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Commodities Briefing 14.May 2013

Posted on 14 May 2013 by VRS |  Email |Print

Is it too early to pronounce the so-called commodity super-cycle over? Just maybe. Two Canadian commodity indexes came out Monday, and they both suggest that raw materials are going through a modest stumble, not the huge blow up being forecast by the commodity doom and gloom crowd.
The indexes are from Toronto-Dominion Bank and Bank of Nova Scotia, whose top commodity analyst gave a relatively sanguine observation on the overall trend, despite April’s swoon for precious metals………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

The main fundamental drivers of the commodities supercycle are still in force and recent commodity price weaknesses are more related to business-cycle fluctuations and short-term commodity-specific supply increases than a change in structural fundamentals.
Resource-intensive economic growth in emerging markets, led by urbanisation and industrialisation, has been the main force behind the rise in commodity demand and prices in the past 10 years. This process is expected to continue for the next 10 to 20 years………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Farmers responded to a big rise in prices in the past five years with a combination of increased planting, better husbandry and larger applications of fertiliser and pesticides. As a result, production rose, sending prices down.
The price weakness could last. Unlike agricultural commodities such as corn or wheat where seeds are set down every year, coffee bushes continue to produce beans and cocoa trees keep growing once planted. In short, it is a lot easier to increase production in response to rising prices than to cut it when prices fall………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

The decline in Scotiabank’s Commodity Price Index in April was quite mild - down 0.2% month-over-month (m/m) - despite a sharp mid-month selloff in gold and talk of an end to the ‘Super-Cycle’ in commodity prices. “Financial market concern over the outlook for commodity markets was overblown mid-month,” said Patricia Mohr, Scotiabank’s Vice President of Economics and Commodity Market Specialist.
“While China’s Gross Domestic Product (GDP) slowed to 7.7% year-over-year (y/y) in 2013:Q1, from 7.9% in 2012:Q4, actual demand for raw materials was robust in China. The double-digit growth of China’s passenger car market, up 20% in Q1, reinforces its importance as a driver of growth in worldwide auto demand and related commodities such as copper.”……………………………………….Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Iran is unhappy with the current oil prices, its oil minister said Monday, hinting at a proposal for the OPEC to lower its output to compensate for a drop in crude prices. “Iran’s suggestion has always been to reduce OPEC production ceiling,” Rostam Qasemi told reporters at a petrochemical conference in Tehran.
The Organisation of the Petroleum Exporting Countries last week boosted production to 30.21 million barrels a day in April from 29.93 million in March maintaining a flat forecast of global demand………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Crude oil prices slipped Friday on renewed global demand worries after OPEC left its 2013 estimate unchanged and reported increased output in April. New York’s main contract, West Texas Intermediate (WTI) for June delivery, closed at $96.04 a barrel, down 35 cents from Thursday.
In London trade, Brent North Sea crude for June settled 56 cents lower at $103.91 a barrel. The WTI futures contract sank more than $3 before pulling back up in late-session trade………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Emkay Commodity Research has come out with its report on energy and precious metals. The research firm expects crude oil prices to go down as investors would remain cautious ahead of the manufacturing, GDP and retail sales data to gauge the health of global economy.
Emkay Commodity Research has come out with its report on energy and precious metals. The research firm expects crude oil prices to go down as investors would remain cautious ahead of the manufacturing, GDP and retail sales data to gauge the health of global economy………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

According to Bloomberg, Warren Buffet’s MidAmerican Energy Holdings Co. is gearing up to drop $1.9 billion on new wind farms in Iowa. The investment might build as many as 656 new turbines by 2015, which would add as much as 1,050 megawatts of wind power capacity to the 2,285 megawatts the company already operates in the state.
The project could also herald a revival in American wind power in general. The anticipated expiration of the production tax credit for wind energy drove a spike in installations in 2012, then a lull into 2013, and finally an anticipated ramp up now that the credit was extended for another year by the fiscal cliff deal………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Consumers will sell the least used gold in five years after prices tumbled into a bear market, curbing a source of metal that typically accounts for about one in every three ounces of global supply.
Refiners will handle about 1,550 metric tons of old jewelry and other discarded metal this year, 4 percent less than in 2012 and the least since 2008, Toronto-based TD Securities Inc. estimates. The amount is valued now at $71.4 billion, from $84.5 billion at this year’s peak………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

How many of us would like to walk into a shopping mall holding several grams of gold in the pocket to buy a packet of soap or other daily necessities? This is quite possible if paper currency loses its significance or value. But why would that happen and what does it have to do with gold prices?
Think of a scenario. A scenario in which the world collapses and there are massive job losses. Economic activities tumble, companies shut their offices and factories, governments decline to honour debt and banks refuse to return our deposits………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

I find myself reminiscing about April 2011 when the white metal ended the month at a sterling $48.70 an ounce after hitting an all-time intraday high of $49.51. That record surpassed the previous high of $49.45 set three decades earlier when the Texan Hunt brothers set out to corner the silver market.
Since the 2011 peak, the S&P has roared higher by some 50%, while the value of silver has tumbled 53%. That’s not nearly as bad as the drop silver experienced between its Hunt brothers induced high on Jan 1, 1980 through its low on June 21, 1982, when silver fell a devastating 90%………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Weaker metals prices overall spurred speculators to shed some of their bullish precious metals futures and options positions at the Comex division of the New York Mercantile Exchange, according to U.S. government data.
For the week ended May 7, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report saw their net-long positions in precious metals drop across the board in disaggregated report. In the legacy report, action was similar, although silver saw a mild gain in the net-long position. Speculators decreased their net-short position in copper in both reports as prices for the red metal rose………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Physically-backed gold exchange traded funds are used by investors as an easy alternative to buy the metal within the equities markets. However, the innovation in ETFs can also add to the selling pressure on gold.
“The ETF revolution set expectations very high and brought a lot of liquidity at first” to the commodity markets, said Kevin Kerr, president and chief executive officer of Kerr Trading International. “After all, the ETFs were much more palatable to the average equity investor who wanted to steer clear of futures or physical gold and silver.”……………………………………….Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

Despite price gains across a range of commodities last week, commodity investors remain cautious. In fact last week saw the largest ever inflows into ETF Securities short gold ETP (SBUL), with $48mn of net new inflows.
Other of ETF Securities’ range of short commodity ETPs have also seen large inflows, with ETFS Daily Short Copper (SCOP) seeing $37mn of inflows last week alone. While investors remain bearish, there are increasing signs that a commodity price turnaround may lie ahead………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

The Dubai Gold and Commodities Exchange (DGCX) said Monday it reached in April a total trading volume of 24.5 million contracts, valued at 1.025 trillion U.S. dollars and a first since the market’s inception in 2005.
The DGCX said in an e-mailed statement the major milestone achieved in its eighth year of operation, comes on the back of a substantial year-on-year volumes growth of 139 percent in April. Volumes in April totalled 1,336,942 contracts, valued at 48.73 billion dollars………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

It may be hard to accept, given the yen’s recent sharp fall, but the Japanese unit remains in the eyes of many a haven currency. The dollar’s rise above Y100 is not just a function of Bank of Japan easing, but also the benign market of late.
Bursts of angst can still see the yen gain ground. As can the Swiss franc, a haven peer, which may now also face a distinct weakening trend………………………………………..Full Article: Source

Posted on 14 May 2013 by VRS |  Email |Print

A report by Bloomberg New Energy Finance and Ernst & Young forecasts that South Korea’s emissions trading scheme (ETS) could reach the penalty level of $90 per tonne of CO2 – exceeding that of any other ETS in the world.
According to the authors the high prices expected from the Korean scheme come down to three factors: 1) ambitious emission reduction targets ( 30% below business-as-usual (BAU) emissions in 2020 applied proportionately to the sectors covered by the Korean ETS or equivalent to a 19% reduction from 2010 levels);……………………………………….Full Article: Source

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