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Commodities Briefing 14.Dec 2012

Posted on 14 December 2012 by VRS |  Email |Print

Analysts are blaming the drop in gold and the dull action in oil futures on “buy the rumor, sell the fact” trading Thursday in the wake of the Federal Reserve’s bond-buying program announcement a day earlier.
“Equities and the prices of many industrial commodities initially reacted positively, but the gains have faded as the focus has returned to worries about the U.S. fiscal cliff,” said Julian Jessop, head of commodities research at Capital Economics………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

A “strong and broad-based” commodities price rally is likely to occur in the first part of 2013 similar to that seen at the beginning of 2011 and 2012, particularly if a resolution to the fiscal cliff in the US comes soon, according to analysts with UK-based Barclays Capital.
“The similarities in current market conditions are striking and suggest that the likelihood of another strong start to the year for commodities is quite high,” Barclays said in a note………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Gold, silver, soybeans and corn will remain among the most attractive commodities for investors in the upcoming year. According to Morgan Stanley, the platinum group of precious metals will continue to benefit from a positive outlook in 2013, though there are certain concerns toward base metals such as copper.
In 2013 the price of gold is expected to rally about $1,853 per ounce. An average of $35 is predicted for silver, while platinum is expected to sit at around $1,715 per ounce………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Prospects are improving for a positive albeit gradual turn next year in global economic and investment conditions, according to the BlackRock Investment Institute’s 2013 investment outlook, released today and entitled: Low Turn Ahead?.
Investors need to keep a close eye on the impact of government policy – first and foremost, the urgent effort to avoid the looming “fiscal cliff” in the US, which will drive the direction of both the US and global economies, according to the BlackRock Investment Institute (BII)………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

After a decade of tight energy markets and rising commodity prices, the global economy is entering a new era marked by rising oil production at high prices. Yet, the prospects of U.S. energy independence, on the back of the “shale revolution,” a move toward cleaner energy, and slowing growth across the emerging world suggest longer-term oil prices should trend downwards.
Going into 2013, crude oil will remain range-bound, with the potential to fall on sub-par global GDP growth and the prospects of positive supply shocks. Goldman Sachs sees Brent averaging $110 next year while Raymond James’ chief economist suggests U.S.-benchmark WTI could fall as low as the mid-$60s………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

OPEC does not see increased US oil output as a threat to its interests but is skeptical about current forecasts on the boom of American shale gas production, a senior official of the 12-nation group said.
OPEC Secretary-General Abdullah Al-Badry also said figures supplied by Iran show it producing around 3.7 million barrels a day. That is the same amount as Tehran pumped before international embargos on its crude that took effect this year and had been estimated to have cost it hundreds of thousands of barrels a day in sales………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

OPEC members agreed to keep a 30mbpd crude oil output ceiling during the 152nd ministerial meeting on Wednesday. The 30mbpd quota was approved in December 2011, whilst the previous quota was 24.8mbpd, but neither last nor current quotas have been kept.
For instance, during the Libya revolution, Saudi Arabia used its spare oil production capacity and the OPEC output increased to above 26mbpd (excepting Iraq), or during this summer 12 members increased oil output altogether to about 32mbpd, when the U.S and EU were preparing to put their oil sanctions on Iran into force………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

“We may be squandering a once in a lifetime opportunity,” said Jim Cramer, an opportunity to finally break the back of OPEC. “We currently have the opportunity for our continent to become energy independent,” Cramer explained “But the government is doing next to nothing to make it happen.”
That may seem counter-intuitive at first – after all – lower nat gas prices mean lower energy bills. However, from the industry perspective, lower prices suggest supply will far exceed demand for some time to come………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

The International Energy Agency provided a characteristically mixed bag of monthly oil market indicators this week, with key themes of an outlook for higher oil demand running parallel to apparent market oversupply.
The report’s headline forecasts of higher than expected oil demand in Q4 and next year were tempered with comments of continued “sluggish” global economic growth. Next year’s oil demand expectations were raised by 110,000 b/d to 90.5 million b/d. Meanwhile, Q4 demand was hiked by 435,000 b/d more than forecast last month. By way of contrast, the IEA had previously slashed its Q4 oil demand estimate by combined 800,000 b/d since June………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Coal companies here in the United States have had a rough go of it over the past 18-24 months due to natural gas, warm winters, and EPA regulations. Many of them are hoping for a pickup in their international business to carry them through this domestic lull.
With a senior analyst at the International Energy Agency claiming that Europe could be at the beginning of a “Golden Age of coal,” along with Chinese and Indian projections for higher needs of the fossil fuel, these markets could help turn the tide for Arch Coal and competitors like Peabody Energy and Alpha Natural Resources………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Gold in recent months has been stuck in a trading range between $1,675 and $1,750 an ounce - disappointing many bullish investors and quite a few gold-market analysts (like myself) who had expected the yellow metal to be ending the year approaching – or even exceeding – its all-time high-water mark near $1,924 recorded back in September of 2011.
Recent attempts to rally higher have been thwarted by stepped-up speculative selling and softer physical demand with many buyers now conditioned to wait for the next dip………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

There has been a lot of focus on the price of gold recently. Some say it is expensive, or that it is time to sell. Charts have been constructed that pit gold against the Consumer Price Index in an attempt to disprove the market’s perception of gold as the greatest hedge against inflation.
For several years there has even been talk of a gold bubble. This leaves one to wonder why market leaders like Morgan Stanley claim gold to be the best commodity going into 2013………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Large-scale policy easing by the U.S. Federal Reserve and European Central Bank positions gold as a useful hedge against global macro and inflation risks taking the commodity to $2000/oz levels, said Bank of America Merrill Lynch in a report that provides for 2013 outlook for global economic front.
BofA Merrill Lynch analysts outlined nine other macro calls on which they are basing their 2013 outlook………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

After the digestion of not only the initial FOMC rate announcement, but the Bernanke commentary in the afternoon, thebig story is actually the bond market. The SP futures (emini DEC12) are slightly above unchanged while the US bond market is down today. In addition to the US 30yr bond futures trading down .38%.
We are also watching the various months of the Eurodollar interest rate futures contracts as indicators of how the market is digesting the FOMC commentary. Eurodollars expiring in 2015 and 2016 are taking the biggest hit from sellers this morning, perhaps indicating that the market is getting more poised for higher growth………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Take seven recent research reports on the outlook for gold from top-ranked investment banks and consultants and you’ll find one thing in common: Virtually no mention of China and India.
This is astonishing when you consider that those two nations account for 40 percent of the physical gold market. Any oil analyst who ignored demand in the four biggest importers, namely the United States, China, Japan and India, when writing about the crude outlook would struggle to be taken seriously………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

These are weird times… Fiscal cliff, Eurozone crisis, China slowdown, Middle East show down, Emerging Market doldrums…there seem to be no dearth for negative news, one would say.
But what can explain gold’s silver syndrome and silver’s gold syndrome? It all started on November 28 when gold unexpectedly crashed on the Comex by around $26 dollar. Explanations vary. But since then gold has been undergoing turbulent times. It is as if gold is eclipsed by some sort of a volatility curse. Silver, since then has been volatile occasionally, but not to the extent that one may expect it to be………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Asset flows to ETFs are on track to break 2008’s record, reeling in $154 billion year-to-date through November, according to Morningstar. But a special report released by BlackRock today reveals some surprising ETF trends that came out of 2012. The trends tell us more about investor behavior over the last 12 months than the markets themselves.
ETP flows maintained positive momentum throughout changing risk-on and risk-off market conditions. Despite good equity returns, mutual fund flows suffered (especially domestic equity funds)………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

As 2012 draws to an end, investors are taking time to reflect on some of the best and worst performing commodities of the year. Though the year’s headlines have been dominated by energy and precious metals, there are a number of assets that have flown relatively under the radar.
Industrial metals are among the most practical commodities on the market given their wide use in our everyday lives, but they rarely receive attention over something like gold or oil. Below, we outline the performances of some of the biggest industrial metals for 2012……………………………………….Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Global index company FTSE Group has launched a rules-based, long-short index, the FTSE Dynamic Commodity Index. Announcing the launch of the new product this week, the company said it was derived from Professor John M. Mulvey’s risk management and portfolio allocation approach – Dynamic Portfolio Tactics.
It said the new index would provide investors with transparent and efficient exposure to global commodity markets, via a proprietary regime-shifting approach, which seeks to capture discrete changes in economic data to guide positive or negative commodity weightings………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Eleni Gabre-Madhin on how a market has empowered Ethiopian farmers by focusing on distribution as well as production. While government leaders, NGOs and corporations devise strategies to churn out more food for future generations, Eleni Gabre-Madhin is taking a different approach.
Concerned by a 2002 famine in her home country of Ethiopia that followed bumper crops in 2000 and 2001, the Stanford-educated economist decided it was time to go beyond food production and take a hard look at distribution………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

The Jakarta Futures Exchange (JFX) will launch coal, natural rubber and coffee bean contracts in the first quarter of next year, an exchange director said on Thursday, with the aim of tapping into a surge in interest from new commodity investors.
One year ago, the JFX said it would launch a coal and coffee futures, but strict government rules blocked the plans. “We plan to launch three commodity future contracts - coal, natural rubber and coffee - in the first quarter of next year,” JFX director Bihar Sakti Wibowo said………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

Chicago agricultural commodity futures post a mixed performance Thursday, with corn and wheat futures down while soybeans up, as the net weekly export data dominated the trading on the day.
The most active corn contract for March delivery fell 5.25 cents, or 0.72 percent, to close at 7.2025 dollars per bushel. March wheat edged down 3.5 cents, or 0.43 percent, to settle at 8. 085 dollars per bushel. January soybeans rose 3 cents, or 0.2 percent, to close at 14.765 dollars per bushel………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

California’s first auction for carbon allowances on November 14 was hailed as a success by state officials. But the fledgling market must survive a barrage of legal challenges before it can truly take off. Alexander Osipovich reports
The past few years have been gloomy for US emissions traders and environmentalists concerned about climate change. But on November 14, they finally had something to celebrate. On that day, California held the inaugural auction of its new cap-and-trade programme, kicking off what promises to develop into the world’s second-largest carbon market after the European Union Emissions Trading System (EU ETS)………………………………………..Full Article: Source

Posted on 14 December 2012 by VRS |  Email |Print

At the end of another lavishly-funded UN conference that yielded no progress on curbing greenhouse emissions, many of those most concerned about climate change are close to despair.
As thousands of delegates checked out of their air-conditioned hotel rooms in Doha to board their jets for home, some asked whether the UN system even made matters worse by providing cover for leaders to take no meaningful action………………………………………..Full Article: Source

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