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Commodities Briefing 22.Feb 2013

Posted on 22 February 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will increase shipments into next month as refiners in the U.S. and Europe prepare to start operating after seasonal maintenance, according to tanker tracker Oil Movements.
The group that supplies about 40 percent of the world’s oil will export 23.56 million barrels a day in the four weeks to March 9, up 90,000 barrels or 0.4 percent from the previous period, the researcher said today in an e-mailed report. The figures exclude Angola and Ecuador……………………………………Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Opec’s biggest cushion of unused production capacity in two years is doing little to restrain prices, as threats to supplies from Algeria to Iran undermine the confidence that surplus crude usually creates. Brent futures have advanced even as idle reserves expand in the Organisation of Petroleum Exporting Countries, moving higher in tandem at the fastest rate since at least 2006, according to data compiled by the International Energy Agency and Bloomberg.
Oil is facing unprecedented political threats, Goldman Sachs Group said last month, three days before Algeria was struck by the bloodiest assault on its energy industry in five years…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

The United States’ shale oil and gas boom has catapulted the country into global energy prominence. The International Energy Agency estimates the U.S. could become the world’s biggest oil producer by 2020, and others are saying it will be closer to 2017.
Experts have realized the potential for decades, but extraction was difficult and expensive. Not until modern technology and drilling techniques that include horizontal drilling and hydraulic fracturing, or fracking, was it all possible. The U.S. is producing its highest output level since 1992, threatening the strong hold held by the Organization of Petroleum Exporting Countries (OPEC)…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

The weakness in commodities experienced yesterday was a short-term profit booking rather than any structural problem, believes Tom Price of UBS Equities. Widespread rumours of a large commodity hedge fund being forced to liquidate its holdings triggered a broad sell-off in industrial commodities led by crude oil yesterday. “We have been trying to investigate the so-called rumour about hedge fund all day and have not found any sort of evidence for that at all,” says Price.
Price maintains its bullish stance on the world commodities market. “The fundamentals in commodities trade look reasonably sound and there are no structural problems in any of the economies around the world that could justify this sort of shocks,” he adds…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

First, this whole thing about Soros selling GLD is making us sigh a bit. Headlines like “Soros dumps gold as prices sink” are not only misleading but missing the point entirely. What’s even more frustrating is that most of the time the Soros stories refer directly to the issue at hand: the sales date back to the fourth quarter of 2012.
These disclosures thus must not be taken at face value. This is, if anything, expert exploitation of the hedge fund disclosure system, based on the expectation that the filings themselves cause people to react stupidly too late rather than too soon…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Less informed money is again selling gold or proclaiming the end of gold’s bull market. The smart money such as Marc Faber, Jim Rogers and those who predicted this crisis and have constantly advocated a long term allocation to gold bullion to hedge systemic and monetary risk, will accumulate again on this dip, said Goldcore in a market update.
Gold fell $40.30 or 2.51% yesterday in New York and closed at $1,564.30/oz. Silver slipped to a low of $28.28 and finished with a loss of 2.99%. The report also rubbished gold’s death cross fears, a technical possibility in charts…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Gold and silver along with their related miners have been under a lot of selling pressure the last few months. Prices have fallen far enough to make most traders and investors start to panic and close out their long term positions, which is a bullish signal in my opinion.
My trading tactic for both swing trading and day trading thrive on entering and exiting positions when panic trading hits an investment. General rule of thumb is to buy when others are extremely fearful and cannot hold on to a losing position any longer. When they are selling, I am usually slowly accumulating a long position…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Given their view that demand will recover in H2 13 and that supply will come offline later in the year, Barclays believes platinum prices are likely to find more sustained support as the year evolves.
Platinum has been the strongest - performing precious metal thus far this year. Prices have tested $1740/oz, levels last seen in September 2011, and continue to trade at a premium to gold…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Barclays forecast deficit for the palladium market remains sizable at 681koz for 2013, and the market is set to remain in deficit, should mined and recycled supply not be supplemented with stock releases.
“We retain our positive view on the palladium market and believe that it has the most constructive fundamentals across the precious metals” the report from Bank noted…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Despite great resource potential, government bureaucracy and local sensitivities have effectively stymied India’s bauxite/alumina expansions in the country.
It is likely that smelter production will move well ahead of domestic alumina availability requiring higher imports over the next several years, said Deutsche Bank in a report…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Precious metals are underperforming while the S&P 500 is soaring. This is leading the consensus to abandon the mining sector to look for greener pastures in housing and financials. I believe this may be the wrong approach to sell discounted junior miners shares for overextended blue chip equities particularly in the banking and housing sector.
Recently a news item from the Wall St. Journal crossed my desk entitled, “A Fearful Time For Gold”.”Then I read another article with the headline, “S&P 500 In Longest Winning Streak Since 2004.” These articles are an indication of what the majority is thinking and may be a contrarian buy alert for my readers…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

U.S. ETF investors’ five-month love affair with gold came to an abrupt end in January as they pulled $1 billion from the world’s largest bullion-backed exchange-traded fund to put into other commodity funds, data from funds tracker Lipper showed.
The exodus of money from the SPDR Gold Trust was driven initially by encouraging economic trends that boosted appetite for riskier commodities such as oil and grains. The retreat has continued into February despite uncertainties over global growth…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Amundi, Europe’s second-largest asset manager, is in the process of closing three of its commodities exchange traded funds amid criticism that such funds are “speculating on hunger”.
The Amundi ETF Commodities S&P GSCI Agriculture, the Amundi ETF All Commodities S&P GSCI Light Energy and the Amundi S&P GCSI Non Energy ETF will be closed “within the next few weeks”, the French fund house says…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Charles Schwab’s exchange traded funds business has reached the $10bn milestone for assets just three years after the US financial services provider launched its first ETF. Marie Chandoha, president of Charles Schwab Investment Management, said that crossing the $10 billion mark for assets in February was “just the beginning” for Schwab’s ETF business.
Schwab’s range of 15 equity and fixed income ETFs have made a strong start to the year with inflows of more than $1bn in the first few weeks of 2013…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Over the past year, investors continued to look around the world for higher levels of income potential. For some, the decision to allocate to the debt of Australia and New Zealand in 2012 resulted in strong performance compared to U.S. Treasuries.1
But individual investors were not the only market participants looking to diversify their holdings internationally. In fact, central bankers around the world have long allocated a portion of their foreign exchange reserves to Australian assets (such as government bonds)…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Carlyle Group LP (CG), the second-largest buyout firm, bought commodities hedge-fund manager Vermillion Asset Management LLC, adding $2.2 billion in commodities assets as the firm expands beyond private equity.
Carlyle purchased 55 percent of Vermillion for a mix of cash, stock and performance-based payouts, effective Oct. 1, Carlyle said today in a statement. The price wasn’t disclosed…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Commodities from oil to gold took a beating Wednesday—is a hedge fund partially to blame? Such were rumors late yesterday: As energy and metals logged some of their biggest losses in months, some speculated that a hedge fund, forced to liquidate its positions, drove some of the selling.
Yet it may have been more fear than fact. While markets were in the red, losses didn’t seem to be enough to push any mystery fund to the breaking point. Nonetheless, such speculation about a seller dovetailed with ongoing concerns about the Federal Reserve’s quantitative actions that may have fueled the decline…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Bovespa stock-index futures fell, signaling the stock gauge may retreat for a seventh day, as commodities declined on concern China’s property curb and contraction in the euro region will sap global growth.
Iron-ore mining company Vale SA (VALE3) slid in Frankfurt trading. Steelmaker Gerdau SA (GGBR4) may be active after reporting profit in the fourth quarter missed analysts’ estimate…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Yesterday, I watched the stock market fall because some members of the Federal Reserve wanted to end its quantitative easing (QE) program before hitting its target of 6.5% unemployment. The reason some Federal Reserve members want to end QE early was the risks further QE could have on the economy and inflation.
If the Federal Reserve removes or slows down QE, I believe the market could be in for a correction. With the stock market sitting near a five-year high, I believe this would be a prudent time to think about the investment landscape and see what investment options make sense for the possible coming correction…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Commodities as a group have been underperforming equities for about six months now. The correlation between the two groups has been grinding lower. Even more important, I think the underperformance of commodities—and by extension emerging markets—will persist for some time.
Hang on. If the backdrop is improving growth expectations and continued, if not increased, global central bank base money expansion, why have they underperformed and why should it continue? ……………………………………Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Latin American currencies weakened on Thursday for a second consecutive session after a series of weak economic data in the United States and Europe fueled concern about the global economy, driving investors to the perceived safety of the dollar.
The data, which showed deteriorating business conditions in Europe and the United States, as well as a struggling U.S. labor market, came as investors still fretted about a Federal Reserve threat to scale down or withdraw its monetary stimulus program before expected…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

What’s the fair value of a euro? That depends on whether the answer comes from Berlin or Paris. German Chancellor Angela Merkel on Wednesday weighed in on what the currency should be worth, saying the euro’s exchange rate is “normal in the historical context.” French Finance Minister Pierre Moscovici had a different take earlier this month, calling the euro “perhaps too strong”.
Economists say Ms. Merkel is right—technically. The euro’s buying power is roughly where it should be, according to the Peterson Institute for International Economics, which judges currencies based on countries’ current-account balance…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

The Polish zloty was a top performer among emerging-market currencies Wednesday, spurred by expectations that recent positive data might lead to a central bank less keen on cutting interest rates.
The zloty continued to be buoyed by recent economic data that beat expectations. On Tuesday, data showed Polish industrial production rose 0.3% in January, when markets had expected a decline of 3.5%. That, along with lower-than-expected inflation figures late last week, means the central bank might have to ease monetary policy less aggressively than markets had projected, analysts say…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

Global cotton production will exceed demand by 1.15 million metric tons in the 12 months starting Aug. 1, Cotlook Inc. said in its first forecast for next season. The surplus will be 3.54 million tons this season, Birkenhead, U.K.-based Cotlook, the publisher of a benchmark cotton index, said today in a statement.
World output will drop 7.3 percent to 24.3 million tons, Cotlook said. Production in China, the world’s largest grower, will fall 8.9 percent to 6.65 million. The crop in the U.S., the top exporter, will tumble 24 percent to 2.87 million tons…………………………………….Full Article: Source

Posted on 22 February 2013 by VRS |  Email |Print

The European Parliament has thrown its support behind the bloc’s faltering emissions trading scheme. But is it enough to save the shattered carbon market?
Brussels is starting to fix the problems of one of its most important mechanisms in the fight against climate change. The environment committee of the European Parliament in Brussels has now voted yes to amending the Emissions Trading Scheme (ETS)…………………………………….Full Article: Source

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