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Commodities Briefing 14.Jun 2013

Posted on 14 June 2013 by VRS |  Email |Print

Commodity funds with combined assets of about $10 billion are heading for the half-year mark with losses, with some hoping that improving market fundamentals will overpower worries over global growth and stimulus measures in the second half.
The funds, run by some of the most high-profile commodity traders such as Andy Hall, Stephane Nicolas, Chris Levett, Neal Shear and Chris Brodie, have declared negative returns through the first five months of the year, performance data from their investors showed on Thursday………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Commodity hedge funds are finding it harder to make a profit partly because fees and other charges “soured customers,” the Food & Agriculture Organization said.
Customers who besides paying annual fees are now finding themselves “saddled with 100 percent of the losses,” the United Nations agency said today in a report called “Commodity hedge funds in retreat?” The FAO cited commodity index fund investment data showing a 20 percent drop since April 2011, mirroring a withdrawal from hedge funds………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Commodity market decreased in May amid mixed signals from the global economy Commodities were lower in May as uncertainty surrounding the future of the global economic recovery remained high.
Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management business, said, “Over the second half of the month financial markets became increasingly nervous over the possibility that the Federal Reserve will begin to taper its program of asset purchases in coming months. This sent the ten-year yield sharply higher and started to increase risk aversion. The heightened concerns were due to numerous mentions of scaling back the pace of quantitative easing by various members of the Federal Reserve Board………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Scratch the surface of the planet and the chances that hydrocarbons will spew forth appear to grow by the day. This week America’s Energy Information Administration (EIA) released new estimates of the amount of gas in the world’s shale beds. It reckons that there are 7,299 trillion cubic feet, 10% more than its 2011 estimate.
The EIA’s estimates for shale oil, not included in the 2011 numbers, are a staggering 345 billion barrels, adding a tenth to the world’s total oil resources………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will reduce crude shipments this month as rising U.S. production dulls a seasonal increase in the nation’s imports, tanker tracker Oil Movements said.
The group that supplies about 40 percent of the world’s oil will ship 23.88 million barrels a day in the four weeks to June 29, down 0.3 percent from 23.95 million in the previous period to June 1, the researcher said……………………………………….Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

U.S. oil prices could fall to $85 per barrel in the coming year. However, Cameron and Canadian Natural Resources should do well even if prices moderate. Only a few years ago, it seemed we were running out of oil. Now it seems we’re bathing in it.
However, plentiful supply from new drilling techniques and weaker demand in the U.S., Europe and China suggest that oil prices will moderate………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

China is apparently growing more interested in Australian gold assets as prices slide. Aphrodite Gold, which like most junior miners is being forced to seek funds outside troubled equity markets, is in talks with Shandong Gold and other Chinese parties to sell up to a 50 per cent stake in the Aphrodite project, 65km north of Kalgoorlie.
Shandong last year bought a 49 per cent stake in Focus Minerals, which operates in the nearby town of Coolgardie, and the Chinese miner is considered a potential buyer of Alacer Gold’s Australian assets, which went on the block………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Gold prices have come under pressure after better than expected economic data raised U.S. yields creating headwinds for the precious metals market making a vertical options spread look appealing.
The decline in riskier Japanese assets is also creating a deleveraging process where investors who are underwater on their Nikkei positions are selling assets such as gold to handle margin calls. Gold volatity remains elevated, allowing investors to benefit from further market volatility………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Gold imports by India, the world’s largest consumer nation, are falling rapidly after the government imposed new curbs, according to import industry leaders. May this year saw record levels of gold bullion imports, as Indian households “front-loaded” their 2013 purchases thanks to the sharp drop in world gold prices, according to Crisil Ltd., the Indian division of financial analysts Standards & Poor’s.
“The curbs will change the financial models of jewelers in the country,” says Bhaskar Bhat the director of jewelers Titan Industries, quoted by Bloomberg………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

When most people think of precious metals, gold is what springs to mind. Silver, the less glamorous shiny metal, gets forgotten. If it is remembered at all, the temptation is to lump it in with the yellow stuff as the Kardashians of the financial world; pretty to look at and interesting at times, but fundamentally of no use to society.
This is the case with gold, and I would therefore argue that investors should look at gold more as a currency than a commodity. Silver, on the other hand, does have significant industrial uses. Indeed, industrial applications typically take up around half of the annual global production………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Copper prices are in “no-man’s land” with both limited upside and downside, says Citi Research. The market has been unable to surge despite mishaps leading to shutdowns at the Bingham Canyon mine in the U.S. and the Grasberg mine in Indonesia. Citi says copper appears to be “fairly priced” in a range between $6,800 and 7,500 a metric ton.
“Copper prices are range-bound for both fundamental and macro economic reasons, in our view,” Citi says. “Mine supply losses are being matched by growth at new projects. Chinese demand growth, though still positive, appears insufficient to keep the market tight enough to drive prices higher, while positive U.S. demand growth is essentially being countered by generally weaker demand in Europe………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

The market may be too sanguine about the outlook for copper prices, as import demand in top consumer China shows signs of increasing just as an anticipated global supply surplus is looking vulnerable.
Shanghai copper fell on Thursday when trading resumed after a three-day holiday, with the most active October contract dropping by as much as 3 percent to 51,350 yuan ($8,354) a tonne in early trade. While the decline was largely a catch-up to weakness in London earlier this week, it’s indicative that traders aren’t overly concerned about the supply outlook………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Gold traders turned bearish for the first time in a month as investors reduced holdings in exchange-traded products for an unprecedented 17th consecutive week and India, the biggest buyer, announced curbs on imports.
Eighteen analysts surveyed by Bloomberg expect prices to fall next week, with 14 bullish and four neutral, the largest proportion of bears since May 17. Investors sold 490.4 metric tons valued at $21.8 billion through ETPs since Feb. 8 and the 2,124.7 tons left is the least they have held since April 2011, data compiled by Bloomberg show………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Silver is punishing investors amid diminishing trust in precious metals as a store of wealth and concern that growth is weakening, with $5.2 billion erased from the value of their near-record holdings this year.
Investors expected silver to be one of the biggest gainers in 2013, with a 33 percent return, a Bloomberg survey in December showed. Instead it’s leading a retreat in commodities with a 28 percent plunge to $21.79 an ounce, on track for its worst performance since 1984. While the median prediction from 14 estimates compiled last week is for a rally to $23.50 by Dec. 31, that would still mean a 23 percent drop for the year………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Who knew the world’s biggest commodities mutual fund was a leveraged play, and who knew the world’s biggest commodities ETF isn’t? Last month, the largest commodities fund in the world, the Pimco Commodity Real Return Strategy Fund (PCRAX), fell more than 5 percent, while the worst-performing broad commodities ETF fell slightly more than 2 percent. What gives?
May was a rough month for commodities and bonds. Thankfully, ETF investors only had to worry about the former. The bad news for investors in Pimco’s Commodity Real Return Strategy Fund is the latter was perhaps even more important………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Hedge funds may be in retreat from agricultural commodity markets - with a “disastrous” bet on corn futures adding to the pressures on profitability raised, ironically, by their own success, a former Chicago Board of Trade director said.
Ann Berg, also the first recorded female grain exporter, said that the retreat in hedge funds’ net long positions in major US-traded agricultural commodities in April to their lowest since 2006 may be a sign of waning interest in the sector………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

Although much of the recent focus has been on rules in the European Union and the US, other jurisdictions across the globe are also weighing changes to the way they regulate over-the-counter commodity derivatives. In some cases, these could have significant implications for market participants.
Over-the-counter commodity derivatives represent a tiny part of a big jigsaw puzzle. By the end of 2012, the size of the OTC commodity derivatives market stood at $2.6 trillion in notional value, according to the Basel-based Bank for International Settlements, while the wider OTC derivatives market represented a staggering $633 trillion………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

As the Indian currency slides to an all-time low against the dollar, the Indian Finance Minister is trying to bolster confidence in the country’s flagging economy. The rupee’s slide this week came on the heels of steady losses over the last month. Overall the Indian currency has slipped by 8 percent since the start of May.
India’s Finance Minister P. Chidambaram Thursday tried to calm fears that the falling currency will put further strain on the flagging economy. He said India’s huge trade imbalance has triggered the slide. The current account deficit as it is called, is driven by the country’s massive oil and gold imports………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

More time is needed for the nation’s seven pilot exchanges to build up sufficient data-collection infrastructure and trading rules. The mainland will not be in a position to form a national exchange to trade carbon emission rights until after 2015, according to an official of one of seven pilot exchanges.
It will take time for the nation’s seven pilot exchanges to build up sufficient data-collection infrastructure and trading rules, let alone operate smoothly and come up with a model that works nationwide, said David Tang Yue-tan, secretary of the board of Tianjin Climate Exchange………………………………………..Full Article: Source

Posted on 14 June 2013 by VRS |  Email |Print

The Greens group in the European Parliament said it was against a tentative carbon compromise as the restrictions agreed on by representatives of three other political parties reduce the impact of the planned market fix.
Climate negotiators from the European People’s Party, the Alliance of Liberals and Democrats for Europe, and the Socialists and Democrats group struck a draft deal on the conditions of a carbon-market intervention sought by the European Commission………………………………………..Full Article: Source

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