and the ETFs that track them have been performing well over the past month. Digging deeper into the retail space, investors may want to consider ETFs that are heavy on apparel makers, according to a research note published by S&P Capital IQ. The research firm apparel retailers have benefited from slumping cotton prices.
“Higher cotton prices and rising manufacturing costs drove retail prices up last fall (2011) and this spring,” said S&P Capital IQ………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Regulators approved the planned takeover of the London Metal Exchange (LME) by Hong Kong Exchanges and Clearing (HKEx). This means the deal to buy one of the City’s oldest – and certainly its most unusual – trading venues could complete as early as 6 December, bringing to an end 135 years of member-ownership.
LME is one of the few venues in the world that still practises open outcry trading and visitors to its Leadenhall Street offices can still see traders enter the ring and use arcane hand signals to buy and sell copper, aluminium, lead, nickel, tin and zinc………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

The Ethiopia Commodity Exchange (ECX) is currently conducting a high-ticket international procurement - the first of its kind since a multi-million dollar bid was busted in 2010 due to alleged fraud and corruption during the bidding process.
The bid for the supply, installation, and maintenance of a futures trading software that ECX floated back in 2010 was marred by dishonest maneuvering, seemingly to favor the Sri Lanka based company, Millennium IT, and World Bank withdrew ECX’s award proposal and cancelled the loan. The loan was part of what the government had borrowed from International Development Association (IDA) for the purposes of financing the Rural Capacity Building project………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Barclays Plc. is contemplating a retreat from trading in agriculture commodities, according to a Reuters report. The move comes as the company gears up for a strategic revamp of its overall business as well as to avoid any threat to its reputation.
Notably, trading in agricultural commodities has received much criticism in the recent years as the speculation activity has been blamed for a shoot up of prices. This has had severe consequences in the undeveloped countries, leading politicians as well as common people to raise their voices in protest………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

The Food and Agriculture Organization of the United Nations (FAO) has raised its July forecast of global paddy production in 2012 by 4.2 million tons to 729 million tons (486 million tons, milled) because of the progression in the crop.
Prospects have improved especially for India, but also Egypt, the Democratic Republic of Korea, the Philippines, the United States and Vietnam, while they worsened in Myanmar, Colombia and Senegal………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Palm oil may trade in a range in the next three months before slumping into a bear market as global production peaks in the second half of next year, according to Dorab Mistry, director at Godrej International Ltd.
Futures on the Malaysia Derivatives Exchange will trade between 2,300 ringgit ($755) and 2,600 ringgit a metric ton until February, keeping inventories high in Indonesia and Malaysia, the top producers, Mistry told a conference in Bali, Indonesia today. Prices will drop below 2,200 ringgit in August or earlier as a pickup in output expands inventories, he said………………………………………..Full Article: Source

Posted on 30 November 2012 by VRS |  Email |Print

Nations around the world have signed up for a CO2 ‘cap-and-trade’ system, but questions abound over its effectiveness. Can the carbon market attain enough credits to help halt global climate change? How, with its diversity of climate mitigation efforts, can carbon contracts be kept feasible enough for the markets to grow? And are there costs to biodiversity and indigenous people living in or near forests?
Under the 1997 Kyoto Protocol, 193 countries committed to reduce their annual rate of greenhouse gas emissions by four per cent compared to 1990 levels. One of their suggested methods for implementing the goal was a “cap-and-trade” market………………………………………..Full Article: Source

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