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Commodities Briefing 03.May 2013

Posted on 03 May 2013 by VRS |  Email |Print

Glencore completed its takeover of Xstrata on Thursday, becoming the world’s fourth largest mining company and the world’s largest commodities trader.The announcement comes after 15 months of difficult negotiations and lengthy antitrust reviews.
The merger adds coal, copper, zinc and lead mines to Glencore’s trade empire, which will now include more than 90 commodities “from copper to barley and from oil to vanadium.”……………………………………….Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

The world’s little-regulated and often secretive commodity trading houses could face new disclosure rules, and even capital requirements, because of their money lending activities, after a global regulatory watchdog’s review of “shadow banking”.
The Financial Stability Board (FSB) - a task force set up by the G20 group of major economies to improve global financial regulation in the wake of the 2008 crisis - has asked national and regional regulators to determine whether commodity traders should come under the scope of new rules………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Latin America, once as riddled with tariff barriers as it is with rivers, mountains and jungles, is about to claim global trade’s starring role. The race to head the World Trade Organisation (WTO) is now down to a Mexican and a Brazilian. Their candidacies highlight a schism that splits the region down the middle.
In terms of competence there is probably little to separate Herminio Blanco, the Mexican, from his Brazilian rival, Roberto Azevêdo. Mr Blanco casts himself as an outsider, who proved his credentials when he negotiated Mexico’s entry into the North American Free-Trade Agreement (NAFTA) in 1994. Mr Azevêdo has been Brazil’s ambassador to the WTO since 2008, which he says has given him a ringside seat on its problems………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Dairy leads 12.6 per cent jump last month - largest rise in index’s 27-year history.Led by dairy products, ANZ’s commodity price index hit an all-time high last month but Fonterra’s auction saw prices give back nearly half of April’s gains.
In world price terms, the ANZ index climbed 12.6 per cent - the largest monthly rise in its 27-year history. It was underpinned by a 26 per cent rise in dairy prices, which make up 44 per cent of the index and without which the rise would have been only 0.2 per cent………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Oil prices are headed down, and I mean down at least $20 a barrel. The key reason is that prices have been high. It’s not a paradox, but a result of the long time lags in oil production.
Oil prices were fairly stable from 1986 through 2001, averaging just $20 per barrel. Then prices started rising, spiking to $134 just as the recession began. The price of oil has been above $80 for the past two and a half years. With rising prices has come a dramatic increase in exploration activity. During the era of low prices, the number of drilling rigs in operation around the world was 1,900 on average; now we are at nearly double that pace, and we have been for nearly three years………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

The U.S. is experiencing a boom in the production of oil. Only since the beginning of 2011, oil production in the U.S. has gone up by 30%, from 5.5 million barrels per day (mbd) to 7.2 mbd. Just this week, the U.S. Geological Survey announced that the amount of technically recoverable oil in North Dakota was tripled from a previous estimate – so this boom is unlikely to fall away in the short term.
At the same time, U.S. and European demand for petroleum products are declining. The economic troubles in the Euro zone have dampened economic activity (and petroleum demand), while in America, economic growth has returned, but the consumption of petroleum products are down as consumers change habits and lifestyles to drive less………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Oil futures are trading slightly lower in Friday’s Asian as traders take profits and look toward the U.S. non-farm payroll report due out later Friday. On the New York Mercantile Exchange, light, sweet crude futures for June delivery fell 0.20% to USD93.81 per barrel in Asian trading Friday after settling up 2.37% at USD93.19 a barrel on Thursday.
Traders had plenty of ammunition with which to propel crude higher Thursday. The European Central Bank cut its benchmark interest rate by 25 basis points to 0.50%. Additionally, ECB President Mario Draghi left the door open to further monetary easing………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will keep shipments little changed this month as “glum” demand in the U.S. and Europe counters rising consumption in Asia, tanker tracker Oil Movements said.
The group that supplies about 40 percent of the world’s oil will ship 23.67 million barrels a day in the four weeks to May 18, stable from 23.68 million in the previous period, the researcher said today in an e-mailed report. The figures exclude Angola and Ecuador. U.S. crude imports by tanker have fallen about 13 percent this year, the consultant said………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Markets can misprice risk, as investors in subprime mortgages discovered in 2008. Several recent reports suggest that markets are now overlooking the risk of “unburnable carbon”. The share prices of oil, gas and coal companies depend in part on their reserves. The more fossil fuels a firm has underground, the more valuable its shares. But what if some of those reserves can never be dug up and burned?
If governments were determined to implement their climate policies, a lot of that carbon would have to be left in the ground, says Carbon Tracker, a non-profit organisation, and the Grantham Research Institute on Climate Change, part of the London School of Economics………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

EON SE, Germany’s biggest power generator, used the most United Nations offsets to cover carbon- dioxide emissions last year, overtaking steelmaker ArcelorMittal (MT), data on the European Commission website show.
Factories and power stations used 500 million offsets in the bloc’s cap-and-trade program, the data show. EON handed in about 35 million credits, enough to cover 43 percent of its emissions last year. RWE AG (RWE), the second-biggest polluter in 2012, used credits covering 22 million tons, or 14 percent of its discharges. Offsets may be used to cut compliance costs within Europe’s carbon-trading system………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Delivered coal prices appear to be exceptionally resilient to the drop in consumption. In fact, while delivered coal volumes have been declining, delivered coal prices have been rising, Barclays noted in a report.
One might expect coal deliveries priced at $3.00 per MMBtu equivalent or more to drop the most as coal-to-gas displacement eats into the coal supply stack………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Coal prices are likely to fall this year, owing to low demand and increased supplies. Citi Research has lowered the price estimates of global thermal coal for this year and the next, citing increased supply and subdued demand in India and China, the key coal-importing nations.
Citi’s commodity research team cut its coal price forecasts for 2013 and 2014 by six per cent and 15 per cent to $89 a tonne and $94 a tonne, respectively. Earlier, the price was estimated at $95 a tonne for 2013 and $111 a tonne for 2014. Citi said the subdued demand in the European and Chinese markets, along with oversupply of 31-41 million tonnes (mt) in 2013-14, would reduce prices further………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

The gold price is expected to continue falling to as low as $1 200/oz over the next year, after what seemed to be an unstoppable climb over the past 12 years, says investment company Rezco Asset Management investment director Rob Spanjaard.
He adds that Rezco attributes the drop in price mainly to a large number of exchange-traded funds being liquidated. “The primary problem is that there was speculative money in gold, which is currently being withdrawn. As soon as the gold price stops rising, speculative investors start changing their minds………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

The most puzzling part of the investment business is seeing how the vast and largely economically illiterate masses interpret any given piece of news. Take the recent gold selloff: Many large players were motivated to sell by news that Cyprus will have to liquidate its gold stockpiles to pay off acute debt obligations. But just a moment’s reflection shows this reaction to be knee-jerk.
The real story behind Cyprus’ deal has much more profound ramifications — and they are positive for gold………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Silver in general is standing at a very interesting position, as it’s poised to break out in the short term, while at the same time a weakening economy will play havoc with the precious metal over time.
We’ll look at some myths surrounding silver in this article, as well as some of the realities inherent in silver as an investment option. Along with that the performance of silver in a weak economy and recession will be examined, as it appears that’s where we’re headed yet again. The recent CPI numbers point to that as a probability………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Make no mistake: The April sell-off in gold created some extensive “collateral damage” in the silver market.
The silver price dropped nearly 20% in just two days… and many Wall Street analysts were quick to downgrade their forecasts for the rest of 2013. But we believe Wall Street analysts have grossly misinterpreted recent events………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Labour disruptions in South Africa pushed the platinum market into a narrow deficit in 2012, for the first time in seven years, Thomson Reuters GFMS said on Thursday.
Speaking at the launch of the group’s Platinum & Palladium Survey in Johannesburg, Thomson Reuters GFMS, Research Director for Mining, William Tankard, said the market swung to a marginal deficit of 83,000 ounces in 2012………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Palladium’s deficit rose to the biggest in 11 years in 2012 as strike action in South African mines curbed supply and demand expanded, Thomson Reuters GFMS said. Platinum slipped into a deficit for the first time since 2004.
Palladium supply fell 4 percent to 8.19 million ounces as usage expanded 5 percent to 9.32 million ounces, the highest on record, the London-based researcher said today in a report. Excluding sales from Russian state stocks and investor selling, demand outstripped supply by 1.12 million ounces, the biggest gap since the 1.3 million-ounce shortfall in 2001, GFMS said………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Exchange-traded funds like the SPDR Gold Trust (ETF) have many similarities with regular stocks. However, even though it trades like a stock on the market, an ETF is a security that follows an index, a commodity or a basket of assets, so it has some particularities as an index fund. Because it acts like a stock on the market, but also because of the low cost and tax efficiency, an ETF can represent an interesting investment opportunity.
Speaking of the SPDR Gold Trust ETF, its shares have recently started to fall together with the overall slump of the gold market. The Trust had already hit a new 52-week low near the $132 mark in April before rebounding slightly………………………………………..Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

A move to a separate Scottish currency could see Scottish-based savers and depositors rushing for the Border to ensure their cash stays in sterling, a leading economist has warned. After pro-independence supporters criticised Alex Salmond’s “keep the pound” policy, a major conference in Edinburgh heard that, while a switch to a new Scottish currency was feasible, it could trigger turmoil in high-street banks.
Dr Angus Armstrong, the director of macroeconomic research at the National Institute of Economic and Social Research, said people in Scotland – especially firms and individuals with substantial savings – would ask themselves: “Do you think the Scottish pound would be lower than the UK pound?”……………………………………….Full Article: Source

Posted on 03 May 2013 by VRS |  Email |Print

Global cotton production is estimated to fall 5% to 26.3 mn tons while acreage is expected to to fall fall 5% to 34.1 mn ha in 2012-13 season on a year-on-year basis, according to International Cotton Advisory Committee (ICAC). World production is forecast to fall another 6% to 24.6 mn tons in 2013-14.
From 2012/13 to 2013/14, cotton production in China and the United States is each forecast to fall by 700,000 tons to 6.7 million tons and 3 million tons respectively, and production in India is forecast to decline by 170,000 tons to 5.7 million tons as farmers continue to switch out cotton for more profitable alternatives………………………………………..Full Article: Source

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