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Commodities Briefing 05.Jun 2013

Posted on 05 June 2013 by VRS |  Email |Print

Diverging prices for raw materials and other “risk assets” is a sign that traders will once more focus on supply and demand, said Scott Kerson, the head of a commodities unit at Man Group Plc (EMG) in London.
The Standard & Poor’s GSCI (SPGSCI) gauge of 24 commodities fell 3.9 percent this year, while the MSCI All-Country World Index of equities rose 8.3 percent. The 30-week correlation coefficient between the two measures is at 0.56, down from as much as 0.88 in 2010. A figure of 1 means the two move together………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

It’s all doom and gloom for the UK’s Ministry of Defence! Unlike the conservative and relatively optimistic reports published by the government, a recent report released by the MoD warns that current energy trends could threaten the Western way of life by 2040.
The report states that as reserves of easy-to-extract oil deplete, climate change reduces the amount of food produced and drinking water available, and population continues to rise, energy prices are likely to soar and remain high for the long term, causing long recessions in Western economies………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Opec oil production rose in May as an increase in Saudi Arabian flows more than offset lower Iranian output, a Dow Jones Newswires survey of industry sources and analysts showed on Monday. Crude-oil production from the Organisation of the Petroleum Exporting Countries averaged 30.575 million barrels a day in May, up 109,000 barrels a day from 30.466 million barrels a day in April.
Iran’s oil output has been hit by mounting sanctions on its exports and production equipment. But “Saudi Arabia increased its output by 125,000 barrels a day to 9.4 million barrels a day ahead of the direct crude burning season and the ramping up,” of the Manifa field, Vienna-based consultancy JBC Energy GmbH said in a note last week………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Technology, technology, and more technology—this is what has driven the American oil and gas boom starting in the Bakken and now being played out in the Gulf of Mexico revival, and new advances are coming online constantly.
It’s enough to rival the Saudis, if the Kingdom allows it to happen. Along with this boom come both promise and fear and a fast-paced regulatory environment that still needs to find the proper balance………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

With fracking continuing to gain momentum — and with legislation from the Obama administration that could make as many as 65% current coal plants uneconomical — the “dirty” energy’s future is uncertain.
It used to be that coal dominated energy consumption around the world, as this fossil fuel was both abundant and relatively cheap to use. But as big oil stepped in, the past few decades have seen dependence on coal cool off. In more recent years, coal has taken an even bigger hit as developed countries have attacked the fuel source for its negative environmental impact………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Contrary to speculation that China’s demand for coal will peak in a decade, the nation’s strong appetitte for thermal coal will lead to a doubliing of demand by 2030, despite the best efforts to curtail its use and seeking alternative options according to a new report by Wood Mackenzie.
The report titled, ‘China: The Illusion of Peak Coal’ said China’s demand will grow to approximately seven billion tonnes per annum (btpa) of thermal coal which is contrary to speculation that China’s thermal coal demand may be reaching a peak in the next decade………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Four months ago I warned my readers that the uranium price could breakout because of the rise of terrorism and radical extremism in West Africa. This past week there was a suicide car bombing on a French uranium mine in Niger. Twenty people were killed.
This latest terrorist attack comes just a few months after terrorists violently took control of a natural gas plant in Algeria. Thirty-eight hostages were killed in that standoff. This latest incident was at the Somair uranium mine owned and operated by France’s Areva………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Gold futures may crash to touch $1,000 an ounce by 2015 according to noted economist Nouriel Roubini. Nicknamed Dr. Doom, Roubini described the yellow metal as a “barbaric relic” and used as a hedge against “irrational fear and panic.”
In a report appeared in The Guardian, he said that even as gold can spike in times of financial turmoils, it did fell sharply a few times in 2008 and 2009, at the peak of global financial crisis………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Although Roubini made headlines on Monday with his forecast that gold will drop to $1,000 an ounce by 2015, he is not the only bear in the marketplace. A few firms have updated their forecasts and expect prices will continue to drop.
By far Roubini, nicknamed Dr. Doom, is the most bearish in his predictions; on Saturday he published a report highlighting six reasons why prices would fall to $1,000 by 2015………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Investec has capitulated to the recent movements in the gold price and chopped its price forecast for the metal for this year and up to 2016 to US$1,400. The South African broker had been one of most bullish gold forecasters for this year at US$1,650, but following the recent decline a more prudent estimate is now required it believes.
The broker says there still remains sufficient macro-economic uncertainty for gold to go higher, but sentiment has been hit hard in recent months and this will have an impact on investment demand………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Although gold prices have gone down a lot, it’s still hard to call it an end, investor Jim Rogers said in Beijing on June 1 at the launch ceremony of the Chinese version of his book Street Smarts. He said that it is rare that gold prices have been on an up trend for 12 years and it’s time for a correction, which may last for one to two years.
However, he said he has held gold for many years and has not sold any. He added that he bought a little bit of gold last Thursday. Hong Rong, acting president of Shanghai Dazhihui Co, a financial information and software provider, said gold is a typical tool for speculation and not for investment………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Professional traders and the army of day traders who watch the gyrations of their particular markets day in and day out take it as written that markets are manipulated. Everyone is at it. In a real sense, this is simply how markets work. “Horse trading” where buyers and sellers each try to gain an advantage works if there are enough buyers and sellers out there to create the conditions for a competitive market.
Anti-trust and government or pan-national organizations aimed at discovering and breaking-up cartel price-fixing activities are all about trying to ensure that markets stay competitive and prices are always under competitive pressure………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Speculative investors are dipping a toe back in the gold market. Analysts’ faith in the power of gold buyers in China and India continues. Those factors, plus the loss of momentum in other assets, seem to be helping gold’s price lately.
The pressure from ETF redemptions also appears to have slowed somewhat. The last week has seen $135 million in redemptions from the SPDR Gold Trust (GLD), according to the latest XTF data. That’s a slower pace that the outflows that saw $2.8 billion pulled from the fund over the last month………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Both Standard Bank and Natixis believe that silver prices are likely to remain around current levels for the remainder of 2013. But, both maintain that the price of the metal is largely in the hands of the demand side of the equation, primarily the investment market.
Walter de Wet, head of commodities research at Standard Bank explained that because of the high correlation between gold and silver, a lot of investors have lost interest in silver as a result of the fall in the gold price - a situation exacerbated by the level of above-ground silver stocks………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Where silver is trading today represents a 35% decline from six months ago - which has led many investors to bail on the white metal in 2013. Silver prices hovered around $22.78 in trading today in New York, almost $10 lower than where they started the year.
For more detail on what’s next for silver, we asked Money Morning Global Resources Specialist Peter Krauth what investors should make of where silver is trading today. While Krauth remains bullish on both silver and gold over the long term, he does see prices possibly falling a little more before a reversal………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Aluminum prices are likely to remain capped as production will outstrip supply, even if demand grows as expected, said an aluminum research firm on Tuesday.
Primary production out of China, India and the Middle East lead both the demand and supply growth, said Jorge Vazquez, managing director of Harbor Aluminum Intelligence. He spoke at Harbor’s conference in Chicago………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Copper rose to the highest in more than a week on prospects for reduced supply of the metal as the world’s second-biggest mine remained closed following deadly accidents.
Freeport-McMoRan Copper & Gold Inc.’s Grasberg mine in Indonesia will be shut for as long as three months while the government holds an investigation. Closing the minefor the entire period would remove about 140,000 metric tons of copper supply, according to Macquarie Group Ltd., about 20 percent of the investment bank’s disruption allowance for 2013………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Global stainless crude steel production has risen 6% Y-o-Y in the first quarter of 2013, according to preliminary data published by the International Stainless Steel Forum (ISSF). Except China, all regions reported lower production volumes.
The highest drop in year-on-year production was in the Asia excluding China area. Here production fell by 3.6% to 2.1 Mt compared to the first quarter of 2012. Eastern Europe reported a decline in stainless crude steel production of 3%. In Western Europe/Africa, stainless steel producers reduced production by 2.8% to 2.1 Mt. The Americas region achieved production of 0.6 mmt, almost the same as in the corresponding quarter of 2012………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

A bell rings and the floor of Ethiopia’s Commodities Exchange is flooded with traders dressed in coloured coats, waving hands and shouting bids for coffee, sesame seeds or haricot beans. Following a feverish shouting match, prices are agreed upon and the deal is sealed with a high five between buyer and seller.
Established in 2008, the ground-breaking ECX has boosted exports in Ethiopia, improved conditions for producers and is now inspiring other countries in resource-rich Africa to set up their own exchanges to ensure they are the main beneficiaries of commodity exports………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

The head of the United Nations Food and Agriculture Organization (FAO) today called for greater efforts to combat malnutrition and hunger worldwide as the agency launched its flagship annual report, which this year focuses on improved food systems for better nutrition.
In a message marking the launch of The State of Food and Agriculture (SOFA), Director-General José Graziano da Silva said that although the world has registered some progress on hunger, one form of malnutrition, there was still “a long way” to go. “FAO’s message is that we must strive for nothing less than the eradication of hunger and malnutrition,” he declared………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

The US has unveiled fresh sanctions against Iran, targeting its currency, as it increases the pressure on Tehran to abandon its nuclear programme. These include penalties on anyone facilitating “significant” transactions in the rial or holding significant amounts of the currency outside Iran.
A US official said the move would force institutions to dump rial holdings and weaken the currency further. This is the first time the US has directly targeted the Iranian currency………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

Five countries on emergency aid, six consecutive quarters of economic contraction and 19 million people out of work haven’t dimmed the euro’s allure for small states that, like Latvia, have nowhere else to turn.
Latvia is expecting today to be put on the path to becoming the 18th country to use the euro at the start of 2014, binding it deeper into the western European economy and providing an extra layer of insulation against Russia, its former imperial overlord………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

A proposal agreed to this week by major airlines could rescue U.N. efforts for a deal to cut greenhouse gas emissions in the aviation sector, but the industry still needs to lean on governments for the plan to move ahead, industry observers said.
Following its annual meeting in South Africa on Monday, the International Air Transport Association (IATA) said it will ask governments to create a system through which airlines would offset any increase in emissions after 2020 by buying carbon credits from projects that reduce emissions in other sectors………………………………………..Full Article: Source

Posted on 05 June 2013 by VRS |  Email |Print

The idea of slapping a price on carbon to reduce emissions and tackle global warming is moribund in Congress for now. But that’s not the case elsewhere in the world.
A big new World Bank report (pdf) finds that more than 40 national governments and 20 sub-national governments have either put in place carbon-pricing schemes or are planning one for the years ahead. That includes either carbon taxes or some form of cap-and-trade………………………………………..Full Article: Source

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