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Commodities Briefing 18.Mar 2013

Posted on 18 March 2013 by VRS |  Email |Print

Hedge funds and other big speculators raised their bullish bets on U.S. commodities for the first time in five weeks, piling mostly into natural gas and corn due to favorable supply and demand situations, trade data showed on Friday.
Natural gas saw close to $2 billion worth of new net long contracts by the so-called money managers during the week to March 12, according to Reuters calculations of the data released by the Commodity Futures Trading Commission (CFTC)………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Commodities fell as Cyprus rekindled concern that Europe’s debt crisis may deepen, with copper dropping by the most in five months, pacing declines in industrial metals and oil. Rubber and wheat also slid while gold rose to a two-week high.
The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 0.8 percent at 11:16 a.m. Seoul time while copper for delivery in three months dropped as much as 2.7 percent, the biggest loss since Oct. 19, to a four-month low of $7,545.75 a metric ton on the London Metal Exchange………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

The commodity super-cycle, in which commodity prices reach ever-higher highs, and fall only to higher lows, is not over. Despite the euphoria around shale gas – indeed, despite weak global growth – commodity prices have risen by as much as 150 per cent in the aftermath of the financial crisis. In the medium term, this trend will continue to pose an inflation risk and undermine living standards worldwide.
For starters, there is the convergence argument. As China grows, its increasing size, wealth, and urbanisation will continue to stoke demand for energy, grains, minerals, and other resources. For example, the US consumes more than nine times as much oil as China on a per capita basis. As more of China’s population converges to Western standards of consumption, demand for commodities – and thus their prices – will remain on an upward trajectory………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Investors increased wagers on a commodity rally by the most in eight months as signs of a U.S. economic recovery bolstered the outlook for demand and drove rallies in crude oil, cotton, copper and gold.
Hedge funds and other large speculators raised net-long positions across 18 U.S. futures and options in the week ended March 12 by 30 percent to 528,680 contracts, the biggest gain since July and up from a four-year low the previous week, U.S. Commodity Futures Trading Commission data show. Money managers raised bullish bets on corn by 39 percent, cotton holdings were the highest since 2010, and gold wagers increased 9 percent………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

OPEC’s output may rise in the second quarter to meet increasing demand from refiners, indicating prices will increase as spare production capacity is reduced, Morgan Stanley said.
Output by the Organization of Petroleum Exporting Countries could rise by 850,000 barrels a day from April to June, the bank said in the report published today. The group will pump more as refineries come out of maintenance and utilities in Saudi Arabia and Japan use more crude and fuel oil for electricity generation, said Morgan Stanley………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Benchmark oil prices are likely to extend gains this week on expectations that the U.S. Federal Reserve will restate its commitment to its asset purchase program and maintain its ultra-low rates policy at a two-day meeting starting on Tuesday, according to CNBC’s weekly oil market sentiment survey.
Nine out of 15 respondents, or 60 percent, forecast prices will rise, building on last week’s 1.6 percent gain in U.S. crude futures. April delivery crude rose 42 cents to settle at $93.45 a barrel on Friday, the highest settlement since Feb. 20. Brent crude for May delivery gained 86 cents, or 0.8 percent, to close at $109.82 a barrel on the London-based ICE Futures Europe exchange on Friday………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Oil prices may have well peaked, for good. The International Energy Agency (IEA), in its latest medium-term oil market report, foresees a more ‘benign’ outlook on the strength of subdued demand and stepped-up supplies that it says could be deeply transformative globally.
This makes domestic energy price reform politically easier and all the more imperative. The IEA adds caveats on possible geopolitical risks and consequent supply rigidities, even disruptions; oil prices anyway do tend to be volatile. But the big picture emerging that ought not to be missed is this: the days of flaring oil prices may be history………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

The commodity super-­cycle in which commodity prices reach ever-higher highs and fall only to higher lows is not over. Despite the euphoria around shale gas — indeed, despite weak global growth — commodity prices have risen as much as 150 percent in the aftermath of the financial crisis. In the medium term, this trend will continue to pose an inflation risk and undermine living standards worldwide.
For starters, there is the convergence argument. As China grows, its increasing size, wealth and urbanization will continue to stoke demand for energy, grains, minerals and other resources………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

US regulations may launch an official investigation into whether prices gold and silver prices are being manipulated in London, the Wall Street Journal reported citing sources familiar with the situation.
While no formal investigation has been launched yet, the Commodity Futures Trading Commission (CTTC) is looking at issues including whether the setting of prices for gold and silver are transparent………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

There is a rule of thumb when it comes to working out if the price of gold will go up or down. It sounds ridiculously easy — almost too easy to be true. It goes like this: when things are going well in the global economy, the price of gold goes down. When things go badly, the price of gold goes up.
It really is that simple. Except rather like the property bubble and crash in 2008, it does increasingly look like many of the smaller, take-a-punt and hope-for-the-best investors, have got this all horribly wrong again………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Back in September 2012 when gold hit a high of US$1784.50 per ounce, Bank of America Merrill Lynch (BAML) analysts forecasted gold racing to $3,000 or even as high as $5,000 over the long term.
BAML’s analysts argued that gold was on a well-defined uptrend and that the best long story for commodity markets was gold. The big factor driving gold, according to BAML, was aggressive monetary policy easing. “You really want to be invested in gold,” BAML’s Sabine Schels, head of fundamental commodity research reportedly said………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

So many headlines are saying “$5,000 Gold, or $10,000 Gold; Silver, The Investment of the Decade,” etc, etc, etc. Will that happen? A history of failed fiat currencies says yes. When will it happen? That is the question few articles address because they simply have no clue, beyond their sensationalized headlines.
Who can best answer that question? It is not Who, but What, and that comes from the market itself, ever the most reliable source. The answers may not always satisfy, but the market is never wrong. What can be said with certainty is that before gold and silver, [PMs, Precious Metals], can go up, they first have to stop going down………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Value seeking investors are increasingly returning to the precious metals market. Furthermore, many of them will undoubtedly gravitate toward using the more conveniently traded alternatives to self-storing the metals.
The idea of taking physical possession of gold or silver currently seems almost taboo in the mind of the mainstream precious metals investor, although many alternative minded investors tend to see personal physical possession as the only safe option in the event of a financial collapse scenario. With that noted, the various widely-traded precious metals funds have taken on the burdensome task of owning and storing physical metal for their investors………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

The euro sank against the dollar in Asian trading hours Monday as news that Cyprus plans to impose a one-time levy on bank deposits as part of a sovereign bailout deal spooked investors.
Over the weekend, international lenders agreed to provide a 10 billion euro ($12.9 billion) bailout for Cyprus, but demanded that the nation help pay for its rescue by taxing bank deposits — an unprecedented step in the long-running euro-zone crisis………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

What will be the market impact from the Cyprus bailout? Citi FX guru Steven Englander explains what to watch in the currency space. The developments in Cyprus will lead to EUR selling and USD, CHF, GBP, NOK and SEK buying (in that order).
The issue is whether to believe that the Cyprus levy on depositors is one-off, but depositors and investors elsewhere could easily see this as another in a string of ‘one-offs’ and react badly. The risk-return to depositors in countries with weak banking systems may not favor taking the risk that Cypriot banking system was so unique that such a levy would never be considered elsewhere. The levy on deposits ostensibly covered by deposit insurance may also undermine confidence in weak banks………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

The Australian cleantech sector boasts revenue of $29 billion a year and employs 53,000 people, making it larger than Australia’s automative manufacturing industry and one quarter the size of the country’s entire manufacturing sector.
A new study produced by research and advisory firm Australian CleanTech says an analysis of 1,340 Australian cleantech firms shows they were involved in capital transations totalling $1.3 billion in the 2012 calendar year in 126 separate capital transactions………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

For decades, the basic farm goods and industrial raw materials that underpin the economies of many poor countries sold at low and volatile prices on world markets. Development experts and government officials lamented that these low returns kept nations in Africa, Asia and Latin America from expanding their economies and reducing poverty.
Since the end of 2002, however, commodities prices have staged an unprecedented and long-lived boom - yet the windfall, while contributing to notable increases in gross domestic product (GDP) in a number of countries, especially in Asia, has been less significant in other countries, and has not led in those cases to other economic progress that was hoped for, such as economic diversification. In the countries that have done less well, there have been disappointingly small declines in poverty rates………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Latin America and the Caribbean face weaker economic growth over the next five years as commodity prices fall and governments struggle with fiscal deficits, the Inter-American Development Bank said.
Annual growth for Latin America and the Caribbean is forecast to be 3.9 percent through 2017, down from 4.8 percent during the five years before the 2007 global recession, the Washington-based lender said in a report today. Out of 21 major economies in the region that were reviewed for the study, only Colombia, Trinidad & Tobago and Belize were in better fiscal shape than before the financial crisis………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Russia may be the ninth largest economy in the world by nominal gross domestic product, but its abundance of natural resources in the Ural Mountains, Siberia and the Russian Far East makes it much more important in the world of commodities.
The emerging market has long been known for its vast production of some of the most vital commodities in the world. Below, we dissect Russia’s commodity industry to give investors an in-depth look at this BRIC nation………………………………………..Full Article: Source

Posted on 18 March 2013 by VRS |  Email |Print

Australian Treasurer Wayne Swan on Sunday warned of a “dramatic” hit to the government’s bottom line due to commodity price falls, steeling consumers for an austere budget in an election year.
Mr Swan said the government’s revenue had taken a “massive hit” from a plunge in its terms of trade — the value of exports measured against imports — with prices for its key mining products down but the Australian dollar remaining high………………………………………..Full Article: Source

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