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Commodities Briefing 21.Jun 2013

Posted on 21 June 2013 by VRS |  Email |Print

Commodities tumbled as everything from gold to crude oil and copper dropped on concern that the Federal Reserve may phase out stimulus and as China’s cash crunch worsened.
The Standard & Poor’s GSCI Index lost 3 percent to 616.46, capping the biggest drop since December 2011. All 24 raw materials tracked by the gauge declined. Gold futures slid below $1,300 an ounce to the lowest in more than 2 1/2 years, and silver plunged as much as 9.7 percent, while nickel touched the lowest price since 2009………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

As concerns surrounding the inflationary impact of central bank intervention recede, investors have begun to unwind commodity-based inflation hedges, resulting in a flood of outflows from commodity funds. It is a trend that could accelerate, with some analysts warning that the commodities super-cycle may finally have ground to a halt. And that could leave prices subdued for the next decade.
“Futures markets suggest no respite to commodities correction for the time being. The evidence seems to be clear – the commodity super-cycle is over,” noted Taimur Baig and Jun Ma, DB’s chief economists in a recent report………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

The World Bank has lowered its growth estimate for the global economy in 2013, but says the expansion appears better balanced than just before the 2008 financial crisis. The global economy was expected to grow at an annual rate of 2.2 per cent this year, led by a 5.1 per cent surge in developing countries, down from a January estimate of a 2.4 per cent.
“The overall acceleration is not stronger because the majority of developing countries have more-or-less fully recovered from the 2008 financial crisis,” the report said. Kaushik Basu, the World Bank’s chief economist, said the estimates are “actually somewhat similar to what we were saying about six months ago”………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Morgan Stanley will trim its commodities division by exiting areas such as trading of agricultural products, freight and some European power and gas following similar steps by other banks due to a poor outlook for revenue.
The move will lead to the departures of around 30 traders or just under a tenth of the workforce in the Wall Street bank’s commodities division, one of the most powerful in the industry, a source familiar with the plan and a memorandum by the bank said. “The commodities revenue pool available to firms in our sector has fallen by almost 50 percent from the peak years of 2007-2009,” the memorandum said………………………………………..Full Article: Source

Posted on 21 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.
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 21 June 2013 by VRS |  Email |Print

Supplies of oil have been surging this year, and U.S. drivers, who have been switching to more fuel-efficient cars, are using less gasoline. That would seem to be the right economic combination to push down prices at the pump, but gasoline prices have remained stubbornly high this summer.
Even some people in the industry are wondering whether the law of supply and demand somehow has been repealed. “I’m actually quite dumbfounded,” says Azam Zakaria, vice president of Lone Star Petroleum, a family owned company that owns and operates 15 gas stations in the Houston area………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Seaborne oil shipments from the Organization of the Petroleum Exporting Countries will fall by 20,000 barrels a day in the four weeks to July 6, compared with the previous four-week period, U.K.-based tanker tracker Oil Movements said Thursday.
Shipments from OPEC will average 23.84 million barrels a day in the four weeks to July 6, the tracker said in its weekly report. The figure excludes exports from Angola and Ecuador………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

OPEC’s role in supplying global oil markets has not been diminished by the surge in oil production in the United States, though trade patterns willshift as a result of the shale boom in North America, the head of the International Energy Agency said Thursday.
In an interview with Platts on the sidelines of the St Petersburg International Economic Forum, IEA executive director Maria van der Hoevensaid OPEC’s role was as important as ever. “I don’t think that [OPEC] will be less important than it used to be,” van der Hoeven said………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

The International Energy Agency said yesterday that natural gas was enjoying “a golden age” even if the growth in output over the next five years will be a lower-than-expected 2.4% instead of 2.7% forecast earlier.
The IEA’s Medium-Term Gas Market Report pointed out that shale discoveries in North America and China’s attempts to ease its reliance on polluting coal were boosting the relatively clean energy resource’s prospects………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

So as to attain a sustainable energy future, captains of energy industry and government officials will converge at the World Energy Congress taking place in Daegu, South Korea, from 13 to 17 October 2013. Raising some of the key issues of tariffs and subsidies by the countries, World Energy Council has called for a transformation to move to better and new technologies.
“Countries and regions need to recognise that we will all benefit from a level playing field in respect of tariffs and subsidies which will reduce the massive cost involved in this transformation and the take-up of the much needed new technologies to encourage a more diversified energy mix,” commented Christoph Frei, Secretary General of the World Energy Council………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Gold and silver futures closed at their lowest levels in more than 2 ½ years Thursday, a day after Federal Reserve Chairman Ben Bernanke said the central bank could move as early as this year to slow the flow of monetary stimulus to the economy.
Although Bernanke emphasized that the Fed’s moves would be dictated by economic data, “there seems to be a pretty broad expectation that [quantitative easing] is coming to an end in the next year or so,” said Peter A. Grant, chief market analyst at USAGOLD……………………………………….Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

In April the gold price buckled and fell $330, $200 of which took only two days. It was a well-engineered bear raid, initiated by over 400 tonnes of ‘short’ positions on the COMEX futures and options market.
But the futures and options market is not likely to cause the price of gold to fall as only 5% of that market involves the physical delivery of gold and then only after the counterparty has been put on notice that physical delivery of gold is required………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Gold prices dropping to its lowest point in 2 1/2 years is once again creating renewed demand for physical gold; however, it is not to the same degree dealers saw in April. Patrick Heller, owner and CEO of Liberty Coin Service, said he saw a rush Thursday morning when the office first opened but the flow of customers has slowed down a little heading into the afternoon.
Heller added that he has the sense people considered that prices could go lower and are now waiting for prices to go up before they start buying physical gold again………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Fear and panic are settling in once again for Canadian gold and silver miners. Thursday’s plunge in precious metals prices brings them down to dangerous levels for mining companies. Many miners are already working on razor-thin margins, and if prices do not recover soon, they will be forced to make very difficult decisions about their businesses. Those include massive production cuts, layoffs and outright mine closures.
Many gold miners have slashed capital spending, but they have avoided dramatic overhauls of their businesses so far. However, that is already starting to change………………………………………..Full Article: Source

Posted on 21 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 21 June 2013 by VRS |  Email |Print

Currently there is a legislative proposal before the Armed Services Committee of the U.S. House of Representatives to encourage the U.S. Department of Defense to buy up volumes of strategic rare earth elements.
According to Canadian rare earth minerals producer Ucore Rare Metals, the legislation calls for the U.S. government to spend $41 million to stockpile six critical metals, including dysprosium and yttrium………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

World crude steel production for the 63 countries reporting to the World Steel Association (worldsteel) was 136 million tonnes (Mt) in May 2013, an increase of 2.6% compared to May 2012.
China’s crude steel production for May 2013 was 67.0 Mt, up by 7.3% compared to May 2012. Elsewhere in Asia, Japan produced 9.6 Mt of crude steel in May 2013, an increase of 4.3% compared to the same month last year. South Korea’s crude steel production was 5.5 Mt in May 2013, down by -7.1% on May 2012………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Falling commodity prices have knocked some of Australia’s once high-flying mining millionaires off their perch with the latest confirmed casualty being coal investor, Nathan Tinkler, while another, Clive Palmer, is coming under close scrutiny.
Tinkler’s crisis came to a head this week when bankers to his group of companies took possession of a 20% stake he held in Whitehaven Coal, one of Australia’s biggest stock-exchange listed miners………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

A wave of selling caused many exchange traded funds to tumble below the value of their underlying assets as a bond market sell-off caused stress in the $2tn ETF industry. ETFs track baskets of underlying assets, such as emerging-market stocks or municipal bonds, but discounts widened sharply on Thursday as dealers struggled to keep up with the sell orders.
Emerging-markets ETFs were among the worst affected, as investors took fright that the end of Federal Reserve monetary easing would lead to outflows from developing countries………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

While speculating on commodities is simple, in that the price rises when there’s more demand than supply, the problem is that you’re competing against large industry insiders who have deep inside information.
The largest insiders of all can move prices on their own, and there are tons of outside events that can move supply quickly. Basically, it’s nearly impossible for a retail investor to get an edge in commodities markets. That’s why oil ETFs are for speculation and hedging, not for investment………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

CME Group Inc., the largest futures exchange, is considering new soft commodities contracts to compete with IntercontinentalExchange Inc (ICE). and NYSE Euronext Liffe, according to four people familiar with the situation.
CME, which is starting a new exchange in London this year, is talking to traders and brokers about new sugar, cocoa and coffee derivatives, according to the people, who asked not to be identified because the information isn’t public………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Hong Kong Exchanges & Clearing Ltd., the world’s second-largest bourse operator, said it plans to list commodity futures that are settled in cash.
The new contracts may be iron ore, coking coal and agricultural products and denominated in the Chinese currency, a spokesman said by phone today. The exchange has yet to set a start date, he said………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

Commodity Transaction Tax (CTT) will come into effect from July 1 with a levy of 0.01 per cent of the transactional value being applicable on the seller in futures trading of a host of items such as gold, sugar and edible oils.
Apart from gold, other commodities such as silver, crude oil and base metals and processed farm items such as sugar, soya oil, mentha oil and guar gum will also come under CTT. According to a Finance Ministry notification here on Thursday, 23 pure agricultural commodities such as wheat, barley, chana (gram), cotton and potatoes would be exempted from the levy………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

With Federal Reserve Chairman Ben Bernanke signaling an end to quantitative easing, investors are looking ahead to rising interest rates in the U.S.—and rethinking their willingness to tolerate risky emerging markets.
As they do, India’s currency is taking a particularly painful beating. The rupee fell to a record low today, dropping the most in 21 months. Since April 1, the rupee has tumbled 9.2 percent, making it the worst-performing currency in Asia. The currency may continue weakening, with rupee three-month forwards dropping to 60.64 per dollar………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

The Swiss National Bank said it was far from ready to end its unconventional policy measures, on Thursday, despite the U.S. Federal Reserve signaling it will soon start scaling back its asset purchasing program.
“The exit is still so far away, we have not even thought about how to communicate it,” said Swiss National Bank (SNB) Chairman Thomas Jordan………………………………………..Full Article: Source

Posted on 21 June 2013 by VRS |  Email |Print

The rains may have cooled down north India, but global average temperature is set to rise by as much 4 degrees if urgent steps are not taken to address climate change. Bringing with it heat waves, untimely and unpredictable quantities of rain and other forms of extreme weather, which would wreck more havoc than the extra 40mm rainfall just did.
Science puts the acceptable global temperature rise at 2 degrees above pre-industrial levels to limit the harmful impact of climate change. ……………………………………….Full Article: Source

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