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Commodities Briefing 31.Jan 2013

Posted on 31 January 2013 by VRS |  Email |Print

Rising commodity costs this year will leave drinks companies .Producers will continue to face commodity price pressures in 2013. Rabobank’s Global Beverage Outlook study warns that companies must ensure “security of supply” and develop an integrated supply chain to guard against price fluctuations. Manufacturers can no longer afford to focus solely on lowest price when buying commodities, the report said.
As Europe wrestles with economic austerity measures and the US deals with a growing debt burden, the global beverage industry will feel the impact of weaker consumer demand from developed markets and slower growth in emerging markets during 2013. Adding to this global economic headwind is price and supply volatility for key beverage related commodities such as sugar, corn and barley. While prices were generally lower in 2012 than the prior year, the outlook for key commodities in 2013 is still a major concern for all beverage companies………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Commodities have decisively broken their lock-step with other assets, which lasted from 2008 to 2012, and now lower volatility and an expected end to central bank money printing could ensure the correlation does not return.
The 30-day correlation between the Thomson Reuters-Jefferies CRB commodities index and the S&P 500 equities index has slid to 0.24 from 0.7 in late November. Many commodities markets have seen lacklustre activity and range-bound prices in January, and many investors are opting for equities, which have been buoyed by recovering global growth………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

The world’s biggest mining and steel companies have wiped about $50 billion off project valuations in the past year and the purge is poised to continue this earnings season as managers reassess expensive takeovers.
Anglo American Plc (AAL), Vale SA (VALE3) and Rio Tinto Group (RIO) led the writedowns as declining metal prices, rising project costs and slowing demand forced reviews. Glencore International Plc (GLEN) may write down some nickel and copper assets acquired through its takeover of Xstrata Plc (XTA), Liberum Capital Ltd. has said. BHP Billiton Ltd. (BHP) may trim aluminum operation valuations, according to Goldman Sachs Group Inc. and Sanford C. Bernstein Ltd………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Commodities were up across the board Wednesday, spurred by a lackluster economic report and signs that the government will continue to keep borrowing cheap. Silver for March delivery jumped 99.3 cents, more than 3 percent, to $32.177 per ounce. Gold for April delivery rose $18.90, more than 1 percent, to $1,681.60 per ounce.
That contrasted with stocks, as all major U.S. indexes ended lower. Investors fretted about a government report showing the U.S. economy unexpectedly shrank in the fourth quarter………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

BP hosted an entertaining table outside the annual conference of the Commodity Markets Council, a US trade group, held in Florida this week. Visitors could sit at laptops and simulate trading WTI oil futures. I made a virtual $409,500 in 10 minutes, a feat that might seem impressive were I not down $100,000 in the first five.
The simple exercise of going long or short crude stood out as an anomaly at a conference where the increasing complexity of trading commodities emerged as a theme. This is posing a challenge both to companies and to regulators seeking to peer more deeply into their trading operations………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Iran’s crude oil exports in December leapt to their highest level since European Union sanctions took effect last July, analysts and shipping sources said, as strong Chinese demand and tanker fleet expansion helped the OPEC member dodge sanctions.
Exports rose to around 1.4 million barrels per day (bpd) in December, according to two industry sources and shipping and customs data compiled by Reuters on a country-by-country basis and corroborated by other sources and consultants………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Nothing like some good manufacturing figures out of China and Germany to give the oil price a kick along.
Yet you have to wonder how any further rises in crude will help the global recovery rather than just reflecting it. But, don’t worry, the supply picture is looking a lot more rosy, which should mean crude prices start going south again — and perhaps helped by some bad economic news as the year progresses………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

The lowest oil volatility in 17 years is pushing down options costs, setting up trades that BNP Paribas SA (BNP) and Commerzbank AG (CBK) say will profit when Mideast supply disruptions send prices swinging again.
BNP in Paris recommends buying contracts that pay should crude advance and financing them by selling bearish puts. New York-based Goldman Sachs Group Inc. (GS) said the drop in oil volatility is “too much too soon.” Commerzbank sees value in bets on Brent climbing toward $130 a barrel………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

According to new U.S. Energy Information Administration data, China burns nearly as much coal as the rest of the world combined. Coal consumption grew in the country for the 12th year in a row in 2011 and accounted for 87 percent of the 374 million ton global increase in coal use in 2011.
China overtook the U.S. as the world’s biggest carbon emitter in 2007, and became the world’s biggest consumer of energy in 2010. David Frum noted that the statistics make greenhouse gas emission restraint goals posited by the Kyoto Protocol look “obsolete.”……………………………………….Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

The amount of fresh water consumed for world energy production is on track to double within the next 25 years, the International Energy Agency (IEA) projects. And even though fracking—high-pressure hydraulic fracturing of underground rock formations for natural gas and oil—might grab headlines, IEA sees its future impact as relatively small.
By far the largest strain on future water resources from the energy system, according to IEA’s forecast, would be due to two lesser noted, but profound trends in the energy world: soaring coal-fired electricity, and the ramping up of biofuel production………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Having seen the Arab Spring develop and come to a head over the past couple of years, should European countries be worried that some of the same factors, and consequences, could rear their heads closer to home?
With governments seemingly increasingly out of touch with the person in the street, and with the public’s growing distrust of politicians and their attempts to right the financial mismanagement of their predecessors, could rioting on the streets develop into full blown insurrection?……………………………………….Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Two major Swiss banks have vastly increased their charges to store bullion, it has emerged. Insiders with knowledge of the situation have informed the Financial Times that UBS and Credit Suisse have ramped up their fees for holding gold by around 20 per cent in an attempt to reduce the size of their balance sheets.
Switzerland has traditionally been regarded by commodities traders as the best place to stash bullion, although this trend may now change as banks in the country are becoming increasingly reluctant to offer “unallocated” accounts………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Perhaps you have heard that the Fed is printing money to get out of the crisis and that such actions cannot possibly end other than in even more money being printed and in the dollar losing its ability to buy you tangible assets. In our essay on gold and the dollar collapse we pointed out that since 1970 the debt numbers have gone up more than 40-fold (!).
In 2002, future Fed chairman Ben Bernanke noted that “the U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.” In keeping with these words, Bernanke has played an important role in the introduction of three rounds of what is known today as quantitative easing (QE) — programs expanding the money supply beyond the usual………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

The “2013 Mineral Commodities Summaries” released by the U.S. Geological Survey Tuesday revealed that, in 2012, the estimated total value of U.S. mineral production increased for the third consecutive year. The estimated value of mineral raw materials produced at U.S. mines was $76.5 billion, a slight increase from $74.8 billion in 2011, according to the USGS.
Estimated total value of U.S. metal mine production in 2012 was $34.9 billion, down 3% from 2011. Principal contributors to the total value of metal mine production last year were gold (36%), copper (27%), iron ore (15%), molybdenum (10%), and zinc (4%). Average prices for most domestically mined metals decreased in 2012………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

The amount of investment demand will be one of the key variables for silver in the long term, said CPM Group while releasing the 2013 update to its Silver Long-Term Outlook market study.
The report provides an analysis of global mine production, secondary supply, fabrication and investment demand, inventory levels and prices. The report looks out through 2022 and is an update to a 2011 report………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s biggest banks, are adjusting precious-metals charges for financial institutions. UBS revised fees for unallocated accounts and offers an alternative physical account that has “a lower fee structure,” it said in an e-mailed statement. Both banks didn’t give specific details.
The Financial Times reported earlier that the banks are trying to encourage holding metal through allocated accounts, where they would act as custodian and wouldn’t need to increase capital reserves. That’s instead of holding metal through unallocated accounts, which show up on balance sheets………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Precious metals are one of the rarest and most valuable commodities in the world, making them a popular investment tool for long-term buy-and-hold and short-term investors alike. Typically, this asset class has appeal as a safe haven, since its returns are generally greater in periods of high market volatility.
Besides the commodity’s inherent use as a store of value, precious metals are also used in a number of manufacturing applications. Although gold is perhaps the most popular precious metal, palladium, platinum, and silver are also viable and potentially lucrative options to round out a portfolio’s commodity exposure……………………………………….Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

If you’ve been looking to add metals to your portfolio lately, you might be confounded by the variety of exchange-traded options that offer exposure to the market. Let’s shine some light on this pocket of the investment market. There are many metals to choose from, but I’ll focus on copper to simplify the comparison of the advantages and disadvantages of each investment approach.
All of the following are viable exchange-traded products that offer exposure to the copper market, but they do it in different ways that result in significant exposure and return differences. So, it’s important to understand the various products in order to match your investment thesis with the right product………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Commodity funds have mostly been a graveyard for investment returns since 2009, yet London-based asset manager IKEN Capital’s new fund has bucked the trend in its first six months.
Using a combination of algorithmic and relative value strategies while hedging out macroeconomic risk, the Commodity Alpha Fund is up over 7 percent since its “soft” launch in June 2012, having navigated tricky third and fourth quarters in which many commodity funds were hard hit………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Deutsche Bank has appointed Louise Kitchen and Richard Jefferson as co-heads of its global commodities business, a source close to the bank said on Wednesday. Both are internal appointments and are based in London. Kitchen had been global head of commodity structuring while Jefferson was head of commodity sales.
They will take over immediately from David Silbert, who is leaving the post, said the source, who declined to be identified………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

The US dollar rose against its leading counterparts as risk-related currencies pulled back from recent highs while the UK pound was a notable underperformer.
Sterling hit its weakest level in more than five months against the dollar amid negative sentiment on the UK economy after figures released on Friday showed a sharper-than-expected contraction in growth in the fourth quarter of last year………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

Emitters in the Chinese city of Shenzhen may choose to relocate as the city introduces a cap- and-trade program to limit greenhouse gases.
Companies may go elsewhere as the cost of their carbon emissions cuts profitability, Ge Xing’an, vice president at the Shenzhen Emission Exchange, said yesterday at a conference in Hong Kong. Ge predicts the fallout from businesses leaving would be offset by new companies that can benefit as emitters try to reduce greenhouse gases linked to climate change………………………………………..Full Article: Source

Posted on 31 January 2013 by VRS |  Email |Print

It’s not the happiest time to be an environmentalist. Climate change hit home last year with brutal force: 2012’s historic drought singed much of the Midwest, turning farms to dust and withering the corn crop. Other parts of the U.S. suffered through storms like Sandy and massive wildfires.
Average annual temperatures in the continental U.S. beat the previous recorded high by a full 1°F (1.8°C). And the future is uglier still: over the weekend, British economist Nicholas Stern warned that climate change could be even worse than he predicted in his sobering 2006 report on the financial impact of warming, while on Jan. 28 the National Oceanic and Atmospheric Administration released a draft report outlining the serious threat sea-level rise poses to the coastal U.S………………………………………..Full Article: Source

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