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Commodities Briefing 20.Jun 2013

Posted on 20 June 2013 by VRS |  Email |Print

People have lost faith in the political process - protests over bus fares and the cost of hosting the Fifa World Cup have become a vehicle for anyone unhappy about anything.
How should a government respond when it is the target of nationwide protests? Swedish leaders reacted by wringing their hands and empathising, Turks by calling counter-demonstrations, Syrians by shooting the demonstrators………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

The more-than-decade-long surge in commodities since the tech bubble burst actually ended about two years ago with the killing of Osama bin Laden, according to Donald Luskin, an economist and chief investment officer of TrendMacro, a macroeconomic research firm.
Fresh and sure to be rejected by those who see the rise of the emerging markets as lasting fuel for the commodities boom, Luskin this week offered attendees of IndexUniverse’s second annual Inside Indexing conference his views on how profoundly and fundamentally geopolitics affect financial markets………………………………………..Full Article: Source

Posted on 20 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 are actually worth. Recent sentiment readings for some key commodities such as copper, gold, sugar , wheat and cattle, etc. were/are 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 20 June 2013 by VRS |  Email |Print

The European Union says it is searching for evidence that oil traders manipulate prices. If oil trader Halis Bektas is correct, it shouldn’t be hard to find. Mr. Bektas describes one strategy he has used himself: Offer to sell a small amount at a loss to drive down published oil prices, then snap up shiploads at the lower price.
He says such a trading strategy works this way: He might be scheduled to buy perhaps 80,000 metric tons of fuel oil, its price pegged to the daily benchmark published by Platts, a division of McGraw Hill Financial Inc. In the days before the purchase, he could offer to sell smaller quantities at discount prices—sometimes $3 to $5 a metric ton below market rate—and report those offer prices to Platts………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Surging U.S. oil production and greater energy conservation are helping keep a lid on oil prices worldwide and may be limiting the sway OPEC holds over world markets.
U.S. oil output rose by 14% in 2012, BP reported last week in its annual statistical review. The million barrel-per-day jump in output was the largest increase for any country in 2012, and the fastest single year increase in U.S. history………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

The Wall Street Journal has a painstakingly detailed article out today on how oil prices are benchmarked, and how those benchmarks can be manipulated. The EU has been investigating major oil companies, as well as the industry publication that sets the daily benchmark price, since last month. If the probe turns up damning evidence, this could be the biggest price-fixing scandal since Libor.
What’s going on here? In mid-May, EU investigators raided the offices of Shell, BP and Statoil, three of Europe’s largest oil exporters. They also hit Platts, which takes pricing data from oil traders and uses it to set a daily oil-price benchmark………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

The U.S. oil boom is moving Congress closer than it has been in more than three decades to easing the ban on exporting crude imposed after the Arab embargo. Advances such as hydraulic fracturing are leading to record production that may outstrip refinery capacity within 18 months to three years, said Benjamin Salisbury, a senior energy policy analyst at FBR Capital Markets Corp. in Arlington, Virginia.
Net petroleum imports now account for about 40 percent of demand, down from 60 percent in 2005, according to the U.S. Energy Information Administration, the Energy Department research unit………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

China will remain the main leader in the global demand for energy resources in the coming years, deputy executive director of the International Energy Agency (IEA) Richard Jones said.
“We expect the rate of increasing demand for hydrocarbons to slow in the coming years,” Jones said at the third International Oil and Gas Conference ‘The Caspian Sea shelf development’ in Atyrau today. “However, China will still be the main leader in the global demand for energy resources. We expect its demand for energy resources will reach 12 million barrels per day in the coming years.”……………………………………….Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Societe Generale SA’s Michael Haigh correctly predicted this year’s rout in gold by using a math problem to measure a feeling. His arithmetic says there’s worse to come.
Haigh’s algorithm, called the Principle Component Analysis model, uses 27 indicators ranging from the value of the Indian rupee to the yield on 10-year German bunds to determine what percentage of a commodity’s price movement is influenced by supply and demand, and how much is related to macroeconomic concerns, liquidity and fluctuations in the dollar………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Gold and silver prices continue to disappoint the hard money believers, but fundamentals – depending on how you interpret them – do to this observer suggest that the long term future for precious metals remains a positive one. Physical gold, and presumably silver, although this is not as well reported, continue to move from West to East – and from less supportive holders to firmer ones.
And, despite the occasional conflicting reports, it appears that China and India in particular continue to remain strong markets………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Big price declines and a sharply weaker Australian dollar have made shares in Australian resources companies more attractive on paper. But China’s cooling economy and a rising U.S. dollar are giving some investors the shivers.
Once market darlings, shares in Australian mining and mining-services companies have tumbled this year, pushing the S&P/ASX 200 Materials index to a four-year low last week. The declines have attracted some bargain hunters BlackRock Inc., the world’s largest asset manager, said this month that it had been buying Australian mining shares………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Supply losses, tight scrap situation, improving Chinese demand, depleting bonded stocks and rumours of SRB buying; all these positive factors have failed to take copper prices beyond the $7500/ton mark on LME.
This apparently exhibited “a weak appetite for sustained rally in prices,” Barclays noted in a report on copper. “Copper dominated by construction and infrastructure spending may be seeing a shift to permanently slower demand growth,” the report said. This should be contrasted with Aluminum demand which is growing in excess of 10% per annum, way ahead of economic growth in various nations………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

The phenomenal success of Absa Capital’s NewPlat ETF, which it listed in April, reflects long-term belief in the platinum price, but disillusion in the local industry’s ability to mine it profitably.
The NewPlat exchange-traded fund (ETF) already accounts for around 20% of total global platinum ETF holdings, according to data analysed by Reuters. “There is appetite for platinum ETFs and with good reason,” says Alon Olsha, senior metals and mining analyst at Macquarie in London. “Investors in general remain reasonably bullish on the long-term fundamentals for the metal.”……………………………………….Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

As more and more investors adopt exchange-traded funds in their portfolios, it is becoming increasingly important to understand the opportunities and risks in these unique investment vehicles.
The first step to success with trading ETFs is to avoid potential pitfalls, which is why I wanted to point out some of the common mistakes that I see made whenever I am reviewing investors’ portfolios………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Interesting data point this morning from the Merrill Lynch fund manager survey showing the extreme hatred for commodities at present. I’ve always hated the idea of “investing” in commodities so it’s interesting to see these extreme swings in sentiment. I basically think the chart below should show a negative blue bar across the entire timeframe.
Anyhow, this could be a contrarian sign or it could be the beginning of what I hope is a big change in the way managers view commodities. I think Wall Street has spent the last 15 years selling the concept that commodities are a good way to diversify your portfolio………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Trading of Chicago agricultural commodity futures soared across the board Wednesday, with three major agricultural commodities all registering double-digit gains.
The most active corn contract for December delivery gained 20 cents, or 3.63 percent, to close at 5.705 dollars per bushel. July wheat rose 19.5 cents, or 2.84 percent, to settle at 7.07 dollars per bushel. November soybeans climbed 21 cents, or 1.63 percent, to close at 13.1075 dollars per bushel………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

Finance Ministry will soon notify implementation of Commodity Transaction Tax (CTT) which will be levied primarily on processed agricultural commodities, including sugar, soya oil and mentha oil.
About 11 processed farm commodities would attract CTT, which will be levied at the rate of 0.01 per cent of the transaction value. These would include sugar, guar gum, mentha oil, soya oil and rapeseed oil………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

The Mexican peso and other emerging-market currencies dived against the dollar Wednesday after Federal Reserve Chairman Ben Bernanke said the Fed could moderate its asset purchases later this year.
While the Fed left its current policy stance unchanged, it also provided a more optimistic outlook for the world’s largest economy and a potential timeline for ending the central bank’s bond buying. Bernanke said if the economy progresses as the central bank expects, the Fed will begin pulling back on asset purchases later this year and could end the stimulus measure in the middle of 2014………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

On June 18th, China became the latest and largest country to trade carbon emissions. The southern city of Shenzhen started a pilot emissions-trading scheme (ETS), the first of seven citywide and provincial carbon markets which, when all up and running, will constitute the second-largest in the world, after Europe’s.
China needs to cut emissions. It also needs to shift from command-and-control limits on pollution to market-based ones, like an ETS. So on the face of it the idea is fine. But the actual pilot looks like charade………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

More than 20% of global emissions are now either taxed or traded. But the question remains: will adding economic incentives to cleaner energy actually work? Putting a price on carbon emissions is seen as crucial to curbing climate change. And the good news is that much of the world is doing just that (though not the U.S.). A new report from the World Bank identifies 40 national, and 20 sub-national, mechanisms globally.
The European Union, South Korea, Australia, and New Zealand all now have emissions trading systems, or are implementing them. Other countries, like Denmark, Finland, Ireland, Japan, Norway, and South Africa have (or are implementing) carbon taxes. And then there are regional trading initiatives, such are those in California and Quebec………………………………………..Full Article: Source

Posted on 20 June 2013 by VRS |  Email |Print

European Union carbon permits fell the most in four weeks as the European Parliament’s environment committee approved a weakened proposal to reduce a surplus of emissions allowances.
The December futures contract lost 6.9 percent to close at 4.39 euros ($5.88) a metric ton on London’s ICE Futures Europe exchange, the biggest decline since May 22. Earlier the contract fell as much as 7.2 percent to 4.36 euros a ton………………………………………..Full Article: Source

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