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Commodities Briefing 15.Jan 2013

Posted on 15 January 2013 by VRS |  Email |Print

Drought, recession and political upheaval rocked commodity markets and confounded price forecasters last year, but at least some got it right, even if guess-work sometimes overtook mathematical calculations.
At the start of 2012, no one could have foreseen the drought that decimated a historically high planted area for U.S. corn, or deadly violence in the Middle East and in South Africa’s mining sector, or the extent of China’s economic slowdown………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Goldman Sachs Group Inc. (GS) forecast commodities will return 5 percent this year as it lowered its outlook to “neutral,” citing recent gains in prices and risks in the U.S. The gain in the Standard & Poor’s GSCI Enhanced Commodity Index will include 7 percent for precious metals, 6.5 percent for energy and 5 percent for livestock, the bank said.
The U.S. reached its $16.4 trillion borrowing limit on Dec. 31, and policy makers are still struggling to resolve their differences over the budget after agreeing to avert more than $600 billion in automatic tax increases and spending cuts that were due to start this year………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

We are not even halfway through January and the mining sector has already produced a number of big stories. Anglo American has a new CEO at the expense of AngloGold Ashanti; unrest in South Africa’s mining sector continues with the stoppages at Harmony Gold’s Kusasalethu mine; debates around the minting of a $1 trillion platinum coin have raised heart rates and, in the US a 20 uranium mining ban is being challenged.
Amid all of these stories as well as hopes that there is a nascent recovery on the cards among junior stocks, Barclays has put out a list of five things it has already learnt this year that are likely to continue to affect commodity markets:……………………………………….Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

It is pretty obvious that there is a lot of liquidity in the system, with the Fed`s loose monetary policy, extremely low interest rates, and traders in all out “Risk On” mode with regard to their two favorite funding currency crosses in the EUR/USD and USD/JPY.
Traders are banging every asset class except for the Metals into the close, pushing asset classes up overnight with the futures contracts on a regular basis, and it is definitely a “Risk On” environment in the markets………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

OPEC productionwill drop by half million barrels daily, demand will increase to 800,000. USA will be largest oil, gas producing country in 2015, Saudi will continue to dominate market. A report issued by KFH-Research expected the average price for west Texas crude oil to reach USD 88 per barrel, while Brent average price will reach USD 100 per barrel in 2013, due to growing demand from transportation sectors in developing countries.
The report expected the global demand to continue to rise, even slightly by 0.8 million barrels per day. The report noted that most of the increase in demand will come from China by 3.6% on yearly basis, Middle East 2.3%, and Latin America 2.3%. 2012 shows that the demand for oil will remain strong; especially in emerging markets like China, India, Russia, Brazil, and South Africa. the supply coming from OPEC countries will drop by 500,000 barrels per day in 2013, after increasing by 1.2 million barrels per day in 2012. (Press Release)

Posted on 15 January 2013 by VRS |  Email |Print

Oil production from the Organization of the Petroleum Exporting Countries fell by 430,000 barrels per day in December from a month earlier to 30.65 million barrels per day, according to a Platts survey of OPEC and oil industry officials and analysts released Monday.
The decline takes the cartel closer to its 30 million barrel per day output target, Platts said. “Global supply has been running above demand for many months, so the Saudis appear to have decided to simply take away a good chunk of that surplus all in one shot,” said John Kingston, Platts global director of news……………………………………….Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

The Executive Director of the International Energy Agency (IEA) Maria Van der Hoeven said Monday she doesn’t see a further decline in global crude production in 2013.
Saudi Arabia cut its oil production by close to 5 percent to 9.025 million barrels a day in December in response to lower demand chiefly from Asian customers, and comes amid expectations for lower demand for crude oil from the Organization of the Petroleum Exporting Countries this year. Asked by Dow Jones Newswires in an interview if the market is likely to see further production cuts this year, Van der Hoeven said: “I don’t think so.”……………………………………….Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

In recent weeks the prices of natural gas has changed direction and declined. The current price is still higher than the price of natural gas during the same time last year. Will natural gas continue to fall and perhaps even reach a lower rate than in 2012?
How will another year with historically low natural gas prices affect leading oil and gas companies such as Chesapeake Energy and Chevron? Let’s examine these questions in further detail. ……………………………………….Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Investment in clean energy projects dipped 11 per cent last year, according to new figures from Bloomberg New Energy Finance (BNEF), which confirmed the $268.7bn invested still made 2012 the second most successful year on record for the global clean energy sector.
The analyst firm also revealed the rapid expansion of China’s clean energy market continued last year, with investment rising 20 per cent to $67.7bn, allowing China to re-take the top spot from the US………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Danske Bank A/S and Credit Suisse Group AG, the most-accurate gold forecasters, say prices will probably peak this year while their nearest rival, UniCredit SpA, sees no end in sight to the 12-year bull market.
Gold will average $1,720 an ounce this year and $1,600 in 2014, said Christin Tuxen of Danske Bank in Copenhagen, who came closest to predicting moves in the past eight quarters, according to data compiled by Bloomberg. Tom Kendall at Credit Suisse in London expects $1,740 and $1,720 and Jochen Hitzfeld of UniCredit in Munich predicts $1,700 and $1,800. Bullion rose more than sixfold since the bull market began in 2001………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

I view investments in gold not only as a potential inflation hedge (recognizing that shorter term inflation forecasts remain muted presently) but also as an equity market volatility hedge.
The latter in a similar fashion to the way that investors traditionally have gravitated towards fixed-income investments when equity markets are volatile, or depressed, these same investors now seem to be increasingly looking to precious metals (gold and silver included) to help not only from a diversification standpoint but also to assist with total return potential given the record low interest rate environment that fixed income investments find themselves within currently in the U.S…………………………………………Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

There are several ways to invest in gold - bullion funds, leveraged funds, gold mining company shares, and others. The question is: Which form of gold investment provides the best risk mitigation if there is a war or major crisis?
The risk of global instability is real. In my Instablog, I identified the greatest risks and reasons for a crisis in the Middle East or Far East, as well as a few assumptions and disclaimers. Contrary to the World is Our Classroom saying: “I’ve learned that most of the things that I worry about never happen,” worrying about portfolio-impacting events can lead to loss-mitigating results………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Silver prices are expected to average $31.16 per ounce this year and some softness is expected as fear trade evaporates and speculators look to reduce their positions commensurately, said Sharps Pixley in a commodity research note.
According to the firm, an improved economy should encourage silver’s industrial demand, but “there is a danger that sharp rises will be seized upon by producers as an opportunity to sell forward, effectively capping the rallies. With primary mine production continuing to rise to new record highs, the onus is increasingly on the silver bulls to prove the case.”……………………………………….Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Platinum prices hit a three-month high on Monday as speculation for further supply outages in major producer South Africa sparked buying, pushing the metal back towards parity with gold.
Traders are awaiting the outcome of a review of mining operations at number one platinum miner Anglo American Platinum by its parent company Anglo American. The company is widely expected to announce at least some shaft closures later this week………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Rallying platinum prices are on the brink of hitting parity with gold, as concerns over supply outages in South Africa reignite, and stabilizing economic conditions in China and the U.S. boost the appeal of industrial metals over safe havens.
Even though platinum is still vulnerable to hiccups in the tentative global economic recovery, the white metal’s discount to bullion has shrunk to its tightest in nine months, a signal commonly associated with cyclical upswings………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Correlation is a useful measure – it helps us make predictions about a variety of events. But it’s also a bit tricky – while there are relationships that seem stable (such as the fact that rich people tend to spend more on luxury goods than the less wealthy), there are some that do experience some volatility.
These require special caution, as relying blindly on what was seen in the past without checking whether it is still true can lead to disaster………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

The Baltic Dry Index gained notoriety before and infamy during the global financial crisis. Few investors realize the Baltic Dry Index has existed, in some form, for nearly 200 years. After the index garnered almost everyday mentions in the mainstream financial press during the crisis, it is fair to say at least few investors know it is a gauge of the costs of shipping various raw materials around the world.
The index measures daily charter rates for pricing on Handysize, Supramax, Panamax, and Capesize dry bulk carriers that haul an array of commodities such as coal and iron ore. Said another way, the Baltic Dry Index itself is not a tradeable security, but it can be a good gauge of risk appetite………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Soft commodities and related agriculture exchange traded funds continued their rally Monday on lower U.S. inventories, with corn supply at its lowest since 1995.
U.S. corn supplies are diminishing at their fastest in 17 years and the lower prices have fueled demand from livestock producers beyond government projections, reports Jeff Wilson for Bloomberg………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

The New Zealand and Australian dollars gained versus their U.S. counterpart as commodities rose the most in more than a week. New Zealand’s currency, nicknamed the kiwi, advanced versus all 16 of its most-traded peers after the nation’s statistics agency said the value of retail transactions on electronic cards increased 0.3 percent in December, the third-straight monthly advance.
The Aussie dollar reached the highest level in more than four years against the yen………………………………………..Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Emerging-market currencies look set to be 2013’s best performers, according to J.P. Morgan Private Bank. Sara Yates, the bank’s global currency strategist, has forecast that investors’ rising risk appetite will drive them towards such foreign-exchange markets, which she also said she expected to be supported by economic fundamentals.
‘2013 promises to be a year of loose monetary policy and less systemic risk,’ argued Yates. ‘As market confidence grows, we expect investors to feel more comfortable in taking on a larger amount of risk in their search for yield. In other words, we look for risk-on currencies to outperform.’……………………………………….Full Article: Source

Posted on 15 January 2013 by VRS |  Email |Print

Kazakhstan and Croatia have become the latest countries to establish carbon trading schemes. Oil, gas and mineral rich Kazakhstan now requires any organisation emitting more than 20,000 tonnes of CO2 to take part in a cap and trade system.
It launched on January 1 this year with 178 oil and gas, mining and other big industrial emitters taking part. “Kazakhstan takes an unprecedented effort. In CIS we are the first country which steps forward to establish a national emissions trading system. This is a kind of innovation,” said Nurlan Kapparov, Kazakhstan’s Minister of Environmental Protection ahead of the launch………………………………………..Full Article: Source

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