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Commodities Briefing 03.Jan 2013

Posted on 03 January 2013 by VRS |  Email |Print

With the twin U.S. fiscal cliff and euro debt crisis worries out of the way, commodities get another boost as investors are now freer to focus on growth stories in economies such as China. A weaker U.S. dollar, stronger growth in China and the rest of Asia (yes, maybe even Japan), temporary relief from macro worries over the U.S. fiscal cliff and the euro debt crisis. . . could this be time for a commodity rally?
Sure looked that way Wednesday with pretty much everything — with the exception of natural gas — moving up. The Brent crude benchmark price climbed 1.3%. Copper was up 2.2%. Gold rose 0.66%………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Lead drove base metals high on the benchmark London Metal Exchange, following American lawmakers agreeing on a long-awaited deal to avoid a fiscal crisis. The US leaders approved a plan to prevent huge tax increases and delay spending cuts that together might have pushed the world’s largest economy off the “fiscal cliff” and into a likely recession.
While the lead price hit a 15-month high to settle at $2,385 a tonne, copper followed and achieved a two-week high of $8,085 a tonne today. Other base metals, including aluminium, zinc and tin, moved the same way………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Rejoice! After months of contentious negotiations, we finally have a deal on the “fiscal cliff.” Not a comprehensive deal, but a cliff-averting deal nonetheless. Is this a good deal or a bad deal? That’s not the question I want to answer. Instead, I want to analyze the legislation and figure out: What’s the impact on the futures markets?
Let’s start with gold. You might have expected gold to sell off on a deal. But instead, the opposite happened, and gold rallied. Why? Well, while the deal will allow some of the tax increases to go into place, it did little to cut spending, and did not mention the debt ceiling………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Financial markets are flush with the vast sums of cash unleashed by the United States’ stimulus measures. Emerging economies have big appetites for infrastructure development such as roads, rail and ports. Put these two elements together and you have quite a bright outlook for commodity prices, analysts said.
Once the US negotiations over a budget deal are settled, and assuming a sensible deal is done to avoid the dreaded “fiscal cliff”, Credit Suisse said, the outlook for many industrial commodity prices is likely to be driven by the pace of global growth………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

The unofficial start to earnings season is only days away and there are a number of players in commodities that will soon be announcing quarterly results. There will be plenty of options for traders looking to make some money but, in some cases, more attractive buying opportunities may arise subsequent to the releases. Here are four commodity plays ahead of earnings.
On Friday, potash producer Mosaic will check in with the results of its fiscal Q2. Analysts are predicting that the company will post revenue of $2.54 billion versus $3 billion in the prior year. The stock finished 2012 strong with a 2.6% gain on Monday………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

In OPEC’s recent World Oil Outlook, published in November 2012, over the period 2010-2035 primary energy demand in the reference case increases by 54 per cent. In terms of oil, demand increases by over 20 mbd for the period 2010-2035, reaching 107.3 mbd by 2035. The region of developing Asia is expected to contribute 87 per cent of this increase.
Allow me to highlight a few other numbers from the World Oil Outlook. In terms of the Middle East and the Asia Pacific regions, crude oil exports from the former to the latter are expected to increase by six mbd between 2011 and 2035………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Billionaire US investor Warren Buffett is taking a $2.5bn (£1.5bn) bet on solar energy, acquiring what is set to become the largest photovoltaic development in the world. MidAmerican Energy Holdings, a subsidiary of Mr Buffett’s Berkshire Hathaway investment company, has struck a deal with SunPower to acquire and build two projects in California’s Antelope Valley.
The deal, which will see MidAmerican pay between $2bn to $2.5bn, marks the third time in little over a year that Mr Buffett has ploughed cash into solar energy………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

After last year’s warm winter, here are 3 ways to take advantage of a chillier season. This past year was dominated by inclement weather that left United States Natural Gas Fund reeling; natural gas futures have been all across the board.
Despite making an impressive 70% run during the summer, this commodity still managed to end the year with losses topping 20%. With this past year set to be one of the warmest (if not the warmest) in U.S. history, it should come as no surprise to see the commodity struggle, as the winter months are key for demand and consumption………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Gold rose, capping the longest annual gain since at least 1920, on renewed concern that central banks from Europe to China will take steps to spur economic growth and as U.S. leaders near a budget deal.
Gold futures for February delivery gained 1.2 percent to settle at $1,675.80 at 1:41 p.m. on the Comex in New York, while prices for immediate delivery jumped as much as 1.5 percent………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Analysts are split on the outlook for gold price this year. Based on the World Gold Council’s data, overall gold demand in the first three quarters in 2012 fell about 8% year-on-year, although ETF demand and official sector purchases grew. A turn in investment demand for gold will not bode well for gold prices.
Chartists pointed out that buyers and sellers of gold have been struggling to gain control of gold prices in the past five quarters, and expected more range trading in 2013. However, most people agree that the central bank demand and the continued money printing by the major central banks will put a floor to the gold prices………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

The government is considering to further raise taxes on gold imports in a bid to tame the runaway current account deficit (CAD). CAD stood at an all-time high of $22.4 billion for the July-September quarter (or 5.4% of the GDP, up from 4.2% in the year-ago period). High CAD could necessitate higher government borrowing, weakening the rupee and stoking inflation and higher interest rates.
“We may be left with no choice but to make it a little more expensive to import gold. The matter is under the government’s consideration,” said finance minister P Chidambaram………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

With 2012 now behind us it’s time to start looking for some new long-term investments that have big potential gains in the New Year. Copper is one metal that has caught my eye.
The long-term monthly chart of the copper ETF JJC shows a potential cup and handle pattern accompanied with bullish volume characteristics. Last year copper traded sideways in a narrowing range. This type of price action tends to bore traders and investors forcing them to look elsewhere for new trades. The saying is “If the market doesn’t shake you out, it will wait you out.”……………………………………….Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

The palladium exchange traded fund continues to see strong interest as investors try to capitalize on the largest supply deficit in over a decade. ETFS Physical Palladium Shares is up more than 10% the past three months to within shouting distance of its 52-week high from early 2012.
Last month, Johnson Matthey calculated that palladium will hit its worst deficit in 11 years. “Funds have been after palladium ever since that JM report came out,” Frank McGhee, head precious metals at Integrated Broking Services in Chicago, said in a Reuters article………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Commodity currencies enjoyed gains against the dollar and yen on Wednesday as hopes rose that a solution to the US budget and tax crisis had been found.
The dollar and yen traded lower against most other currencies as risk appetite was boosted by the deal in US Congress to avert the fiscal cliff………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

In an affirmation of what market participants believed would be the defining trend of the year, the first trading day of 2013 opened with the theme of divergence within emerging market currencies.
The Russian ruble and the Mexican peso were gainers on the session after Congress signed a deal to avert a slew of spending cuts and tax increases known as the fiscal cliff. But the gains weren’t felt across the board, with the South African rand among the decliners………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

The worst U.S. drought since the 1930s Dust Bowl is damaging wheat crops across the world’s biggest supplier, at a time when hedge funds are the most bearish on prices in seven months. About 62 percent of the country is mired in a dry spell that the government says will last at least until March in states growing the most winter wheat.
With dormant crops already in the worst condition since records began in 1985 and global inventories headed for a third annual drop, Chicago futures may rise as much as 26 percent to $9.50 a bushel this year, the median of 32 analyst estimates compiled by Bloomberg shows………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

The big greenhouse-gas debate coming up in 2013 over Environmental Protection Agency plans to restrict emissions from coal-fired power plants. Some market-oriented environmentalists say the most logical solution is to let the plants emit as much CO2 as they like, so long as they pay extra for doing so or find offsets for the emissions.
And that’s where the legal angle comes in: Washington’s lawyers disagree whether the EPA could engineer such a system on its own………………………………………..Full Article: Source

Posted on 03 January 2013 by VRS |  Email |Print

Governments need to re-energize their deployment of carbon capture and storage in 2013, the International Energy Agency started the new year by saying.
“For the IEA, carbon capture and storage is not a substitute, but a necessary addition to other low-carbon energy technologies and energy efficiency improvements,” according to Juho Lipponen, head of the agency’s Carbon Capture and Storage Technology Unit. “Fossil-fuel CCS is particularly important in a world that currently shows absolutely no sign of scaling down its fossil fuel consumption.”……………………………………….Full Article: Source

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