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Commodities Briefing 17.Dec 2012

Posted on 17 December 2012 by VRS |  Email |Print

Hedge funds cut bullish commodity bets by the most in a month as the Federal Reserve warned the U.S. budget impasse may damage the economy, increasing concern about demand just as prices head for the first loss since 2008.
Speculators and money managers decreased net-long positions across 18 U.S. futures and options by 11 percent to 802,817 contracts in the week ended Dec. 11, U.S. Commodity Futures Trading Commission data show. Sugar holdings tumbled 68 percent, the most in five years, and those for wheat dropped to the lowest since June. Wagers on higher crude-oil prices tumbled 21 percent, the most since May……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

The year 2012 was very exciting for the agro-commodities market. High volatility and rising trading interests resulted in improved volumes in the futures market. There were many commodities, which gave significant returns — especially during the initial eight-nine months before profit booking set in at higher levels.
Volumes shot up on the exchanges and high liquidity was observed on counters that were not very liquid so far. Assisted by strong fundamental factors, we saw commodities like pepper, jeera, chana, kapas, cocud giving 50 per cent to 100 per cent returns in the first nine months itself before corrections occurred. Turmeric prices nearly doubled from their lows……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

Global liquidity will still be huge in 2013 and start finding its way into risk assets — which are mainly commodities and emerging markets. Since the commodities cycle seems to be over, a lot will flow into emerging markets. Further, since Russia and Brazil are commodity-driven, money will flow into India and China.
First, the political uncertainty on leadership change is over. Second, China was going through a de-stocking (of inventory) cycle which is almost over. Now restocking will start and this will push Chinese growth. And, third, there is a dispensation in place which will push infrastructure spend, and India will automatically benefit……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

Due to better governance practices and a commodity boom, Brazil’s economy has enjoyed incredible growth over the past 20 years. Brazil is now the largest economy in Latin America and the sixth or seventh largest economy depending upon the metric used.
On the other hand, while Brazil’s GDP per capita has improved, it still ranks at a relatively low 64th in the world - meaning that it is a large economy, but not an especially wealthy one yet (at least not uniformly so). While Brazil has made a concerted effort to build up its manufacturing sector (and reduce the risk of being trapped as a commodity-driven economy), minerals, energy and agriculture are still very significant to the Brazilian economy, as well as the larger global economy……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

Expanding domestic consumption will drive China’s economic development next year, according to a statement issued at a key annual leadership meeting. With export growth falling in November to 2.9 per cent year-on-year, down from 11.6 per cent in October, China’s new leaders are pinning their hopes for the world’s second-largest economy on fostering demand at home.
Sunday’s statement was issued at the two-day Central Economic Work Conference in Beijing. But unlike after previous meetings, state media did not immediately report China’s much-anticipated target for gross domestic product……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

David Coolidge may still be the king of U.S. natural gas hedge fund managers but his $2 billion Velite Capital has made less than half of last year’s money while one of his biggest rivals is headed for a loss in an unusually tricky year for traders.
Andy Rowe, former trader at Citigroup’s Smith Barney, also has a much smaller profit to show for this year than in 2011 at SandRidge Capital, another gas-focused fund in Houston……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

While global oil prices continue to be exposed to sudden sharp moves, primarily to the upside, caused by supply disruptions, the recent changes especially in new production methods should leave the market in better and less volatile place than in previous years.
Brent Crude Oil has traded in the $90-125 range in the past couple of years and will continue to do so in 2013 and 2014, according to Ole S Hansen, Head of Commodity Strategy at Saxo Bank……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

Iran’s oil revenues have been cut in half this year compared with last year, a newspaper quoted Iran’s economic minister as saying, an admission of how deeply Western sanctions are cutting Tehran’s chief source of funds.
U.S. and European Union sanctions are designed to slash oil revenues to starve Tehran of funds that might be channeled into expensive nuclear weapons programs. Iran denies it is seeking nuclear weapons, saying its atomic program is solely for peaceful purposes……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

The Organization of Oil Exporting Countries (OPEC) will likely consider supply cuts next year to prevent prices from falling and to protect Brent crude at $90-110/bbl, especially that the market remains well balanced with sufficient supplies ready to counter any short-term disruptions or heightened geopolitical risks, the National Commercial Bank said in its December “Saudi Economic Review”.
Saudi Arabia has been unilaterally decreasing its supply in recent months, curbing output to a 13-month low of 9.67 mb/d in November, the report said……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

In a few days’ time, we will be saying “that was the year that was” which could mean good, bad or in between, depending on one’s perspective.
As for oil producers, they could very well cautiously celebrate the end of a tumultuous year where the price of the Opec (Organisation of Petroleum Exporting Countries) basket of crude oils rose from about $107 (Dh392.9) a barrel at the beginning of the year to approximately $123 a barrel as an average for March before falling sharply to about $94 for the month of June……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

The energy market used to hang on every word from OPEC. A reduction or increase in production could send prices rising or falling in an instant. But, earlier this week, the oil-producing group announced that it would maintain production where it is, and almost no one cared. There weren’t headlines on the evening news or endless analysis on cable television. It was a story that was over almost before it happened.
This begs the question: Is OPEC still relevant in the oil market? It’s not what it used to be: To say that OPEC doesn’t matter would be silly. In fact, OPEC’s production has grown faster than world production over the past 20 years……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

“We expect large-scale policy easing by the Fed and the ECB should push gold prices higher,” the analysts wrote, forecasting gold prices at $2,000 an ounce for 2013 and $2,400 for the end of 2014. “A stronger Chinese economy will likely lend support to supply constrained metals next year, and we expect copper prices to average $7,750 a ton in the fourth quarter of 2013.”
Our analysis shows that investors will have to buy significant amounts of gold to push prices above $2,000/oz this year. However, with emerging markets getting richer, their budget allocation to non-essential items such as gold will likely increase in the long-run. (Press Release)

Posted on 17 December 2012 by VRS |  Email |Print

Smith & Williamson Investment Management £73m Global Gold fund manager Ani Markova says she is bullish on gold bullion prices. She says: “Gold bullion has performed really well this year, leading to another year of very mixed signals in the market, we will continue to be optimistic about the price of the bullion.”
She says India, an important player in the gold bullion market, has seen an increase in tax on bullion imports which has led to a drop in imports……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

As some analysts feared, Wednesday’s launch of a new wave of Federal Reserve money printing (more politely known as “QE4″, or the central bank’s fourth round of “quantitative easing”) failed to spur a rally in precious metals markets as prices for both gold and silver ended the week below where they began.
Since, in the past, new stimulus measures by the Fed have been a major factor in pushing metal prices higher, this has prompted some concern amongst investors……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

The last time I wrote regarding silver, back in November, silver futures were in the 32.25 region. I noted that “I am looking at a potential move up to the 34.40 region” before we see further downside movement towards the 29 region. On the 29th of November, silver hit 34.49 (missed by 9 cents), and then began the downside consolidation I expected.
While my expectation was for silver to drop to the 29 region, I am not sure, at this time, if it will get that low. But, if we do begin to move down, there is even an outside chance we may drop as low as the 22/24 region before the parabolic rise takes us over $60……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

In spite of rapid development in the Chinese silver market over the past decade, both silver demand and supply are expected to achieve further growth, says a Thomson Reuters GFMS study released Thursday by the Silver Institute.
Meanwhile, investment demand from Chinese silver investors has jumped in recent years, making China the world’s largest market for both physical investment and paper trading of silver future and other similar contracts, says the study……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

Although you wouldn’t know it from listening to all the bearish commentary out there, silver is actually enjoying a strong young upleg. Its technicals are very bullish, contradicting the prevailing pessimism gripping traders. This glaring disconnect between price action and sentiment won’t last forever. It has hammered silver stocks to depressed levels that offer a smorgasbord of opportunity for brave contrarians.
As a hyper-volatile speculators’ playground, silver has always been exceptionally sensitive to prevailing sentiment. While all prices are affected by their traders’ collective greed and fear, silver’s emotional roller coaster has higher peaks and deeper valleys. Silver can skyrocket on greed like no other commodity, but the other end of the sentiment pendulum’s arc is equally extreme. Fear can depress silver for a long time……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

Although you wouldn’t know it from listening to all the bearish commentary out there, silver is actually enjoying a strong young upleg. Its technicals are very bullish, contradicting the prevailing pessimism gripping traders.
This glaring disconnect between price action and sentiment won’t last forever. It has hammered silver stocks to depressed levels that offer a smorgasbord of opportunity for brave contrarians……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

Rising gold prices and continuing investor demand has pushed the size of assets held through gold ETFs ( Exchange Traded Funds) to an all-time high of Rs 11,918 crore in the country.
The surge in asset size of gold funds continues even as the government has taken steps to direct the flow of household savings into equity, mutual funds and other financial instruments, rather than to idle assets like gold……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

It was a pretty hectic year for agricultural commodities as the summer months wreaked havoc on prices. After the United States endured the hottest 12-month span on record and an abysmal drought, a number of these staple commodities experienced big movements in price and trading volume alike.
But now that 2012 is nearing its close, we look back at these funds throughout the course of the year to see which funds outperformed the rest……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

There’s always a difference in the markets between “de facto” (”in practice”) and “de jure” (”in law”), and recent announcements regarding international reserve currencies would seem to reflect that difference. Word came out in mid-November that the IMF is likely to reclassify the Australian dollar and Canadian dollar as “official” reserve currencies. While this is indeed a significant development, it seems more a reflection of reality than a major prospective change.
Foreign exchange reserves are held by most governments as a means of facilitating trade and better managing (and maintaining) credit……………………………………..Full Article: Source

Posted on 17 December 2012 by VRS |  Email |Print

One of the most important and oft-discussed topics in asset management is benchmarking. Even though the daily turnover in global currency markets has reached over $4.7 trillion, (according to Bank for International Settlements) investors need to be aware of some key issues when it comes to benchmarking currency portfolios.
Growth in Global Currency Markets: In terms of daily turnover, global currency markets are almost 20 times the size of global equity markets and about 36 times the size of global bond markets. From 2007 to 2010, just the daily spot transactions had a 48% increase, from $1 trillion to $1.49 trillion……………………………………..Full Article: Source

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