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Commodities Briefing 11.Dec 2012

Posted on 11 December 2012 by VRS |  Email |Print

Participants at the 2012 Opalesque South Africa Roundtable, sponsored by IDS and Eurex in Cape Town, heard of new local demand for commodity funds. St. John Bungey, Chief Investment Officer of Blue Ink Investments reported that their firm had just launched a commodity fund of hedge funds, based on all the commodity holdings they have had across their multi-strategy portfolios for the last three years. “The reason we launched it was in response to increased demand for a differentiated, more aggressive product” he said.
“Unlike the rest of the world, the South African hedge fund industry jumped the stage of being seeded by individuals and family offices and it went institutional within a year or 18 months of its birth. As a result, from early on, funds of hedge funds were offering low volatility and very institutionally-focused multi-strategy products”………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Should you pin down long-term commodity deals now, hedge or hang on until later? Bad news: buyers believe commodity prices will continue to increase throughout 2013. A recent survey by consultancy AT Kearney reveals the outlook is bleak, while concern over securing natural resources was highlighted as one of the biggest fears facing the global economy in a report by the World Economic Forum.
However, analysts are more optimistic. Tom Bundgaard, chief analyst at Kairos Commodities, says: “There is a huge correlation between the Purchasing Managers’ Index (PMI) and commodity prices. At the moment the PMI [globally] is falling – it has been below 50 for a while. As long as the economy contracts, commodity prices will contract.”……………………………………….Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

A new global risk analysis report has said investors in the Nigerian oil and gas sector will face more risks in the coming year, with slow progress expected on the long-delayed Petroleum Bill. According to the report, even if the bill is passed, its implementation will be uneven, adding to protracted corruption problems in the country.
London-based consultants, Control Risks, which carried out the analysis, added that “Nigeria is also considered a high risk politically”………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Crude-oil futures slipped a little in Asia on Tuesday, extending a five-day losing streak, amid cautious tone ahead of Wednesday’s Organization of Petroleum Exporting Nations meeting to decide production quotas and the U.S. central bank’s monetary policy decision.
Oil futures for delivery in January were down 2 cents at $85.54 a barrel in electronic trading. The contract moved on either side of Monday’s settlement on the New York Mercantile Exchange, when prices fell 37 cents to record a fifth consecutive day of losses………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

OPEC is caught between Dakota and Damascus. This week’s meeting of the Organisation of the Petroleum Exporting Countries ought to have a party atmosphere. Averaging almost $US112 a barrel to date, Brent crude oil looks set for its best year ever in 2012.
But any celebration of that would ring hollow. Oil prices are at risk of a major correction next year. Deutsche Bank says the range of analyst forecasts for oil prices is at “extreme levels”, with $US50 between the high and low ends. Beyond 2013, OPEC faces growing tensions that threaten its long-term survival………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Mexico’s Finance Minister Luis Videgaray said on Monday that the country has hedged 2013 crude oil exports at a price around $84.90 per barrel.
“The hedges that protect the price of oil have already been set … in line with the proposals in the revenue law which cover exports in case we have a fall in the price of oil,” Videgaray said in remarks to Mexico’s lower house of Congress. The country’s 2013 budget proposes a per barrel price of oil for export at $84.90 per barrel………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

The U.S. Department of Energy has released a study that finds that allowing U.S. liquid natural gas (LNG) exports would help the economy. If LNG grows, so will the economy.
NERA Economic Consulting believes that the U.S. will “gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.” Is this announcement good news for energy investors? Well, yes and no………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

India’s estimated proved coal reserves of 118 bn tons are expected to last for over hundred years. Coal production planning closely follows the projected demand for coal.
However, in view of various constraints coming in the way of enhancing coal production during the XI five year plan, the gap widened between projected demand and domestic availability – stated Pratik Prakashbapu Patil- Minister of State for Coal, in a written reply in the upper house of Indian Parliament (Rajya sabha) on Monday………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

What does £197 billion ($315 billion) in gold bullion look like? Chemistry Professor Martyn Poliakoff and videojournalist Brady Haran visitied a gold bullion-filled vault at the Bank of England and give us all a look.
Gold is one of those elements that I’ve often wondered about. Sure, gold is wonderful because it is pretty and easy to work with, it’s an excellent conductor of heat and electricity and yet, it doesn’t tarnish, rust or corrode. And purified, its colour is distinctive amongst the elements. But none of these properties are unique………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Why investors are turning to gold ahead of 2013…Although the price of gold has fallen over the last couple of months, there has been a marked increase in demand for physical bullion.
The amount of bullion held to back gold exchange-traded funds has risen to record levels. November meantime saw the United States Mint record its best month for sales of gold American Eagle coins since July 2010………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

After a prolonged sell-off in gold, prices have started climbing again this week. For Barclays Research, this has been a time for introspection on its outllook for the yellow metal. They have now concluded that the sell-off rally was overstretched and perhaps it is time to start buying gold again changing their view from desperation on fall in prices to recent cautiously bullish to bullish view– thereby completing a circle.
The investment Bank is bullish on the macro environment as well as investor inflows. On the fundamental front, the Bank is neutral and from the point of view of technicals, they have a bullish strategy………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

This morning the gold price has received a bit of a boost thanks to positive data from China and potential political mayhem in Italy. Political and economic uncertainty causes people to want to buy gold bullion.
Thanks to fresh data from China indicating better than expected domestic activity, investors are feeling more bullish about gold investment. Following on from October’s data showing a cooling in inflation and a revival in growth, November’s figures give further confidence to the markets. This coming Friday may also bring some good news from China as flash PMIs are released………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

One of the biggest difficulties facing serious silver analysts, rather than those who just interpret data without looking at, or understanding, its true background is that many of those conducting ‘independent’ (i.e. those who are not themselves ’silver bugs’) analyses mostly predict a weak silver price ahead because of what they see as a large silver production surplus.
Gold analysts, on the other hand, have come to accept that any surplus in gold production over normal jewellery and industrial demand is largely accounted for by investment demand………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Take look at the five-year chart for silver, then you can appreciate both why silver investors are so anxious and why they really have nothing to worry about. True if you bought silver 19 months ago when it hit $48.50 an ounce ready for an exponential take-off then you have reason to be annoyed.
However, silver did not break its $50 all-time high at that point and fell back into a trading range. Our old friend Gerry Schubert at Emirates NBD Bank still holds the record for having placed the highest priced order for silver ever back in 1980 as a young trader………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Global exchange-traded fund (ETF) and exchange-traded product (ETP) assets reached an all-time high of $1.9 trillion at the end of November 2012, according to figures from ETFGI, a London-based consultancy firm. Assets in ETFs and ETPs reached $1.3 trillion in the US, $359 billion in Europe, $78.7 billion in Asia Pacific (ex-Japan), $46.9 billion in Japan and $11.6 billion in Latin America.
Year to date through end of November 2012, ETF and ETP assets have increased by 23.8% from $1.5 trillion to $1.9 trillion………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

The recent moves in copper prices are a leading global indicator to me. The commodity is up 4% and climbing. And that tells me part of the global recovery will favor industrials. What’ll push the global appetite for commodities, such as copper, through the roof? Emerging markets, of course, fueled by a growing work force and increasing productivity.
Look at China… PMI statistics are the best in seven months. And Brazil … in October industrial output posted its first annual increase in more than a year. The Brazilian government put through a tax break on autos that helped support a nascent recovery in the country’s beleaguered manufacturing sector………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

The head of the Bank of England warned on Monday that too many countries were trying to weaken their currencies to offset the impact of the slow global economy and the trend could grow next year.
“You can see, month by month, the addition to the number of countries who feel that active exchange rate management, always to push their exchange rate down, is growing,” Mervyn King said in a speech………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Brazil’s real gained on Monday after a central bank director said the currency still has room to appreciate, adding to expectations that the government may further intervene in the foreign exchange market.
Other Latin American currencies also strengthened as a positive Wall Street session fueled investors’ appetite for risk, while Venezuela’s bonds rallied after ailing President Hugo Chavez named a successor, raising the prospect of his departure after 14 years in power………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Oh China, how could we ever have doubted you? Look at those data go. Official figures released Sunday showed that industrial production was up by a very perky 10.1% last month, compared with the position a year earlier. And there was more: retail sales soared 14.9%, putting in their best showing for eight months.
These are the first numbers to see daylight since the Communist Party’s epochal leadership transition last month, and the new boys must be delighted with them. There have been seven straight quarters of slowing growth running up to September, but this sort strength will argue strongly against 2012 bowing out with an eighth………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Sterling continued to lose ground against the US dollar on Friday dropping to 1.60; but, traded in a relatively narrow range against the majority of currencies. Rumours continue to build that the UK will soon lose its gold plated AAA rating; however, a lot of economists are suggesting this is already priced into the market and won’t really affect the UK’s economy due to only 7 countries currently having a “stable outlook”.
On the data front, the change in manufacturing production fell sharply by 1.3% when only a 0.2% drop had been anticipated. The Governor of the Bank of England is speaking this week and we will also have the benchmark 10-year bond auction………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

Three consecutive years of smaller U.S. corn harvests are driving inventories of the world’s most- consumed grain to a 39-year low and spurring Goldman Sachs Group Inc. to predict that prices will rise near record highs.
Global stockpiles probably will drop 11 percent to 117.64 million metric tons by Oct. 1, according to the average of 16 analyst estimates compiled by Bloomberg. That would be 13.8 percent of what the U.S. Department of Agriculture expects to be used for food, ethanol and livestock feed, the lowest ratio of inventories since 1974. The USDA is scheduled to update its forecasts at 8:30 a.m. in Washington………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

World leaders recently met in Doha, Qatar for the 18th UN climate change summit, better known as COP 18. By most accounts, COP 18 did little to bring real solutions to the problem of how to reduce greenhouse gas (GHG) enough to preserve the way of life most developed countries enjoy.
That doesn’t mean that some countries aren’t doing what they can to reduce their GHG emissions. Vietnam is a good example. Best known to Americans as the country where males of the baby boomer generation were sent to war, Vietnam will launch a national emissions trading scheme in 2020………………………………………..Full Article: Source

Posted on 11 December 2012 by VRS |  Email |Print

It was a boom that would seemingly go on forever. But now fingers are crossed for other parts of the Australian economy to lift their game and fill the gap being left by a resources sector coming off the boil.
It’s hoped residential housing construction could be the one in 2013, but so far the sector has shown only glimmers of potential. Australian Chamber of Commerce and Industry (ACCI) chief economist Greg Evans believes the economy - and government revenue - is too reliant on the mining boom and the massive investment that comes with it………………………………………..Full Article: Source

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