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Commodities Briefing 19.Mar 2013

Posted on 19 March 2013 by VRS |  Email |Print

As markets continue to roar forward, many investors have turned their gaze toward the commodity world, wondering how this asset class will fare after a “super-cycle” filled with gains. While there are a number of important factors at play, it is widely agreed that China will have a significant impact on the future of some of the world’s most popular hard assets.
What is not widely agreed upon, is whether or not the Chinese economy will hinder or enable commodities going forward, as the emerging nation has seen its economy cool off………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Data from the Organisation for Economic Co-operation and Development (OECD) forecasts a 0.1 per cent contraction in Europe’s GDP growth this year, and only moderate GDP growth in emerging market heavyweights China and India. The emerging markets have been the growth story of the past few years. As the developed world plunged into recession, these economies surged forward.
In 2007 for example, when the UK saw GDP growth of 3.6 per cent and US growth slowed to just 1.9 per cent, China saw a rapid escalation to 14.2 per cent. In the same year, India’s GDP growth reached 10 per cent………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Morgan Stanley has recently called for the return of the U.S. dollar. In his new report to clients, Morgan Stanley’s Adam Longson updates the firm’s global commodities projections with this in mind. As you’ll see, it’s not quite as simple as gold taking a hit.
Almost all commodities are expected to get more expensive as long as the global recovery picks up steam. But every commodity will also be impacted by its own supply and demand dynamics………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

The economic fundamentals of supply and demand remain the key factors in driving the direction of commodity prices and determining whether– commodity prices have risen by as much as 150% in the aftermath of the financial crisis. As long as China’s commodity demand grows at a higher rate than global supply, prices will rise.
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% 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………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Oil at $100 a barrel is a “reasonable” price that won’t choke global economic growth, Saudi Arabia’s Oil Minister Ali Al-Naimi said. “Prices will stay at these current levels in the foreseeable future,” he said today in a speech in Hong Kong, according to the text reported by the official Saudi Press Agency. “Current price levels will not affect economic growth in Asia,” he said.
Saudi Arabia, the world’s largest crude exporter, increased oil production and sales in January, according to figures from the Joint Organizations Data Initiative yesterday. The kingdom produced 9.25 million barrels a day in February, estimates from the International Energy Agency show………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Current oil prices will have no impact on growth in Asia, the Saudi Arabian Oil Minister Ali Al Naimi said. “Current levels will not deter further economic growth in Asia,” Al Naimi told the Credit Suisse Asian investment conference in Hong Kong.
Al Naimi’s comments follow warnings that weak economic growth could hobble global oil demand growth………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

The price of crude oil rose toward $94 per barrel on the New York Mercantile Exchange Monday, while natural gas prices also closed higher. Traders were still reacting to supply reports from last week and an extended winter chill in much of the country.
West Texas Intermediate crude oil for April delivery added 41 cents to reach $93.86 Monday. Gasoline shed 3.9 cents to $3.121 per gallon. Home heating oil lost 2.2 cents to settle at $2.918 a gallon. ……………………………………….Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Platts will change the way it arrives at prices for the influential Brent crudes, the pricing and information service said Friday. The changes are designed to encourage trade in crudes extracted from the North Sea that separates Britain and Norway–and to ensure that sufficient volumes of oil will be available in the marketplace.
A constant supply is needed to avoid any distortion that would come from shrinking availability of the crudes. Adjustments have been required ever since supply from the first North Sea discovery, the Brent field, began to fall in the late 1990s………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Iron ore has been one of the most volatile commodities over the last 24 months. Just a couple of years ago, iron ore prices were approaching the $200/ton mark — specifically, iron ore spot was at $191/ton in February 2011. Then, just a few months ago, in September 2012, spot prices were down more than 50 percent from their February 2011 high, trading at $87/ton.
Iron ore began the year on a fairly positive note after rebounding from September lows to settle at $145/ton in early January………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Worries about the Cyprus bank bailout drove investors into the safe haven of gold on Monday. Gold for April delivery rose $12, nearly 1 per cent, to $1,604.60 per ounce.
News about Europe’s bailout plan for cash-strapped Cyprus unsettled many investors, and all three major US stock indexes lost ground. Traders were surprised that the bailout plan included slapping a tax on deposits in the country’s banks, essentially forcing anyone who keeps money in a Cypriot bank to take a “haircut,” or a loss. ……………………………………….Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Analysts at several major banks cut their gold price targets over the weekend as sentiment about the precious metal continues to cool this year. Gold fell to a six-month low last month, dropping below the key resistance level of US$1,600 an ounce. The precious metal, which some investors view as a safe haven, has been suffering as sentiment about the U.S. and global economy have improved this year.
Scotiabank cut its price target on gold to US$1,650 for 2013 as a result, down from its earlier target of US$1,800………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

HSBC lowered its gold price outlook for this year and next, citing weakness of the yellow metal year primarily due to negative sentiment on investor expectations the US Federal Reserve would curb its quantitative easing (QE) program.
The bank cut its 2013 gold price forecast to $1,700 per ounce from $1,760 and the 2014 price outlook to $1,720 per ounce from $1,775………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Gold – valued as a currency, commodity and investment for thousands of years – is popular among today’s investors because it can be used as a 05hedge against currency devaluation, inflation or deflation, and due to its ability to provide a “safe haven” during times of economic uncertainty.
The gold market is highly liquid and there are a number of ways in which investors can gain exposure to this precious metal, including holding physical gold (i.e., gold coins and bars) and exchange traded funds (ETFs)………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

To enhance yields, three of the Canada’s seven ETF providers, BMO, Horizons and First Asset, have a specialty group of funds that use covered call writing as a fundamental component of their investment strategy. In total, there are 20 ETFs available in Canada that generate income from option premiums.
These covered call funds focus on equities and commodities, with total assets under management of $1.7-billion. In the right environment, the premiums from writing covered calls can add an extra 50 per cent or more to an ETF’s dividend income. The ideal environment involves high volatility, which results in a higher price for the calls being sold………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Perturbed by the possible negative implication of the proposed commodity transaction tax (CTT), the Finance Ministry has asked commodity derivatives market regulator the Forward Markets Commission (FMC) to do a detailed impact analysis of how CTT once implemented will affect commodity derivatives non-agri segment and submit the report to it.
The ministry had asked the FMC to submit the report by March 15. Since, the FMC chairman Ramesh Abhishek returned from abroad on Sunday, the report will now be submitted in a day or two. FMC chairman is also meeting consumer affairs minister where the issue of CTT could come up for discussion, said a source in the know………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

U.S. futures regulators are looking into whether high-speed traders indulged in “wash trading,” a strategy in which they improperly buy and sell futures contracts without taking a position in the market, The Wall Street Journal reported, citing people familiar with the probes.
The Commodity Futures Trading Commission (CFTC) is investigating suspected wash trades by high-speed firms in futures contracts tied to crude oil, precious metals, agricultural commodities, and the S&P 500, among other underlying instruments, the people told the Journal. Wash trades are banned under U.S. futures law………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

The drachma may no longer exist, but the economic crisis in Greece has inspired some communities to invent new ways of trading goods and commodities.
In a backlash to the euro, enterprising Greeks have created their own currency systems, such as the TEMs, in which individuals earn units of TEMs based on goods or services rendered. The system bypasses the euro altogether, and some have seen the cashless system as an easier and more direct way to engage in trade………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

Farm-commodity price swings are set to increase on tight supply, said Bruce Tozer, a consultant at De Novo Agricultura and former head of EMEA sales for soft and agricultural products at Credit Agricole SA. (ACA) He spoke at a commodity-industry meeting in Geneva organized by the United Nations Conference on Trade and Development.
On speculation in agricultural commodities, price swings and regulation: “If you took away all derivatives you would still have volatility, as you see in commodities that don’t have futures markets. Physical markets without futures markets are experiencing high levels of price volatility, so there is something happening over and above financialization………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

The Chinese government has unveiled a detailed roadmap for a national emissions trading scheme in a significant sign the world’s largest greenhouse gas emitter will introduce a country-wide carbon price.
Speaking in Washington, the deputy director of China’s powerful National Development and Reform Commission, Wang Shu, backed a national scheme, saying it could provide ”an efficient and lower-cost approach for addressing climate change and realising low carbon development”………………………………………..Full Article: Source

Posted on 19 March 2013 by VRS |  Email |Print

The European Union’s executive told EU national governments last month that it expected the bloc’s Parliament to approve in April the start of negotiations on a proposal to reduce a record glut of carbon permits.
The European Commission updated representatives of EU nations on the status of the draft measure during a meeting of climate experts from member states on Feb. 27 in Brussels, according to a summary of the gathering obtained by Bloomberg News. The proposal, which includes an amendment to the EU emissions trading law, has divided EU governments and members of the Parliament, which is next scheduled to discuss the draft measure at its plenary meeting starting on April 15………………………………………..Full Article: Source

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