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Commodities Briefing 05.Mar 2013

Posted on 05 March 2013 by VRS |  Email |Print

Investors cut wagers on a rally for commodities to the lowest in almost four years and pulled a record $4.23 billion from funds last week as prices erased this year’s gain on a slowdown for manufacturing in China.
Hedge funds and other large speculators reduced net-long positions across 18 U.S. futures and options in the week ended Feb. 26 by 16 percent to 447,106 contracts, the lowest since March 2009, U.S. Commodity Futures Trading Commission data show. Investors are betting on a decline in copper prices for the first time since November, and reduced their crude-oil holdings by the most in 11 weeks………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

It seems the Fed has failed to spark a spike in commodities. Federal Reserve Chairman Ben Bernanke strongly reiterated the value of qualitative easing in his semi-annual testimony before Congress last week. He made it clear that QE, the Fed’s low interest rate policy, could continue well into the future.
What makes this significant is that there has been some dissension within the Fed, and some seem to believe that the policy should end early. So if QE is the Fed’s policy, why has the U.S. dollar been so strong of late, and why has gold failed to hold above $1,600?……………………………………….Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

China has overtaken the US as the world’s largest net importer of oil, in a generational shift that will shake up the geopolitics of natural resources. US net oil imports dropped to 5.98m barrels a day in December, the lowest since February 1992, according to provisional figures from the US Energy Information Administration. In the same month, China’s net oil imports surged to 6.12m b/d, according to Chinese customs.
The US has been the world’s largest net importer of oil since the mid-1970s, shaping Washington’s foreign policy towards energy-rich countries such as Saudi Arabia, Iraq and Venezuela………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

A new report by countries by the World Economic Forum has criticized the OPEC-member countries of failing to adjust to the changing energy architectures and renewable energy sources.
None of the member countries have made it to the top 50 list of the energy report, which focuses on the strengths and weaknesses of countries’ energy systems. Titled ‘The Global Energy Architecture Performance Index 2013‘, the report has been compiled in partnership with Accenture and ranks the top high-income countries in the world for adapting to the upcoming energy systems………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

Coal has been beaten up in the media and the markets over the past year or so. Being outspoken against coal has been made easy by cheaper, cleaner-burning natural gas, which has been produced in abundance here in the United States recently.
To tackle reductions in both demand and price, coal companies in the U.S. were forced to curtail production and capital spending in preparation for future production. Entering 2013, could the coal market finally have found a trough? To help answer that question, I turned to the conference calls of some of the biggest players in the business to see what their CEO’s had to say………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

Gold prices in the domestic market could gain as investors are likely to go in for value buying. Also, since prices have been hammered in the past few days, technical correction is likely to set in.
In the global market, the yellow metal pared losses marginally on hopes that the recent decline could lead to buying interests since buyers in Asia are set to return after the Chinese New Year holidays. In early trade at Singapore, spot gold was quoted at $1,643.61 an ounce, while gold April contracts ruled at $1,644.10………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

Gold stocks fell to a three-and-a-half year low on Monday, as investors continue to reduce their exposure to bullion and other commodities on weakening economic data from China.
With stocks rising, the dollar strengthening, and U.S. Treasury bond yields holding below 2 percent, investment demand for gold continues to decline. According to BlackRock, gold exchange-traded product outflows have now reached $5.6 billion year-to-date………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

The London Bullion Market is the global trading center for physical gold, and the Bank of England holds gold on behalf of other central banks. There are a number of historical reasons the Bank has this privileged role, but the most important are that the Bank is trusted, and it oversees the largest bullion market by far. Therefore a significant portion of the world’s monetary gold should be stored at the Bank of England.
This does not appear to be the case. First, we must try to get an idea of how much unidentified central bank, or monetary gold, is in London at the Bank of England………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

ETFs have rightfully earned the approval of countless buy-and-hold investors as these financial vehicles have proven to be cost-efficient portfolio building blocks. With over 1,400 exchange traded products (ETPs) on the market, it’s also no surprise that more tactical investors and savvy traders have also embraced these instruments for their ease-of-use, transparency and unparalleled liquidity.
As such, ETFs can do a lot more than offer diversified exposure; these funds can be effective in executing both simple and more sophisticated hedging strategies, helping to improve your portfolio’s risk-adjusted returns……………………………………….Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

Suppose that natural gas prices are on the rise and you’d like to capitalize. Like most retail investors, exchange-traded funds (ETFs) are probably the first thing that comes to mind, as they’re a lot easier to buy than commodity contracts.
So, you decide to purchase a natural gas ETF that holds natural gas futures contracts of its own, in order to capitalize on this bullish investment thesis over the coming three months. Now, imagine that natural gas prices rise by 10% over this period, and you’re ready to sell and book the profit………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

An inconclusive Italian election result and the start of an US$1.2tn program of spending cuts in the US weren’t enough to stop investors rotating into more cyclical assets last week. A stronger US Dollar saw ETP investors continue to shun gold, with February 2013 recording the largest outflows since January 2011.
Copper and Brent crude oil were key beneficiaries of improving, but still fragile, risk appetite. Strength in the US housing market, where new home sales surged to a 4-1/2-year high, buoyant consumer confidence, rising manufacturing activity, and encouraging words from the Federal Reserve’s Chairman about the likely length of monetary easing kept the appeal of cyclical commodities………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

Hedge funds have slowed their shift into short position in agricultural commodities, but not by much, maintaining in particular a negative stance on livestock derivatives.
Managed money, a proxy for speculators, made their biggest positive shift in three months in positioning in Chicago wheat futures and options in the week to last Tuesday, according to data from the Commodity Trading Futures Commission, the US regulator………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

The value of trade on commodity exchanges is likely to drop for the first time this fiscal since the first commodity futures exchange began functioning in 2002. Two reasons are cited for the trend. One is the current downtrend in the bullion. The other is that some investors shifted to smaller denominations, i.e., mini lots in trade parlance, after gold prices touched Rs 32,000 for 10 gm during the first half of last year.
According to the Forward Markets Commission (FMC), an arm of the Consumer Affairs Ministry that supervises the functioning of commodity futures, the value of trade between April 1, 2012 and February 15 dropped to Rs 151 lakh crore against Rs 159 lakh crore during the same period a year ago………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

The euro slipped against the dollar Monday as caution ahead of a round of monetary policy meetings this week pushed the currency to its lowest level against the greenback in over two months. The euro at $1.3019, down from $1.3066 late Friday.
The shared currency fell as low as $1.2981, according to FactSet data, back below the psychologically important $1.30 handle, with concerns about a downgrade of Italy’s credit rating resurfacing on Monday. Inconclusive election results in Italy last week spurred worries about political instability in the euro zone………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

The search for yield in currency markets is leading investors into new emerging market currencies in sub-Saharan Africa, according to banks focused on the region.
African currencies might not attract as much attention as Chinese renminbi, the Russian ruble or the Mexican peso, but when it comes to emerging markets, some participants believe sub-Saharan Africa offers better opportunities to generate investment returns as the markets become gradually more liquid and transparent………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

South Korea’s government plans to meet in May with the nation’s biggest emitters to provide information about the start of cap and trade in 2015.
The government plans to select an exchange for greenhouse- gas emissions in the second half of this year and decide how to allocate free allowances to an estimated 480 emitters by June 2014, Lee Hyung Sup, a deputy-director at the Ministry of Environment, said in a phone interview yesterday in Seoul. Trials for carbon trading are set to start in June 2014, he said………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

China will step up efforts to cut its emissions and improve energy efficiency this year after record air pollution in Beijing, where the national legislature opens its annual meeting.
The government plans to reduce the nation’s carbon emissions and energy use per unit of gross domestic product by at least 3.7 percent in 2013 and carry out carbon-trading trials, the National Development and Reform Commission, China’s top economic planner, said in a report today. Carbon releases fell 5.02 percent and energy use per unit of GDP slid 3.6 percent last year, beating targets of 3.5 percent, the NDRC said in Beijing………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

Recently there has been a lot of attention paid to an essay on tax reform by the head of the tax department at the Ministry of Finance in Beijing, which mentions two hot-button words: carbon, and tax.
But does this mean that China, the world’s biggest emitter of carbon, will adopt a serious carbon tax? According to Su Wei, director general of climate change at the powerful economic planning ministry, the answer is: probably not anytime soon………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

The European Union is being urged to scrap its landmark emissions trading scheme (ETS) by an international coalition of environmental, development and other civil society organisations. “The ETS is in trouble – big time,” the coalition said, adding that this assessment was shared by most analysts, policymakers, politicians, carbon traders, industrial polluters and non-governmental organisations.
“The EU maintains a scheme which allows polluters and financial ‘market makers’ and speculators to move around pollution permits and cash in on windfall profits without making any significant contribution to halting runaway climate change,” it claimed………………………………………..Full Article: Source

Posted on 05 March 2013 by VRS |  Email |Print

President Obama gave his second-term global warming agenda a lot more definition Monday with a new Environmental Protection Agency chief to replace Lisa Jackson. Picking Gina McCarthy, one of her top lieutenants and the architect of some of the agency’s most destructive carbon rules, is a sign he intends to make good on his vow of “executive actions” if Congress doesn’t pass cap and tax.
Over the last four years running the EPA’s air office, Ms. McCarthy has been a notably willful regulator, even for this Administration………………………………………..Full Article: Source

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