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Commodities Briefing 04.Mar 2013

Posted on 04 March 2013 by VRS |  Email |Print

Money managers removed a record $4.23 billion from commodity funds in the week ended February 27, led by declines in precious-metal holdings, as raw materials capped the biggest monthly loss since October.
Investors pulled an all-time high of $4.03 billion from gold and precious-metals funds, said Cameron Brandt, the director of research for EPFR Global, which started tracking the flows in 2000. The Cambridge, Massachusetts-based researcher said last week that total commodity outflows for the period ended February 20 reached $828 million………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Gold and copper lose their lustre; Dynamic strategies replace index plays. “Oil, gold and copper just are not what they used to be,” muses Blu Putnam, chief economist at the CME Group. “The hedge funds trading them got whipsawed last year.” Indeed, several high-profile commodities funds closed their doors last year because of poor performance and Clive Capital and BlueGold were among several large billion-dollar commodities funds to suffer hefty losses in 2012.
The January revelation that the California Public Employees’ Retirement System pension fund (Calpers) had more than halved its commodities exposure to just $1.57 billion (0.6% of exposure) from $3.45 billion in September 2012 started speculation that an exodus from the sector is imminent………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

The rising price of corn, soybean and wheat, which was triggered by last summer’s drought in the U.S. Midwest, helped BMO Agriculture Commodities exchange-traded fund gain nearly 6 per cent. (This ETF also tracks futures contracts of commodities like cocoa, coffee, sugar and cotton.)
“The dry and scorching weather between late June and August of last year severely limited crop production and supply,” said Alfred Lee, a portfolio manager with BMO ETFs at BMO Global Asset Management. “That area in the United States, known as the Corn Belt, also produces wheat and soybeans.”……………………………………….Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Prices for New Zealand’s main commodities rose for the seventh consecutive month in February, bolstered by some dairy and forestry products and meat, a survey showed on Monday. The ANZ Bank’s commodity price index gained 1 per cent on the previous month, following the rise after a 0.3 per cent rise in January.
The series has gained 9 per cent since its low point last July but is 13 per cent below its record high in April 2011. Ten of the 17 commodity groups rose in price, two were weaker, and five flat………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

SNL Metals Economics Group’s (SNL MEG) 23rd edition of Corporate Exploration Strategies (CES) calculated that the industry’s estimated total budget for nonferrous metals exploration increased to $21.5 billion in 2012.
Despite ongoing uncertainty in Europe and the United States, and concerns about waning demand in China, most metals prices remained well above their long-term averages in 2012, giving varying levels of support to the industry. Led by higher budgets among the major producers, exploration budgets documented in the study increased by $3.3 billion (19%) to $20.53 billion to set a new all-time high………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

An Oxfam report that accuses banks trading agricultural commodities of “speculating on hunger” is transmitting high-voltage shocks across the fund management industry. European banks are choosing either not to speculate on food prices on behalf of investors or to scrap funds tracking agricultural prices, following a scathing critique by the non-profit group’s Paris office.
The change in conduct has been dramatic. BNP Paribas, France’s largest provider of agricultural commodities funds, suspended a $214m agricultural fund. Crédit Agricole, meanwhile, shut three funds that permitted investors to speculate on agricultural commodities, although this was partly for economic reasons as the funds were small………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Opec crude oil output grew in February - the first monthly increase since October - owing to higher exports from Iraq and a slight increase in supply from top exporter Saudi Arabia, Trade Arabia citing a survey. Supply from the 12-member Organisation of the Petroleum Exporting Countries was 30.32 million barrels per day (bpd), up from 30.21m bpd in January, the survey of shipping data and sources at oil firms, Opec and consultants found.
The survey indicates Opec output has risen for the first month since October 2012, before cutbacks by Saudi Arabia which coincided with a rise in oil prices towards $120 a barrel. Even so, analysts said, supply remains low compared to recent months………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Turkey’s exports to OPEC countries were up by 74 percent in 2012 over the previous year to reach nearly $38 billion, according to data from Turkey’s statistics authority. Exports to the 12 OPEC nations counted for 25 percent of Turkey’s overall sales abroad as the country ran a surplus of $17.6 billion, which marked a fivefold increase over 2011.
Iraq claimed the biggest share from Turkish exports among OPEC countries with $10.8 billion in goods and services, which was followed by Iran with $9.9 billion and by United Arab Emirates with $8.1 billion………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Asia is expected to become the world’s second-largest gas market by 2015. And yet this market is dominated by long-term contracts in which the price of gas is linked, or indexed, to that of oil. In recent years, this has helped keep Asian gas prices much higher than those in other parts of the world, leading to serious questions about the sustainability of the system and its effects on Asian competitiveness.
In a new report, the International Energy Agency shows how the Asia-Pacific region’s natural-gas market can evolve from one in which prices are linked to oil to one featuring a more competitive and dynamic network of trading hubs in which prices better reflect local gas demand and supply………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

For the past 40 years, since the Arab oil embargo of 1973, Opec has conspired to set the global price of oil. The rest of the world has simply observed this staggering restraint of trade and done nothing.
If western oil companies tried to do what Opec does, they would be prosecuted within hours. The producers’ cartel, however, can get away with it because its members own 78 per cent of the world’s oil reserves and lie beyond our courts………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Current market sentiment in the gold and silver markets is running at extreme levels not seen since 2008. According to the COT reports, managed spec funds have the largest short position in the past 4 years. It appears the risk has been transferred from bullion central banks to the managed money spec funds.
This is the combination of players we want to see in the gold and silver COT reports to validate the possibility that a strong rally is about to occur………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Gold peaked at just over 1900 dollars an ounce about a year-and-a-half ago and has been falling ever since. As of this writing gold hasn’t broken to new lows, but it may. The question is “why?” There are many reasons, but the first and foremost reason is due to an incorrect monetary assessment by most gold bugs and their followers.
Over the last many years, the gold community was divided into two camps: those who believed we were going to endure an inflationary depression, and those who believed we were in for a deflationary depression. During this great debate many first-time gold investors were attracted to both arguments and entered the market………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

As the gold mining sector plunges to the end of a cyclical bear market, one wonders if this ongoing selling climax will precipitate a catalyst for more mergers and acquisitions in the industry. The last 12 years tells us that these transactions tend to follow the market itself but with a lag.
Peaks in M&A activity (in global mining) in terms of number of transactions and value occurred in 2006-2007 and 2010-2011 while troughs occurred in 2002 and 2008-2009. According to Ernst & Young, 2012 had the lowest number of global mining deals since 2008 and the lowest in terms of value since 2009………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

After five months of declines in gold prices, it’s still not time to call an end to gold’s bull run. After all, the factors that contributed to gold’s fifth straight monthly decline — central-bank monetary-policy cues, economic data, currency fluctuations, asset relocation, and emerging markets — are generally the same as they’ve been for gold’s more-than-decade-long bull run.
“Many are declaring that there is no catalyst to drive gold forward,” said Jan Skoyles, head of research at The Real Asset Co., a precious-metals investment platform provider. “They’re right — the bullish drivers of gold haven’t changed at all for several years.”……………………………………….Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

China’s foreign currency reserves, which have surged more than 700 percent since 2004, are enough to buy every central bank’s official gold supply — twice. The CHART OF THE DAY shows how China’s foreign reserves surpassed the value of all official bullion holdings in January 2004 and rose to $3.3 trillion at the end of 2012, data compiled by Bloomberg show.
The price of gold increased 263 percent from 2004 through Feb. 28, with the registered volume little changed, according to data based on International Monetary Fund and World Gold Council figures. By comparison, China’s reserves rose 721 percent through 2012, while the combined total among Brazil, Russia and India rose about 400 percent to $1.1 trillion………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

As everyone has been waiting with bated breath to see gold bottom, every drop has been viewed by many as THE bottom. But, I have been looking for lower levels for months now. In fact, weeks ago when many thought the bottom was in, I was still looking for levels in the 150-154 region. And, thus far, they have been attained, but have we seen the final bottom in gold?
Well, for those of you who have read my analysis before, you know that my primary perspective is market sentiment. So, allow me to present the arguments based upon that fundamental perspective………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Delegates got two hard gold price number to remember this morning during the opening salvo of newsletter writer talks on the first day of the Prospectors and Development Association of Canada (PDAC) conference now in progress in Toronto. Indeed, you can even put one on the calendar.
Ian McAvity, author of Deliberations on World Markets, got about as specific as it gets in the gold price prediction game. “And I’ll tell you right now. It’s a very simple forecast. If we can break through $1,800, we’ll see $2,642 in the week of September 20th, 2013. Everyone ok with that one?”……………………………………….Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

As the gold mining sector plunges to the end of a cyclical bear market, one wonders if this ongoing selling climax will precipitate a catalyst for more mergers and acquisitions in the industry. The last 12 years tells us that these transactions tend to follow the market itself but with a lag.
Peaks in M&A activity (in global mining) in terms of number of transactions and value occurred in 2006-2007 and 2010-2011 while troughs occurred in 2002 and 2008-2009. According to Ernst & Young, 2012 had the lowest number of global mining deals since 2008 and the lowest in terms of value since 2009………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

The price pattern in silver and gold remains intact. It shows that each time these precious metals are pushed below a key technical moving average, new buyers come into the market.
Most are weak hands, speculators or amateur traders who have fallen in love with the idea of a futures contract, although the original longs have still refused to trade their valuable metal for intrinsically worthless paper dollars………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

A comparison of two types of intervention has become interesting with respect to silver. First of all, Central Planning support of the mortgage and housing markets has already reached the supernova stage.
There seems nowhere left to go, as real interest rates are already negative. Furthermore, over 90 percent of the mortgage market is now backed by Federal agencies. The Fed has already pledged to buy trillions of dollars in mortgages to help prop up the market artificially………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Tin prices on the Kuala Lumpur Tin Market (KLTM) are expected to hover around US$23,500 this week, a dealer said. He said the prices would fluctuate because of the poor external economic conditions. “It’s very difficult to predict the prices for next week (this week). They are likely to move within a tight range,” he said.
During the week just-ended, the metal’s prices moved between US$23,280 at its lowest and US$23,600 at its highest with the participation from European, Japanese and local buyers………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

The mining and exploration companies who responded to 2012/2013 Fraser Institute’s Annual Survey of Mining Companies ranked Finland as the best place to do business, while Indonesia was deemed the worst place for mining and exploration companies.
Along with Finland, the top 10-ranked jurisdictions are Sweden, Alberta, New Brunswick, Wyoming, Ireland, Nevada, Yukon, and Norway. All were in the top 10 last year except for Utah and Norway………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Deutsche Bank expects further inflows totalling 400koz this year into Platinum ETFs, which would be enough to tip the platinum market into deficit. At present around 1.5 million ounces are held across five platinum ETFs globally representing around 21% of Deutsche Bank’s total projected demand for 2013 of 7.2moz.
“Clearly any boost in demand for platinum from newly established funds in South Africa would also support out forecast for a sustained deficit in the market over the medium term.” the Bank said………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

Exchange traded funds have helped retail investors easily access various commodities assets. However, investors should know the risks associated with commodities investments that use futures contracts, which could lead to underperformance and even losses if you are not careful.
Specifically, commodity ETFs and other funds that invest in futures contracts are susceptible to contango in the futures market. Contango occurs when the price on a futures contract is higher than the expected future spot price, which creates the upward sloping curve on future commodity prices over time, writes Aaron Levitt for Investopedia………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

The new transaction tax on commodity trading is bad economics, as these columns have argued many times. There are substantial differences between the equity and commodity markets, including the fact that the latter is a pure hedging play.
Therefore, the “what’s fair for equity is alright for commodity” argument doesn’t apply. But having done the bad thing, the Budget did a semi-good thing. After decades of being treated as a vice, commodity trading has finally been officially declared respectable. The Budget says commodity futures trading will not be considered a speculative transaction……………………………………….Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

A crowded calendar of central-bank meetings this week could give currency traders new clues about whether weak global growth will lead to easier monetary policy in the developed world.
Authorities in Europe, the U.K., Australia, Canada and Japan will all hold meetings. Investors will pay close attention to comments from top central bankers for signals on what actions they may take later in the year. “It’s all about the messaging” from central banks, said Greg Anderson, a strategist at Citigroup in New York………………………………………..Full Article: Source

Posted on 04 March 2013 by VRS |  Email |Print

China’s potential carbon tax may spur U.S. lawmakers to consider climate protection more seriously, according to a trader representative.
“China’s announcement that it’s considering a carbon tax may, over time, chill superficial resistance by some to the issue and spur U.S. lawmakers to more seriously consider what the appropriate U.S. actions should be on market-based climate policies,” Cameron Prell, Washington-based counsel at McGuireWoods LLP in Washington, said……………………………………….Full Article: Source

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