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Commodities Briefing 28.May 2013

Posted on 28 May 2013 by VRS |  Email |Print

Lower prices for commodities from cotton to copper are helping U.S. businesses by reducing their raw-material costs and buoying consumers by keeping a lid on prices paid. Copper, used in many goods including electronics, is off nearly 10% this year. Silver, which has various industrial uses, has tumbled more than 25%, and wheat is down more than 10%.
While lower commodity prices are bad for producers and countries reliant on exporting raw materials, they are good for Alabama Chanin, a Florence, Ala., maker of high-end clothing. Cotton prices are up a bit this year, but they are down about 50% since a surge two years ago. The cost of organic cotton—a niche product that Alabama Chanin uses exclusively in its wares—has roughly tracked that price movement…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

China’s key commodity imports like oil, copper, iron ore and soybeans all dipped into negative territory year over year in April. Exporters that are China dependent, from American soy farmers to Brazilian iron ore companies, are continually seeing only patchy signs of improvement.
This sluggish picture for headline commodity imports is consistent with reports from Chinese commodity consumers that while demand has picked up in line with seasonal norms, it is not surprising to the upside…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The global steel market is oversupplied and miners are going to feel the pinch. Demand is, at best, subdued and steel production has been ramping up, especially in China. Last week, the World Steel Association said that production in April was 132m tonnes, an increase of 1.2pc year on year. “This growth is almost solely attributable to China, where 6.8pc more steel was produced in April than in the same period last year,” Commerzbank noted.
Most key producing regions reduced output, so China’s market share of worldwide steel production climbed to 49.8pc. “The global steel market remains clearly oversupplied,” Commerzbank added, “which should block any marked increase in steel prices.”………………………………….Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The American energy boom is deepening splits within the Organization of the Petroleum Exporting Countries, threatening to drive a wedge between African and Arab members as OPEC grapples with a revolution in the global oil trade.
OPEC members gathering on Friday in Vienna will confront a disagreement over the impact of rising U.S. shale-oil production, with the most vulnerable countries arguing that the group should prepare for production cuts to prop up prices if they fall any lower…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Millions of people may be affected by the suspected oil-price manipulation being probed by the European Union, according to EU Competition Commissioner Joaquin Almunia’s most senior aide.
Royal Dutch Shell Plc (RDSA), BP Plc (BP/), Statoil ASA (STL) and Platts, the commodities price reporting company, earlier this month said they are being investigated after the European Commission, the EU’s antitrust authority, conducted raids at the companies’ offices to collect possible evidence of collusion…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Saudi Arabia and Iran face off at Friday’s Opec meeting – not about oil prices and supply, but over the leadership of the cartel of oil producers.
The office of the Opec secretary-general is often seen as largely ceremonial, but its importance cannot be overstated with oil prices still hovering above $100 a barrel. Abdalla El-Badri, the secretary-general, has been forced already to extend his tenure because Riyadh and Tehran have failed to agree on a successor…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Venezuela will support holding the Organization of the Petroleum Exporting Countries’ production ceiling but is open to a reduction if members find that it would help maintain the South American country’s base price of $100 a barrel at the cartel’s meeting this week in Vienna, Oil Minister Rafael Ramirez said Monday.
“We have an agreed level of production of 30 million barrels a day which we think can be maintained to keep the price at $100 per barrel. If some view comes out of the discussions that this could affect or lower the price, we are for a cut in production,” Mr. Ramirez told reporters at the Caracas headquarters of state energy monopoly Petroleos de Venezuela SA…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

On 31st May, OPEC (the Organisation of Petroleum Exporting Countries) will meet to review its target for oil production for the year, which will help ensure that supply from its members is sufficient to meet demand.
As OPEC prepares for this meeting, Suhail Mohammed al Mazrouei, the energy minister for the United Arab Emirates (UAE), has announced that his nation believes the current crude prices are “suitable and fair.” Of the 12 member countries that form OPEC, providing 40% of the world’s crude oil………………………………….Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The “golden age of gas” forecast by the International Energy Agency (IEA) in 2011 faces significant challenges from growing coal use and increasing community concerns, as well as rising costs in key markets, reports The Australian.
According to the influential chief economist of the world’s energy watchdog, Fatih Birol, cheap gas being produced with relatively new techniques such as fracking could undermine support for renewable energy if governments don’t take urgent action…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Germany must rein in runaway retail prices for electricity or risk a consumer backlash that could undermine support for a massive shift toward green energy, the International Energy Agency (IEA) said on Friday.
The Western world’s energy watchdog pointed to weaknesses in Germany’s effort to move away from nuclear and fossil-fuel energy towards a low-carbon economy, a move that was accelerated by Chancellor Angela Merkel’s decision in 2011 to exit nuclear power altogether…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Hedge funds are the least bullish on gold in more than five years as speculation about the pace of money printing by central banks whipsawed prices, driving volatility to a 17-month high.
Money managers cut their net-long position by 9 percent to 35,686 futures and options as of May 21, the lowest since July 2007, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts rose 6.7 percent to a record 79,416. Net-bullish wagers across 18 U.S.-traded commodities slid 2.1 percent, as investors became more bearish on coffee and wheat…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The great Indian gold rush witnessed during April and early May has started to taper off. Physical demand has declined by at least 15% in the last one week and bullion dealers and jewellers say that they do not see an immediate recovery in demand as the crop planting season will kick off shortly, which will keep the rural buyers away.
This year, rural India has accounted for nearly 65% of the demand. A weak rupee will make gold imports costlier, which will further affect the consumption pattern. The rupee has weakened against dollar and is now hovering around Rs 55.60. The landed price of gold depends on the exchange rate…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Commercial participants in the gold market, also known as “smart money” given that they work in the industry as opposed to being speculative trend followers, are the most bullish on gold in nearly five years.
As prices declined over the last few months, commercials - those involved in the production, processing or merchandising of a commodity - have been busy buying futures contracts and covering short positions, according to data from the Commodity Futures Trading Commission…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The gold price fell $10 per ounce after reaching almost $1,400 for the fifth time this week in London trade Friday morning. Silver held tight around $22.50 per ounce, managing only one-third of gold’s 2.0% gain for the week.
After yesterday’s 7% plunge Japan’s stock market bounced, but other Asian equities fell, as did European stocks. U.S. and U.K. markets are closed Monday for national holidays…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The natural ratio of the occurrence of silver to gold in the ground is typically estimated at roughly nine ounces of silver to one ounce of gold, and yet the recent trading price ratio of 62 to one is almost seven times higher.
After contemplating this curious anomaly, one is left wondering if comparisons between gold and silver may be as fruitful as comparing silver investment demand and silver industrial demand…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Hong Kong Exchanges and Clearing is considering joint listings of commodities products on mainland Chinese bourses to capitalise on last year’s acquisition of the London Metal Exchange (LME),CE Charles Li said on Monday.
“This is about developing mutual product listing/licensing arrangements and forming strategic partnerships with leading exchanges,” said Li in a blog post outlining developments for the exchange’s commodities business…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The chairman of the recently closed Hong Kong Mercantile Exchange and a close ally of Hong Kong leader Leung Chun-ying has resigned as an independent nonexecutive director of AIA Group Ltd., the insurer said Sunday.
AIA said Barry Cheung, who stepped down from all public positions Friday night, resigned “in order to attend to other commitments.” Government officials say he is under police investigation amid a probe on suspected irregularities at the commodities exchange, which was founded in 2008 but has struggled to get off the ground…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Germany’s DZ Bank is to end speculation in food commodities, following a move taken by several other German banks, a letter from the bank showed on Monday. The move was announced by DZ Bank director Lars Hille in a letter to German pressure group Foodwatch seen by Reuters on Monday.
Groups such as Oxfam and Foodwatch have said such trading is responsible for pushing up international food prices and exacerbating famine in poor countries. A series of other German banks, including Commerzbank , DekaBank and Landesbank Baden-Wurttemberg, have stopped trading in agricultural commodities in the past year…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

Commodity currencies fell and haven currencies gained ground following a volatile week in the global foreign exchange markets that saw investors take profits on bets that the US dollar would strengthen.
The Japanese yen and Swiss franc rose against the US dollar for the second day after expectations that the US Federal Reserve could slow its bond-buying programme led to caution in the markets. Sharp falls in Japanese equities had a knock-on effect on the yen, which strengthened against other major currencies…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The recent sell-off in commodity currencies triggered by a fall in demand for resources and the rush to buy U.S. dollar, may continue, say analysts, as the need to diversify capital dwindles. Commodity prices have been hammered by worries that China’s economic recovery is slowing, along with the U.S Federal Reserve hinting at a possible cutback to its stimulus plans, which is boosting the U.S. dollar.
Richard Yetsenga, head of global markets research, ANZ said the trend of diversifying capital by buying commodity currencies is reversing and weakness in this asset class will continue…………………………………..Full Article: Source

Posted on 28 May 2013 by VRS |  Email |Print

The United States is in the midst of a surge in energy production, one that could realign one of the market’s most reliable barometers: the inverse link between the U.S. dollar and oil. Gnerally speaking, what’s good for the dollar tends to be negative for oil, and vice versa—but the U.S. oil boom might be altering that rule of thumb.
With the U.S. suddenly awash in oil and gas, it has raised the question of whether the greenback can join the ranks of the dollars of Canada and Australia or the krone of Norway as a “commodity currency”—which tend to correlate directly with the price of oil…………………………………..Full Article: Source

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