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Commodities Briefing 13.Feb 2013

Posted on 13 February 2013 by VRS |  Email |Print

A very common question always puzzles me as to how it can be answered as precisely as it is asked. At the beginning of every year analysts are popped a question, “How are commodity markets looking in the coming year?” Though the question is very simple the answer can’t be simple.
That’s because the commodity markets are a complex web of commodities driven by various segments of the economy and influenced by a wide array of fundamentals, from the weather to labour unrest, natural calamities to policy actions, and the health of the global economy and demand prospects. Let’s look at what could be in store for 2013………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

Barclays is halting agricultural trading with hedge funds in a move to burnish its reputation amid a major overhaul, but will still market index-linked investment products in the sector.
The British bank is among several financial institutions to have come under fire for speculating on grain and other agriculture products, which critics say has pushed up food prices and fuelled unrest in some poor countries………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

Commodities are out of favour with investors, but may not be quite as unfashionable as gloomy headlines have suggested, with the decline in their appeal stabilising. Investors are, overall, underweight commodities, Bank of America Merrill Lynch said, following a survey of 251 fund managers, responsible for $691bn of assets between them.
However, the majority of fund managers underweight, compared with those overweight, is, at 1%, the lowest possible. It was also level with January’s figure, and well below a reading of about 15% in July last year………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

There have been four great commodity super cycles in the past century, each with a different duration, degree of magnitude and overall intensity. The first was during World War I, resulting in tremendous demand for agricultural products and metals, lasting for four years. During this time agriculture boomed with mechanization.
Many of the old-time barns on our landscape today can be dated back to those times. The Farm Credit System, Cooperative Extension Service and the American Bankers Association’s agriculture division were created as a result of the super cycle. Unfortunately, while America’s general economy was booming during the roaring 1920s, agriculture crashed and stayed down until the beginning of World War II………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

The U.S. Energy Department increased its crude-oil price and global demand projections for 2013. West Texas Intermediate oil will average $92.81 a barrel this year, up 3.7 percent from the January projection of $89.54, the Energy Information Administration, the department’s statistics arm, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $92.17 in 2014, up from the previous month’s estimate of $91.
Brent, the benchmark grade for more than half the world’s crude, will average $109.33 a barrel in 2013, up 4 percent from last month’s forecast of $105.17. Brent will slip to $100.75 next year, according to the report………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries said the U.S. should see the biggest output gains among non-OPEC oil producers this year, but it sees the U.S. supply forecast, dependent on growth in shale oil production, as risky.
OPEC, in its monthly report, said the U.S. should increase production by 520,000 barrels per day. It said U.S. production should average 10.51 million barrels a day in 2013 and stand at 10.6 million barrels in the fourth quarter, due to gains in production in the Bakken, Eagle Ford and Permian areas and growth in natural gas liquids………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

World oil demand will grow faster than previously thought in 2013, producer group OPEC said on Tuesday, citing signs of a recovery in the world economy. Consumption of oil will expand by 840,000 (bpd) barrels per day this year, the Organization of the Petroleum Exporting Countries said in its monthly report, 80,000 bpd more than previously expected.
According to secondary sources cited by the report, OPEC trimmed its output further in January by about 21,000 bpd to 30.32 million bpd, closer to its official target of 30 million bpd………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

Jim Rogers has never been shy about vocalizing his love of precious metals. Though he has some cautionary sentiment about short-term gold prices given their 12-year bull run, the legendary investor still remains optimistic about the long-term future of both silver and gold.
Rogers feels that investors should be loading up on silver and gold coins right now as he notes that they have surged in popularity and that mints have been consistently selling out of silver coins because investors are worried about the future………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

A day after reports flew that Russia has become the world’s biggest buyer of the safe haven yellow gold metal, the country’s Gold Producers’ Union said Vladimir Putin’s turf is poised to become the world’s third biggest gold producer by 2015.
This as higher prices of the metal in the world market are sure to boost mining companies to increase production volumes, Sergey Kashuba, chairman of the Gold Producers’ Union, said at a conference in Moscow on Tuesday. Gold prices are expected to reach $1,845 per ounce in 2015, according to a January report by Morgan Stanley, when it averaged $1,668.77 an ounce in 2012………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

Investment into exchange-traded commodities (ETCs) linked to platinum has surged over the past six months, and with good reason. Platinum, having hit a 17-month high on Thursday, closed yesterday at $1,714 per troy ounce, approximately 22% above where it was just six months ago.
Uncertainty surrounding South African production and strong belief that demand is set to rise have led to renewed interest in the industrial precious metal………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

As the ETF industry continues its rapid development, investors can now gain cheap and easy access to nearly every corner of the investable universe, including the previously hard to reach commodities market. For many years, commodity trading was reserved for only highly-skilled futures traders.
But now the evolution of the ETF world has democratized this asset class, allowing average investors to place their bets on this lucrative corner of the market. From hyper-targeted products that track a single futures contract to funds that cast a wider net over the space, investors can choose from multiple commodity ETF options……………………………………….Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

As equity markets have raced ahead in January, a diversification strategy may not be top of every investor’s list of priorities. However, if the fiscal cliff negotiations do not go to plan, or the European crisis rears its head once again, investors may resume their hunt for non-correlated asset classes. Of these, currency funds are an increasingly popular option.
Currency markets remain one of the few places investors can make money in all environments simply because they trade relative rather than absolute value. A good manager should, in theory, be consistently on the right side of the trade. ……………………………………….Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

The Group of Seven rich nations sought on Tuesday to cool growing tension over exchange rates sparked by weakness in the Japanese yen, but currency markets found the effort lacking in clarity, triggering a second straight day of volatility.
The G7 declared that fiscal and monetary policies would not be directed at devaluing currencies, a statement meant to soothe nerves that Tokyo was aiming to guide the yen lower with its aggressive expansion of monetary policy………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

The illusory benefit of a weaker currency is to boost corporate earnings as companies increase their exports. That may well be true for the next quarterly earnings report, but ignores that their competitive position may be weakening.
The clearest evidence of this is the increased vulnerability to takeovers from abroad. As the value of the U.S. dollar has been eroding, for example, Chinese companies are increasingly buying U.S. assets. The U.S. is selling its family silver in an effort to support consumption………………………………………..Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

A New Zealand forestry expert says the country’s greenhouse gas emissions trading scheme is “irrational” and damages its environmental credentials. University of Canterbury Professor Euan Mason said New Zealand had allowed unrestricted imports of credits, including many from Eastern Europe, becoming “a dumping ground for worthless credits.”
“No other country with a carbon trading scheme behaves in this way,” he said in a statement. “They recognize that some credits are doing nothing for the environment and they restrict them.”……………………………………….Full Article: Source

Posted on 13 February 2013 by VRS |  Email |Print

This year, North American carbon markets will more than double in value to $2.5 billion, according to market intelligence firm Thomson Reuters Point Carbon. The growth will be driven by activity in California, whose market will increase over four-fold year-on-year to 186 Mt.
Strong demand for California carbon allowances (CCAs), driven by hedging by power suppliers, should push the Californian market as a whole to $2.3bn this year. At state auctions Thomson Reuters Point Carbon predicts CCA prices will increase to around $11 per ton, only slightly above the minimum price of $10.71 per ton, due to a likely over-supply of allowances this year………………………………………..Full Article: Source

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