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Commodities Briefing 06.Dec 2012

Posted on 06 December 2012 by VRS |  Email |Print

The “super cycle” of gains for commodity prices is not ending as improving global economic growth boosts demand for raw materials, Goldman Sachs Group Inc. said.
Rising consumption may create limited availability of immediate supplies and boost near-term prices higher than long- term levels, a trading opportunity that may provide “significant” returns, New York-based Jeffrey Currie, Goldman’s head of commodity research, said in an e-mailed report today. The bank reiterated its recommendation that investors should be “overweight” in commodities, and that prices will return 7 percent in 12 months………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

The Commodity Futures Trading Commission has released a statement outlining the results of a closed-door meeting between international regulators last week that promises widespread international cooperation in the implementation of global derivatives market reforms.
The message is likely intended to provide comfort to derivatives market participants and the rest of the international regulatory community who have jointly decried the CFTC’s approach to safeguard U.S. markets from abuses in the derivatives market via newfound regulatory powers provided in Dodd-Frank………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

As OPEC members meet in Vienna next week, they have good reason to feel satisfied, Gulf Oil Review said in its market insight released Wednesday. For the first time in history, the average price of the group’s basket of oil has been above $100 a barrel for eight consecutive quarters.
The stability of the oil price, especially in the past three quarters, is remarkable given the many weaknesses in the world economy; the EU debt crisis; sanctions on Iran’s oil; geopolitical tensions in the Middle East; and unplanned supply outages outside this region. While macroeconomic risks abound, the risks of a shock are receding and therefore, so is the prospect of a sharp dip in the oil price………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

OPEC is expected to stick with an output target of 30 million bpd when it meets on December 12. Global oil supplies are comfortable, OPEC secretary general Abdullah al-Badri said on Tuesday ahead of the oil exporting group’s meeting in Vienna next week.
“The market is comfortable as I see it at this time,” he told Reuters on sidelines of United Nations climate talks in Doha………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

As the U.S. gears up to become the world’s top oil producer by 2017, another major energy development is shaking up the energy industry halfway around the globe. It’s happening in Iraq, the world’s third-largest oil exporter and second-largest OPEC oil producer.
What’s the story? According the International Energy Administration (IEA), oil production in Iraqis set to more than double over the next seven years to 6.1 million barrels per day. That adds up to 45% of the anticipated growth of oil’s global output through 2020, much more than any other nation………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Gold may gain in the domestic bullion market on Thursday as the dollar gained against the basket of currencies. But a report by Goldman Sachs pointing to downturn in the yellow metal is likely to cap most of the gains.
Overnight, Goldman Sachs said that bullion prices could head lower next year as real interest rate could rise on the heels of improved growth. The real interest rate could increase in view of improved growth, it said, projecting a bearish outlook for three, six and 12 months outlook………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Gold, still in its longest winning streak in at least nine decades, will probably peak in 2013 and keep declining the following year as U.S. growth accelerates, Goldman Sachs Group Inc. said.
Prices will peak in 2013 before declining even as the Federal Reserve expands stimulus, the bank said in an e-mailed report today. Bullion will be at $1,825 an ounce in three months, $1,805 in six months and $1,800 in a year’s time, it said, lowering its three-month forecast from $1,840 and its six- and 12-month outlooks from $1,940. It introduced an average 2014 estimate of $1,750. This year’s average is $1,670………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

For any gold investor, the question is whether to buy the physical bullion or gold mining stocks. For the average investor, I favor gold stocks over the higher risk of other options.
The mining sector continues to be an excellent place to make money. An investment strategy would be to buy a mixture of exploration-stage gold mining stocks along with small to large gold producers. Under this scenario, you can play both the potential aggressive gains of exploration stocks and the steady returns of the large gold producers………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

The Bank of Korea increased gold reserves 20% last month to diversify investments, boosting holdings for the fourth time since June 2011 and underscoring increased demand by central banks, according to Bloomberg.
The bank added 14 metric tons in November, bringing the total to 84.4 tons, the bank said in a statement today. By value, holdings increased about $780 million to $3.76 billion, equivalent to 1.2% of total reserves, the bank said. “Gold is a physical, safe asset,” the Bank of Korea said in the statement. The precious metal “is a way of diversification, which helps reduce investment risk in terms of foreign-exchange reserves management,” it said………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Gold prices may have recovered a bit aided by the uncertainty prevailing in Eurozone area; but investors seem to abandon the commodity in droves as US fiscal cliff issue continues to keep markets on tenterhooks.
While only a handful would predict that US would go off the click, the day-to-day developments in the US political arena is adding to the uncertainty in markets in a big way. When there is uncertainty in the markets, people hardly invest. They would simply sell and markets yesterday saw just that!……………………………………….Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Gold has been a major talking point in the commodity world for the last few weeks. Though it seems that the metal has been grabbing headlines for the better part of a year, the anticipation of the fiscal cliff and the future of the U.S. dollar has gold investors on the edge of their seats.
Famed investor Jim Rogers recently chimed in on his views on the precious metal, as he has been an owner for quite some time, but investors may not like what he has to say………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

The wholesale market gold price traded just above $1,700 an ounce during Wednesday morning in London, having risen back above that level in the earlier Asian session, though they remained near one-month lows.
Silver hovered just above $33 an ounce this morning, down 1.3% on the week, while stocks and commodities edged higher. US and German government bond prices gained, while longer-dated UK gilts fell ahead of the chancellor’s Autumn Statement in London, at which he will unveil the latest UK economic projections………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Analysts with Barclays Capital said that many views expressed during last week’s CESCO Asia Copper Week were for weak demand and low expectations. During the week, Codelco offered to cut 2013 premiums for China.
“Many traders had hoped for a bigger cut, but most participants we talked to expect contracted tonnages to fall only by around 10%, given the need to maintain a steady supply amid uncertainties,” said Barclays………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Against the backdrop of lower output of steel in the rest of the world , China’s exports of rolled steel products has risen 12.3% during the first nine months of 2012 compared to the same period last year. The exports rose 3 million tons to 27.36 million tons, according to MEPS International, London.
The reasons increased demand for China steel is its price competitiveness, the quality of commercial grades is now acceptable for most applications around the world and the demand from the countries with a shortfall in supply continues to grow………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Looking at the historical performance of ETF Securities’ physically backed copper fund, you might wonder why the proposed launch of two more is generating so much opposition among copper fabricators. The UK specialist in exchange-traded funds (ETF) was the first to extend what is now a major precious metals investment product into the base metals arena.
It launched three ETFs backed by physical metal - copper, nickel and tin - in December 2010. In May 2011 the suite was extended to the other three base metals traded on the London Metal Exchange (LME): aluminium, lead and zinc………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

According to a recent report from the Union Nations “world grain reserves are so dangerously low that severe weather in the U.S. or other food-exporting countries could trigger a major hunger crisis next year”.
With food consumption exceeding the amount grown for six of the last 11 years, countries have run down reserves from an average of 107 days of consumption 10 years ago to under 74 days recently………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Brazil’s IC-Br commodities index, published by the central bank to track prices for a basket of basic goods, edged higher in November from the previous month on a spike in energy prices.
The composite IC-Br rose from October to 135.41 points, the Brazilian Central Bank said Wednesday. The index is up 8.9% since the start of 2012 and 8.3% higher than in November 2011. The IC-Br’s subindex for energy commodities such as Brent crude, natural gas and coal rose 2.8% last month, to 101.83 points, its highest level in at least two years………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Investors have been wisely diversifying their portfolios to provide exposure to more than just U.S. stocks. Whether it’s emerging markets, real estate or gold bullion, a broad-based approach provides for a better night’s sleep.
Yet it’s fair to ask: Do commodities also have a place in your portfolio? After all, they seem to rise and fall with alacrity, and investors often only notice them after they’ve made sharp gains or plunges. Truth is, we have no crystal ball that tells us how this group will fare in 2013. We can look at the supply and demand backdrop for various commodities, but much hinges on the health of global economies………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Standard Chartered Plc (STAN), which gets most of its revenue in Asia, increased its global commodity headcount by 25 percent this year and is adding more as demand expands in China, the top user of energy and copper.
The bank added 20 front-office people on a net basis, taking the total to 100, said Arun Murthy, the global head of commodities based in Singapore. The increase includes traders and sales people in oil, coal, metals and agriculture, he said in an interview. The bank may add 10 to 20 in the next six months in places such as Dubai, Shanghai and Johannesburg………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Most emerging-market currencies edged higher Wednesday as investors took on a more optimistic tone on the back of hopes for more economic stimulus policies in China.
Market participants ramped up expectations for Chinese economic stimulus in response to comments by China’s new generation of leaders, led by party chief Xi Jinping, that urbanization and the construction of public housing in the country would be stepped up. Emerging market investors look to growth in the world’s second-largest economy as a key economic engine for much of the developing world………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Goldman Sachs recommended a commodity bet including a long position in corn despite forecasting a rise in sowings of the grain to a 77-year high in 2013, while putting soybean plantings on for a record.
The investment bank included corn, crude oil and a long position in copper balanced by a short in aluminium, in its so-called “CCB commodity carry basket” of raw materials set to outperform………………………………………..Full Article: Source

Posted on 06 December 2012 by VRS |  Email |Print

Japan may backpedal on its pledge to cut greenhouse gas emissions by a quarter, an official said Wednesday, dealing a further blow to already deadlocked global warming talks in Doha.
Tokyo in 2009 promised it would slash its planet-warming emissions by 25 percent from 1990 levels by the start of next decade — provided other major polluters such as China and the United States also make sharp reductions. The target was one of the most ambitious of any industrialised country and won plaudits from environmentalists………………………………………..Full Article: Source

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