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Commodities Briefing 19.Jun 2013

Posted on 19 June 2013 by VRS |  Email |Print

Deutsche Bank AG (DB) said commodity prices are poised to remain in “subdued territory for years to come” after a bull run that drove prices up almost fourfold in the last 12 years.
Banks from Citigroup Inc. to Goldman Sachs Inc. have called an end to the commodities supercycle as the economy in China, top user of raw materials, grows at a slower pace and the country shifts to consumer-driven growth. The Standard & Poor’s GSCI Index of 24 raw materials fell 2.5 percent this year after almost quadrupling since 2001………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Fund managers are holding record underweights to the commodities sector, while emerging market sentiment has hit a near five year low, according to the latest Bank of America Merrill Lynch Fund Manager Survey.
The survey, which canvasses 248 global fund managers with assets under management of $708 billion, found extreme bearishness in assets tied to Chinese growth or US Treasury volatility. The headline findings saw the number of fund managers reporting an underweight to commodities surpass the previous high of December 2009. In the latest data, 32% of those canvassed said they were underweight here………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Prices in financial markets are determined by psychology, by what people think stocks, bonds and commodities are worth rather than what they actually are worth. Recent sentiment readings for some key commodities, such as copper, gold, sugar, wheat, cattle, etc., were at extreme levels of negativity. From a contrarian aspect of course, that’s very bullish.
We see a similar pattern in many, but not all commodities in respect to commitment of traders, where knowledgeable commercials are comfortably long. On the other hand, speculators, who as a group usually guess incorrectly at turning points, are taking the other side of the trade with bearish bets………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Global oil prices are unlikely to drop below $100/b until 2025, supported by OPEC’s market management efforts and crude demand growth in Asia, Leonid Fedun, vice president of Lukoil said Tuesday, presenting key findings of the company’s first public long-term global industry outlook.
“Under our estimates, prices aren’t going to drop below $100/b, with the [oil pricing] dynamics to be determined by three factors…softening or hardening of the [US monetary] policies…growing demand [for crude] in Asia and, in the longer term, African markets, and OPEC’s stabilization efforts,” Fedun said in an interview with Russia’s Business FM radio station………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

In the last 10 weeks Crude oil has added $12/barrel lifting prices as of this post to four month highs with August futures flirting with the $100/barrel level. Not that the fundamentals have mattered in the energy complex but Crude oil inventories are at the highest levels they’ve been in years.
For the last 10 months with the exception of a few sessions August Crude oil futures have been contained in an $11 trading range. Current trade has futures about $1 below that pivot point and $2 below the psychological $100/barrel mark………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

A mixed picture is starting to emerge from the Middle East in terms of oil production. Several members of the 12-member OPEC oil cartel are embroiled in turmoil or struggling to ensure post-war political gains. Oil production from the Middle East declined by 1.5 million barrels per day in 2009.
Production from most Middle East countries has slowed down or leveled off, though gains from Iraq have offset some of those declines. With economic recovery seemingly on the horizon, a new OPEC may be developing from the ashes of the recession………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

A recent report in the People’s Daily that Beijing city will eliminate all large scale coal boilers within the city center by 2015 is another sign of the shifting winds in global commodity and asset markets. The move is certainly a self-interested one on the part of China’s new leaders, who breathe the same filthy air as the proletariat when they leave the carefully filtered confines of their private compound in Zhongnanhai.
But the broader message is clear. As we argued in a previous comment on Commodities: This is Structural, the age of coal-powered and heavy industrial led growth in China is over. Slower, less electricity intensive, and cleaner growth is bad news for bulk commodity producers and shipping stocks. But the winners will also be many………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Legendary commodity investor Jim Rogers has never been shy about vocalizing his opinions about the investing world. In particular, Rogers has an affinity for commodities like ags and precious metals.
Gold has been one of the most talked about hard assets of the last two years, as the metal soared to all-time highs, only to watch its price take a tumble in the months that followed. All along the way, Rogers had been calling for a correction for gold, and it is a sentiment that he still holds today………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Could China be the big silver long? Who else has deep enough pockets to endure the recent price weakness and the increased margin requirements that typically follow? Nevertheless, the Chinese willingness to accept fungible dollars instead of precious metal seems to be waning. They are quietly accumulating metals.
Perhaps this explains why the silver open interest has remained stubbornly high throughout the most egregious washouts the silver market has seen in years………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Gold and silver futures have been pals for sometime now; strictly speaking, that was the case well until April when both commodities were exhibiting similar characteristics. When gold futures moved up, silver too. Silver in a way was tethered to gold.
But given that one could buy as much as 50 times of silver for the same price that one may have to pay for gold, volumes were always high in silver and thereby volatility; multiple opinions dragging the commodity to and fro. But what marked this volatility was nothing else but the dual-demand nature of silver………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Platinum’s fundamentals look increasingly strong and platinum is an attractive diversification for bullion owners looking to further diversify the precious metals component of their investment and savings portfolio.
A record deficit in platinum supplies is set to push prices higher, as unrest sweeps the South African mining industry and demand is boosted by the auto sector and a new exchange traded fund (ETF), according to HSBC, as covered on CNBC……………………………………….Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Gold prices will end 2013 at $1200 per ounce because of increased sales from exchange-traded products, according to analysis from a major investment and bullion bank. Societe Generale analysts sees gold ETF and other investment trust-fund sales continuing to the end of the year, leading the price of bullion to drop to $1200 per ounce.
The bank’s previous year-end forecast was $1375. “We believe that the dramatic price drop in mid-April was the beginning of the deflation of a bubble,” say Michael Haigh, Jesper Dannesboe, and Robin Bhar, pointing to “speculation [that] the US economic recovery will mean less [monetary] stimulus.”……………………………………….Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Concerns over Federal Reserve policies have led to very uncertain trading as of late. In particular, investors have been wary about investing in commodities during this type of environment, as a stronger dollar is usually a disaster for natural resource prices.
While some commodity classes have remained mixed in this type of environment, agricultural commodities have been especially weak. In fact, the post popular agricultural commodity fund, is down about 1.5% over the past 10 days, underperforming broad commodity baskets like DBC or DJP in the process………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

UBS Global Asset Management has launched a new exchange-traded fund (ETF) on the London Stock Exchange. The fund, the UBS-ETF CMCI Composite, offers diversified exposure to the commodities asset class via a widely diversified and dynamic commodities index.
Based on the UBS Bloomberg Constant Maturity Commodity Index (CMCI) Composite, an index developed by UBS in cooperation with Bloomberg, the fund delivers access to 28 commodity futures contracts covering the energy, industrial metals, precious metals, agriculture and livestock sectors………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

In the past month bankers and lawyers from Citigroup, Goldman Sachs and JPMorgan Chase have streamed into a dark brick Washington office building where the future of finance is being shaped.
The high-powered visitors to the home of the Commodity Futures Trading Commission testify to its rise from an obscure US government agency to a global watchdog of financial derivatives, the scandal-hit Libor lending benchmark and physical commodities from oil to silver………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

A depleted outlook for soyabean stocks is boosting the premium for supplies available in the near future, suggesting volatile trading ahead in Chicago’s futures markets.
CBOT July soyabeans rose 1 per cent to $15.27½ a bushel on Tuesday. The contract sold for $2.33 above beans to be delivered in November, a premium that has expanded 71 per cent in the past three months………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

The ruble sank the most in two months as oil fell and investors bet on declines after the Finance Minister supported a weaker currency. The ruble dropped 1.1 percent against the central bank’s dollar-euro basket, the most since April 17, to trade at 36.8825 by 1:26 p.m. in Moscow. The yield on OFZ ruble bonds due 2027 rose eight basis points to 7.64 percent.
Russia is weighing a weaker ruble to spur flagging growth and is considering buying foreign currency on the market before sending oil and gas revenue to its Reserve Fund, Finance Minister Anton Siluanov said in an interview last week. Crude oil, Russia’s main export earner, declined 0.2 percent to $105.26 a barrel in London. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies, slid to the lowest level since Sept. 12………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

Brazil’s real touched a four-year low, prompting the central bank to intervene for a second straight day as a report showed higher-than-forecast inflation.
Central bank President Alexandre Tombini said policy makers are working to reduce the inflationary pressure that may stem from the currency’s decline. Wholesale, construction and consumer prices rose 0.74 percent in the 20 days starting May 21, the Getulio Vargas Foundation reported. The median forecast of 13 analysts surveyed by Bloomberg was for a 0.65 percent increase in the IGP-M index………………………………………..Full Article: Source

Posted on 19 June 2013 by VRS |  Email |Print

China, the world’s largest carbon emitter, was set Tuesday to launch its first carbon trading scheme aimed at reducing emissions, state-media said. A platform allowing businesses in the southern city of Shenzhen to trade permits to emit carbon was established on Sunday, with trading due to start on Tuesday, China’s official Xinhua news agency reported.
China plans to open similar schemes in seven areas before 2014, in what analysts say is a step towards a nationwide carbon market. “This is the first step towards a national carbon trading system,” Li Yan, head of environmental group Greenpeace’s climate and energy campaign in China, told reporters………………………………………..Full Article: Source

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