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Commodities Briefing 03.Dec 2012

Posted on 03 December 2012 by VRS |  Email |Print

Hedge funds increased bullish bets on commodities by the most since August as evidence that China is accelerating outweighed concern that U.S. lawmakers have yet to resolve an impasse over automatic spending cuts and tax rises.
Speculators and money manager increased net-long positions across 18 U.S. futures and options by 9.8 percent to 929,588 contracts in the week ended Nov. 27, the biggest gain since Aug. 21, U.S. Commodity Futures Trading Commission data show. Gold holdings reached a six-week high, and wagers on a wheat rally jumped the most since June………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Great resource booms usually end abruptly, catching almost everybody by surprise. The rhythm is as old as mankind. It is poignantly described Nobel laureate Halldór Laxness through the life of an Icelandic sheep farmer a hundred years ago in Independent People, harrowing because his ruin is so utterly human.
Studies by the World Bank covering two centuries of data sketch a pattern of 10-year supercycles, followed by a slide for the next 20 years or so as excess investment leads to a flood of supply. The long bear market can be cruel for those hanging onto to resource stocks, convinced that the rebound must be nigh………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Inflation risk is the risk that your standard of living including consumption needs such as buying a house will be affected due to increase in general price levels in the future. What should you do to moderate the effect of inflation on your lifestyle requirements? You should consider adding commodities to your investment portfolio. Why?
Inflation can be due to two primary reasons — increase in input costs for manufacturing goods and services and/or supply-side constraints. In either case, inflation essentially means you will experience an increase in the price levels of commodities such as crude, steel and food grains. If you invest in these commodities, you will benefit when their prices move up………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Volatility in agri-commodity prices looks likely to continue into next year, particularly for grain and oilseed markets, a new report from Rabobank shows. A supply squeeze in those markets in the first half was expected to push prices higher before an expected production rebound led to a weakening in the second half of the year.
Soymeal was likely to show the largest price decline by the end of the year, while the bank’s analysts expected palm oil to be the strongest performer. The outlook for soft commodity markets - sugar, cocoa and cotton - was neutral to slightly bearish next year………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Oil and base metals markets closed higher after data showing China’s manufacturing industry expanded for the second consecutive month in November. The China Federation of Logistics and Purchasing’s official Purchasing Manager’s Index hit a seven-month high of 50.6 points in November, up from 50.2 in October.
Crude oil jumped to $US88.91 a barrel, the highest since October 19, as resurgent economic activity in China and the United States fuels investor optimism despite uncertainty regarding the fiscal cliff. Base metals including copper for three-month delivery gained on the London Metals Exchange, closing up 1.21 per cent at $US7995 a tonne………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

“Saudi America”, they are calling it: the boom in US oil production that on some forecasts will make the country a net exporter of crude by the end of the decade.
It is an exciting prospect, promising dramatic growth for the companies able to capitalise on it. Enthusiasts for America’s oil surge often make grandiose claims about the future on the basis of what is still only a very limited history, and there are many risks to that rosy outlook, from environmental protests to doubts over the accuracy of estimates for shale reserves………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Looking at the record of crude oil in 2012, it is likely to go down into the oil history. It is not just the exceptionally frequent supply disruptions. Also there is no shortfall in production that is large enough to affect global oil markets in a significant manner. Such resilience appears to be misleading, especially in part to the sorry state of the global economy.
For instance, the havoc wreaked by hurricane Sandy on US product distribution is the latest in a string of glitches spanning the oil map and supply chain. Mishaps from Brazil to Yemen cut non‐organisation of the Petroleum Exporting Countries (Opec) crude supply by a substantial 1.3 million barrels of oil per day in the third quarter of 2012………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

WTI closed November just shy of $89 a barrel on hopes of an improving economy. I think there is an argument for an improving economy in 2013, but it is just too early to tell how things are going to come together with the economy, and all the ramifications of basically an anti-business and social agenda political leadership of the last four years.
I am not making a political statement that there aren`t some benefits to be gained by such governmental policies, more to state the fact that with a lot of the legislative and fiscal policies of the last four years we have yet to fully understand some of the costs and unintended consequences of these policies like higher taxes, increased healthcare costs, and increased business regulation costs………………………………………..Full Article: Source

Posted on 03 December 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 on Thursday.
Supply from the 12-member Organization of the Petroleum Exporting Countries has averaged 31.06 million barrels per day (bpd), down from 31.15 million bpd in October, the survey of sources at oil companies, OPEC officials and analysts found………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

OPEC member Qatar will ask firms to tender for a 1,800 megawatt (MW) solar energy plant in 2014 costing between $10-20 billion as the world’s highest per capita greenhouse gas emitter seeks to increase its renewable energy production.
“We need to diversify our energy mix,” said Fahad Bin Mohammed al-Attiya, chairman of the Qatari organisers of climate talks in Doha. The United Nations-led summit is being held among almost 200 nations from November 26-December 7………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

The immediate drivers for the gold price appear to be the progress of the talks in the US about the “Fiscal Cliff” and the developments in the European Sovereign debt crisis. It appears now that the markets have the certainty that the uncertainties will continue, until at least September 2013, the time of the German general election.
Greece will most likely receive the required payments as a sort of drip-feed patient, unless real implementations of the Greek government’s decisions take place and effect………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

The mythological power of gold still holds sway, and never more so than when the economy turns to mud. But should we really place our faith in bullion? Would the gold standard really solve our woes? In Germany, gold is now available from vending machines in airports and railway stations - Gold to Go. Shoppers can buy a 1g wafer of gold or a larger 10g bar.
Seeking safety for their savings, individuals have purchased 150 tonnes of gold, mainly in the form of coins. Investors poured money into special funds - known as exchange traded funds (ETFs) - which pool investor monies to buy over 1,000 tons of gold………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

The 10-year bull run is likely to continue with gold remaining an alluring alternative investment probably for one or even two more decades. “Commodity bull markets will last 30 years. If we say that the gold bull market started in 2002, 30 years will take it to 2032 or so,” said Datuk Louis Ng Chun Hau, founder and executive chairman of Public Gold Marketing Sdn Bhd.
Over the past decade, the price of gold has appreciated by an average of 18% per year, moving from US$270 (RM810) in 2002 to around US$1,720 (RM5,160) per ounce today. The US Federal Reserve’s third round of quantitative easing may fuel inflation following liquidity injections into the financial market, making gold more attractive as an alternative investment. ……………………………………….Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

ABN Amro said it expects gold prices to drop substantially over the next two years on a modest increase in supply and slightly lower demand. Breaking ranks with other banks that expect gold to rise, ABN Amro said it sees gold averaging $1,400 per ounce in 2013 and $ 1,300 an ounce in 2014. The $1,400 price forecast would be down 18 percent from gold’s price on Friday of close to $ 1,720.
A slightly stronger world recovery in 2013 and 2014 should lead to a slight drop in gold demand, ABN Amro said in a note. “A stronger recovery is likely to underpin demand for jewelry and hence for gold, but a stronger recovery also means that it becomes more attractive to invest in other assets than gold.”……………………………………….Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Analysts’ median forecast for 2013 year-end gold price has risen from $1,832 as of end-September to $1,850 currently. This is about 7% higher than the current level.
Commerzbank expects gold to reach $2,000/oz. next year, citing supporting factors such as: more central banks buying gold due to their continued ultra-loose monetary policy or addition to reserves, more active Indian buyers, continued low real interest rates, rebound in Chinese growth rate and expected deficits in gold supply to continue into 2013………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

What a fuss over nothing! Gold crept back Friday morning to right where it stood before last Friday’s sudden 1.4% jump, trading at $1730 the ounce. That meant it also unwound half of this week’s sharp 2.0% plunge from Wednesday. It also puts the gold price in US Dollars right back where it stood a month ago. Which is also where gold stood 12 months ago, at the start of December last year.
And then it went and slumped $15 again, taking gold pretty much right back to its monthly average for November………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

The Basel Committee on Banking Supervision is an exclusive and somewhat mysterious entity that issues banking guidelines for the world’s largest financial institutions. It is part of the Bank of International Settlements (BIS) and is often referred to as the Central Banks’ central bank.
Ever since the financial meltdown four years ago, the Basel Committee has been hard at work devising new international regulatory rules designed to minimize the potential for another large-scale financial meltdown. ……………………………………….Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

China’s gold market could get a boost from the debut of interbank trading on Monday, with analysts saying the move will enable traders to swap bullion in larger amounts and heighten the appeal of the metal as an alternative investment class.
Trades will be cleared and delivered under the auspices of the China Foreign Exchange Trading System, a subsidiary of China’s central bank, according to a Thursday statement by the Shanghai Gold Exchange………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Silver prices should range from $33 to $47 per ounce and perhaps test a price of $50/oz, Phillip Klapwijk of Thomson Reuters GFMS advised Thursday. During a conference call conducted Thursday under the auspices of the Silver Institute, Klapwijk forecast that silver prices may hit $36/oz this December and average $40-$42 per ounce next year.
As GFMS previously reported silver mine production is expected to rise by 33 million ounces or 4% this year, “driven by a strong project pipeline, high precious metals prices and a healthy performance by the base metals sector.”……………………………………….Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Gold, silver, platinum and palladium prices are set to rise sharply next year, with yellow metal finally topping $2,000 an ounce, said Commerzbank in a commodity research note.
According to the German bank, other industrially oriented metals should also strengthen in 2013, listing full-year forecasts of $40 for silver, $1,875 for platinum and $855 for palladium………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

South Africa – the post-apartheid version – is a young country as far as Nation States go. Yet today, there are doubts about whether South Africa can survive.
It’s hard NOT to be pessimistic when you read about the 34 people killed at Lonmin’s Marikana platinum mine in mid-August. The deaths at Marikana were followed by widespread strikes across the platinum and gold industries………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

As the Chinese economy develops into a more consumer-driven beast, the world’s mining giants are fighting to look prepared. No surprise that China was the silver lining as Rio Tinto last week announced it was targeting $5bn (£3.1bn) of cost savings across its business by the end of 2014 given the “volatile” macro-economic outlook.
As the FTSE 100 miner, the second largest in the world, warned of “major uncertainties” for American and European growth, it could add least offer investors reassurance that it was “guardedly optimistic” about China, predicting a slight rise in the country’s GDP growth to over 8pc next year………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

As an asset class, natural resources often get lumped together, falling under a single weighting in one’s investment portfolio. After all, the most popular approach by many retail investors is through an ETF or futures fund that tracks a basket of commodities. The PowerShares DB Commodity Index Tracking (DBC) and iPath DJ-UBS Commodity Index ETN (DJP) are two of the most popular options for investors.
However, natural resources are completely distinct animals and behave differently due to various demand, supply, weather and other external factors. Believe it or not, one of those external factors can be who’s in the White House………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

FactorShares, an ETF provider that was recently acquired by GenCap Ventures, has debuted the first ever ETF to focus on diamonds and gemstones. The PureFunds ISE Diamond/Gemstone ETF (GEMS) invests in a handful of firms that produce and sell diamonds/gemstones, making this fund one of a kind.
The GEMS fund has been in the works for some time now, as several issuers were jockeying to release the first Diamond fund, but FactorShares beat everyone to the punch………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

‘Hedging’ is a scientific tool for price risk management and helps in reassuring both sellers and buyers of the profit margins but not the speculative profits, said G. Chandrashekhar of The Hindu Business Line.
Chandrashekhar portrayed the fast-changing economic scenario, explicitly indicating a bright future for food market and how national economies were gradually integrating with global market, necessitating the stakeholders to develop a global perspective about the dynamics of international market……………………………………….Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Asia’s biggest laggard could turn into one of the best performers next year. We are talking about the Indian rupee which has tanked 13 percent since its peak in February, but one expert predicts this beleaguered currency is in for a big turnaround in the new year.
Weighed down by anemic growth and lack of investor interest as the government struggled to implement economic reforms, the Indian rupee has had a tumultuous year. For example, it fell more than 17 percent over February-June, raising the cost of imports and fueling inflation………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Monday’s weekly USDA crop ratings data showed that 33% of the US winter wheat crop was rated good/excellent, down 1% from the previous week and well below year-ago levels of 52%. Meanwhile, 26% of the crop is rated poor/very poor, up 2% from the prior week and double the year-ago level of 13%.
Southern Hemisphere weather concerns are also supporting wheat prices, with excessive rain in Argentina and Australia, Barclays noted in a report………………………………………..Full Article: Source

Posted on 03 December 2012 by VRS |  Email |Print

Standard Chartered Bank group has released a report providing a global economic overview and investment implications for commodities, credit, equities, forex rates and sovereign risk summarising the key issues, risks, opportunities and likely outcomes in 2013 for 70 economies.
The report which was sent to The Independent on Nov. 30 says that the group expect the world economy to strengthen in 2013, particularly in the second half, after two years of slowdown. “We forecast 2.8% growth in 2013 after 2.6% in 2012, with Europe still the main area of weakness,” the report reads in part………………………………………..Full Article: Source

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