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Commodities Briefing 31.May 2013

Posted on 31 May 2013 by VRS |  Email |Print

What happened to commodities investments this year? Fracking has drilled a hole in the sector, and the gold bugs have taken flight. It was supposed to be different. This year was to be the start of the Great Rotation, where stocks started in a big rally (that happened) and bonds were due for a drastic pruning as the Federal Reserve started raising interest rates (that didn’t).
Those inflation hedges – energy and precious metals – were supposed to start paying off as an expanding economy and years of easy money revived inflation. Again, not yet………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

The knock-on effects of the global economic crisis have influenced the financing of the commodities trading industry. Changes in the regulatory landscape in Europe and the United States have likewise influenced the manner in which finance is being provided to the sector.
One manifestation has been an increase in lending conducted through ownership and intermediation structures that interpose the financier as owner of the commodities. Such structures have the advantage that they may, depending on the accounting practices of the bank, be treated as purchases/sales for regulatory capital purposes, meaning the financing that they provide requires less capital than traditional secured loans………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

A decadelong commodity boom in Latin America that lifted millions out of poverty is showing signs of fatigue, as fading demand in China hits consumers and corporate earnings from Bogotá to Brasilia.
The latest evidence of a regional slowdown came Wednesday, when Brazil said its economy grew just 1.9% in the first quarter compared with the year-earlier period, far below estimates for 2.4% growth………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

After the banking crisis, the oil price is the next major threat to the euro zone, analysts told CNBC, arguing that prices will rise once the shale oil revolution in the United States dies down and that the weakened region could be priced out.
The longevity of the shale oil revolution in the U.S. has divided analysts, with PricewaterhouseCoopers (PwC) predicting the boom in shale oil production will shave as much as 40 percent off oil prices by 2035. Others argue that ultimately, exports from the Organization of Petroleum Exporting Countries (OPEC) drive supply and demand for the European Union (EU) and as they shrink, oil prices will rise, leaving the euro zone facing an energy supply problem………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Lower demand, rising prices and higher inventories may see a drop in oil prices in the remaining part of this year and in 2014, the Bank of America Merrill Lynch has said. The Bank of America Merrill Lynch has cut down its global oil demand growth this year due to “slightly weaker than expected consumption in Europe and China”.
In a report released yesterday BOAML said lower global oil demand, rising supplies and higher inventories are “a cocktail for lower prices”………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

The Opec oil cartel is set to keep its production target unchanged, betting that a seasonal rise in demand as Americans and Europeans take to their cars for summer will keep oil prices above $100 a barrel.
Opec has a long history of surprising the market with last minute changes in opinion, but delegates said on Thursday ministers had all but decided to keep its official production at 30m barrels a day – a level that has not changed in more than a year and a half………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Once the symbol of oil dominance, OPEC faces new challenges as its members gather for a ministerial meeting this week on how much crude to pump. For the 12 oil ministers from countries ranging from Venezuela to Nigeria and Iran, the formal focus of Friday’s get-together is to determine production levels.
The consensus in the markets is that ministers will opt to maintain the status quo as prices for U.S. benchmark oil have traded in a narrow range a few dollars above $90 a barrel. Brent crude, the reference point for many international oil varieties, is just above the $100 mark some countries OPEC exporters consider the acceptable minimum………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

OPEC can keep its oil output ceiling as it is so long as Brent crude remains at about $100 a barrel, according to officials from some of the group’s members. “There is balance between demand and supply, and this is reflected on prices, they are stable,” Abdul Kareem al-Luaibi, oil minister for Iraq, the group’s second-largest producer, told reporters in Vienna.
“We don’t want any shock to the market, the stability of prices is important for the global economy.”……………………………………….Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Iraq is due to start pumping crude from two of its largest oil fields within weeks, creating a possible obstacle to future efforts by OPEC to curb supplies in the event of a drop in prices. The Gulf state plans to start production at Majnoon within days, followed by Gharraf in July and West Qurna-2 by year-end, lifting capacity by 400,000 barrels a day, Oil Minister Abdul Kareem al-Luaibi told reporters in Vienna today before an Organization of Petroleum Exporting Countries meeting tomorrow.
The nation, OPEC’s biggest producer after Saudi Arabia, currently pumps 3.125 million barrels a day, he said, without specifying output capacity………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Americans are spending more money at the pump than ever before. According to a recent estimate by the Energy Department, the average U.S. household spent nearly $3,000 on gasoline last year.
Earlier this month, the U.S. Energy Information Administration forecast that the price for regular gasoline will average $3.63 a gallon this summer — a slight decline from last summer, not far from the record levels set in 2008. Why do oil prices remain so stubbornly high?……………………………………….Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Gold demand in China, the world’s largest consumer after India, may slow in the second half of this year after surging in April, said Zhang Bingnan, secretary-general of the China Gold Association.
“The kind of frenzied buying in late April and early May won’t be repeated,” Zhang said. Some of the jewelry demand earmarked for festivals or weddings later this year may have been brought forward to April and May after prices fell, he said………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Rare earth producers may have nothing but blue sky to look forward to after several months of gloomy weather, metaphorically speaking, regarding stagnant rare earth oxide (REO) prices.
A report this week by Morgan Stanley states that demand for REOs has troughed, suggesting prices could start to come back up following another 12 percent cross-the-board price decline in May………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Corporate bond exchange-traded funds attracted investors in record numbers during the credit bull run of the past three years. They also attracted criticism for trading with more volatility than the bond markets they were designed to track. With the selloff in Treasury bonds rattling credit markets, those concerns are proving well founded.
BlackRock’s iShares iBoxx $ Investment Grade Corporate Bond Fund has delivered a one-month total return of negative 2.98%, according to Morningstar. That compares to a total return of negative 2.06% for the widely followed Barclays Investment Grade Corporate Bond Index. An index of more liquid investment grade bonds run by iShares delivered a negative 2.67% return over the same period………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

The Forward Markets Commission (FMC), the commodity derivatives markets regulator, is planning to restrict the number of delivery centres in agri commodities to avoid some complexities in futures trading.
“Sometimes, a large number of delivery centres create problems. Hence, we want to restrict it for which the Commission is waiting for the final recommendations of the sub-committee of the advisory committee,” said Ramesh Abhishek, chairman, FMC………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Reserve Bank of India Governor Duvvuri Subbarao said on Thursday that soft global commodity prices cannot be taken for granted. He was speaking in Ahmedabad.
Oil prices fell below $102 a barrel on Thursday and were on track for a third straight month of losses amid a tepid global demand outlook and abundant supplies in the United States………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

With each year the American dollar is shrinking in percentage as the world’s currency supply. The implications could mean a serious decrease in the dollar’s influence as countries around the world look for alternatives.
When compared to other prominent world currencies, the dollar has been experiencing a 15-year low. That’s according to the International Monetary Fund. And, this indicates that more countries are willing to use other forms of currencies to do business. Experts say it’s a fault of the US banking system and the Federal Reserve………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Everyone loves a weaker currency, right? There’s a currency war on, don’t you know. Well, Australians are not necessarily big fans, it turns out. The Australian dollar has been whacked of late. From the heady heights of $1.05 against its U.S. cousin last month, it made it almost as low as $0.95 earlier this week.
This is not just an Australian phenomenon, of course. The U.S. dollar has been on a tear and has ripped down any number of other currencies in its wake. Still, the Aussie has drawn its fair share of attention, and the currency has its own drags………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Investors have been advised to be wary of dealing in carbon credits after a local company experienced difficulty reselling them. The company touts carbon credits as a green investment and as a means of making a high profit. However, experts in the market say they can have little to no resale value.
Advanced Global Trading (AGT) claims it can resell carbon credits at more than three times the average market price………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

The European Union’s regulator is considering tools to link the supply of carbon permits with the bloc’s economic performance, according to Jos Delbeke, director general for climate at the European Commission.
The possibility of improving the world’s biggest emissions- trading system by equipping it with a flexibility mechanism emerged during public consultations on long-term scenarios for the market, Delbeke said. It adds to six options floated by the commission last year to strengthen the cap-and-trade program after prices slumped to all-time lows amid a record surplus of allowances exacerbated by an economic crisis………………………………………..Full Article: Source

Posted on 31 May 2013 by VRS |  Email |Print

Hopes for a speedy transition from a carbon economy to clean energy have been dashed. Which technologies offer the best chance of turning things around? This month, the concentration of carbon dioxide in the atmosphere exceeded 400 parts per million for the first time in human history. If the trend continues, the International Energy Agency has warned, the world could warm by 6C by the end of the century.
In December 2009, the US Secretary of Energy, Steven Chu, called the world’s first Clean Energy Ministerial. The aim was to speed the transition from a carbon economy to clean energy production in the 22 countries that together produced 80% of the world’s greenhouse gases………………………………………..Full Article: Source

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