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Commodities Briefing 26.Mar 2013

Posted on 26 March 2013 by VRS |  Email |Print

The Cyprus bailout deal left commodities traders scratching their heads. On Monday gold fell, silver rose, and key industrial metals and energy commodities were mixed. The news that dominated trading talk was that Cyprus reached an agreement that it will allow it to get emergency bailout loans from other European countries. But traders weren’t sure what happens next.
Normally an agreement like that would give stocks and industrial metals a lift, because it eliminates the immediate fear of a country’s disorderly breakdown. But Monday, stocks across Europe and the U.S. fell. So did copper and palladium, which can gauge how investors feel about the economy since they’re closely tied to manufacturing and industry………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

The Brics (Brazil, Russia, India, China and South Africa) Summit in Durban this week generally sparks intense debate and interest in the body’s changing role on the international stage. There are many obvious links between the Brics nations that may form the foundation for these debates.
For example, China is the largest and India the third-largest economy in Asia (after Japan). South Africa is the largest economy in Africa, while Brazil holds the same title in South America. These economies also share the common thread that they are emerging markets with all the usual opportunities and challenges associated with economies in this stage of development………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

Commodity markets are prone to bubbles, but like the ones in bathtubs, they don’t last. So concluded one of several interesting papers on commodity price fluctuations discussed at an International Monetary Fund seminar last week.
Researchers at the University of Illinois examined agricultural futures price data from 1970-2011 and found a spate of bubbles running through multiple markets. Sugar, soyabean and cotton markets underwent them with regularity………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

China is about to undergo a rebalancing of its economy from investment to consumption that over the next three to four years could see the global price of hard commodities halve, Peking University-based finance professor and former investment banker Michael Pettis says.
The new leadership of President Xi Jinping and premier Li Keqiang understands the urgency of China making the policy changes necessary to implement this shift in growth, said Pettis ahead of a speech on Monday at the University of Sydney Business School………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

The Kingdom said that $100 a barrel is a “reasonable” price for oil while Kuwait said the price is “fair” and the market was stable. “In 1997, I thought 20 dollars was reasonable. In 2006, I thought 27 dollars was reasonable,” said Minister for Petroleum and Mineral Resources Ali Al-Naimi in Kuwait City.
“Now, it is around $ 100 … and I say again it is reasonable.” Kuwait’s Oil Minister Hani Hussein said the “current oil price is fair. There is a little bit of over-supply, but we think that the market is stable at the moment,” he said………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

Oil prices at around $100 a barrel are reasonable for both consumers and producers, OPEC heavyweight Saudi Arabia’s oil minister said, again highlighting the top crude exporter’s preferred oil price. Saudi Arabia’s Gulf ally Kuwait echoed the comments on price, saying the current levels were fair, with the market a little bit oversupplied.
“I just came from Hong Kong and I told everybody, in 1996, I thought $20 a barrel was reasonable; in 2006 I thought $27 a barrel was reasonable and now it is around $100 a barrel. I told them again it is reasonable,” Ali al Naimi told reporters asking him what the fair price for consumers and producers would be………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

Oil prices have been relatively strong in recent times despite the economic weakness in Europe and North America. But as this week’s monthly oil price futures chart from certified financial technician and councillor with the Australian Technical Analysts Association Mark Umansky shows, it has been trading in an ever-narrowing band since January 2009.
Oil reached a high of $US140 a barrel in June 2008, just before the global financial crisis really hit home with the collapse of Lehman Brothers. Then it fell for seven straight months to reach lows close to $US40 a barrel, under the influence of the intensifying recession and fears that China’s economy might collapse………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

Natural gas is positioned to make a sustained impact on the global energy market but only if it’s developed responsibly, the IEA executive director said.
The International Energy Agency hosted its inaugural unconventional natural gas forum in Paris. IEA Executive Director Maria Van der Hoeven said unconventional natural gas development needs a sustainable and responsible approach………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

From a president who seems to think energy comes from politics, yet another innovation emerged Mar. 15 in a speech at the Argonne National Laboratory in Lemont, Ill. “The only way to really break this cycle of spiking gas prices,” said President Barack Obama, “the only way to break that cycle for good is to shift our cars entirely—our cars and trucks—off oil.”
Like so many of Obama’s proposals for energy, this one is vacuous. If the demonstrated ability of the price of a major oil product to spike justified policies aimed at ending oil consumption, the same argument logically should apply to other commodities. Guess what: Prices of commodities other than oil spike, too………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

Russia, Kazakhstan and Turkey increased their official gold reserves in February, data from the International Monetary Fund showed on Tuesday.
Russia raised its gold holdings by 6.998 tonnes to 976.952 tonnes, and Turkey added 5.574 tonnes to increase its gold reserve to 375.731 tonnes. Kazakhstan boosted its gold holdings by 4.914 tonnes to 121.670 tonnes in February………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

In what could be good news for the jewellery industry; after increasing for 11 consecutive years, the price of gold is set to drop to US$1,300 an ounce, according to a new report. The Australian Government Bureau of Resources and Energy Economics March 2013 Quarterly Report suggests the price of gold has begun its steady decline.
In 2012, the gold price averaged US$1699 per ounce (in 2013 dollars), a 5 per cent increase relative to 2011. By the end of 2012 the average price of gold had increased for 11 consecutive years; however, 2012 was the lowest average annual increase in the gold price over this period, the report stated………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

With an astronomic and ever growing debt and derivatives overhang, there are essentially only two choices for the world economy. One is to deal with it head on, which would trigger a deflationary implosion that would create an economic wasteland leading to anarchy, riots and revolution etc. Quite clearly nobody wants that, least of all those in power.
So that only leaves one other option, which is to keep things limping along for as long as possible by clamping interest rates at zero to stop debt compounding and to print whatever quantity of money is required to keep the status quo going………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

Commodity prices including those of precious metals tend to go through super-cycles. Booms and busts occur as a result of these cycles. These cycles last for many years.
In the latest super-cycle gold prices have climbed consistently in the last decade up until 2011 when prices reached a peak of just over $1,900.00. Since then prices have been volatile. On Friday it closed at $1,609.20 in New York………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

The Fed’s reassurance that they’ll keep pumping money into the economy is great news for gold. But even without it, we’ve got a long way for gold to go before we have to start worrying.
Many of you will have likely seen by now our new gold price calculator section. My favourite in there is the ‘Gold versus debts’ calculator which values gold against the US’s external debts……………………………………….Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

For many months, I have witnessed a trend toward resource nationalism, which is taking a major toll on the potential supply of platinum (PTM) where more than 90% comes from South Africa, Zimbabwe and Russia. These are far from safe mining jurisdictions. Simultaneously, auto sales are rebounding to levels not seen since before the credit crisis in early 2008.
Despite global supply concerns, increase of resource nationalism and rising industrial and automobile demand, platinum is still undervalued compared to gold (GLD)……………………………………….Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

Although some commodities have had a strong start to 2013, many have seen severe weakness to open up the year. This has been especially true in the beaten down base metal space, in products such as aluminum, zinc, and copper.
These metals have been victims of relatively sluggish conditions in some key emerging markets like China, as well as worries over continued dollar strength. This currency issue has been especially bad this year as the U.S. dollar has appreciated significantly, reversing a long trend in the space………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

It is difficult to imagine that anyone is unaware of the importance of commodities in our everyday lives. Rising energy prices have cranked up household costs and higher food prices are squeezing family budgets.
World population growth and rising living standards in emerging markets mean prices are likely to increase over the long term. That said, it is possible to benefit from these trends by investing in companies in the commodities sector………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

We are looking at a risk-on trade begin to take place as news that Cyprus has reached a deal with the EU on a 10 billion Euro bailout. Russia has been left out as they were unable to reach a deal of their own for a bailout and one has to question their actions as of late.
We have seen some reports that they wanted to get assets for pennies on the dollar, and will look to do that should Cyprus have problems in the future, but if Europe is going to be on the hook for this now, they might as well throw more money at the problem in the future. This further cements Cyprus as an EU member and solidifies the Union………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

The euro fell on Monday, hit by worries that the Cyprus bailout deal — which includes a controversial tax on some bank deposits — will serve as a blueprint for future financial aid agreements for troubled countries.
The European shared currency (EURUSD) fell to $1.2855, down from $1.3048 in Asian trade and pulling back from $1.2983 in North America late Friday………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

The volume of carbon traded globally is likely to rise by 14 per cent this year despite depressed prices, but this growth is unlikely to last, analysts say. Research by Thomson Reuters Point Carbon finds around 12 gigatonnes of CO2 will be traded over 2013, with most of the growth coming from the 10 billion EU Allowance (EUA) credits expected to change hands - a rise of 40 per cent on 2012.
Anders Nordeng, senior analyst at Thomson Reuters Point Carbon and author of the analysis, said large volumes coming to market through auctioning would trigger more exchange trades, while the current volatility of prices is driving high levels of speculative trading………………………………………..Full Article: Source

Posted on 26 March 2013 by VRS |  Email |Print

The EU Emissions Trading Scheme “no longer has a significant impact on emission reductions”, according to one in five respondents to Thomson Reuters Point Carbon’s annual carbon market survey. The results of the survey – Carbon 2013 – reveal that 20% of respondents said the EU ETS caused emission reductions in the past but has little impact on emissions today.
“We attribute this to the weak price signal currently generated by the EU ETS, which saw prices fall to historic lows in 2012” said Emil Dimantchev, Thomson Reuters Point Carbon analyst and author of the report………………………………………..Full Article: Source

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