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Commodities Briefing 21.May 2013

Posted on 21 May 2013 by VRS |  Email |Print

Silver prices have slumped to their lowest level since September 2010 and gold prices are down 18% year-to-date leading many market observers to declare that the super-rally in commodities is over.
Jim Rogers, the legendary investor and Chairman of Rogers Holdings, says the commodities bull market continues. He calls the latest slump in prices a correction. “I still don’t see massive new supply coming into the market which will keep prices down,” he said……………………………….Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Rather than wonder if the supercycle has ended, keep watching for confirmations of continuity, or signs of reversal. From an Indian investor’s viewpoint, the debate on whether the supercycle of commodities has ended is relevant for several reasons. A declining trend in commodity prices can take the edge off rising inflation.
It not only makes life less expensive for a consumer, but also ensures the Reserve Bank of India can stay the course on cutting interest rates. If the government gets its fiscal act together, all these factors can combine to get growth back on track. That’s the big picture. But falling commodity prices are a double-edged sword because India’s basic industries will earn less, affecting earnings, valuations and eventually growth………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

As opposed to the gold and silver markets, which are racing like the Corkscrew at Cedar Point (and the stock market for that matter, which looks like a Gemini rocket), the oil market has been a steady earner for traders this year, despite the weakness other commodities and the economy that might be expected to hit crude oil as well.
Oil isn’t a gusher compared with stocks, such as the Dow Jones Industrial Average, which is up 16% this year. But some analysts and investors say oil’s rise is remarkable because it came despite several factors that often push prices lower………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

The Organization of the Petroleum Exporting Countries (Opec) will need to pump slightly more oil than it thought in 2013 and expects global consumption to be much higher in the rest of the year, signs of a stronger market that argue against any calls for supply restraint when the group meets on May 31.
Opec in a monthly report forecast 2013 demand for its crude will average 29.84 million barrels per day (mbpd), up 90,000 bpd from the previous estimate. Both world oil demand and the demand for Opec oil will increase in coming months. The average requirement for Opec’s crude in the second half will be 30.47 mbpd, up from 29.14 mbpd in the current quarter………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Turkey and Egypt have agreed with Iran’s proposal to form an international petrochemical association similar to the Organization of Petroleum Exporting Countries (OPEC).
“On the sidelines of the petrochemical conference of the D8 group of countries, Turkey and Egypt, as the two biggest producers of petrochemical products and engineering polymers in the Middle East, agreed to Iran’s oil proposals,” National Iranian Petrochemical Organization (NIPO) Managing Director Abdolhossein Bayat said, Press TV reported………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

The famous Danish physicist Niels Bohr once humorously observed, “Predictions are very difficult, especially about the future.” And so, as the world considers yet another rosy oil supply forecast, this time from the Paris-based International Energy Agency (IEA), it is worth reviewing the agency’s record.
Back in the year 2000, the IEA divined that by 2010, liquid fuel production worldwide would reach 95.8 million barrels per day (mbpd). The actual 2010 number was 87.1 mbpd. The agency further forecast an average daily oil price of $28.25 per barrel (adjusted for inflation). The actual average daily price of oil traded on the New York Mercantile Exchange in 2010 was $79.61………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

For more than a decade, the biggest question in energy has been whether production could keep pace with the rapidly escalating demand from emerging markets. It did, barely, thanks to crude prices that have quadrupled over that span.
The question now, though, is whether the still fast-growing Asian crude demand can keep pace with the even faster-growing production gains in North America, driven by the boom in US tight “shale” oil and increasing exploitation of the Canadian oil sands………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Pessimism on gold is so extreme that sometimes even the bears worry it might be overdone. Today the price jumped a little more than 1 percent after news hit the wires that was perceived to be bullish: Moody’s Investors Service reported that U.S. policymakers must do something about the government debt to avoid a rating downgrade this year.
Contrarians see today’s bearishness as a bullish sign, reasoning that once almost everyone who used to be a bull has become a bear, gold has nowhere left to go but up. That’s why they’re called contrarians. It’s also what happened in November 2008, says Dave Lutz, a precious-metals analyst at Stifel, Nicolaus in Baltimore. As negative sentiment peaked, gold began a rally that took it from $800 an ounce to more than $1,800………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Hedge-fund managers are making the biggest ever bet against gold as billionaire George Soros sold holdings last quarter and Goldman Sachs Group Inc. predicted more declines after the longest slump in four years.
The funds and other large speculators held 74,432 so-called short contracts on May 14, U.S. Commodity Futures Trading Commission data show. That’s the highest since the data begins in June 2006 and compares with 67,374 a week earlier. The net- long position dropped 20% to 39,216 futures and options, the lowest since July 2007. Net-bullish wagers across 18 U.S.- traded raw materials rose 1.1% to 588,482, led by gains in hogs, corn and cotton………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Gold futures may rebound to $1,500 an ounce in June after hitting a “double bottom” yesterday, according to technical analysis by R.J. O’Brien & Associates.
The price may climb 8.4 percent from yesterday’s settlement after touching $1,336.30, a month after slumping to a two-year low of $1,321.50 on April 16, said Matthew Schilling, a commodity broker at R.J. O’Brien in Chicago. A double bottom is a chart pattern showing a drop, a rebound and then another decline approaching the previous low, usually indicating support………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Gold is two tales in one metal. Most immediately, gold (like silver) is the story of renewed dollar strength as investors come to appreciate that the Federal Reserve’s lower-for-longer interest rate policy really does have a sell-by date.
But secondly, precious metals also represent the broader story of how just as market euphoria develops its own logic, separate from what’s happening in the real world, the downside can develop its own relentless momentum as well………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Base metals on the London Metal Exchange (LME) have closed higher, tracking a stronger euro in a jerky session for all metal markets as volumes were thinned by a European holiday.
Further out, some analysts argued the fundamental picture for flagship LME metal copper may be improving. By the close of open outcry trading on Monday, LME three-month copper was up 1.3 per cent on Friday’s settlement price at $US7,398 a metric ton………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

The big divergence over the past few months in the direction of the S&P 500 and copper, which historically trade in tandem, has one strategist questioning which market is getting it wrong.
David McAlvany, CEO, McAlvany Financial Group said it doesn’t make sense that S&P 500 should motor higher, while the sell-off in copper continues………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

ETF Securities short commodity ETPs continued to see inflows last week as tactical investors remained bearish gold, and a strong US dollar continued to weigh on sentiment towards commodities broadly.
Global cyclical growth indicators were mixed, with Euro area Q1 GDP and US industrial production numbers disappointing, but US confidence, US leading indicators and Japanese GDP data showing upside surprises. The one bright spot was continued inflows into palladium ETPs, which gained on news of Johnson Matthey’s forecast of a large supply deficit in 2013………………………………..Full Article: Source

Posted on 21 May 2013 by VRS |  Email |Print

Currency strength due to stimulus measures in the developed world is currently Latin America’s Achilles’ heel, though the region’s macroeconomic management is a bright spot, the head of the United Nations’ body for the region told Reuters.
Monetary easing in Europe, the United States and Japan has led investors to hunt for better returns in the emerging world, strengthening Latin America’s currencies and damaging the competitiveness of its crucial exports………………………………..Full Article: Source

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