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Commodities Briefing 25.Apr 2013

Posted on 25 April 2013 by VRS |  Email |Print

Since 1998, commodities have been in a bull market—the so-called supercycle, where surging demand for raw materials eclipses supply, juicing prices to abnormal highs.
Lately, though, it has been all downhill for commodities. On Morgan Stanley’s MS -0.74% recent earnings call, finance chief Ruth Porat characterized this weakness as cyclical rather than structural. But a more fundamental shift appears under way………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

That’s the gist of BofA Merrill Lynch rates guru David Woo’s latest report – titled “The impossible trinity: A tale of three cities” – which begins like this (emphasis added):
The commodity market is saying global growth is slowing. The US equity market is saying US consumers are still going strong. The FX and European sovereign markets seem to believe Mrs. Watanabe is about to embark on a global shopping spree. We think it is unlikely that these markets will all turn out to be right. Something will have to give and a major re-alignment of the markets, the odds of which are rising, will probably not be either smooth or benign, in our view………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Brent crude held above $100 a barrel on Wednesday, supported by fear that the Organisation of Petroleum Exporting Countries (Opec) could cut supply if prices fall further, although data from major economies pointing to slower growth and fuel demand capped gains.
Oil has propped above $100 this week after calls from Opec oil hawks Venezuela and Iran for an emergency meeting ahead of one already scheduled on May 31………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Iran considers the logical price of crude to be around $100 to $120 a barrel, the Mehr News Agency quoted him as saying.”It is possible to reach an agreement on the issue of oil price without holding an emergency meeting,” he said.
Brent crude fell below $100 a barrel on Tuesday.OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Crude oil prices have recently dropped to near $101 ahead of the next OPEC meeting on May 31. “Negotiations and consultations have begun with OPEC members and it is likely that an agreement could be reached between the members without holding any extraordinary meeting,” Nikzad Rahbar said on Tuesday.
He noted that the OPEC members are all unanimous that oil prices should remain above $100 per barrel. “Under the present circumstances, $100 (per barrel) is a reasonable price for crude oil, but any price lower than that will be definitely unreasonable,” Nikzad Rahbar added………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Since its inception in 1960, OPEC has never been shy in flexing its energy-fuelled power over the West. But those days are gone. And it’s not just the US and Israeli shale gas and oil revolution which threatens OPEC decline. OPEC is already grappling with a whole bunch of serious energy problems that are colluding to hasten its demise.
Let’s just focus on the OPEC kingpin and world’s leading oil producer, Saudi Arabia. Even as the Saudis and other OPEC leaders have played down the nascent impact of US shale development on global production (especially America’s growing self-sufficiency), the signs are that the Saudis are increasingly desperate to keep their world no 1 ranking in oil production………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

“The drive to clean up the world’s energy system has stalled,” IEA Executive Director Maria van der Hoeven told the CEM, which brings together ministers representing countries responsible for four-fifths of global greenhouse-gas emissions. “Despite much talk by world leaders, and despite a boom in renewable energy over the last decade, the average unit of energy produced today is basically as dirty as it was 20 years ago.”
To illustrate this inertia, the report, Tracking Clean Energy Progress, introduces the Energy Sector Carbon Intensity Index (ESCII), which shows how much carbon dioxide is emitted, on average, to provide a given unit of energy………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Europe’s share of international coal trading is rising despite a sluggish economy, as a collapse in emissions permit prices and a global oversupply of coal bolsters the fuel’s profitability in power generation.
Global coal use has been steadily rising, driven largely by soaring demand in developing economies such as China and India. But high European gas prices and healthy production levels from exporters have also made coal more attractive for electricity generation in Europe, prompting a rise in coal burn despite efforts by policymakers to curb carbon emissions………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

The New York-based hedge fund manager has long stuck by his thesis that gold will someday be a powerful hedge against inflation, and it was no different on the investor call he held, two people who listened to the call said.
John Reade, a partner at Paulson & Co, said that the firm, which oversees about $18 billion, is not veering off its course even as he cautioned that there could be more price fluctuations in the short term………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

What is a “Safe-Haven”? It should be defined as a long-term investment that holds its value internationally, in extreme financial times. Is gold one of these? After all, it has fallen from $1,921 at its peak to $1,344 at its trough.
This is a 30% fall over the last year plus. At one time George Soros described gold as the “Ultimate Safe-Haven”, before saying it was a “disappointing Safe-Haven”. Alan Greenspan described gold as being “money in extremis.”……………………………………….Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

There an oddity about gold at the moment with phenomenal physical demand in Asia, U.S. and Europe, while the actual spot prices languishes. We have written before about the strange disconnect between paper and physical demand — with the former bearish yet the latter bullish — but rarely has there been such a clear divergence.
Over the last few days on we have run many stories about this … Dubai running short of physical, U.S. Mint selling out of smaller denomination bars, coins and bars flying off the shelves in India and China and queues outside leading gold sellers such as Degussa in Germany………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

While silver prices have definitely been battered in recent weeks, Neal Meader of Thomson Reuters GFMS suggested “unique factors” that contributed to the retreat in price may be overcome in the short term.
Meader, the head of precious metals research and forecasts for Thomson Reuters GFMS, cautioned that the lift, which originally wasn’t anticipated by Thomson Reuters GFMS until the second half of this year, could come sooner, briefly sending silver prices to $30 per ounce………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Recent, previous commentaries have focused on the massive liquidation in the paper-gold market; as large investors (in large numbers) have fled that paper in favor of real metal. It has now been established that this flight out of the paper-gold market was in response to the Cyprus Steal – and at least to some extent has been a choreographed event.
Naturally this had led to a question from readers: what about the silver market? Indeed, while the silver market has also seen the price for paper-silver plunge; there has been no corresponding liquidation of paper-silver. So what is going on here?……………………………………….Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Global platinum market may deliver a deficit of 248koz this year, compared to 461koz last year. The deficit is also expected to touch 317koz in 2014, stated London based Barclays in its recent market analysis.
“Despite the weak demand backdrop, we expect supply to under perform, keeping the market in deficit. We forecast overall supply to fall by 3% y/y from a weak base year and global demand to fall by 5.4% y/y,” the bank added………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Demand for metals is likely to increase tenfold as developing economies surge ahead, putting severe stress on the natural environment, a new report from the United Nations Environment Programme (Unep) has warned.
The organisation has suggested a novel response: bring in the mining companies – often seen as the environmental villains – to sort out the recycling.At present, demand is fulfilled by mining more metals, some of them – such as rare earths – that are in limited supply. Mining in many parts of the world is often carried on regardless of the social and environmental consequences, including child labour, ground, water and air pollution, and the destruction of forests………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Perhaps the most important question for precious metals investors is whether the recent sharp declines in gold, silver, and platinum are a “selling climax” — which will reverse powerfully to the upside and provide strong long-term investment opportunities — or are harbingers of even further weakness to come.
According to my chart analysis, all sorts of red warning flags are flying, regarding the short to intermediate terms for the precious metals and their associated shares………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

If you are invested in the lofty stock markets of the United States or Japan, legendary investor Jim Rogers has a message for you …Euphoric gains always lead to hangover pains – it’s just a matter of when.
“This is artificial, as I’ve [repeatedly] said,” Rogers told Money Morning during an exclusive interview Sunday night. “This is the first time in recorded history where nearly all the central banks in all countries are pumping out lots of money, debasing their currencies, printing money. I’ve never seen this in history, and now we’ve got everybody – or nearly everybody – doing it.”……………………………………….Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Even if Scotland votes for independence and manages to keep the pound (No currency union with independent Scotland, says Osborne, 24 April), there’s another problem facing its choice of currency.
There is a risk that the rest of the UK will decide to leave the EU, leaving Scotland using a currency controlled by a non-EU state. It’s hard to believe that this will be a practical proposition, and harder still to believe that the EU will stand for it. English and Scottish politicians haven’t mentioned this issue so far. They may be trying to consider the Scottish and EU referendums as separate matters. But don’t worry, I’m sure the European Central Bank is considering it………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

UBS Strategists, Gareth Berry and Geoffrey Yu take a technical perspective at today’s commodity-based currencies and outline the technical positions.
In terms of the AUD/USD, “There’s scope for more downside with the bearish conditions persisting. Support is at 1.0202 ahead of 1.0115. Resistance is at 1.0308 ahead of 1.0359.” In addition, the USD/CAD indicators suggest a bullish outlook, as resistance is at 1.0294, a break above this would open 1.0342 – support is at 1.0230 ahead of 1.0203………………………………………..Full Article: Source

Posted on 25 April 2013 by VRS |  Email |Print

Prices for United Nations carbon offsets fell to the lowest ever as a ban on the use of some credits approached and as factories and power stations surrendered permits and credits to cover emissions in 2012.
Certified Emission Reductions, or CERs, for next-day delivery fell 86 percent to 1 euro cent ($0.01) a metric ton on London’s ICE Futures Europe exchange. The contracts have plunged from 19 cents at the start of the year amid a surplus of permits in Europe, where the region’s recession has cut demand………………………………………..Full Article: Source

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