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Commodities Briefing 28.Jan 2013

Posted on 28 January 2013 by VRS |  Email |Print

Hedge funds increased bullish commodity bets by the most in six months as accelerating growth from China to the U.S. boosted prices for a seventh week.
Speculators raised net-long positions across 18 U.S. futures and options by 11 percent to 758,048 contracts in the week ended Jan. 22, the biggest gain since July 3, U.S. Commodity Futures Trading Commission data show. Bullish crude- oil bets reached a four-month high, while those for soybeans climbed by the most since March. Investors are the most bullish on cotton since February 2011………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

The slowdown in the world’s largest economies last year, particularly in China, led to warnings that the end of the commodities super-cycle was near, as prices of key resources plummeted. However, a flood of government stimulus unveiled in recent months has reversed that trend, prompting one expert to say the commodities bull run that began in 2002 is here to stay.
“(The super cycle) is still intact. The combination of the economic recovery, especially with China powering ahead, and continuing support from central banks…It’s going to be a good year for commodities,” Eugen Weinberg, global head of commodities research at Commerzbank told CNBC, pointing to the Bank of Japan’s commitment to open-ended easing this week………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Despite recent hiccups in gold prices, if you’re investing in commodities, it is still the best, safest bet, according to Morgan Stanley’s commodities team led by Hussein Allidina.
Silver offers a little more risk and reward than gold; Allidina expects it to outperform gold in 2013. he report also favors soybeans and corn as demand for them is accelerating faster than supply………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Morgan Stanley, in its newly released Commodity Manual, just delivered good news for anyone investing in commodities in 2013. The report gives a bullish outlook in 2013 and 2014 for eight of 14 commodities it evaluated. Estimated two-year gains range from 3.05% to 17.3%.
Money Morning Global Resources Specialist Peter Krauth agrees most commodities will perform well. In fact, he projects even higher growth than Morgan Stanley’s outlook. “With central banks on their virtually uninterrupted fiat money-printing spree bound to continue for the next few years, hard assets remain a great place to be,” Krauth says. “That being said, some commodities will undoubtedly do better than others.”……………………………………….Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

OPEC’s influence on oil prices is very visible in the short run, but it is less certain that its pricing power can be maintained in the long term, according to a thoughtful review published by Bassam Fattouh and Lavan Mahadeva of the Oxford Institute for Energy Studies.
Fattouh and Mahadeva examine how OPEC’s strategy and power over oil prices have varied over time depending on market conditions and the interaction among OPEC members……………………………………….Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Oil traded near the highest level in four months in New York, after posting the longest run of weekly gains since April 2009, amid speculation a global economic recovery will boost fuel demand.
West Texas Intermediate crude was little changed after climbing for a seventh week. Chinese industrial companies’ profits rose for a fourth month in December, the National Bureau of Statistics in Beijing said……………………………………….Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Diamond prices have probably finished their correction and a return to a bull market is close at hand, according to Japanese broker Nomura. “The diamond market has progressed through a tremendous dislocation since the global financial crisis in 2008. Prices fell sharply, followed by a rebound that pushed rough diamond prices through record levels and beyond equilibrium levels.
The market corrected in 2012, but we see a reasonably strong holiday period as likely signalling the end of the downturn,” Nomura explains………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Gold prices are likely to rule range-bound, looking for direction from the Bank of Japan that is set to decide on ways to boost the Japanese economy. Though India has raised the import duty on gold by two percentage points, it is unlikely to have any effect on demand. Already, the global market has ignored the impact of the duty rise, made to overcome the current account deficit.
Despite the duty hike, prices in the domestic bullion market were unchanged on Monday evening at Rs 30,415 for 10 gm of gold for jewellery (99.5% purity). Pure gold, too, was unchanged at Rs 30,555………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

China has finally overtaken India as the world’s largest end-market for Buying Gold according to analysis of the latest data, and is now “clearly” the world No.1. Despite India importing more gold than China did in 2012, “China is [also] the world’s biggest miner of gold,” writes Nic Brown at French investment bank and bullion dealer Natixis’s office in London.
India has no domestic gold mining output. Its private demand for gold – the world’s heaviest on official data since the early 1990s, and most likely the No.1 for centuries before that – has been blamed for the country’s huge trade deficits of 2011 and 2012………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

According to UBS, the prospect of a stronger US economy is currently gold’s biggest risk. Writing in its latest Precious Metals Daily note, the bank said that “with US economic data holding up of late, if not beating consensus, the prospect of a stronger US economy is certainly gold’s biggest risk right now – not only from a perspective of dollar strength, but more importantly because of the impact this would have on monetary policy expectations.”
Of course, the likelihood that the US economy is out of the woods, or indeed, even on the right path through the thicket is by no means a certain one, a point UBS makes clearly but it says, “the market is currently determined to stay optimistic, and as long as US data holds up, gold will be prone to downward pressure.”……………………………………….Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Silver’s drawing more and more attention as an investment these days, especially from China. That appetite has made silver bulls giddy and lifted prices closer to a record.“Investment demand, not industrial demand, is what drives silver prices right now,” said Mark Thomas, author of email-alert service provider SilverPriceAdvisor.com. “World investment demand is starting to really pick up.”
Chinese citizens are “now buying silver because gold topped out in 2011 and silver is much more affordable,” said Thomas, a silver bull who has recently tripled his exposure to the white metal………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

A basic issue with silver investing for many people is that the actual metal is scarce, valuable and increasingly vulnerable to explicit and implicit confiscation. Yet silver is not only an investment vehicle. It also acts as an alternative savings vehicle to saving wealth in fiat currencies.
Silver remains both literal and symbolic of the principles here. Furthermore, the physical possession of silver requires a different kind of investor strength and resolve, and it involves directly confronting market risk, storage risk and confiscation risk………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Deutsche Bank expects that, despite high copper stocks, net copper imports into China will likely remain elevated in the first half of 2013, with some re-stocking taking place at the consumer level.
“This may result in copper prices approaching USD9,000/t in Q2 in our view.” Deutsche Bank said in a report. Meanwhile, in 2013 Deutsche Bank economists expect Chinese growth to accelerate to the end of the year, averaging 8.2% after 7.7% in 2012………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Nickel and aluminium markets have been in surplus for some time on account of production indiscipline, but the forecasted surplus for 2013 may be wiped away on account of potential write downs Rio Tinto and BHP Billiton, according to Barclays Research.
Both Rio Tinto and BHP Billiton have been impacted by high costs and lower prices. In the event of a write down on nickel assets at BHP Billiton, it will wipe out 43 kt of surplus, Barclays said………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

Sam Walsh’s first message to his employees could have been directed at the mining sector at large. The new chief executive of Rio Tinto referred to a need for “greater accountability and responsibility”, adding “we must treat the company’s money like it is our own and act like owners of our businesses not managers”.
Mr Walsh – whose elevation to CEO followed the surprise departure of Tom Albanese ten days ago – had good cause to press his staff for a change of thinking………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

George Soros, one of the most outspoken critics of Germany’s proposed austerity policies to solve the European debt crisis, said the euro is here to stay and will gain as other nations seek to devalue their currencies.
Soros, who made $1 billion shorting the British pound in 1992, said that while the causes of the euro crisis haven’t been solved, the acute phase of the turmoil is over………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

In many ways, things are better than in 2012. Though unemployment remains high in some countries and the global recovery looks fragile, some big political uncertainties (like the U.S. election) are off the table, and the dysfunctional U.S. Congress has stepped back twice from the fiscal brink.
But most important, the euro zone doesn’t look like it’s going to implode. In fact, the Economist reported, “the invalids in Europe’s medical ward are making a remarkable recovery.”……………………………………….Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

While child labour remains a cause for concern in coffee and cocoa production in the developing world, global buyers of these commodities are also worried about the ageing workforce. Many smallholder farmers are growing older and their offspring are abandoning rural areas, and the question is how to make commodities farming appealing to younger people.
Most statistics point to a demographic shift in rural areas. In one study for Cadbury, on cocoa farmers in the Ashanti, western, south and eastern regions of Ghana, the average age of the farmers was 51………………………………………..Full Article: Source

Posted on 28 January 2013 by VRS |  Email |Print

The carbon market is the lynchpin of EU climate policy. And from this article in Speigle Online, it appears the market is down for the count: For those involved in European Union climate policy, the German regional election in Lower Saxony on Sunday was a nail-biter.
The hope for many was that Germany’s pro-business Free Democratic Party (FDP) would suffer defeat and leader Philipp Rösler, who has been under pressure within his party for weeks now, would be forced to step down as economics minister. But that didn’t happen. Instead, Rösler ended up in a stronger position than before, and the flagship project of Europe’s climate policy settled deeper into a lifeless coma………………………………………..Full Article: Source

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