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Commodities Briefing 02.Apr 2013

Posted on 02 April 2013 by VRS |  Email |Print

If you slept through the first quarter in commodity markets, you didn’t miss much.The Dow Jones-UBS Commodity Index fell 1.1% in the first quarter, and the lackluster performance could add further fuel to detractors’ argument that the commodity supercycle is over for now. The index fell 1.1% in 2012 after declining 13% in 2011.
Most commodity markets are reflecting a modest outlook for the global economy, crimped by slackening Chinese demand, uncertain growth prospects in the U.S. and Europe, adequate stores of raw materials, and a strengthening U.S. dollar undercutting commodity prices. A stronger dollar typically makes dollar-denominated commodities more expensive in other currencies………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Investors are boosting wagers on higher commodity prices at the fastest pace in almost four years, rebounding from the least bullish position since 2009, on signs that the U.S. is accelerating and Europe’s debt crisis is easing.
Hedge funds and other large speculators increased net-long positions across 18 U.S. futures and options by 10 percent to 679,191 contracts in the week ended March 26, data from the Commodity Futures Trading Commission show. The bets surged 67 percent in three weeks, the biggest advance since May 2009. Wagers on higher oil prices climbed the most this year, while those for cattle are at a six-week high………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Switzerland is one of the most important commodity trading centres in the world, said the Swiss Federal Council in a release last week announcing the publication of a background report on commodities. This report responds to challenges within the commodities trading industry coming from international competition and from calls for better compliance with international standards and more financial transparency.
Switzerland indeed wants to meet reputation risks, protect its significant role in this industry and remain attractive to commodity companies. The commodities industry in Switzerland includes groups such as Glencore Int’l, Vitol SA, Trafigura Beheer and Cargill and many smaller trading houses. But the country rejected calls for tougher regulation and chose to go for voluntary principles instead………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Commodity trading houses are expanding aggressively in Africa as they look to add volume and take on assets that promise to benefit from a continent achieving some of the highest economic growth in the world.
Merchant traders have historically been mostly concerned with shipping Africa’s oil on to global markets, but are now viewing Africa as a destination market for fuels and are investing in the storage and retail networks the continent needs to develop. But their growing involvement in a region where several top companies have faced legal problems or payment delays may worry would-be investors at a time when the companies, typically privately owned, are scouting for new forms of capital………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

The ANZ Commodity Price Index rose 7.4% in March, led by whole milk powder, pelt, butter and skim milk powder prices, in its third strongest monthly rise ever. ANZ economist Steve Edwards said the index, at 296.1, was now just 6% below its all time high, which was recorded in April 2011.
The only two months when the index has risen by more are November 2009 and April 1986 when it posted 11.13% and 8.84% increases, respectively. “Underpinning the latest lift was a strong jump in dairy and pelt prices,” says Edwards………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

At a time when U.S. equities are trading near a record and the dollar is having its best start in three years, commodities will finish this quarter little changed from where they were at the end of 2012. The Standard & Poor’s GSCI gauge of 24 raw materials will be at 644 at the end of June, 1.4 percent lower than now, according to the median of nine investor and analyst predictions compiled by Bloomberg.
The index rose 1 percent this year, the worst start since 2009. Gains in arabica coffee, silver and nickel will be offset by declines in cotton, crude and natural gas, analyst forecasts show. Investors had $132 billion tracking commodity indexes at the end of February, Barclays Plc estimates………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Without fanfare, China passed the United States in December to become the world’s leading importer of oil – the first time in nearly 40 years that the U.S. didn’t own that dubious distinction. That same month, North Dakota, Ohio and Pennsylvania together produced 1.5 million barrels of oil a day — more than Iran exported.
As those data points demonstrate, a dramatic shift is occurring in how energy is being produced and consumed around the world – one that could lead to far-reaching changes in the geopolitical order………………………………………..Full Article: Source

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Ed Morse, Citigroup’s top energy economist, has taken a fresh swipe at companies and countries that rely on the global petroleum edifice. With a typically vivid title—“The End is Nigh”—Morse argues in a new report that permanent changes in the ways we produce and consume energy are hollowing out oil demand, with head-spinning ramifications.
The nub of the March 26 report: If the market transformation resembles that which occurred after the 1979 Iranian Revolution (which Morse regards as a possibility), global oil demand would plummet by 18%, to around 74 million barrels a day from the current 90 million. Such a plunge would trigger political and economic havoc in petroleum export-reliant Russia and OPEC………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Oil theft in Nigeria helped drive down production from the Organization of the Petroleum Exporting Countries in March to its lowest level in a year and a half, according to a survey conducted by Dow Jones Newswires.
Crude-oil output from the group of major oil producers averaged 30.226 million barrels a day in March, down from 30.436 million barrels a day in February, according to the survey of industry and official sources. The March level is the lowest since October 2011, when it stood at 30.195 million barrels a day………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Oil producers used to cushy prices of US$110 to $120 a barrel will soon have to brace themselves for leaner times, analysts predict. Many expect the oil price, boosted in the past two years by the Arab Spring and the West-Iran nuclear stand-off, to undergo a correction by the middle of this year.
Current prices cannot solely be explained by the dynamics of supply and demand, says the International Energy Agency, the developed countries’ energy watchdog. Regional national oil companies are preparing for a dip. Citi foresees oil prices dropping by the end of the decade to between $80 and $90 a barrel………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Globally crude oil is expected to witness a healthy demand in the second quarter of 2013 as a result of return of refineries from maintenance and growing consumption, stated London based Barclays in its recent market outlook.
“To meet this increased call on crude, we expect a slight improvement in supplies, which would help to create a well-balanced market,” it added. Front month Brent edged higher over the week, registering marginal gains and trading in a tight intra-day range since Monday………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

The BRIC (Brazil, the Russian Federation, India and China) is an interesting political and economic conglomeration. Currently, only the Russian Federation is a major oil exporter, while the ongoing prosperity of both China and India depends on continued access to reliable sources of oil and natural gas imports.
The BRIC acronym is sometimes expanded to BRICS to include South Africa, another energy deficient state, with all five states recently hosting a summit in Durban, South Africa………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

The market for liquefied natural gas (LNG) in Asia faces uncertainty on a number of fronts, even as gas projects worldwide are seeking customers there, International Energy Agency (IEA) analyst Anne-Sophie Corbeau told Canada’s Financial Post this week.
Among the questions regarding demand from Asia are whether Japan will return to heavy use of nuclear power and how successfully shale gas can be developed in China………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

The IMF jumps into the climate change debate with a headline-grabbing carbon tax proposal; Dr John Abrahams talks to us about climate change realities; the idea of the self-driving car gains traction; Shell announces $1 billion annual spending plan on Chinese shale; and a sneak preview of this week’s premium offerings…
The International Monetary Fund (IMF) is against government energy subsidies. This certainly shouldn’t come as any surprise for this austerity institution, but its latest report is gaining a decent amount of traction in the media because it’s the first time the IMF has seriously jumped into the climate change theater. It calls for an end to energy subsidies across the board (about $1.9 trillion annually around the world) or for these subsidies to be offset with taxes that could pay for expensive social programs………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

The coal exporters – Australia, South Africa, Indonesia and Mosambique – have come out with regulations in the past few months that make the price of the fuel coming from these nations at similar levels.
On one side, the mineral-rich countries are becoming more conservative of taking away revenues generated from their land overseas. Other, they are making sure they sell at premium, even though prices have seen a downward rally recently. This make the buyers such as India wonder are the coal producers also forming an OPEC-like cartel………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Resurgent confidence in the global economy has propelled equities higher in recent months, and investors have in turn shunned the safety of traditional flight-to-safety asset gold. Indeed, the yellow metal is set to record its worst quarterly performance in more than a decade following a 3.7% drop to around $1,600 per ounce.
However, I am convinced that a backdrop of rising inflation — coupled with enduring hiccups in the macroeconomic recovery, particularly in the eurozone — should send yellow metal interest higher as the year progresses. Gold bugs can latch onto rising metal prices through SPDR Gold Trust and Gold Bullion Securities, instruments that are designed to track movements in the gold price………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

The gold industry’s decision to hedge against falling prices of the metal cost major miners billions less than a decade ago, when bullion soared, leaving them trapped in loss-making contracts.
But as the gold boom shows signs of coming to an end, miners and analysts question whether hedging, in a different form, could make sense again for producers tackling challenging deposits, rising costs and demands from their lenders………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Gold has had a spectacular run since the onset of the global financial crisis. From about $US750 an ounce in 2008 it reached $US1900 in September 2011. But since then the gold price has been trading in a range between $US1550 and $US1800. Each time there’s a wobble in Europe, investors head for the haven of gold and its price moves towards the upper end of this trading range.
That is just what has happened over the past couple of weeks with the financial woes besetting Cyprus………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

You no doubt have heard it said: A market requires buying, a lot of buying, to rise, but it can fall for any reason. Really; I hope you heard that before now because like so much of what passes for perceived wisdom on Wall Street, it is wrong, worthy only of the Annals of Unsubstantiated Musings, and therefore would not be said by me.
As a case in point, I recall a March 1989 conversation with a bond market technician who said, almost in passing, “There is not a lot for sale out there.” Yields have declined ever since then. Similarly, stocks have been able to rise in the face of continued outflows from mutual funds as buyers are willing, and indeed forced, to accumulate them at higher prices. Markets that do not sell off on bad news can rise with only minimal buying interest………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

2012 was a bull year for gold in number, says the CPM Group but, by other measures, the bull-run ended in 2011. Writing in the 2013 edition of its Gold Yearbook, the metals consultancy points out that, while the gold price rose 6.2% on an average basis, prices were unable to revisit the 22 August 2011 settlement peak of $1,889.70.
“Prices actually only moved between $1,525 and $1,800 last year, compared to a steady rise from $1,300 to $1,920 in the first eight months of 2011,” it writes………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

As a traditional investment product, gold has been favored by almost everyone. But this year, the gold market has been sluggish after the Spring Festival. Falling prices have disappointed some investors, while making others happy. Li Dong has the details.
In contrast to the gold market in the past, the price of gold this year after the Spring Festival did not rebound. In the global market, according to the COMEX division of the New York Mercantile Exchange, gold futures ended last week with a loss of 0.7 percent, ended March with a gain of 1.1 percent, and ended the first quarter of 2013 with a loss of 4.8 percent………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Gold has not been able to enjoy a rally that equity markets have saw. Year to date, gold is down 4.5%, while the S&P is up 10%. The reason why gold is down may speak for itself. It’s often believed that a strong equity market will translate to a lack of demand for gold.
Gold is a hedge when the market is falling, so it’s pretty clear investors have little reason to invest in gold when equity prices are rallying………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Central banks have increased their gold holdings in their vaults over the past few months taking advantage of the lower prices, according to GoldCoin.net, a leading Gold coin superstore of USA.
South Korea (20 metric tons) and Russia (19.2 metric tons) are the leading buyers in 2013, while Kazakhstan (6.6 metric tons), Indonesia (1.9 metric tons), Bosnia (1 metric ton) and Herzegovina (1 metric ton) also made substantial increases in their gold holdings. The eastern European nation of Azerbaijan has bought 2 metric tons so far in 2013 after holding no gold for over a decade………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Investors are celebrating the 10th anniversary of the world’s first exchange-traded fund backed by physical gold, and they’re in awe over how much the investment vehicle has altered the landscape for the precious-metals market forever.
MarketWatch told you almost seven years ago that change was already in motion. Still, at the time, it would have been tough to imagine the true scope of influence the gold ETFs have had on the market. Now “it is widely acknowledged that the launch of gold [exchange-traded products] has had a very significant impact on the gold market and is now a key part of it,” Graham Tuckwell, chairman at ETF Securities, said in a press release marking the 10th anniversary of the first gold ETF………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

The turnover on commodity exchanges dipped seven per cent to Rs 696,348 crore (Rs 745,970 crore) in the first fortnight of March, according to the Forward Markets Commission data. The fall in turnover followed the Government announcing imposition of transaction tax on all non-agriculture commodities trading in the Budget.
The tax came into effect from April 1. A sharp drop in agriculture futures dragged the overall turnover in the first half of March. Agriculture commodity turnover was down 35 per cent at Rs 80,914 crore (Rs 123,538 crore)………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Set up in 2010, the Singapore Mercantile Exchange, a pan-Asian commodity and currency derivatives exchange, is now hunting for more agricultural commodities from black pepper in Vietnam to rubber in Thailand, to become the regional centre for agriculture futures transactions.
SMX last month signed a memorandum of understanding with the Agricultural Futures Exchange of Thailand to include rubber futures in its trading platform, following similar deals with Vietnam and Indonesia, which are famous for their black pepper and palm oil………………………………………..Full Article: Source

Posted on 02 April 2013 by VRS |  Email |Print

Funds that specialize in currencies are enjoying their best start to a year in at least a decade as economies show signs of decoupling. The Parker Global Currency Manager Index gained 2.7% in the first three months of the year, the most for the period since at least 2003 and the biggest jump for any quarter since 2007.
The index fell 0.2% in all of 2012 and tumbled 8.4% the year before. The $4 trillion-a-day foreign-exchange market is roaring back to life as economies and monetary policies diverge, with the US surging, the UK and Eurozone flirting with recession, and Japan stepping up efforts to end deflation………………………………………..Full Article: Source

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