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Commodities Briefing 22.Jul 2013

Posted on 22 July 2013 by VRS |  Email |Print

Investors are suffering mounting losses as a decadelong rise in commodity prices unravels amid slowing emerging-markets economies, rising supplies of oil and metals and the eventual end of central-bank stimulus policies that propped up prices for raw materials.
The sharp reversal in the prices of commodities, ranging from gold to copper and aluminum, is undermining one of the most popular bets in global financial markets: that prices would keep rising, fueled by strong growth in China and other developing economies and the relative scarcity of many raw materials………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The U.S. Federal Reserve is “reviewing” a landmark 2003 decision that first allowed regulated banks to trade in physical commodity markets, it said on Friday, a move that may send new shockwaves through Wall Street.
The one-sentence statement suggests the Fed is taking a much deeper, wide-ranging look at how banks operate in commodity markets than previously believed, amid intensifying scrutiny of everything from electricity trading to metals warehouses………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The high desert of Storey county in Nevada is home to the US state’s oldest licensed brothel, a machine gun factory, a toy warehouse and a power plant that is owned by Morgan Stanley. The Wall Street bank installed the generator in 2001, records show. “It’s what they call a peaker plant,” says Lance Gilman, owner of the industrial park where it sits as well as the nearby brothel, Mustang Ranch.
“Beyond knowing they’re there and passing the parking lot, I have no idea what their inner workings are.”……………………………………….Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Hedge funds are betting on a big commodity price rebound after a dismal second quarter, with trade data showing bets for higher prices at a near six-month peak after the U.S. Federal Reserve softened its stance on tapering its monetary stimulus.
Wagers on U.S. crude oil are already at record highs, the weekly data from the U.S. Commodity Futures Trading Commission (CFTC) showed on Friday. Bets are also growing for a rebound in gold after its price tumbled 23 percent in the second quarter………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The energy market is on tenterhooks over late-stage negotiations that will determine whether commodities are to be included in wider benchmark regulation. Discussions within the European Commission have intensified in recent weeks as it works towards a provisional publication deadline of September 11 for the rules, according to people familiar with the situation.
The energy industry fears that EC proposals to hold all benchmark contributors, including commodities, liable for their submissions as well as subjecting them to a legally binding code of conduct would lead to a more opaque market because companies would be hesitant to voluntarily offer information………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Petrol prices roar away, but oil stocks are stuck in the slow lane. Emma Wall looks at the investment case. Feeling the effects of inflation at the pump? That’s because the oil price has risen steeply. Since early June, Brent crude has risen from a little more than $100 to reach $108.60 a barrel. Overall inflation rose to 2.9pc last week from 2.7pc the previous month – largely because the increase in the price of oil.
But despite the climbing price of oil, the value of oil stocks – and funds that invest in them – has so far failed to enjoy similar gains. But that could change………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The world needs less oil from Opec! With non-Opec crude production on the rise - expanding at the fastest rate in two decades - the call on Opec crude is getting less and less. “Non-Opec supply growth looks on track to hit a 20-year record next year, surpassing the 1.3m barrels per day high reached in 2002,” the Paris based IEA underlined in its just released July Monthly Oil Report.
This growing, conventional and non-conventional, output outside the Opec meant that the demand for Opec crude will be about 1 million bpd lower than the volumes it is currently pumping………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Recent developments in domestic energy production have shifted the political debate about energy independence. Yet as the discussion focuses on finding a desirable mix of American energy sources, policy decisions must account for a global oil market distorted by the interventions of foreign governments.
Some may think this doesn’t matter because the domestic oil boom offers the United States a chance to reclaim the title of the world’s largest oil producer………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Crude oil prices climbed higher in early July, after trading broadly flat through May and June. The price of Kuwait Export Crude (KEC) rose from a trough of $97 per barrel (pb) in late June to $103 by July 12th. Similarly, Brent crude prices climbed by some $9 to $109 — its highest level since early April. Both crudes are still some $11 off their February peaks.
Meanwhile, West Texas Intermediate (WTI) — the main US benchmark blend — accelerated by some $12 to $106, exceeding the $100 mark for the first time since May of last year. In the process, the Brent-WTI spread narrowed to its lowest in two and a half years……………………………………….Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

With non-OPEC crude production on the rise - expanding at the fastest rate in two decades - the call on OPEC crude is getting lower. “The 2014 outlook . . . should give oil bulls some cause for alarm. Non-OPEC supply growth looks on track to hit a 20-year record next year, surpassing the 1.3 million barrels per day high reached in 2002,” the Paris-based IEA underlined in its just released July Monthly Oil Report.
This growing, conventional and non-conventional, output outside the OPEC meant that the demand for OPEC crude will be about 1million bpd lower than the volumes it is currently pumping………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The fall in the gold price is now being recognised in gold mining companies’ balance sheets – and it is hurting. AngloGold Ashanti, the world’s third biggest gold producer, last Monday revealed itself as the latest to take a hit, predicting a writedown in the range of $2.2bn (£1.5bn) to $2.6bn (£1.7bn) on its mining assets, including its stockpiles of ore. The figure will be revealed in its financial results for the second quarter.
The company also said it would produce 4m to 4.1m ounces of gold this year, rather than the 4.1m to 4.4m ounces previously planned, in response to the fall in its product’s price………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Bullion was ripping higher in Asian trade on Monday with the gold price scaling the crucial $1,300 level for the first time in a month. A number of observers say the relatively rare occurrence of backwardation in the gold futures market means that physical demand is about the overwhelm the over-leveraged bullion banks and an imminent short squeeze of epic proportions will send prices soaring again.
Could this be the breakout for bullion that gold bugs have been waiting for?……………………………………….Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

After plunging from a high of nearly $1,900 an ounce, gold is set to rally about 20%, to $1,550. Why traders “have not been as bullish since gold prices were under $300.”
The collapse in the gold price from a high of nearly $1,900 an ounce in August 2011 to a low of less than $1,200 late last month has inspired a few gold bears to liken the metal’s outlook to the early 1980s, when it fell nearly two-thirds from its January 1980 peak of $850. That bearish scenario would mean a low of $640 before history fully repeats itself………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Hedge funds raised bets on a gold rally before prices capped the biggest two-week gain in 20 months as Federal Reserve Chairman Ben S. Bernanke damped speculation that a cut in stimulus is imminent.
Speculators increased their net-long position by 56 percent to 55,535 futures and options by July 16, the highest since June 4, U.S. Commodity Futures Trading Commission data show. Short contracts fell the most since November after reaching a record the previous week. Net-bullish wagers across 18 U.S.-traded commodities jumped 28 percent, the biggest gain since March………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

In 2012 gold producers cut their hedging activity to the lowest level since research firm GFMS and investment bank Societe General began tracking the data a decade ago.
After falling 21% in the final quarter of 2012, the outstanding producer hedge book now stands at a mere 3.95 million ounces, or 123 tonnes, a far cry from levels of as much as 3,000 tonnes seen before gold began its 12-year upward climb………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The gold and silver markets have fallen dramatically in the wake of the FOMC signaling an upcoming end to its controversial Quantitative Easing programs. The pricing in of such QE taper-talk has also triggered a yield spike in southern Europe that could deepen that region’s existing debt crisis.
Furthermore, sharply rising interest rates have resulted as billions of investors exit perhaps the largest financial bubble ever seen. The end of cheap real estate refinance has finally arrived as mortgage rates are now approaching 5%………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The question about which of these two metals to invest in has no simple answer because it is a question about what kind of investor you are and what you believe in. If you are a long term investor who is just looking buy gold online trading or to preserve value, a mix of gold and silver might be something to consider since gold have, as we know, been a preserver of wealth since before the Roman empire but gold has lately been under a lot of pressure it is true that gold preserves value over the really long run, but in the short run it is often used as a tool for traders to bet against something else.
For example the major bull run in gold price that we saw begin a few years ago was not due to the fact that gold was all of a sudden seen as a better preserver of wealth than before but rather because of the fear that the FED was creating too much dollars and easy credit witch would push up inflation………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Chinese copper consumption is facing bearish sentiments; however, subsequent to adjusting for bonded and SHFE stock fluctuations, the Middle Kingdom’s apparent copper demand has climbed 29% y/y in April and May! What is wrong (or for that matter, ‘right’) here?
Barclays believes that the strength in Chinese refined production and draws in bonded and SHFE stocks is the cause behind this drive. And above all, the changes effected in import finance policy have the potential to boost imports and fuel apparent consumption………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

The U.S. commodities market regulator has put Wall Street banks and other big traders on notice for a possible investigation of their metals warehousing businesses following years of complaints about inflated prices.
The U.S. Commodity Futures Trading Commission (CFTC) last week sent a letter to firms ordering them to preserve emails, documents and instant messages from the past three years, two sources who received the letters told Reuters. The notice amounted to a “warning shot” ahead of what is probably a formal CFTC probe, one of the sources said………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Since 2007 we have seen waves of investor bubbles. First there was uranium where, at one stage, more than 200 ASX listed companies had either acquired uranium projects or had suddenly decided their existing ground (acquired for some other minerals) might just contain the odd bit of yellowcake.
Investors didn’t discriminate: they bought anything that had uranium in the latest ASX release’s headline. Subsequently it was a case of ditto with phosphate and then rare earths. Then the bottom fell out each time. So is graphite headed for the same rise and fall?……………………………………….Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

There’s no denying China’s massive economic growth over the past decade, as the country recorded an average GDP of more than 10 percent per year. In only seven years, China’s economy doubled; in 13 years, it tripled.
With this incredible expansion, China began to import commodities at an incredible pace. In 2000, the country imported only 70 million tons of iron ore; today, it’s more than 10 times that amount, at 763 million tons. Copper imports increased dramatically too, growing from 1.6 million tons in 2000 to more than 4 million tons per year today, according to BCA Research data………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Since the early 1990s, there have been many cases of currency investors who have been caught off guard, which lead to runs on currencies and capital flight. What makes currency investors and international financiers respond and act like this? Do they evaluate the minutia of an economy, or do they go by gut instinct?
A currency crisis is brought on by a decline in the value of a country’s currency. This decline in value negatively affects an economy by creating instabilities in exchange rates, meaning that one unit of the currency no longer buys as much as it used to in another. To simplify the matter, we can say that crises develop as an interaction between investor expectations and what those expectations cause to happen………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Almost two in three Australians support making big companies pay to emit carbon pollution, a new poll commissioned by an environmental group shows. The ReachTEL poll conducted for WWF-Australia also found more people supported a move to an emissions trading scheme (41 per cent) than opposed it (33 per cent).
However there still wasn’t a majority in support and a quarter of respondents were undecided which course of action was better, just days after Prime Minister Kevin Rudd announced an early move to a trading scheme………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Chinese government officials, environment and energy experts, and entrepreneurs have vowed to join hands in accelerating the process of building a nationwide carbon emissions trading market.
“The country will soon carry out scientific methods to record enterprises’ carbon emissions in major industries and find ways to allocate emissions quota appropriately, as preparations for a nationwide carbon emissions trading market,” said Su Wei, director of the climate change department of the National Development and Reform Commission………………………………………..Full Article: Source

Posted on 22 July 2013 by VRS |  Email |Print

Many are puzzled by the political theory of carbon markets. Why does the Institute for Public Affairs – a libertarian think tank – oppose a market in carbon? Tim Wilson, for example, thinks that private property rights are good, intellectual property rights are important, but carbon markets are some kind of socialist plot. The difference seems to be that carbon markets aren’t “free” because they involve regulation, and carbon permits aren’t “natural” property.
Of course, there are distinctions. Physical land can be defended with a sword. You don’t need such elaborate official definition………………………………………..Full Article: Source

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