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Commodities Briefing 28.Mar 2013

Posted on 28 March 2013 by VRS |  Email |Print

Fundamental changes in supply and demand account for less than a third of short-term movements in commodity futures prices, according to an authoritative new study by researchers at UNCTAD and the Swiss Federal Institute of Technology.
Reflexive trading, when prices respond to past price changes rather than new information about fundamentals, now accounts for 60 to 70 percent of price moves in the main futures contracts, up from less than 40 percent before 2005………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

A “doomsday scenario” drop to $1,000/ounce would “make half the gold industry worthless,” according to Bank of America Merrill Lynch. Despite recent hiccups in gold’s long bull run, gold is currently hovering at roughly $1,600 per troy ounce.
Gold stocks, however, have been unable to match the precious metal in performance over the past couple of years as “rising costs, expensive acquisitions and paltry dividends” have pushed investors away, wrote Tatyana Shumsky of the Wall Street Journal on Monday………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

A Swiss government investigation into the country’s $20 billion commodities sector has stopped short of proposing any new or tighter rules on trading companies as it seeks to prevent departures to Asian finance centres.
The long-awaited report published on Wednesday said that the sector’s 500 or so companies and about 10,000 employees contributed roughly 3.5 percent of Switzerland’s GDP and that the country needs to regulate the sector without chasing them away. Switzerland, home to commodities giants such as Glencore and Cargill, commissioned the report last year after left-wing politicians said that the traditionally secretive sector exposed the country to risks to its reputation………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Switzerland rejected calls for tougher regulation of commodity traders, including Vitol SA, Glencore International Plc and Trafigura Beheer BV, in favor of a voluntary industry code.
“Switzerland generally prefers voluntary standards, which are supported and upheld by businesses, to laws,” Economy Minister Johann Schneider-Ammann told reporters today in the Swiss capital, Bern. “It’s important that we make sure the framework in Switzerland isn’t less attractive than elsewhere.”……………………………………….Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Global oil demand isn’t the runaway train we have been led to believe, analysts at Citi said Wednesday. Punching holes in this theory are the push to replace oil with cheaper natural gas and steady improvements in fuel efficiency. The combination “is enough to mean that oil demand growth may be topping out much sooner than the market expects,” Citi said.
Several groups, including the International Energy Agency, have called for oil demand to rise through 2035 and beyond. The IEA recently said it expects global oil demand to reach 99.7 million barrels a day in 2035, up from 87.4 million in 2011………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Oil prices increased Mar. 26 with crude up 1.4% to its highest close in a month on the New York market, buoyed by improved US economic data and near-resolution of the Cyprus crisis. Natural gas climbed 2.8% with cooler weather.
“Brent performance, although less spectacular, was nevertheless good,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. The price spread between Brent and West Texas Intermediate ended the day near $13/bbl………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

The oil market has become somewhat stuck in terms of the dynamics of both prices and quantities. Indeed, had an analyst stated on the last day of 2010 that, until further notice, their predictions were that Brent crude oil would average $111 per barrel, that global demand would grow by 1% and that at the global level non-OPEC supply would struggle to grow, then that analyst would still be happy with their predictions today.
Since the start of 2011, there has been a long parade of $111 prices and 1% demand growth rates. Rounded to the nearest dollar, Brent averaged $111 per barrel in 2011, $112 per barrel in 2012 and, thus far in 2013, it has averaged $113 per barrel………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Chinese traders on Wednesday welcomed the government’s oil product pricing reforms, saying more frequent price adjustments would allow gasoline and gasoil supply in the domestic market to better match demand.
The National Development and Reform Commission said Tuesday that it was making changes to the way it sets regulated retail prices of oil products, mainly gasoline, gasoil and kerosene. Price changes will now be made every 10 days in line with crude oil price fluctuations………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Gold headed for a second quarterly loss as holdings in exchange-traded products fell by the most on record and the dollar climbed on prospects for a U.S. recovery, eroding the metal’s allure as an alternative investment.
Bullion for immediate delivery traded little changed at $1,605.97 an ounce at 10:48 a.m. in Seoul from $1,605.25 yesterday. Prices have fallen 4.1 percent this quarter in the first back-to-back quarterly losses since 2001. The metal touched $1,555.55 on Feb. 21, the cheapest since July 2012………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

The average dollar gold price this year may be lower than that of the previous year for the first time since 2001, according to a leading precious metals analyst. Jeffrey Christian, managing director of precious metals consultancy CPM Group in New York, says gold may average $1565 an ounce over the course of 2013, compared to $1668.75 last year.
“The global economy is likely to muddle along,” says a statement from CPM, which launched its ‘Gold Yearbook 2013′ this week, adding that “present [positive] sentiment has reduced the urgency [felt by investors to buy gold].”……………………………………….Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

According to the International Monetary Fund (IMF), in February, the central bank of Mongolia increased its gold bullion reserves to its highest level since August of 2008. The country has been purchasing gold bullion for three consecutive months—its reserves have increased from 1.5 metric tons to 5.8 tons, or about 287%. (Source: Bloomberg, March 26, 2013.)
Similarly, the central bank of Russia has been purchasing gold bullion. It bought seven tons of the yellow metal in February to bring its total gold bullion holdings to 796.9 tons. Turkey, the country which has started to use gold bullion as collateral, increased its reserves by 5.7 tons in February, bringing its total holdings to 375.7 tons……………………………………….Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Bloomberg reported recently that Russia is now the world’s biggest gold buyer, its central bank having added 570 tonnes (18.3 million troy ounces) over the past decade. At $1,650/ounce, that’s $30.1 billion worth of gold.
Russia isn’t alone, of course. Central banks as a group have been net buyers of gold for at least two years now. But the 2012 data trickling out shows that the amount of tonnage being added is breaking records. Based on current data, the net increase in central bank gold buying for 2012 was 14.8 million troy ounces - and that’s before the final 2012 figures are in for all countries………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Since the bailout deal was reached on Cyprus, the gold price has fallen. The decline suggests that gold is really in a weak position right now. I think the price is likely to fall further. Here’s why.
The major global stock markets are doing really well this year: the S&P 500 is up about 10 percent, U.K. stocks are up about 1 percent in dollar terms and Japanese stocks up about 10 percent. Even with all the problems in Europe, the Euro Stoxx index is down only about 2 percent in dollar terms. By contrast, gold and silver are down about 5 percent. Platinum and palladium have also outperformed gold and silver. In fact it’s hard to find any commonly held assets that have fallen as much as gold and silver………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Gold will post its first consecutive quarterly loss since 2001. And since mid-2011 gold has been a money loser. If you’re perplexed by that, keep reading. Even silver – which has been a star performer over the past few years - has followed gold prices lower. Will precious metals rebound?
Mixed Performance: The precious metals market consists of four key metals: gold, silver, platinum, and palladium. Thus far this year, exchange-traded products (ETPs) linked to gold and silver have fallen 5.18% and 7.25% respectively. Conversely, platinum and palladium have outperformed on a relative basis………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Nickel prices in China have not moved up due to more than ample supply with expectations that Nickel Pig Iron (NPI) production would be higher, states a recent analysis by London based Barclays.
However, nickel demand in China has been improving with increased buying from the stainless sector, galvanizing and batteries, the report added………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

According to Goldman Sachs, in 2011 China added $1.3 trillion to global growth. This is the equivalent of adding an economy the size of Greece to the global economy every 12.5 weeks or an economy the size of Australia over the course of the year. In 2012, if you look at all four BRIC (Brazil, Russia, India and China) economies combined, they added $2.2 trillion to global growth.
This is the equivalent of one economy the size of Italy — the eighth-largest economy in the world — over the course of the year. I looked at broad economic data in the U.S., the Eurozone and China, such as industrial production, consumer spending and debt-to-GDP ratios, to present a vision of where we are in the economic cycle………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

In the era of global slowdown, shareholders of mining companies are demanding more of discipline when it comes to capital expenditure.
This is largely attributed to a change of heart amongst share holders who feel that falling commodity prices may hurt profits of miners. In the same breath, one should add that supply is behaving exactly the same way as one should expect in a subdued price environment………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

As the broad markets are approaching their all-time highs, investors are gaining confidence over the riskier asset classes. As such, equities and equity ETFs are showing heavy inflows this year on the heels of improving global economic conditions.
In this backdrop, commodities like gold, agriculture and industrial metals have experienced some weakness due to a lack of investor interest and a strong dollar. The fears of a deepening euro zone crisis of late has also taken a toll on these commodities, hurting demand for raw materials, further adding to their woes………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Water is reaching super-commodity status as it is always in demand and we rely upon a constant supply. As water infrastructure systems continue to age, the case for a water-focused exchange traded fund gets stronger, within a properly diversified portfolio.
“There are estimated to be between 700,000 and 800,000 miles of public sewer mains in the U.S., and over one million miles of drinking water systems, with pipes over 100 years old, meaning they are either past or nearing the end of their useful life, according to a ASCE report. Pipes represent the largest capital investment, accounting for 80%-85% of all wastewater systems investment requirements in the U.S.,” S&P Capital wrote in a recent note. ……………………………………….Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Water is reaching super-commodity status as it is always in demand and we rely upon a constant supply. As water infrastructure systems continue to age, the case for a water-focused exchange traded fund gets stronger, within a properly diversified portfolio.
“There are estimated to be between 700,000 and 800,000 miles of public sewer mains in the U.S., and over one million miles of drinking water systems, with pipes over 100 years old, meaning they are either past or nearing the end of their useful life, according to a ASCE report. Pipes represent the largest capital investment, accounting for 80%-85% of all wastewater systems investment requirements in the U.S.,” S&P Capital wrote in a recent note. ……………………………………….Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Commodity and macro markets trader Stephen Jamison has closed his macro commodity fund to new investors after nearly doubling its capital to $1.5 billion last year, making it one of the biggest players in that niche market.
Jamison Capital Partners took the action for its Koppenberg Macro Commodity Fund just four years after its launch with $125 million under management, a source familiar with the New York-based company said………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

Louis Dreyfus Commodities, one of the world’s largest agricultural traders, on Wednesday reported its largest-ever annual profit on robust global demand for food products and historically high crop prices after a severe U.S. drought.
The privately held company said in an annual report that net earnings jumped 25 percent to $1.1 billion in 2012, excluding a $93 million loss in BioSev, the company’s ring-fenced Brazilian sugarcane milling business which suffered from low cane yields and low ethanol prices………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

The introduction of capital controls in Cyprus is a textbook example of shutting the stable door after the horse has bolted. Rich Russians and wealthy Cypriots knew the crisis was coming and have had the best part of a fortnight to spirit their money out of the country since it broke, even assuming they did not do so beforehand.
The restrictions will intensify the slump Cyprus faces while not removing the risk of bank runs when branches finally open for businesson Thursday. What’s more, the controls severely damage the credibility of the euro………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

For the eighth time in 10 months, Peru’s central bank has raised deposit requirements on dollar-denominated accounts to stem the flow of hot money into its fast-growing economy and dampen currency appreciation.
With the sol approaching a 16-year high, Peru’s central bank said that as of April 1, the reserve ratio will rise 0.25 percentage points. The bank, which has ruled out Brazilian-style capital controls, has also been aggressively buying dollars in the spot market to slow the trajectory of the sol………………………………………..Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

A senior foreign exchange analyst attending the 4th Saudi Money Expo and Conference 2013 has predicted a rise in global gold prices in 2014.
Peter Rosenstreich, chief FX Analyst and associate director of Swissquote Bank SA, speaking to Arab News on the sidelines of the conference yesterday, said: “Currently the relationship between inflation and gold prices is no longer there. Therefore, without that connection people really don’t have a reason to trade gold. If we start seeing global inflation rising at the end of 2013, we will tell investors to start buying gold again to offset inflation, which would make gold prices to rise.”……………………………………….Full Article: Source

Posted on 28 March 2013 by VRS |  Email |Print

When you turn on the faucet of your kitchen sink or bathroom shower, it’s easy to forget that behind the water is a really big business. From finding a clean source, to purifying it, and getting it into your home, there are plenty of ways to profit from good old H2O. And the demand for safe, clean water in every corner of the world has never been higher.
We were reminded of its importance last week with the United Nation’s 20th annual World Water Day. Connecticut Water Services (CTWS) marked the occasion by ringing the closing bell at the Nasdaq marketsite. ……………………………………….Full Article: Source

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