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Commodities Briefing 13.May 2013

Posted on 13 May 2013 by VRS |  Email |Print

Hedge funds increased bets on lower gold prices after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc. (BLK), the world’s biggest money manager, said it’s still bullish.
Speculators held 67,374 so-called short contracts on May 7, 6.4 percent more than a week earlier, U.S. Commodity Futures Trading Commission data show. The net-long position dropped 10 percent to 49,260 futures and options. Net-bullish wagers across 18 U.S.-traded raw materials climbed 5.8 percent to 582,265, with gains for cocoa, cotton and hogs…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

A controversial hedge fund-lite structure looks likely to survive, despite a regulatory clampdown that has claimed its first victim. Cantab Capital Partners, a $5.5bn systematic global macro manager, last week announced the imminent closure of its only onshore Ucits fund as a result of pressure from European regulators.
However, fund promoters are restructuring a swath of similar funds, advised by groups such as Winton Capital, Man Group and Aspect Capital, to get around new rules imposed by the European Securities and Markets Authority…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

The net long money held by hedge funds and other big speculators in commodities is back to a six-week high, moving on from April’s market tumble, as traders piled into oil and oversold crops like coffee, cocoa and corn, trade data showed on Friday.
But hedge funds are not bullish on all commodities, sharply paring their bets on soybeans and natural gas for the week ended Tuesday amid expectations of a bumper soy crop and warmer U.S. weather that reduces the need for gas-driven heating…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Commodity trading houses are not “too big to fail”, says a report commissioned by the banking industry’s top lobby group, which had hoped it would conclude the opposite.
The Global Financial Markets Association, which commissioned the report from a leading academic on commodity markets, had hoped to use it to persuade watchdogs to regulate their rivals. GFMA members such as Goldman Sachs and JPMorgan Chase compete directly with commodity trading houses in some areas. But the report said that trading companies “pose less systemic risks” than big banks…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Dubai demand for gold has been witnessing a massive surge since the price collapse of last month, with demand far outstripping supply. Various estimates suggest that demand in the past few weeks has been nothing short of astronomical, surging by 10 times the normal demand.
According to the latest precious metals weekly report by Gerhard Schubert, Head of Precious Metals at local bank Emirates NBD, “Participants of the physical industry in Dubai believe that an additional 50 tonnes have been bought since the price crash in April. These sales figures are in addition to the ‘usual’ numbers and put a little perspective on the derivative side of the market.”………………………………….Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Survey participants are divided on the price outlook for gold next week, with no one group capturing the majority of opinions, although nominally more participants see weaker prices.
In the Kitco News Gold Survey, out of 36 participants, 25 responded this week. Of those 25 participants, eight see prices up, while 11 see prices down and six see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

The Opec will need to pump more oil than previously thought to balance the market in 2013 and expects global consumption to be much higher in the rest of the year, the group said in a report ahead of its meeting to set policy on May 31.
The Organization of the Petroleum Exporting Countries in a monthly report forecast 2013 demand for its crude will average 29.84 million barrels per day (bpd), up 90,000 bpd from the previous estimate. The 12-member group’s own production rose by 280,000 bpd in April to 30.46 million bpd, according to secondary sources cited by the report, led by higher output in Saudi Arabia and Iraq………………………………….Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

A surge in US tight crude oil production has reached 2 mb/d; and it is expected to reach 2.8 mb/d by 2015 and 3.1 mb/d 2020, London based Barclays noted in a report.
The improvement in drilling efficiency gains across some key tight oil plays is meritorious and contributes directly to the current surge in tight oil production, there are growing risks of this momentum approaching inflection points in the future (depending on rig availability) at which steep decline rates start to offset these efficiency gains…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Dubai demand for gold has been witnessing a massive surge since the price collapse of last month, with demand far outstripping supply. Various estimates suggest that demand in the past few weeks has been nothing short of astronomical, surging by 10 times the normal demand.
According to the latest precious metals weekly report by Gerhard Schubert, Head of Precious Metals at local bank Emirates NBD, “Participants of the physical industry in Dubai believe that an additional 50 tonnes have been bought since the price crash in April. These sales figures are in addition to the ‘usual’ numbers and put a little perspective on the derivative side of the market.”………………………………….Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Gold bullion fell to a two-week low Friday, drifting lower towards $1440 an ounce during this morning’s London session before dropping sharply through that level, as stocks gained and most commodities fell as the Dollar strengthened against major currencies.
Silver fell to $23.34 an ounce, while copper prices ticked higher. “The risk [for gold] is a break through support [will] test the $1322 low,” say technical analysts at bullion bank Scotia Mocatta, who cited $1440 an ounce as a key support level…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Gold attracts investment capital when other asset classes fail to deliver. So now equities have clearly regained their appeal after more than a decade of what finance professionals would rather we called “sub-optimal” returns, gold investing has lost its urgency for money managers.
Indeed, it’s become a neat little “short” to trade against whilst picking the next winner in the S&P’s all-time high dash. More telling than equities, however, gold’s 20% drop in real terms since the top of summer 2011 has coincided with an upturn in real interest rates. You might not have noticed it…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

It seems that everyone “knows” that silver is going lower. In fact, almost all of mainstream media is certain that lower levels are going to be seen in the metals. But, when everyone in the mainstream is so certain about lower levels, it is usually the time for the market to shake them out of that notion, just before it proves them right.
As I noted in my recent gold article, Dave Kranzler published an article on Seeking Alpha recently, wherein he did a nice job in compiling the sentiment numbers across many of those tracking market sentiment…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

After a recent article I wrote about the potential of a silver bubble, I got a question about the behavior of JPMorgan Chase with regard to the silver market, specifically the allegation that the bank was actively involved in manipulating the silver market through a sizable short position. The basis of the question seemed to be a request to bring forth the issue and address how silver was trading as a result of JPMorgan’s activity and within the context of the global economy in general.
As of last December, the last major complaint against the bank was dismissed in a federal court, as well as by the Commodity Futures Trading Commission. That doesn’t mean that no wrongdoing occurred, but it does suggest that insufficient evidence exists to take the matter forward…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Platinum and palladium markets may witness deficits in 2013 and continue with the trend in 2014 as the challenging mine supply backdrop overshadows the modest recovery in demand anticipated for later in the year, stated London based Barclays in its recent market analysis.
Although the bank does not expect that the production losses to the magnitude suffered last year. Given the pick-up in recycling toward the end of last year, Barclays sees scope for supply to be revised up from the preliminary estimates released in November…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Copper prices may witness further upward movement as market positioning is still short with positive demand signals from China. The base metal prices may rise above $7,500 per ton before re-stabilising shorts, stated London based Barclays in its recent market report.
Last week, across the base metals complex, short-covering dominated price dynamics. In the context of extreme CTA short positioning, a stronger-than-expected US employment report alongside a surge in German factory orders for March combined to act as catalysts to fuel the move in prices…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Despite their more optimistic view of the global economy, an Ernst & Young survey of 193 mining and metals sector executives finds only 24% are focused on mergers and acquisitions. Those surveyed anticipate 91% of mining and metals M&A deals will be below US$500 million in value.
“Instead, companies are opting for lower risk organic growth, optimizing capital structure and strategic divestments,” said E&Y in its latest Global Capital Confidence Barometer. “For those among which M&A is still a priority, smaller bolt-on acquisitions are preferred.”………………………………….Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

A reversal of the recent exodus from gold exchange-traded funds is unlikely for some time, according to market experts. Net outflows in commodity ETFs of $9.3bn in April marked the biggest monthly exit by investors from the asset class in its 10-year lifespan, according to a BlackRock report this month. The outflows almost doubled the previous record of $5.2bn, set in February.
A gold-selling frenzy has been blamed for the phenomenon and creating the mass departure from commodity ETFs, according to providers. On April 15, the market suffered its biggest one-day price drop since 1983…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Exchange-traded funds ushered in a new era of investing in commodities, allowing everyone from avid retail investors to leveraged hedge funds to make bets on gold, silver and other hard assets without the constraints of trading in traditional futures.
But the popularity of those stocklike vehicles, credited with helping to drive commodities to record highs in the past five years, may be working against prices — and commodity investors — right now…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Commodity super-cycle that began in 1990’s is far from over and it will continue to be driven by resource intensive urbanisation, industrialisation in emerging countries, according to an analysis by ETF Securities Ltd. It said that analysts have shown a tendency to confuse short term correction in prices denoting end of super cycle while such cycles have to be defined over a larger time frame extending to three to four decades.
ETFS said that the world has seen four major super cycles in the past 160 years with bull cycles ranging from 30-40 years and the immediate two previous super cycles were driven by growth in USA (1870-1913) and post war Japan from 1946-1973…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Japan convinced its partners in the Group of Seven leading industrial economies that it was not manipulating its currency as part of a bold attempt to get its economy out of a near two-decade period of stagnation.
At the conclusion of a two-day meeting between the leading financial representatives of the G-7 countries - the United States, Britain, Germany, France, Italy, Japan and Canada - British finance minister George Osborne said there was a formal acknowledgement that each member needed to secure their own country’s growth by balancing austerity measures with growth-enhancing policies…………………………………..Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

Unilever (ULVR), the seller of Lipton tea and Dove shampoo, expects Southeast Asia’s currencies to strengthen further against the U.S. dollar and euro in the next few years as foreign investment boosts economic growth.
“I would go long on the currencies in Southeast Asia,” Peter Ter-Kulve, the London- and Rotterdam-based company’s chief executive officer for Southeast Asia, said in an interview on May 10. “Most of the monetary policies are very robust at the moment and the currencies are a testament to the fundamental strength of the economies we are in.”………………………………….Full Article: Source

Posted on 13 May 2013 by VRS |  Email |Print

A plan to bolster the flagging price of permits to emit carbon dioxide that are traded in the EU’s Emissions Trading System (ETS) appeared dead last month after being voted down by the European parliament. But now, less than a month later, supporters say momentum is growing to reintroduce the plan for another vote, possibly as early as July.
The plan, which parliament rejected on 16 April, would have delayed the introduction of 900 million carbon allowances into the ETS, the cornerstone of EU efforts to reduce industrial greenhouse gas emissions. But what seemed a bitter defeat in April for supporters, is now, in retrospect, starting to look like an unlikely victory…………………………………..Full Article: Source

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