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Commodities Briefing 28.Jun 2013

Posted on 28 June 2013 by VRS |  Email |Print

An exclusive club of banks that has long dominated commodities trading is opening up as some big players shrink, allowing rivals to expand their trading teams in anticipation of better profits when the global economy picks ups.
Higher costs due to tighter regulations and rapidly inflating pay for dealers have combined in recent years with an overcrowded market and low price volatility to undermine profitability in trading oil and metals………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Citigroup Inc. is building up its commodities teams while “big players” such as Morgan Stanley and Deutsche Bank reduce their trading interest because of poor returns. New York-based Citigroup, which had to retreat during the financial crisis along with a number of other major financial institutions, is now actively building up its commodities teams in anticipation of improved profits as the global economy recovers.
During the past few years, higher costs, tighter regulations, and inflated dealer salaries have had an impact in overcrowding the market, contributing to low price volatility and reducing the profits in trading commodities such as oil and metals………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

The new chief executive of Anglo American PLC said he fears a cash crunch in China will curb investment in the world’s second-largest economy, hurting commodities demand at a time when mining companies are grappling with high costs and low prices.
In an interview with The Wall Street Journal, Mark Cutifani said the fallout from Beijing squeezing the Chinese financial system as a warning to overenthusiastic lenders was a concern, though he added policy makers needed to act swiftly to prevent a credit bubble………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

A new survey from Credit Suisse finds investors are focusing on fundamental strategies to generate benchmark beating returns as the correlation between commodities and other asset classes breaks down. Credit Suisse conducted the survey as part of its third annual New York City Commodities Day on Tuesday, June 25, attracting about 300 clients covering a wide cross section of hedge funds, institutional investors, distributors and mutual funds to showcase the bank’s competitive differentiation in areas ranging from energy and metals to investor products and business servicing.
“To have this kind of turnout on a day during a week of extreme market turbulence is a testament to Credit Suisse’s ability to deliver the type of products and thought leadership that top investors are looking for,” said Oscar Bleetstein, Head of Americas Institutional Sales for Commodities at Credit Suisse. “The market is in a sea change and across the bank we’re providing investors with new products to meet the challenge.” (Press Release)

Posted on 28 June 2013 by VRS |  Email |Print

During the past four days, the price of light sweet crude oil has risen and is slowly pushing toward the $100 mark again. That has sparked my interest in taking a closer look at oil following my May 31 examination, again using the U.S. Oil Fund (USO) as a proxy.
First things first. For a little perspective, let’s look at a long-term chart of the light sweet crude futures contract. The chart looks back to 2009, showing a sturdy uptrend with support in June 2012 and again in April 2013. At the same time, the trading range has undergone a fair amount of tightening so far this year, wedging the price of oil between the 2011 downtrend resistance and the aforementioned support line………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will raise shipments by 1.9 percent through the middle of July as summer demand for driving fuels in the northern hemisphere nears its highest point, Oil Movements said.
The group that supplies about 40 percent of the world’s oil will ship 24.03 million barrels a day in the four weeks to July 13, up 450,000 a day from 23.58 million in the previous period to June 15, the tanker tracker said in an e-mailed report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Crude-oil output from the Organization of the Petroleum Exporting Countries fell by 300,000 barrels a day in June from May, to 30.1 million barrels a day, the Energy Information Administration estimated in a report released Thursday.
The EIA figure would put the group near its committed level of 30 million barrels a day, which OPEC ministers reinforced at an end-May policy meeting. Output from Libya dropped 200,000 barrels a day in the month, to 1.4 million barrels a day, while Nigeria’s flow slowed by 100,000 barrels a day, to 1.9 million barrels a day, the EIA data show………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Gold prices fell to roughly $1,220 an ounce Wednesday, nearly a three-year low, and further downside may be possible for the metal. That downside could be a longer-term move for gold, too, as the metal may be moving back to its fair value, according to Campbell Harvey, professor at Duke University’s Fuqua School of Business, who has done academic research regarding the value of gold.
Harvey’s research puts the long-term fair value of gold at $800 an ounce, which is about $400 an ounce lower than current prices. Fair value is “an average, so to get to the average, there are prices above and below it. We’ve been above it for a number of years,” Harvey told Kitco News………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Spot gold prices fell below $1,200/oz in late evening trade, breaching that psychologically critical level for the first time in three years.
An ounce of the yellow metal changed hands (electronically speaking) for $1,199.29 at 11.30pm UAE time (7.30 GMT) as positive data from the US housing market had investors worried that the US Federal Reserve is getting the fodder that to needs to taper off its infamous stimulus programme later in the year………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Gold prices decreased almost $700 in the past three years. In September of 2011, gold prices got close to $2,000. The price just dropped to a little more than $1,200, and that’s about a 35 percent drop. One gold dealer in the area said he doesn’t know how much further the price will drop, but he said lowering the price may indicate the economy is improving.
“It’s the uncertainty in the times that makes gold and silver go up. So if they are uncertain about what is going on in the world, it might rise or what’s uncertain about the dollar, about jobs, or about their home. That’s what makes gold go up,” said Rocky Simonetti, the owner of Rocky’s Gold and Silver………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Gold traders are divided on the outlook for prices, with some judging that the slump to a 34-month low following the Federal Reserve’s comments on tapering stimulus will spur demand for coins and jewelry.
Fifteen analysts surveyed by Bloomberg expect prices to rise next week and 14 were bearish. Three were neutral. Gold fell 13 percent in the past two weeks, reaching $1,196.98 an ounce yesterday, the lowest since August 2010. The metal is poised for the biggest quarterly drop in at least nine decades after investors cut bullion holdings to a three-year low………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Running a leveraged hedge fund with a long position in gold has not been a lot of fun lately. The price of gold closed in New York at $1,225.20/oz on Wednesday. This was down by 4.1% on the day, lower by 18.6% year-to-date, and down by more than 35% from gold’s peak on September 6, 2011.
I have never owned gold. For years, people have asked me if gold is a good investment. My answer has always been the same: “It had better not be.” This is because if gold is a good investment, neither America nor ordinary Americans are likely to do very well………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

In April, after gold dived more than $200 an ounce in two days, an unprecedented scramble to buy everything from coins to jewellery at “bargain” prices helped arrest the plunge, tempering fears of a prolonged rout.
But not this time, say dealers and jewellers, who report that consumers across the world are reluctant to buy even after a price decline of almost $200 in 10 days as investors rushed to liquidate their gold in anticipation of the Federal Reserve’s scaling back its bond-buying stimulus since November 2008………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

As gold’s price is perched this afternoon at just above $1,200 per ounce, Ned Davis Research sends over the argument by commodity analysts John LaForge and Warren Pies for why we may see $1,100 before long.
Short answer: Speculators are pushing. Hard. And they’re getting close to the long-term trendline. Here’s NDR’s chart of exchange-traded fund outflows plus the notional value of large speculators’ net positioning in gold futures………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

The World Gold Council’s (WGC) announcement of a Guidance Note on “all-in sustaining costs” and “all-in costs” metrics, should have investors dancing in the streets. Its unlikely to happen because gold miners aren’t renowned for public displays of dancing - especially with markets as depressed as they are, but it is a cause for celebration.
Admittedly it is not a binding measure, but it is a definite move toward greater clarity on the issue of gold mine cost reporting, something Mineweb has been clamouring for, for a long time………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Silver has underperformed gold so far in 2013, but analysts figure the grey metal eventually will regain the upper hand.
They say if the U.S. economy is in fact recovering, which is the basis for ideas that the Federal Reserve could start tapering quantitative easing, then industrial demand for silver should pick up and allow it to fare better than gold. Some look for both metals to eventually rise again on more financial and economic disarray, and they point out that silver tends to outperform in rising markets………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

The gold bugs are in total disarray. After crowing about how gold must rise to stratospheric levels, they are at a loss intellectually, although not financially, since most of them bought at much lower prices.
The primary feature of the financial markets this week – and, indeed, for many weeks past – has been the very high level of volatility. Price swings far in excess of anything considered normal in a given market have now become commonplace, to the point that if they continue, the accepted notions of “normal” will have to be adjusted or thrown out entirely………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Even as new measures to consolidate the rare earth industry in China are on the cards, prices for the 17 elements have jumped 10% over the past two weeks. The report has indicated that prices of praseodymium-neodymium oxide stood at around $43,000 (270,000 yuan) per tonne on June 25, about $3,237 (20,000 yuan) higher than the price recorded two weeks ago, according to the Shanghai Securities Journal.
Prices of dysprosium oxide and terbium oxide, on the other hand, were quoting at $218,571 (1.35 million yuan) and $420,989 (2.6 million yuan) per tonne respectively on June 25, each higher by $3,237 as compared to a fortnight ago………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

The stock exchange is going to start trading gold and silver by the end of this year, and platinum and palladium in 2014. Trading physical metals is expected to boost liquidity in the market and attract more participants.
Russia has so far only been trading futures on gold and silver, not dealing with real metals. Gold has been occasionally sold on the over-the-counter market and the only benchmark for price was the Central bank’s quotations, Gazeta.ru reports. Now gold will get the market price in rubles………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Americans bailed out of domestic stocks at just the wrong time, plowing recklessly into emerging markets in a vain pursuit of faster growth. Emerging markets have taken it on the chin this year, but U.S. investors who piled into them are really feeling the pain.
The iShares MSCI Emerging Markets Index ETF has lost 16% of its value since its recent high in January — and unlike U.S. indexes, which have made all-time highs this year, it’s still a third below its 2007 peak………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

The Canadian dollar is modestly higher Thursday morning, as commodity prices and commodity currencies firm in response to encouraging economic data from China. The U.S. dollar is trading at C$1.0462 Thursday from C$1.0472 late Wednesday, according to data provider CQG.
Commodity currencies rallied overnight on the back of encouraging Chinese industrial profits release, currency strategists at Scotibank said in a report………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

Vietnam decided to devalue its currency 1% versus the dollar and cut the ceilings on deposit rates in an effort to give momentum to economic growth. The State Bank of Vietnam said in a statement the devaluation of the currency, the dong, is meant to improve the country’s trade balance and boost state foreign-exchange reserves. Effective Friday, one dollar will bring 21,036 dong, compared with 20,828 dong now, the level since November 2011.
The central bank said it will also lower the interest-rate ceilings on short-term dong-denominated bank deposits to 7.0% from 7.5%. That will reduce banks’ funding costs, allowing them to lend at lower rates………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

This is an unusually busy moment in the unhappy history of efforts to curb climate change. In two weeks at the end of June the world’s three biggest polluters unveiled carbon-reducing measures. In China and America these are more ambitious than previous policies. But they fall far short of what is needed to rein in the relentless rise in global carbon emissions.
The centrepiece of the changes was the announcement, on June 25th, of new controls on American greenhouse-gas emissions, “one of the most important decisions we make as a nation”, Barack Obama boasted………………………………………..Full Article: Source

Posted on 28 June 2013 by VRS |  Email |Print

President Barack Obama’s climate plan, unveiled this week, may boost regional schemes to cut greenhouse gas emissions, known as cap and trade, four years after the United States failed to pass legislation for a nationwide programme.
Unlike Europe, the United States has no national cap and trade scheme to combat carbon emissions. The U.S. Congress considered but ultimately failed to bring in a national scheme in a climate bill which stalled in the Senate in 2009………………………………………..Full Article: Source

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