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Commodities Briefing 19.Dec 2012

Posted on 19 December 2012 by VRS |  Email |Print

Investors almost doubled purchases of commodities this year, at a time when Goldman Sachs Group Inc. and Morgan Stanley are forecasting higher prices and Citigroup Inc. says the best returns are over. Money invested in commodity funds increased by $21.6 billion this year, up 92 percent from the gain in 2011, according to Cambridge, Massachusetts-based EPFR Global, which tracks the flows.
Hedge funds’ bets on a rally are 51 percent bigger than a year ago, U.S. government data show. Precious metals will lead returns in 2013, rising as much as 25 percent, as grains advance 18 percent and industrial metals 16 percent, according to a Bloomberg survey of 131 traders, investors and analysts across 15 raw materials………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Chinese demand makes it hard to gauge the outlook for bulk metals such as copper and iron ore. But grains look different. Global stocks of agricultural commodities are low and the drought that hit harvests in the fall of 2012 has continued, jeopardizing the new wheat crop. With low rainfall also hitting river-borne U.S. trade routes, grain prices may well stay elevated.
Prices of corn and soybeans have retreated somewhat from the record highs they reached when the severity of last summer’s dry spell became clear. But the lull may be deceptive. Several factors point to high prices next year………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Wall Street rarely agrees on anything, so it’s notable that virtually all of the majormarket strategists are in agreement on one theme: Get ready for abear market inbonds . Seeking safety in a troubled globaleconomy , investors have poured tens of billions of dollars intobond funds during the past five years, pushing bond yields down to all-time lows.
But as the global economy starts to build a head of steam in 2013 and beyond, bond yields are likely to rebound while bond prices are likely to fall, leading to a major investor exodus………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

The recent period of relative calm in commodities markets looks unlikely to persist, in the view of Barclays. As in previous years when commodities have started strongly, investors are underweight and prices have fallen during the final quarter.
“However, a likely resolution of US fiscal cliff issues, a recovering Chinese economy and the potential for event risk to materialise, in the form of geopolitics and weather, all suggests a much more positive price environment heading in to 2013,” according to Barclay’s commodity specialist Kevin Norrish………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

As many individual investors have taken a cue from professional and institutional money managers, alternative investments have gone mainstream – and commodities lead the trend.
Interest in this asset class has exploded as individual retail investors have discovered commodities’ vast benefits, like low correlation to equities and bonds, inflation-fighting capabilities and their ability to profit from some of the world’s fastest-growing emerging markets………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

China will drive demand for food and farm products in the next decade, Rabobank International said, citing a poll it performed of food and agribusiness executives. Sixty-one percent of the 350 executives polled said China will be the country or region to have the largest impact on commodity demand in the next 10 years, followed by India and Africa, the bank said.
Forty percent said China will be the primary driver of world economic growth in the next 50 years. Weather extremes were cited by 68 percent of respondents as the biggest factor affecting North American food and agribusiness in 2013, ahead of consumer demand and government regulations………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

The European Commission announced yesterday that it was putting ¤1.2bn ($1.56bn) into renewable energy demonstration projects but had found no carbon capture ventures to back.
EU Climate Change Commissioner Connie Hedegaard said the funding came in part from the EU’s carbon trading system, so that in effect polluters were paying, while the private sector would provide another ¤2bn investment. “This will help the EU keep its front-runner position on renewables and create jobs here and now, in the EU,” Hedegaard said………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Agency predicts further rise in coal use due to fall in price and failing EU emissions trading scheme, threatening green targets. Coal is likely to rival oil as the world’s biggest source of energy in the next five years, with potentially disastrous consequences for the climate, according to the world’s leading authority on energy economics.
One of the biggest factors behind the rise in coal use has been the massive increase in the use of shale gas in the US………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Coal will nearly overtake oil as the dominant energy source by 2017, and only a drop in world gas prices could curb the use of the dirtier fossil fuel in the absence of high carbon prices, the International Energy Agency said.
China will use more coal than the rest of the world put together, while India will overtake the United States as the world’s second-largest consumer and become the biggest global importer, the IEA forecast in its annual Medium-Term Coal Market Report, released on Tuesday………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Global coal demand will rise 2.6 percent annually in the next six years and challenge oil as the top energy source, according to the International Energy Agency.
Coal consumption will climb to 4.32 billion tons of oil equivalent by 2017, compared with about 4.4 billion for oil, the Paris-based agency said today in its first Medium-Term Coal Market Report. Usage will rise in all regions except the U.S., where cheap natural gas has damped demand, the IEA said………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

OPEC’s spare capacity will rise to 4.1 percent of global oil demand in 2013, analysts of the Global Energy Studies Centre (CGES) believe. According to the CGES analysts’ report, due to the recent reduction in Saudi Arabia’s production, OPEC’s spare output capacity has risen slightly to 3.74 million barrels per day (mbpd).
Although OPEC decided in Vienna recently to maintain its 30-mbpd ceiling, making no attempt to address its excess production, which has persisted throughout 2012, many observers predict that the Saudis and their Gulf allies will need to trim output in 2013………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

India is likely to be the second largest consumer of coal, surpassing the United States, in the next five years, says a report. “China and India would lead the growth in coal consumption over the next five years…While India will become the largest seaborne coal importer and second-largest consumer, surpassing the United States,” according to a report by International Energy Agency (IEA).
The report further said that coal demand is expected to increase in every region of the world except in the US, where coal is being pushed out by natural gas………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Global oil supplies are plentiful and demand is good, while buyers and sellers are happy with current prices, top exporter Saudi Oil Minister Ali Al-Naimi said Tuesday. “You know my desire is that people leave the market alone,” he told Reuters in an interview in Seoul. “You know why? Because everybody now is happy with where the prices are. Nobody is complaining about high prices or low prices.”
“They are no longer skyrocketing or falling down. So I will really leave the market alone.” The oil minister had identified $100 a barrel as a suitable price earlier in the year. Brent crude is currently trading above $108 per barrel………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Nine years after U.S.-led forces toppled the dictatorship of Saddam Hussein, even specialists in frontier markets are backing off from Iraq. Daily blackouts, congested ports and other infrastructure woes compound investor concerns about violence and corruption, and a broad recovery continues to elude this energy-rich nation of 33 million people.
Iraq generated $7.8 billion a month from oil sales this year and seeks to triple output of crude by 2020. The economy, adjusted for inflation, is set to expand by 14.7 percent in 2013, 12 percent in 2014 and 9.3 percent in 2015, according to an International Monetary Fund forecast………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

Gold fell almost 2 percent on Tuesday to its lowest price since August, hit by heavy technical selling and growing hopes that U.S. legislators are closer to reaching a deal that would avert a fiscal crisis next month.
Bullion posted its biggest one-day drop since Nov. 2. Analysts said that gold is at a turning point held by technical support at its 200-day moving average and a multi-year rising trendline near $1,660 an ounce. “If gold is not able to defend those key supports, one should expect a new wave of technical selling to continue,” said Adam Sarhan, chief executive of Sarhan Capital………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

China has become the world’s biggest silver market, according to an industry report, both as a physical investment and in paper trading of silver futures and other similar products.
The Washington-based Silver Institute said total silver demand in China increased by more than 100 million ounces, or Moz, in the past 10 years, to a record of 170.7 Moz in 2011. China has been liberalizing its silver market since the start of 2000, creating more investment channels for buyers and sellers of silver………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

When they first hit the market, exchange-traded funds (ETFs) were seen as the next big thing for investors who simply wanted to track an index at the lowest cost.
For the most part, they were targeted at the institutional and professional investor market, but their exchange-traded nature makes them accessible to the everyday investor, while their lower charges draw in those who believe active management offers little advantage for the higher price………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

With four different ETFs offering physical storage of gold, investors may feel like they are at Best Buy trying to find the best plasma TV. Fortunately, there are some key differences between the funds that will make the decision easy, as long as you care about these distinctions.
But if all you care about is investing in gold without having to bury it in your backyard or store it in a safe, the decision is even easier: Buy the iShares Gold Trust (IAU) and use the savings to buy more. The four grantor trust ETFs that hold physical gold differ mostly in their expense ratio and vaulting, with little else differentiating them. After all, gold in Mumbai is the same as gold in Carson City, Nevada………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

The government will drop a controversial clause from a banking bill pending in parliament that would have allowed banks to trade in commodity futures, Parliamentary Affairs Minister Kamal Nath said on Tuesday.
Opposition to the clause threatened to stall the passing of the bill, which is aimed at drawing foreign investment into the banking sector and increasing the Reserve Bank of India’s (RBI) regulatory oversight in local banks………………………………………..Full Article: Source

Posted on 19 December 2012 by VRS |  Email |Print

First round of a contest to fund CCS projects has failed to find a winner, after setting aside €275m. The first round of a European commission contest to fund carbon capture and storage (CCS) projects failed to find a winner, the EU’s executive said on Tuesday, deepening concerns that the technology will not be emerging soon to help cut emissions.
CCS developers will be able to resubmit bids for a second round, which environment commissioner Connie Hedegaard said should be concluded within a year. “Within 12 months we will be able to award the second round. We would like to make a very fast second call, as fast as possible,” she said………………………………………..Full Article: Source

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