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Commodities Briefing 22.Mar 2013

Posted on 22 March 2013 by VRS |  Email |Print

Any commodities rebound in the second quarter will be limited by a stronger dollar and accelerating supply in copper and oil, Barclays Plc said.
Investors should be prepared to sell industrial metals if there is a “significant” rise in prices, Kevin Norrish, an analyst at Barclays in London, said in a report dated today. The growth outlook is not strong enough to support commodities the way it has other markets, he said………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Only about a third of commodity price moves are caused by news, reflecting the growing role of high-frequency trading in steering prices, according to a study selected by the International Monetary Fund. The study, co-written by researchers at the United Nations Conference on Trade and Development and ETH Zurich, may spur regulators who blame traders for price volatility.
High frequency trading involves rapid-fire computers which place thousands of bets within the space of a second. “At least 60-70 percent of commodity price changes are now due to self-generated activities rather than novel information,” according to the 56-page study published this week………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Stocks and commodities are more likely to go separate ways than to move together, according to Binky Chadha, Deutsche Bank AG’s chief global strategist.
As the CHART OF THE DAY illustrates, the Standard & Poor’s/GSCI Index of commodity prices was little changed from the end of 2011 through yesterday. During the same period, the S&P 500 climbed as much as 24 percent and approached a record set in October 2007………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Fund managers are underweighting commodities big time according to the latest fund manager survey issued by Bank of America Merrill Lynch (BoAML) on March 19 which reveal a big jump in the underweighting of the commodities sector from a net 1% to a net 11% underweight in March. This is 1.3 standard deviations below the average and the largest underweight since July 2012.
The number of emerging market investors worried about a hard landing in China also rose from 10% to 18%, highlighting concerns about demand for commodities after four months of improved sentiment towards China recorded by the BoAML survey………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Commodity investing has a bad reputation. It is looked on as risky and not for amateurs. And in the highly leveraged futures markets, that’s certainly true. You can quickly lose all your investment if a trade goes against you. In this article, however, I will detail a simple strategy anyone can use. It’s unleveraged, relatively safe and carries a better than 50% probability of success.
Moreover, this strategy does not require detailed fundamental or technical analysis. Nor does it require extensive research. Instead, it relies on the mathematical principle of mean reversion………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Many investors became concerned about inflation the moment central banks started to flood markets with cash and cut interest rates to record lows in the wake of the financial crisis.
However, so far the reality is that the cheap money made available by policy makers hasn’t fed into the economic system as expected, and inflation has remained under control in most developed countries including the US and Europe, although not in the UK. The question remains whether investors should consider inflation as part of their investment decision processes in the first place……………………………………….Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Societe Generale looks for gold to pull back below $1,400 an ounce by the end of the year. In a review on the commodities sector, the bank said it looks for gains by platinum group metals, however. Meanwhile, it sees copper underperforming the other base metals traded on the London Metal Exchange.
Societe Generale listed a “moderately positive” outlook for the year in commodities as a whole, suggesting the most upside is likely from energy prices………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Over the last 20-years, gold has shown zero correlation with stocks and bonds, and had therefore become a favorite in terms of diversifying the portfolio, according to Societe Generale. But SocGen analysts Alain Bokobza and Roland Kaloyan think “The Gold Rush Is Over”.
Gold is well off it’s 52-week high of $1,802. And the analysts expects gold to fall 15 percent from its spot price to $1,375 per ounce by year end. This is more bearish than the consensus view which is 30 percent above SocGen’s, with a forecast of $1,750 per ounce………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

The dollar gold price hovered just below $1,610 an ounce Thursday morning, while stocks and commodities fell along with the euro as disappointing economic data was added to news that Cyprus’s banks will remain closed until next Tuesday.
“We forecast the gold price to have dropped to below $1,400 by year-end and for it to continue to trend lower next year,” says a note from Societe Generale. SocGen has cut its average gold price forecast for this year to $1,500 an ounce, with the per ounce averages for 2014 and 2015 cut to $1,400 and $1,300 respectively………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Gold use in India, the world’s biggest buyer, may climb for the first time in three years as rising incomes and inflation boost investment demand, undermining efforts to narrow a record current account deficit.
Consumption may total 865 tonnes to 960 tonnes this year, compared with 864.2 tonnes in 2012, Somasundaram PR, managing director of the World Gold Council for India, said in an interview in Mumbai. The gain in imports will match the increase in demand, he said. The country imported 860 tonnes last year, according to data from the council………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Commerzbank lowered its gold price forecast by 10% as it sees reduced demand by investors weighing on prices, the bank said on Thursday. The bank said while it has downwardly adjusted its gold price forecast, it still expects to see higher prices later this year, saying it is “premature to call the end of the bull market in gold.”
They also reduced price forecasts for silver, platinum and palladium, saying that price performance for those metals is “mediocre” when considering the strong exchange-traded fund inflows this year. However, they also see prices for these metals rising toward year’s end………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Copper inventories on the London Metal Exchange have risen to their highest level since 2003, in the latest sign of the copper market’s shift into oversupply.
LME copper stocks have risen 165 per cent since October, amid an increase global mine production and slower purchases from China, which has seen a rapid build-up of copper stocks in recent years………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

In recent years oil and gas companies have applied innovative technologies to make discoveries of vast new hydrocarbon resources. If only it were that easy for them to deal with a dire challenge above ground: identifying and training a new generation of qualified and prepared executives who are ready and willing to lead oil and gas companies at this pivotal time in the industry’s history.
As we found this month at the 2013 CERAWeek conference — the annual gathering of senior energy decision-makers from around the world — yesterday’s pessimism about “peak oil” has given way to a much different picture………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will trim crude shipments through early April while refiners in Asia perform seasonal maintenance work, according to tanker-tracker Oil Movements.
The group that supplies about 40 percent of the world’s oil will reduce crude shipments by 40,000 barrels a day, or 0.2 percent, to 23.72 million barrels a day in the four weeks to April 6, the researcher said today in an e-mailed report. The figures exclude Angola and Ecuador………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

The exchange-traded fund business resembles an episode of HBO’s Game of Thrones. Alliances have been formed, surprise attacks have been launched and everyone wants to be king. And why not?
ETFs are the fastest-growing segment of the staid mutual fund industry. ETFs, which are investment funds traded on exchanges that usually track market indexes, offer investors lower costs and more tax efficiency than traditional mutual funds. Since the financial crisis, more money has flowed out of mutual funds and into ETFs………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Get ready to rumble. Colombia is stepping up the fight against the appreciation of its currency, the peso. Having spent nearly $5bn last year buying dollars to stem the peso’s rise, the government this week said it was willing to deploy double the amount – or $10bn – this year keep the currency in check.
In February alone, Colombia’s central bank spent over $800m in dollar purchases………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

A series of experts urged broad, well-designed strategies to ensure that the higher prices, which have now lasted for a decade, are harnessed in order to achieve significant and durable reductions in poverty in the developing world. For that to happen, they said, greater attention must be paid to the needs of the globe’s 450 million smallholder farmers, and to the millions of impoverished non-farming families, often in the same countries, who suffer when food costs climb.
Opening the debate, UNCTAD Deputy Secretary-General Petko Draganov said: “In essence, high commodities prices have so far had only a limited impact on poverty reduction………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

If there is one word to advocate for more integrated supply chains today it is horsemeat. I am glad to see more public discussion on how to address food security and other challenges for agriculture companies, but vertical integration alone cannot fully address today’s financial and operational risks.
Just before the horsemeat story broke, Rabobank released a report entitled, Winning through the Supply Chain.* The report states “The players in the F&A supply chains are now being asked to do more than ever before: produce more with fewer resources, access new markets, reduce costs, respond to new consumer demands, adapt to new outside influences and prepare for a long-term structural increase in demand.”……………………………………….Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

China will have to raise up to $243 billion a year by 2020 to finance clean energy development, said a report commissioned by Beijing which will be presented to the government this month. Premier Li Keqiang this month pledged more action in tackling China’s heavy pollution which sparked public anger this winter.
Last year, China accounted for one quarter of world investment in renewable energy. It invested a record $67.7 billion in clean energy - 20 per cent more than in 2011 - in a year when overall global clean energy investment declined………………………………………..Full Article: Source

Posted on 22 March 2013 by VRS |  Email |Print

Ireland favors a European Union plan to bolster the bloc’s emissions trading system and expects EU lawmakers to support the measure, the country’s environment minister said.
Carbon permits for delivery in December jumped as much as 14.6 percent after the comments by Phil Hogan, whose country holds the EU’s rotating presidency until June 30………………………………………..Full Article: Source

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