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Commodities Briefing 11.Mar 2013

Posted on 11 March 2013 by VRS |  Email |Print

Wall Street’s commodity-trading gold mine is all but tapped out. Once a booming source of bank profit, the business has been hit hard by tougher new rules and subdued markets. Revenue from trading the likes of oil, metals and soybeans dropped 16% last year at J.P. Morgan Chase and 20% at Morgan Stanley, according to securities filings.
At Goldman Sachs Group Inc., long considered the firm to beat in commodities, commodity revenue slumped to $575 million from $1.6 billion in 2011 and $4.6 billion in the bumper year of 2009. A survey by research firm Coalition of the largest global investment banks shows commodity revenue fell 24% from a year earlier in 2012, to around $6 billion, tumbling by more than 50% since 2008………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Hedge funds cut bets on a commodity rally to a four-year low on signs of surplus supply in everything from coffee to zinc before Goldman Sachs Group Inc. said prices had fallen too far and investors should buy.
Speculators reduced net-long positions across 18 U.S. futures and options in the week ended March 5 by 9.2 percent to 405,885 contracts, the lowest since March 2009, U.S. Commodity Futures Trading Commission data show. They are the most bearish on copper in four years, and are also betting on declines for coffee, hogs, sugar, soybean oil, wheat and natural gas………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

There was always going to be a decline in China’s commodity imports in February, but the pullback appears to have been bigger than expected. Crude oil, iron ore and copper all suffered sharp drops, so much so that even putting them together with January’s numbers still leaves year-on-year comparisons in negative territory.
The question then becomes is this the start of a new trend toward renewed weakness in the world’s largest importer of natural resources, or is it more likely that temporary factors are at work?
It’s always risky to call a trend based on one month’s data, but despite the weak data there is little evidence elsewhere to support the view that China’s economic growth is losing momentum………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Global energy use is set to expand by 33 percent between 2011 and 2035 with an average growth rate of 1.3 percent per annum, said Sheikh Ahmed bin Mohammed Al Khalifa, Minister of Finance, Minister in Charge of Oil and Gas Affairs, Bahrain.
Sheikh Ahmed, who opened the four-day 18th Middle East Oil and Gas Show and Conference 2013 (MEOS 2013) Sunday (March 10), said that the retreat from nuclear energy in some countries, in the aftermath of the Fukushima incident, led to a rebalancing of the energy mix towards fossil fuels………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

While broad stock markets are at or near all-time highs, oil is still well below its peak price. The commodity is actually still below $100/bbl. and it has lost almost 20%– when looking at USO—over the past one year period.
This is pretty surprising as the more robust economy usually would signal modestly higher oil prices are not far behind. This is especially true given the broad positive data which has stretched across not only consumer figures, but employment and manufacturing data releases as well………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Many major oil producers and OPEC leaders may not have been enamored by Hugo Chavez’s charm, but his presence served a useful purpose: under his leadership, Venezuela mismanaged its matchless oil reserves and crude production fell.
With him gone, major producers now face yet another competitor in an already crowded market. Venezuela sits on the world’s largest proven oil reserves of 296.5 billion barrels, but under Chavez, production had declined from a peak of 3.5 million barrels in 2000 per day to around 2.4 million bpd at the end of 2012, and Venezuela had slid from one of OPEC’s major producers, to its sixth largest, according to OPEC data………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

President Hugo Chavez relished using Venezuela’s oil wealth to project power internationally, nudging OPEC to raise oil prices when he could, showering allies like Cuba and Nicaragua with subsidized oil shipments, and mocking the United States while selling it his crude.
But Chavez’s death Tuesday has had surprisingly little impact on global oil markets, highlighting how Venezuela’s dwindling crude production and exports have undercut its global power in recent years………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

The UAE’s crude oil output fell close to 3 per cent to average 2.60 million barrels a day (bpd) in January from 2.68 million bpd in December 2012, latest estimates of the Paris-based International Energy Agency (IEA) show.
“Production from the UAE declined by 80,000 bpd to 2.6 million bpd, due to a temporary reduction in onshore output stemming from work related to plans to raise crude oil production capacity from the current 2.8 million bpd to 3 million bpd. Plans to expand capacity by 200,000 bpd were delayed from the fourth quarter of 2012 and are now expected to be completed by the end of the first quarter of 2013,” said the IEA, which advises 28 industrialised countries on energy policy………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Some stability returned to precious metals this week, with gold rising $14 from $1,564 at last Friday’s low to Friday morning, London time, and silver rising $0.65 from $28. Predictably, on the back of recent falls in precious metal prices, technical analysts, who are basically trend-followers, have turned bearish.
An examination of market action tells a different story. Recent price weakness has allowed the bullion banks to reduce their short positions significantly. So here is a rhetorical question: Do you back the bullion banks’ judgement in closing their bears, or that of the trend-followers?……………………………………….Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Gold Bullion imports to China through Hong Kong fell to a 3-month low in January, new data showed Friday, dropping by more than one-half from late-2012’s build-up to the strong Chinese New Year period. Net of re-exports, the total gold bullion inflow to mainland China fell below 30 tonnes for the month, according to figures from the Hong Kong government, down from almost 100 tonnes in December.
Hong Kong is the major route for bullion flows to and from China, the world’s second-largest consumer market behind India and already the world’s No.1 nation for newly-mined gold………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

The view of the silver market from ten thousand feet away shows what is really going on behind the scenes. The manipulation of the market by deep pocket bullion banks with a hugely concentrated combined naked short position has become increasingly evident.
Furthermore, their market spoofing practices that involve dropping their bids to give the indication of a weak market and then quietly buying back their short positions for a profit are well known………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Copper analysts are the most bullish in five weeks because of mounting optimism the global economy is strengthening, diverging from hedge funds holding their biggest wager on a retreat since August. Thirteen analysts surveyed by Bloomberg expect prices to rise next week. Four forecast declines and three were neutral, for the highest proportion of bulls since February 1.
Goldman Sachs Group recommended on March 1 buying the metal for a 16% gain in six months. Speculators are betting on a drop for the first time since November after inventories monitored by the London Metal Exchange advanced to a morethan two-year high………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

For all its riches, China has a problem that money cannot solve: its reliance on the world’s biggest miners to meet its resources needs. While it is home to significant resources, it lacks a contender to BHP Billiton, Rio Tinto and Vale. Hence Beijing’s irritation recently when iron ore prices hit 16-month highs.
Last week, its top economic planning body accused the world’s biggest mining companies of manipulating the iron ore price………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Gold appears to be consolidating just below the $1,600/oz level. It is 0.3% higher in dollar terms for the week, 0.4% higher in pound terms and 2.3% higher against the yen which has fallen sharply this week.
While it is 5% lower YTD in dollar and euro terms, it has risen nearly 2% and 4% in pound and yen terms so far in 2013. Physical demand continues to be supportive of gold according to UBS. In their note today they say that physical demand prospects out of China remain positive in the weeks ahead. UBS said Asia remains a net buyer and although premiums on the Shanghai Gold Exchange have fallen, volumes remain elevated………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

The greatest downside risk for gold prices arises from ETP interest, which has tended to reflect longer-term, “stickier” investor interest, according to a market analysis by London based Barclays.
Gold ETP flows turning negative pose the key downside risk for prices. ETPs recorded their largest monthly outflow in February, with net outflows on a global basis. Indeed, last year, despite hefty price corrections, ETP holdings remained relatively robust and drew fresh interest on price dips………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

India’s Rs 170-lakh-crore commodity futures market might end FY13 with its worst ever performance. So far, the daily average volumes on five commodity bourses have fallen by about four per cent, while aggregate annual volume is lower by 5.8 per cent, compared with the 50 per cent growth in the past three years. Total average daily trades, too, are lower by seven per cent against last year’s 70 per cent growth.
Shreekant Javalgekar, managing director and chief executive officer of MCX, said: “International exchanges such as CME and LME have seen a sharp fall in volumes due to lower volatility across commodity baskets. MCX has seen a much lower fall due to our sustained awareness campaign among SMEs and farmers’ cooperatives, etc………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

The decade-old commodity futures market is set to end this financial year with it worst-ever performance in terms of growth in volumes and number of trades. Till March 6, this financial year, daily average volumes on five commodity bourses taken together fell 4 per cent while total annual volumes were 5.8 per cent lower compared to the 50 per cent growth in the last three years.
One reason for this could be that commodity prices have been on a decline. The number of trades were lower by 7 per cent against last year’s growth of 70 per cent and little less than average 50 per cent growth in the last three years. This fall in volumes and numbers of trade has happened for the first time since online nationwide commodity exchanges started trading in late 2003-04………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Chinese commerce minister Chen Deming expressed concern Friday about loose central bank policies pushing down the value of major currencies, as the Japanese yen extended its recent falls. Chen told reporters he was “very concerned” this year with “the competitive depreciation of currencies in the world and the negative impact on the global economy led by the excess issuance of money”.
He said that declines in the value of the yen, the US dollar and the euro would have a big impact on developing countries, including China. Chen added that monetary easing policies by central banks in the United States, Japan and the European Union to stimulate their economies “should not spread out to affect other countries”………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Last week saw a remarkable five of the Group of 10 central banks hold policy board meetings: the Reserve Bank of Australia (RBA), Bank of Canada (BOC), Bank of Japan (BOJ), Bank of England (BoE) and the European Central Bank (ECB). All were on hold and none made any policy moves. Yet the hints that they gave were enough to infer that this is just an interregnum in what’s been called the “currency wars.”
The meetings made it clear that the “currency wars” are still with us, and clarified each central bank’s stance in these wars. It’s not yet clear who will “win” the wars by weakening their currency the most, but the U.S. seems set to be a “loser” by having its currency rise in value against the others………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

The Japanese government may revive discussions about a carbon market that would reduce pollution levels after elections for the Upper House of parliament due in July, a government adviser said.
Takashi Hongo, a senior fellow at Mitsui Global Strategic Studies Institute and a delegate for Japan at United Nations climate talks, said ministers are likely to consider building a market for carbon dioxide emissions credits later this year………………………………………..Full Article: Source

Posted on 11 March 2013 by VRS |  Email |Print

Investing in climate change used to mean financing the fight against global warming. Morgan Stanley, Goldman Sachs Group Inc., and other firms took stakes in wind farms and tidal-energy projects, and set up carbon-trading desks.
Then, as efforts to curb greenhouse-gas emissions faltered, the appeal of clean tech dimmed: Venture capital and private- equity investments fell 34 percent last year, to $5.8 billion, according to Bloomberg New Energy Finance………………………………………..Full Article: Source

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