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Commodities Briefing 15.Apr 2013

Posted on 15 April 2013 by VRS |  Email |Print

Your investment portfolio already has stocks and bonds. Do you need to add commodities such as soybeans, copper and oil as well? Some experts argue that you should—and that this may be a good moment in which to make the move.
Studies have found that over a period of a decade or more, adding a basket of commodities to an investment portfolio can reduce volatility and provide strong protection against inflation………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

The world’s top commodities traders have pocketed nearly $250bn over the last decade, making the individuals and families that control the largely privately-owned sector big beneficiaries of the rise of China and other emerging countries.
The net income of the largest trading houses since 2003 surpasses that of the combination of mighty Wall Street banks Goldman Sachs, JPMorgan Chase and Morgan Stanley, or that of an industrial giant like General Electric. They made more money than Toyota, Volkswagen, Ford Motor, BMW and Renault combined………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

The world’s leading commodities trading houses such as Glencore, Cargill, Vitol, Trafigura and Mitsubishi, who represent a “vital nexus between producers and consumers of raw materials” have earned $250 billion over the past decade, surpassing the likes of JP Morgan Chase, Goldman Sachs and Morgan Stanley.
The commodities ’supercycle’ that began in 2000 in response to rapid Asian economic expansion has entered a period of slowing spin as prices of commodities ranging from oil to copper to gold face increasingly strong headwinds………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

If you want to raise $10bn quickly, you need to know who to call. When Igor Sechin, chairman of Rosneft, decided to buy TNK-BP and create the world’s biggest listed oil producer, he faced a problem: banks would not be able to provide the full $55bn required.
So Mr Sechin went elsewhere. Late last year, he phoned two of the world’s trading titans: Ian Taylor and Ivan Glasenberg, the chief executives of Vitol and Glencore. In a matter of weeks, the trading houses offered a $10bn loan that the state-owned Russian company guaranteed with future supplies of crude………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

The powerful Swiss commodity sector is under fire here, as citizens fed up with government inaction on charges of corporate corruption, tax evasion and lack of transparency gear up for major protests.
Switzerland is anything but a country rich in raw materials but it is, nevertheless, a major hub for international commodity trade, hosting some of the world’s biggest commodities companies such as Glencore (which specialises in power generation, steel production, oil and food processing); Xstrata (copper, zinc, aluminium, nickel and coal-fired electricity), Vitol (which ships oil products like gasoline, diesel, jet fuel and metals, as well as ethanol and chemicals) and Mercuria (dealing in oil and energy products)………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Iran wants oil prices to stay above $100 a barrel, its oil minister said on Sunday after crude touched nine-month lows near $101 on Friday and ahead of OPEC’s next meeting on May 31. “An oil price below $100 is not reasonable for anyone,” Rostam Qasemi said.
Fellow OPEC member Saudi Arabia’s oil minister said last month that around $100 a barrel was a “reasonable” price for consumers and producers alike………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

For a commodity usually described as “volatile”, oil prices have been eerily stable over the past three years - averaging US$111.26 in 2011, $111.57 in 2012, and $111.89 so far in 2013. Despite the revolution in Libya, stringent sanctions on Iran and Japan’s nuclear shutdown, the oil market has remained remarkably steady.
Yet on Friday, Brent oil prices fell sharply to under $102 per barrel, their lowest level for nine months. This came in response to downgrades of global oil demand by the producers’ and consumers’ representatives: Opec, the Energy Information Administration in the United States and the International Energy Agency. They were particularly concerned about weak demand in Europe and Japan, as the economic crisis drags on………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

The Organization of the Petroleum Exporting Countries, or OPEC, describes itself as “a permanent intergovernmental organization of 12 oil-exporting developing nations that coordinates and unifies the petroleum policies of its Member Countries.”
Historically, the organization has exerted considerable influence on the world oil market, with many even characterizing it as a cartel. Over the past three decades or so, it has produced a little less than half of the world’s oil, with its Gulf State members still controlling most of the world’s crude oil spare capacity. By lowering their collective output, OPEC members can push global oil prices higher, or so the logic goes………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Gulf Arab OPEC oil producers do not see the need to change production levels to support crude prices, OPEC delegates said after benchmark Brent touched nine-month lows on Friday.
A sell-off in commodities saw Brent contracts fall from around $106 a barrel on Wednesday to lows near $101 on Friday. Brent recovered to $103.11 at close of trade last week and Gulf exporters are happy to leave production unchanged at current price levels, delegates from all the Gulf Arab OPEC producers said over the weekend……………………………………….Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Non-OPEC crude oil supply may be reduced to 625 thousand b/d mark, almost 175 thousand b/d lower than March and almost 500 thousand b/d lower than January due to unplanned supply disruptions, according to the recent market analysis by London based Barclays.
Disruptions in non-OPEC supply centres continue to become less pronounced and constraints are easing, helping to alleviate much of the stress recently placed on the supply system………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Coal’s golden renaissance … While coal use in electricity generation has dwindled in the United States, it has been staging a quiet comeback in Europe. Coal-fired power generation is growing at an annual rate of 5% and 22% in Germany and Spain, while gas-fired generation is falling by 15% and 23% respectively.
In the UK, coal-fired plants accounted for 39% of electricity generation in 2012, a 32% increase on 2011, while gas use declined by the same amount. “As the dispatch of coal plants is more economic in Europe at current coal and CO2 emissions prices, gas lost 5 percentage points of market share in the power sector in 2012………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Hedge funds and other speculators added to bullish gold bets as the metal slumped into a bear market and Goldman Sachs Group Inc. warned the retreat is accelerating after the longest rally in nine decades.
The investors increased net-long positions by 19 percent to 56,084 futures and options in the week ended April 9, the first gain in three weeks, U.S. Commodity Futures Trading Commission data show. That contrasts with a 7.9 percent decline in bullish wagers across 18 U.S.-traded raw materials, which fell to a five-week low of 431,581 contracts. Holdings in agriculture dropped to the lowest since September 2006………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

U.S. specialist precious metals analyst, Jeff Nichols, made the comment that the gold price was driven ‘insanely lower’ that day. In his view the sales were not of physical metal but by technical and computer-driven me3 trading mainly in futures, forward, and options markets, rather than by any change in fundamentals or in the states of the U.S. and global economies.
He commented further that the data on U.S. retail sales and consumer prices released that day should, under normal circumstances have been bullish for gold with inflation indicators subdued and showing a weaker than expected U.S. economy………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

A forecast that gold prices will decline in the next few weeks is forcing customers to have second thoughts before investing in the yellow metal. Despite a fall in gold prices, many customers in the city are adopting a wait and watch approach before lapping up the yellow metal.
Consumers are of the view that gold rate will fall further, and hence there may not be an immediate increase in the demand for it, Ashok Kumar Gupta, joint secretary of Twin Cities Jewellers Association, said on Sunday………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Global commodity markets have had a poor start to 2013 with prices declining nearly across the board. Weakness in March meant that all base metals, most precious metals (notably gold and silver), iron ore and coking coal prices fell over the quarter.
Gold and silver ended the quarter 4 per cent lower from where they started. In particular, gold suffered from an investor sell-off with sustained outflow of the metal from physically-backed Exchange Traded Funds………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Based on the European Commission’s draft, Cyprus will sell about 10.4 tonnes of gold, representing 4 percent of the Euro 10 billion bail-out package for Cyprus and about 2.6 percent of the maximum 400 tonnes annual gold sales by the European central banks. Gold reserves represent 62% of total reserves in Cyprus.
However, Barclays pointed out that other European central banks hold a much higher percentage of gold - 90.3% in Portugal, 82.2% in Greece, 72.2% in Italy and 69.2% in France. The potential sale of Cyprus’ gold triggers fear that other European central banks will sell their gold to meet their financing needs………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Billionaire John Paulson lost more than $300 million of his personal wealth on his gold bet, as the precious metal fell to its lowest price in almost two years.
Paulson has roughly $9.5 billion invested across his hedge funds, of which about 85% is invested in gold share classes.Gold dropped 4.1% on Saturday, shaving about $328 million from his net worth on this bet alone………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

What happened?! is the question so many are asking about Friday’s waterfall in prices. A better question is, “Why?” Outside of the insiders, no one really knows. Yes, there can be some fairly cogent explanations, lots of glib answers, but no one knows, for sure.
What we do know for sure is that the market is always the final arbiter. Throughout the decline of the past nearly few years, there has been a continued glimmer of hope for a turnaround in recognition of the infinite printing of fiat, countries drowning in debt, and the only viable solution, at least in the Western world, has been more debt!……………………………………….Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

First of all, investment banks need to be installed as commercial traders in the silver market. Then, allow major futures exchanges to self-regulate. Next, establish a concentrated short position, whether hedged, or otherwise. Then encourage High frequency Trading and eliminate the human market makers with any sense of real value.
Welcome managed money that trades blindly and unemotionally based on technical indicators. This provides a universal status quo that is almost always wrong. Encourage confusion between the concepts of correlation and causation………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

What? The week opened with the silver price increasing by 70 cents, but investors sold the metal to lock in profits. This continued the pattern of silver failing to hold onto gains, since last October. The result was that prices ended lower for the fifth week in a row.
Why? With current global economic fundamentals, silver should be appreciating. The most intense burst of monetary stimulus the world has seen from the Bank of Japan, improving growth in China and the US, and nuclear threats from North Korea, among others reasons, have seen investors buy when the price weakens………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

So, how many of you are surprised to see silver trading down below $26 in the futures? As you know, I, for one, am not. In fact, I have been looking for the $22-24 region in silver for a longer term buying opportunity for two years now since silver topped almost exactly 2 years ago.
But, I do owe you an apology at this time, as I did not prepare you for this decline to occur from only the 28 region, whereas I thought we would move to at least the 29 region before this last decline began………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

John Maynard Keynes, the curmudgeonly economist, once said “The difficulty lies not so much in developing new ideas as in escaping from old ones…” One of the more intriguing “new ideas” to hit the mutual fund industry over last few years has been their adoption of hedge fund strategies. These “alternative” mutual funds hold out the promise of delivering hedge fund-like returns, without the high fees, to the retail investor.
Firms like UBS, Goldman Sachs and hedge fund giant AQR have opened numerous mutual funds offering small clients access to esoteric strategies like ‘tactical macro’ or ‘ statistical arbitrage’ and derivatives trading. ……………………………………….Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

Last week, Fitch cut China’s credit rating. A few days later, China pegged the yuan at its highest-ever level against the dollar.
On the face of it this seems odd: A strengthening currency should not accompany a sovereign-credit downgrade. Fitch cited underlying structural weaknesses and worries that companies and local governments had amassed too much debt, as it lowered China’s credit rating from AA- to A+………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

A European Central Bank survey shows that households in northern Europe have a much lower net wealth than those in southern Europe. Average German net assets per household are just under €200,000, while they are €300,000 in Spain and €670,000 in Cyprus. No, this not a typo.
German newspapers screamed that poor Germans are bailing out rich Cypriots. This interpretation is wrong but the truth behind these counter-intuitive findings is even more disturbing………………………………………..Full Article: Source

Posted on 15 April 2013 by VRS |  Email |Print

The European Union’s 54 billion- euro ($71 billion) cap-and-trade system may be undermined if the bloc’s Parliament votes against Climate Commissioner Connie Hedegaard’s temporary rescue plan tomorrow.
The strategy, known as backloading, would delay the issuing of some new permits under the EU emissions trading system, or ETS, which imposes pollution limits on about 12,000 power plants and factories across the region. The euro area’s recession has cut demand, exacerbating a glut that drove prices in the world’s biggest greenhouse-gas market to a record low in January………………………………………..Full Article: Source

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