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Commodities Briefing 30.May 2013

Posted on 30 May 2013 by VRS |  Email |Print

For commodity traders, there is more bad news in store. The International Monetary Fund (IMF) has cut its forecast for China’s growth from earlier estimates of 8 per cent to 7.75 per cent for 2013. This follows weak data coming from the country. The biggest impact of a slowing China will be felt in the ‘hard commodities’ (mainly metals) markets. 
China was the reason for a major bull run in these commodities till 2007 on account of its huge requirement and spending in the run-up to the Beijing Olympics. However, a lull in spending by the country resulted in a downward slide in international prices of these hard commodities………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

The commodities boom of the past decade is starting to look its age. Abundant liquidity and the perception that commodities could be a ‘store of value’ pushed prices to record levels in many markets. But today, investors are rightly becoming nervous about the likely fall-out, once the Federal Reserve starts to wind down its stimulus programs.
Markets may therefore start to reconnect with the fundamentals of supply and demand. And this could provide an unpleasant shock for unprepared investors. Oil markets provide a good example of what may be in store………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Latin America is disappointing investors, economists and businesses with slower-than-forecast growth as waning commodity prices and strong currencies hit nations that failed to diversify and become more competitive.
The five biggest investment-grade markets in the region — magnets for foreign capital as rich countries stalled –expanded below projections or show signs of weakness. Mexico’s and Brazil’s gross domestic product missed estimates in a Bloomberg survey. Economists polled by Brazil’s central bank cut the country’s 2013 outlook this week for the second time in seven days, anticipating the worst three-year period in a decade………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Like other big commodities producers in Latin America, Brazil’s economy grew less than expected in the first quarter, hit by falling commodities prices amid lackluster global growth. But unlike most of its neighbors in the region, Brazil’s economy is proving far less resilient to the downturn in commodities.
Why? Just a week ago, Brazilian Finance Minister Guido Mantega said the government’s “anti-cyclical” spending boosts investment and stimulates growth. He suggested Latin America’s biggest economy would expand around 3.5% this year, recovering from a 0.9% expansion last year. On Wednesday, though, he conceded that Brasilia will now have to revise downward that forecast………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

India, buoyed by a decline in commodity prices and a government encouraging international investment, is claiming its place as the stock market with the least volatility and the highest return among the four prominent emerging economies that include Brazil, China and Russia.
The BSE Sensex, the benchmark for India’s $1.2 billion equity market, rose 1.9% in the 12 months ended 27 May when adjusted for price swings, the best gain in the group of emerging-market countries known as the BRICs, according to the Bloomberg Riskless Return Ranking. India’s stock volatility is the least among its peers, and has the highest risk-adjusted returns even over five years………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Bank of America Corp. cut its Brent crude price estimates amid lower-than-expected fuel demand in China and Europe and rising oil production in North America.
Brent, the benchmark for more than half the world’s oil, will trade at an average $103 a barrel in the second half of this year, according to Francisco Blanch, the bank’s head of commodities research in New York, lowering the bank’s forecast from $111. The 2014 Brent estimate was cut to $105 from $112, he wrote in a report……………………………………….Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Oil-price manipulation may have wrought “huge” damage to consumers, the EU’s anti-trust chief said yesterday as he drew comparisons with EU investigations into the rigging of bank rates.
While it is too soon to draw conclusions from the May 14 raids on Royal Dutch Shell, BP, Statoil ASA, and Platts, EU competition commissioner Joaquin Almunia said both sets of probes target price manipulation through a reporting system………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

OPEC has decided to ax a key committee that monitored its members’ compliance with oil production targets and made recommendations on output policy, people familiar with the matter told The Wall Street Journal Wednesday.
The Vienna-based secretariat of the Organization of the Petroleum Exporting Countries will now be responsible for monitoring members’ production levels, instead of the Ministerial Monitoring Sub-Committee, or MMSC, the people said………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

The International Energy Agency now expects that the United States will account for nearly 33% of all oil production growth over the next five years. This news has been unsettling to several members of OPEC that are worried about the increase in supply outstripping the growth in demand. If this comes to fruition, which most consumers are hoping for, benchmark prices for Brent crude oil could drop below $100 per barrel.
Thanks to up and coming plays like the Bakken and the Eagle Ford, quite a few companies have been building some noticeable momentum. If their pace is maintained, OPEC countries like Algeria and Nigeria could be hit hard by price reductions while Saudi Arabia remains happy with the current production levels of the organization………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

OPEC’s best adherence to its production ceiling in 18 months is failing to buoy the outlook for crude oil prices, raising pressure on the group to pare supplies amid burgeoning U.S. output. While all but one of 20 analysts in a Bloomberg survey predict the 12-member organization will maintain its target of 30 million barrels a day at its May 31 meeting in Vienna, most say OPEC needs to conform better with the limit to keep supply from overwhelming demand.
Societe Generale SA says the necessary reduction could be “substantial.” The Centre for Global Energy Studies says prices may tumble without output curbs………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Casey Research’s Chief Energy Investment Strategist, Marin Katusa, whose portfolio profited nicely the last time the uranium bull broke loose a decade ago, recently interviewed a group of world-renowned energy experts to discuss the prospects for the sector that some considered doomed by the Fukushima disaster.
Anti-nuclear power sentiment has by no means evaporated, but Katusa sees clear signals that the bulls are ready to run, not least of which is the recent attack on the Somair uranium mine in Niger. Why? First, the 20-year Highly Enriched Uranium (HEU) Program agreement between the U.S. and Russia, aka “Megatons to Megawatts,” expires this year………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

A correction in precious metals was long overdue, which I have discussed with you and others many times. Gold was up 12 years in a row, which is extremely unusual for any asset. I don’t know about any asset in history which was moving up for 12 years without a declining year. So gold was overdue for a correction.
Normally things correct 30-40% every year or two. So, the anomaly in gold was the price action for 12 years. Now hopefully we are having a long overdue and necessary correction. It may take a bit longer for gold to make a new bottom or sound bottom, and then the bull market will continue………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Paper gold, controlled by Wall Street, is going down. But demand for physical gold all over the globe is going up every time that gold prices are down. That’s not the only place divergences are occurring in the global gold market. A divergence can even be seen in the difference between Wall Street speculators and commercial interests in the paper gold market.
The speculative momentum players continue piling on shorts, while commercial interests are following a path 180 degrees opposite………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Strategists at Bank of America Merrill Lynch, who in April removed their $2,000 target for the price of gold, cut their forecast again. The “ongoing headwinds” to the fundamentals for gold and silver are “heavily influenced by the lack of bullish macroeconomic drivers,” the strategists wrote in their latest global markets weekly note.
After the recession, non-commercial market participants initially raised their exposure to precious metals because of fears that money-printing would boost inflation, and that the Federal Reserve was debasing the US dollar………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Silver may climb toward $25 an ounce after prices rebounded from the lowest level since September 2010, according to technical analysis by Commerzbank AG.
Prices slumped last week to test the support area of $19.49 to $20 before rebounding in a bullish reversal, technical analyst Axel Rudolph wrote in a report dated yesterday. That support zone consists of the psychological $20 level, the May 2010 high and the December 2009 peak, he said………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

China’s demand for silver fell hard in April. But is that all there is…? Analysts at Barclays (BCS) recently noted that silver imports were down 28% in the month of April year on year.
But in an article reporting that news, the author makes it sound like demand was also off significantly for unwrought silver, for silver powder, and for jewelry manufacturing as well. Only if you take a myopic view would such assumptions be correct………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Asian gold demand from this April to June will reach a quarterly record as bullion consumers in the region take possession of supply freed up by selling from exchange-traded funds (ETFs), the World Gold Council (WGC) said on Wednesday.
Gold prices fell to their lowest in more than two years at $1,321.35 an ounce in mid-April on signs of economic improvement in main markets and fears that central banks around the world could start to curtail their bullion-friendly policy measures………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Trading precious metals against each other based on purchases and sales through exchange-traded products would have returned an annual profit of about 30 percent since 2007, according to JPMorgan Chase & Co.
The bank rates investment in the products on a weekly basis, buying the metal with the highest current holding relative to the past six months and selling the one with the lowest relative holding. The strategy, which was first calculated this month, would have been successful about 56 percent of the time since 2007, according to JPMorgan………………………………………..Full Article: Source

Posted on 30 May 2013 by VRS |  Email |Print

Greenhouse gas emissions dropped 7% in the UK, compared with an EU average of 3.3%, according to new data. The mild winter of 2011-12 may seem a distant memory after this year’s big chill, but the warmer temperatures helped the UK achieve a fall in greenhouse gases steeper than any other nation in the European Union.
In 2011, the latest year for which figures are available, UK emissions of climate-warming gases dropped by 7%, compared with an EU average of 3.3%, according to data released on Wednesday by the European Environment Agency (EEA)………………………………………..Full Article: Source

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