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Commodities Briefing 18.Jun 2013

Posted on 18 June 2013 by VRS |  Email |Print

Something went wrong with the commodity cycle during the year after the financial crisis of 2008, and that something may explain why the recovery took so long. Now there are reasons to believe that this time the commodity cycle is turning. That is good news for commodity importers everywhere – and that includes the UK. It is not so good for commodity exporters, however – expect tears in Brazil and Russia, for example.
On paper it is supposed to work like this. Commodity price are high, therefore commodity producers – be they oil companies, miners or in the agriculture sector – invest and try new ideas, until eventually supply increases, forcing the price of commodities down………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Energy trading houses are diversifying into food commodities and metals, which makes them likely to invest in assets such as port capacity as they copy their rival Glencore Xstrata to escape excessive reliance on oil.
Oil giants Vitol and Mercuria have expanded in agricultural commodity markets by recruiting traders in the past 18 months, while Gunvor and Mercuria have also hired metals specialists and begun trading for the first time………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Cartels succeed under two conditions. First: Can the cartel control the supply of the product it wants to monopolise? De Beers did this with diamonds; OPEC with oil. It also means that consumers should not easily find substitute products either.
Second: The cartel must guarantee demand for its product even at higher prices. Oil meets the two conditions. Coal does not. Too many countries export coal. The top 10 exporters account for just 13% of global exports………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Oil prices could consolidate around current levels this week, supported by expectations that the Federal Reserve won’t slow its bond-buying program, according to CNBC’s weekly sentiment survey, though some are not excluding an upside surprise and a return to triple-digit U.S. crude.
Strategists highlight the $98 a barrel level for U.S. crude futures – above the upper-end of the $90 to $97 trading range held since May 1 – as a critical level. A convincing move above $98 this week may foreshadow a return to $100, defying the weak fundamentals of high supply and soft demand, they say………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Gold at $1,200? That’s the price target Societe Generale’s Michael Haigh, Jesper Dannesboe, and Robin Bhar argue this morning will result from more ETF selling and not enough buying in jewelry, coins and bars.
SocGen uses the “b” word — bubble — as it argues the investment demand unwinding over the last several months has been key to the metal’s 12-year price rise. The firm also doubts gold miners will curtail production much in the event of a fall in gold’s price — on account of the trio’s contention that miners have inflated production costs………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Gold bullion is an “ageing athlete” and “a broken commodity” on its way to $1000 per ounce, according to Dennis Gartman, founder and publisher of trading advisory The Gartman Letter.
On the contrary, James Steel, chief commodities analyst at HSBC in New York, sees gold rising to $1600 per ounce in the second half of 2013, before rising above $2000 per ounce longer term. According to Steel, speaking to Bloomberg last week, jewelry demand used to drive the gold price. But now it is bullion demand and increasingly investment demand from China that drives the gold market………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

The U.S. dollar gold price drifted back below $1,390 an ounce Monday morning in London, but remained well within its trading range of the last few weeks, as European stock markets edged higher, with analysts citing Wednesday’s Federal Open Market Committee decision on U.S. monetary policy as “the big driver” for this week.
“On the whole, the market hopes for insightful comments in the course of the next Fed policy meeting…which will affect gold’s further development as well,” says a note from bullion refiner Heraeus………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Metals prices slid, weighed down by a stronger dollar and nervy trading ahead of the US Federal Reserve’s policy-setting meeting. Both precious and industrial metals have been under severe pressure in recent months.
Investors and traders are fretting about the outlook for economic growth in China, the main driver of demand for almost all metals, and at the same time worrying that signs of a better outlook in the US may lead to tightening monetary policy………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

The gold price was under pressure on Monday, giving up $6 an ounce to change hands for $1,381 in New York. Gold has declined more than 17% this year after a dramatic April when the metal fell $200 over just two days following unprecedented outflows from gold-backed exchange traded funds.
ETF holdings of gold have declined to the lowest in more than two years at 2,118 tonnes – down from a record 2,632 tonnes or 93 million ounces in December 2012………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Charles Schwab (SCHW) made a huge splash last September when it slashed expense ratios on several of its exchange-traded funds. They included the Schwab U.S. Broad Market ETF (SCHB), which saw expenses cut from 0.06 percent to 0.04 percent — or $4 per year for $10,000 invested.
That made it the cheapest fund since the invention of the first mutual fund in 1924. With expenses now less than the cost of a small pizza, the fund has doubled in size to $2 billion, and is ever-so-slightly outpacing the S&P 500………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

State Street seeks to issue nontransparent, actively managed ETFs, and AdvisorShares to liquidate an actively managed, sector rotation ETF. On Wednesday, June 12, Credit Suisse launched a pair of exchange-traded notes devoted to offering investors long-only exposure to commodities.
Credit Suisse Commodity Benchmark ETN (CSCB) tracks a Credit Suisse-managed index containing futures contracts for 34 different physical commodities. The ETN is aimed at providing broad diversification. Its index tracks commodity futures contracts that expire between one and three months. CSCB charges 0.65%………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

European regulators have approved IntercontinentalExchange’s $10bn cash and shares deal to take over NYSE Euronext , a move that will allow the creation of one of the world’s largest derivatives exchanges.
Two people familiar with the matter told the Financial Times that a probe into the deal concluded that the two global exchanges were complementary to each other and did not breach competition rules………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Serge Schoen, chief executive officer of Louis Dreyfus Commodities, decided to resign with effect from the end of this month, the company said.
Ciro Echesortu, the chief operating officer and head trader since 2009, was appointed the new CEO, Louis Dreyfus said in a statement e-mailed today. Schoen will join the parent company, Louis Dreyfus Holding B.V., in an advisory capacity and will remain a member of the supervisory board of Louis Dreyfus Commodities Holdings, it said………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Asian currencies have been battered lately by talk of the U.S. Federal tapering its massive stimulus program and analysts expect the pummeling to continue as other major drivers that led the currencies to appreciate now face pressure.
On top of funds flowing out of Asia on worries about the Fed unwinding its asset-purchase program, Citi Research expects sovereign risk re-assessment, weakness in the Japanese yen, and deteriorating current-account deficits to weaken regional currencies further in the months ahead………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Effective July 1st, the United States has authorized new sanctions directly targeting the already-devalued Iranian rial with penalties for transacting or holding the currency outside of Iran. This represents the first time that the U.S. has focused specifically on the Iranian monetary unit itself and the ninth set of sanctions President Barack Obama has imposed against Iran.
White House Press Secretary Jay Carney said, “This new action targets Iran’s currency, the rial, by authorizing the imposition of sanctions on foreign financial institutions that knowingly conduct or facilitate significant transactions for the purchase or sale of the Iranian rial, or that maintain significant accounts outside Iran denominated in the Iranian rial.”……………………………………….Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

China, the world’s biggest carbon emitter, is to launch its first carbon trading scheme as a pilot project in Shenzhen. The test scheme, which will be rolled out to seven areas by 2014, could be spread across the country after 2015.
Beijing is aiming for a 40% reduction in carbon emissions by 2020 from 2005 levels, without specifying how it will achieve that goal. The government has previously faced pressure to reduce pollution in cities………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Global greenhouse-gas emissions rose to record levels in 2012, the International Energy Agency said in a report released last week. Especially disconcerting is the news from May that carbon-dioxide levels reached 400 parts per million “for the first time in several hundred millennia,” the report states.
IEA predicts that the global temperature could rise between 6.84 and 9.54 degrees Fahrenheit, “with most of the increase occurring this century.” This is significantly more than the 3.6-degree Fahrenheit temperature (2-degree Celsius) rise scientists have said the Earth must not surpass………………………………………..Full Article: Source

Posted on 18 June 2013 by VRS |  Email |Print

Global carbon emissions reached a new high in 2012, rising by 1.4% to 31.6 billion tons, according to the International Energy Agency. The large rise in emissions was led by China, which released 300 million more tons in 2012 than it did in 2011.
As well as leading the pack with regards to increased rates of emissions, China was also the leader with regards to total emissions. It’s worth noting, though, that the rise was one of the lowest rises in the country during all of the last decade — perhaps a sign that China’s rapid growth is beginning to slow, as well as being a reflection of its considerable investment into renewable energy and energy efficiency………………………………………..Full Article: Source

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