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Commodities Briefing 20.Mar 2013

Posted on 20 March 2013 by VRS |  Email |Print

Reports pointing to the death of commodities as an investment class appear wildly exaggerated. In fact, despite the doom-and-gloom headlines, the sector seems set to provide investors the benefit of diversification, industry observers say.
The Financial Times and Wall Street Journal reported last month that institutional investors such as pension funds, insurers and hedge funds have pulled large sums of money from commodities following the sector’s worst annual performance in more than a decade. Barclays data showed nearly US$10 billion in outflows from commodity indexes………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Hedge funds continue to lag the market, according to new data from lead hedge fund analyst Mary Ann Bartels at Bank of America Merrill Lynch Global Research. The preliminary February return for the Global Diversified Hedge Fund index was a gain of 0.17% compared to the S&P 500 gain of 1.11%. The Investable Hedge Fund weekly index is up 0.65% MTD for March, while the S&P is up 2.63%.
Commodities are also under pressure as hedge funds sell out of their positions. Macro hedge funds aggressively sold commodities for the first time since January, while other large speculators sold energy across the board out of a crowded long. Only crude remains in a crowded long position. Wheat remains on the edge of a crowded short. Funds bought gold & palladium, sold silver & platinum, and were flat in copper. Gold remains in a buy zone. Palladium stays in a crowded long………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Calpers, the largest US public pension fund, has endorsed commodities as a safeguard against inflation despite recent moves to pull money from the asset class. The $255bn fund chopped commodities investments by more than half late last year, prompting reports it was retreating from the market.
But in a rare interview, Andrew Karsh, portfolio manager for fixed income and commodities at Calpers, said the fund’s shift from commodities to inflation-linked bonds may be shortlived and did not reflect a change of strategy………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Conventional wisdom holds that commodities and commodity stocks typically outperform the rest of the pack in the late stages of a bull market. But Margie Patel, managing director and senior portfolio manager at Wells Capital Management, thinks this time is different.
Why? By now, everyone is just beginning to realize new technologies for extracting oil and natural gas are going to stand the energy business on its head over the next decade. This has major implications for other related businesses, from corn to commodity chemicals………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Geneva is in consolidation mode, following a “golden age” of commodity companies relocating to the Swiss trading hub, said Stephane Graber, general secretary of the Geneva Trading & Shipping Association.
“The golden age of a great number of companies moving over is something that is over, for different reasons, fiscal but also logistic,” Graber said in an interview in Geneva. “We won’t again see the kind of growth that we had in the past 10 years.”……………………………………….Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Australia, the world’s biggest shipper of iron ore, expects to earn more from the export of minerals and energy resources next fiscal year after raising its price forecast for the steelmaking raw material.
The value of exports may total A$205 billion ($213 billion) in the year ending June 30, 2014, the Canberra-based Bureau of Resources and Energy Economics said in a report today. Export earnings may be A$186 billion in the year ending June 30, it said. The bureau expects iron ore prices to average $119 a ton in 2013, compared with a December estimate of $106 a ton………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

The United States is suddenly awash in fossil fuels. Oil output has risen to its highest level since 1992. Natural gas is booming, thanks to new and improved fracking techniques. Refined petroleum has become one of the country’s top exports.
Which means it’s time to start wondering… about “Dutch disease.” Dutch disease isn’t some weird fungal infection. It’s an odd economic phenomenon that often afflicts countries rich in natural resources. Back in the 1960s and ’70s, the Netherlands discovered a large natural-gas field and began selling the gas abroad………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Though US oil production is experiencing steady expansion, Graeber writes, it’s starting to slow down and with it potentially goes the revenue on which Paul Ryan’s budget plan depends.
The United States is expected to lead the pack among non-OPEC members in terms of oil supply growth for 2013. That’s the assessment from this month’s market report from the Vienna-based cartel. OPEC said it projected U.S. oil supply growth of around 600,000 barrels per day in 2013, with most of that coming out of tight oil formations in the country………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

High oil and gas prices have unleashed the biggest drilling boom in 30 years. OPEC members must prepare for a big increase in oil supplies in the second half of the decade, as well as heightened competition from natural gas in some of their core markets, and a further erosion in demand as conservation and efficiency measures bite harder.
Outside North America, the number of rigs actually drilling for oil and gas averaged 1,277 in January and February, the highest since 1983, and more than double the number operating in 1999, according to rig counts published by oil field services company Baker Hughes International on its website………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

The average price of benchmark OPEC crudes held above $100 a barrel for a 173rd trading day, the gauge’s longest-ever stretch at this level.
The so-called OPEC basket, a weighted average of the main grades produced by the Organization of Petroleum Exporting Countries, was at $106.36 a barrel yesterday. Its spell at higher than $100 since July 17 surpasses a previous 168-day record set from Feb. 21, 2011, to Sept. 30 that year………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Yes, the Iraq War was a war for oil, and it was a war with winners: Big Oil. It has been 10 years since Operation Iraqi Freedom’s bombs first landed in Baghdad. And while most of the U.S.-led coalition forces have long since gone, Western oil companies are only getting started.
Before the 2003 invasion, Iraq’s domestic oil industry was fully nationalized and closed to Western oil companies. A decade of war later, it is largely privatized and utterly dominated by foreign firms………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

This week, the world’s largest concentrated solar planet went into operation. Shams 1 is a massive 100-megawatt power plant in Abu Dhabi with some impressive numbers. The $750 million project produces enough energy to power 20,000 homes and stretches across an area of desert, west of the United Arab Emirates capital, the size of 285 football fields.
“With the demand for energy rising exponentially, the region is undergoing a major transformation in how it generates electricity,” said Sultan Al Jaber, CEO of Masdar, the state-owned company behind the power plant. “In fact, the Middle East is poised for major investments in renewable energy, and Shams 1 proves the economic and environmental advantage of deploying large-scale solar projects.”……………………………………….Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Gold is poised to retreat 1.8 percent this year as demand may decline if instability in global financial markets eases and consumption drops, Australia’s Bureau of Resources and Energy Economics said.
Prices may average $1,638 an ounce in 2013 from $1,668 a year earlier, the Canberra-based bureau said in a report today. That compares with a December forecast of $1,738 for 2013………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

The price of gold is poised to retreat 1.8 percent this year as demand may decline if instability in global financial markets eases and consumption drops, Australia’s Bureau of Resources and Energy Economics said.
Prices may average $1,638 an ounce in 2013, down from $1,668 a year earlier, the Canberra-based bureau said in a report Wednesday. That compares with a December forecast of $1,738 for 2013………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

The gold naysayers are still out there in droves, other than Lady Gaga who is ensconced after surgery in a custom-designed, 24-carat gold plated wheel chair.
There is no denying that gold is off to its worst yearly start in a quarter century and that just in February investors sold 106 metric tons of gold from gold ETFs. (Even so, this is just a small portion of the fund’s holding and gold has gone up since then, a bullish sign) The newspapers headlines are full of eulogies for the gold bull market saying it’s finished, washed up, over………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Commodity exchange-traded fund investors have put money into funds with wider commodities exposure after pulling record amounts from bullion-specific funds as the price of gold tumbled, data from funds tracker Lipper showed.
U.S.-based ETFs tagged as “General Commodities Funds” attracted more than $1 billion in February, their highest in nearly a year after outflows from September though December, the data showed. They had inflows of a little more than $1 billion in January and were headed for another positive month in March………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Indian gold funds are shrinking for the first time since June as investors in the biggest bullion-consuming nation follow billionaire George Soros in pulling money from products backed by the precious metal. Exchange-traded funds in gold saw outflows of Rs8 crore ($1.5 million), data from the Association of Mutual Funds in India show.
Investments in sovereign-debt funds rose by Rs446 crore, the sixth straight month of inflows. Gold prices in India have slid 4% this year, while rupee bonds returned 2.7%, the second-highest gains in Asia………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

The long term outlook for potable water remains uncertain, but the prospects for water becoming a valued commodity is not a matter of if, just a matter of when as the global population rises.
“The increasing need for fresh water has emerged in recent years as a potentially lucrative long-term investment theme. The investment thesis is based on the fact that demand for clean water increases along with the global population. PowerShares Water Resources aims to provide exposure to this theme by tracking an index of firms that have business lines focused on water treatment services and infrastructure,” John Gabriel wrote for Morningstar………………………………………..Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

Commodity trade continues to attract sufficient financing amid instability in the Middle East and reduced lending by some European banks, said Jean-Francois Lambert, HSBC Bank Plc’s global head of commodity and structured trade finance.
“The world is in a complicated situation, but what needs to be financed, is financed,” Lambert said in an interview in Geneva yesterday. “There is sufficient liquidity in the market to finance commodities.”……………………………………….Full Article: Source

Posted on 20 March 2013 by VRS |  Email |Print

EU policy-makers should scrap the Emissions Trading System and replace it with new binding long-term targets for specific clean energy technologies and boost interconnection, Eddie O’Connor, president of the Friends of the Supergrid said Tuesday.
Friends of the Supergrid is a group of energy companies, power grid operators and renewable energy equipment manufacturers that proposes linking offshore wind farms in the North and Baltic Seas to form the basis of a new pan-European power grid. O’Connor, who is also chief executive of Irish generator Mainstream Renewable Power, was addressing the group’s annual conference in Brussels………………………………………..Full Article: Source

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