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Commodities Briefing 07.Jun 2013

Posted on 07 June 2013 by VRS |  Email |Print

European share prices have yet to reflect fully the impact of cheaper commodities, with analysts forecasting some stocks could rise as much as 50 percent in coming months. Oil, metals and electricity - representing between 20 and 45 percent of input costs of many companies in the industrials, chemicals and construction sectors - have fallen sharply this year and, when the moves are priced in, could lift these stocks in the second half of the year, some say.
“Equity analysts are waiting to see if the bear trend (falling prices) will stick before reviewing their profit forecasts, but it’s clearly not a temporary dip,” Diamant Bleu Gestion fund manager Christian Jimenez said……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Commodities are trailing equities for the longest stretch in almost 15 years as Goldman Sachs Group Inc. and Citigroup Inc. predict the end of the decade-long bull market even as the global economy expands.
The Standard & Poor’s GSCI Spot Index of 24 commodities lagged behind the MSCI All-Country World Index for six months, the longest stretch since 1998. Hedge funds cut combined bullish bets across 18 U.S. raw-material futures by 51 percent from a 16-month high in September and are bearish on six of them. Commodities will return 1.6 percent in a year as losses in agriculture and precious metals diminish gains from energy and industrial metals, Goldman said last month……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

A subdued trend is likely to continue in industrial commodities until the third quarter of the current calendar year, due to weak global economic sentiment which has reduced their demand from consumer industries.
After a robust start at the beginning of this year, industrial commodities fell substantially due to lack of a clear direction from the US, the world’s largest economy. The average price of Brent crude oil, for example, is expected to fall from $113.19 a bbl in the first quarter of 2013 to $110 in the second and third quarters. Similarly, the average iron ore price is set to decline from $148 a tonne in Q1 to $125 a tonne in Q2 and further to $115 and $110 a tonne in Q3 and Q4, respectively……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Since you’re reading this blog, you’re probably interested in British politics. You may or may be interested in global commodity markets too. A lot of people at Westminster think markets are boring, so the fact that commodities are under-performing equities will leave them cold. It shouldn’t.
What am I talking about? Read this, from Bloomberg. In Bloomberg’s unique way, it basically says that some rich, clever people think the price of physical stuff — stuff like corn, gold, copper, sugar, wheat, soybeans and coffee — is going to fall, if it isn’t already……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

A major European probe into the manipulation of global oil prices has raised concerns that could equally resonate across opaque cash markets for a host of raw materials ranging from iron ore to fertilizer.
Benchmarks established by journalists assessing the value of commodities are not unique to oil, and are used in markets for many raw materials to price cash contracts worth billions of dollars a day globally……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Tough new rules proposed by the European Union for financial benchmarks would seriously threaten oil price reporting agencies (PRAs), industry sources say, as they could impose huge liabilities on oil publishers and participants.
Oil price reporting agencies were already under renewed scrutiny after European authorities raided the London office of lead price publisher Platts - a unit of McGraw Hill MHFI.M - as well as oil majors BP (BP.L), Shell (RDSa.L) and Statoil (STL.OL), saying they suspected oil prices had been manipulated……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will curb crude shipments through most of this month as demand from Asian refiners drops during seasonal maintenance, tanker tracker Oil Movements said.
The group that supplies about 40 percent of the world’s oil will ship 23.7 million barrels a day in the four weeks to June 22, down 1 percent from 23.93 million in the previous period to May 25. the researcher said in an e-mailed report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador. The organization kept its production target at 30 million barrels a day at a meeting in Vienna last week……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

If there was any doubt the U.S. shale revolution is breaking the dominance of unsavory energy producers on global oil supplies, look no further than last week’s OPEC meeting, where the alarm bells were going off. At Friday’s Organization of Petroleum Exporting Countries meeting in Vienna, the mask of non-chalance about America’s new fracking energy boom came off.
After years of dismissing U.S. energy production as insignificant and expensive, OPEC suddenly said it would “study” the growth in hydraulic fracturing and horizontal drilling, a deceptively bland response to the biggest challenge the cartel has ever faced on its monopoly. …………………………………..Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

As part of an institution that is raising the alarm about the future of the planet, you would expect Didier Houssin, director of sustainable energy policy at the International Energy Agency (IEA), to be gloomy. “Scaring people is not always a good strategy,” he says. “It’s important to explain that there are solutions, the future is not hopeless.” He concedes that the situation “is not rosy”, but “there are some positive examples and we need to learn from them”.
Some clean technologies are progressing fast, with developments in electric vehicles boding well for a decarbonised transportation system, for example, and people can make a big impact with some simple changes in their lifestyle……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

The U.S. equity markets are breaking into new 15-year highs, after an unprecedented move by Bernanke to stimulate the economy over the past five years.
Increasingly, investors may look to cheaper, out of favor sectors such as the uranium and rare earth sector, which is critical for clean, carbon-free energy. These sectors are crucial for the carbon reducing future of emerging nations such as China and India, which are dealing with dangerously high levels of air pollution from dirty coal producing plants. Take a look at this picture of Beijing. Air pollution is a major health crisis that is killing people……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Gold traders are the most bullish since before the bear market began two months ago after a retreat in equities from an almost five-year high and a weakening dollar spurred demand for bullion.
Nineteen analysts surveyed by Bloomberg expect prices to rise next week, with eight bearish and six neutral, the largest proportion of bulls since March 22. Global stocks that rose to the highest since June 2008 on May 22 reached a six-week low yesterday amid mounting speculation about whether the Federal Reserve will taper stimulus. The U.S. Dollar Index, a measure against six currencies, slipped to the lowest in three months……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

India should monetize their huge gold stockpiles of over 20,000 metric tonnes according to the World Gold Council (WGC) as reported by Bloomberg this morning. “In the long term gold could be monetized as a financial asset,” Aram Shishmanian, the CEO of the WGC said in India overnight.
The World Gold Council has approached the Reserve Bank of India (RBI) to work with it so that bullion could be used as a financial asset, rather than just a physical asset. Exactly how the considerable store of wealth that is the gold of Indian people could be monetized was not said……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

The rout in gold that drove the metal into a bear market cut the number of hedge funds investing in bullion to the lowest level since 2010 as assets slumped 31 percent this year on losses and redemptions.
Performance declines tied to volatility and withdrawals led either to closures or a shift in strategies, Farhan Mumtaz, an analyst at EurekaHedge Pte Ltd., the Singapore-based fund-research company, said…………………………………..Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

The PGM metals — platinum and palladium — are typically highly correlated assets. However, since February of this year, they have diverged, with palladium pushing toward the highs while platinum has languished. This is a reflection of the relative strength of the U.S. economy vs. Europe.
The primary use of both metals is in autocatalytic converters, with palladium used extensively in gasoline-powered engines (the type favored by Americans), and platinum used in the diesel engines that are much more popular on European roads. Chart 2 shows the sharp difference in demand for new vehicles in the U.S. and in Europe……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Whilst investors keeping faith with commodities can look forward to a recovery, the factors influencing the medium to long-term outlook for commodities will be similar to those before the onset of the so-called super-cycle.
That seems to be the message set down by Kevin Norrish of Barclays Research who said that the synchronous price upswing in commodity prices between 2004 and 2008 was unlikely to be repeated because commodities would be driven more by specific supply and demand fundamentals. “What we expect is a return to commodity risk,” he said at a presentation in Johannesburg……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Palladium settled at a two-month high and platinum rallied to an eight-week high on concerns about a potential strike at a platinum mine in South Africa. Meanwhile, gold prices rallied on a sharp drop in the dollar, which retreated to a one-month low against the euro and the yen. …
Members of the Association of Mineworkers and Construction Union this week voted to go on strike at platinum producer Lonmin PLC, but the union’s president has asked members for more time to negotiate with the company’s management. …Platinum and palladium are often found together, and South Africa accounts for about three-quarters of global platinum output and about a third of the world’s palladium supply……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

PowerShares DB Commodity Index Tracking Fund is down about 6% so far in 2013 compared with a gain of roughly 14% for the S&P 500 to continue the resources ETF’s underperformance trend that started about two years ago. Now, Wall Street analysts say commodities’ best days are probably behind them.
“Commodities are trailing equities for the longest stretch in almost 15 years as Goldman Sachs Group Inc. and Citigroup Inc. predict the end of the decade-long bull market even as the global economy expands,” according to a Bloomberg report Thursday……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Equities across the board have been roughed up over the past week or so, as concerns have been building over some weak economic figures, and more importantly, talk of Fed tapering. This threat of a reduction in bond purchases has acted like a dark cloud over the market, causing many investors to cash in gains rather than wait out a storm.
Unsurprisingly, the talk has also impacted bond markets as well, as rates have slowly crept up in key categories. This has led to some losses in many bond funds, something that most investors haven’t seen in this asset class for quite some time…………………………………..Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Exchange traded funds and products have received record net inflows of $107 billion through the end of May 2013 which is 31% higher than the $82 billion in net flows at this time in 2012. These inflows have helped to push assets invested globally in ETFs and ETPS to a new all-time high of $2.14 trillion US dollars, according to preliminary figures from ETFGI’s Global ETF and ETP industry insights report for May 2013.
There are now 4,849 ETFs and ETPs, with 9,875 listings, assets of $2.14 trillion, from 211 providers listed on 56 exchanges. ETF and ETP assets have increased by 9.6% from $1.95 trillion to $2.14 trillion……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

Martin Abbott quit as chief of the London Metal Exchange (LME) on Thursday, six months after triumphantly steering a sale to Hong Kong owners of the world’s biggest marketplace for materials such as copper and zinc.
While admirers and critics credit him for persuading the 137-year old London institution’s fractious shareholders to accept the $2.2 billion takeover by Hong Kong Exchanges and Clearing (0388.HK), he leaves boiling controversy over an LME warehouse system that constantly frustrates industrial users……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

It looked like the world’s easiest trade. Hedge funds made billions on it. Some investors made 30 per cent in a matter of months. Yet selling Japan’s currency has lately become a headache.
Just two weeks after the yen hit its weakest level against the dollar since the collapse of Lehman Brothers in 2008, the dollar-yen trade is under attack……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

The yen was sharply higher on Thursday as a rout in Japanese stocks forced investors out of popular carry trades, while commodity currencies were under fierce pressure with the Australian dollar wallowing at 19-month lows.
The moves came as a closely watched report showed hiring by U.S. firms was sluggish in May, raising the risk that Friday’s non-farm payrolls could disappoint……………………………………Full Article: Source

Posted on 07 June 2013 by VRS |  Email |Print

The transition toward a new generation of carbon markets includes a range of domestic or regional initiatives that will become the cornerstone of the global growth of the carbon market in the coming years. Over 40 national and 20 sub-national jurisdictions have either implemented or are considering market mechanisms that place a price on carbon.
The World Bank Partnership for Market Readiness Program (PMR) – in which Australia plays a major role – is a key initiative that is helping to support the introduction of market mechanisms to cut emissions in 16 developing countries including emissions powerhouses China, India, Brazil and Indonesia……………………………………Full Article: Source

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