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Commodities Briefing 30.Jul 2013

Posted on 30 July 2013 by VRS |  Email |Print

U.S. banks’ ownership and trading of physical commodities will face further scrutiny tomorrow when the heads of the Commodity Futures Trading Commission and Securities and Exchange Commission testify before lawmakers.
Senator Sherrod Brown, the Ohio Democrat who led a hearing on the issue last week, said he plans to question the CFTC’s Gary Gensler and the SEC’s Mary Jo White on their oversight when the two chairman appear before the chamber’s Banking Committee on implementation of Dodd-Frank Act reforms…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

The Fed loosened rules to allow banks to buy commodities, driving up everyday prices for consumers. Who the next chair is matters if these kinds of practices are ever to be stopped. Who becomes the next Federal Reserve chair matters, not only because of the implications for economic and monetary policy, but because the Fed remains one of the nation’s chief financial regulators.
There are dozens of policies, some we don’t even know about, over which the Fed wields critical influence. While the past year has seen a small but important shift toward tighter controls, particularly on the largest Wall Street institutions, all of that could change if President Barack Obama selects another deregulator in the Greenspan tradition…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

For third time in five years, one of the world’s biggest commodity trading desks is for sale. JPMorgan Chase & Co. said on Friday it would seek “strategic alternatives” for its physical oil, gas, power and metals trading division, the core of which is a group that’s already been through two ownership changes since 2008.
It was a surprise about-face for a bank that spent billions of dollars over the past five years assembling the largest physical trading platform on Wall Street…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Fifteen years ago, a boom in global commodity trading was underway, and JPMorgan was late to the game. Trying to catch up with Wall Street rivals, JPMorgan recruited a young trader, Danny Masters. Within a few years, it had built a global platform that eclipsed its peers. At last it was a major player in markets from oil to metals.
Then it pulled the plug. Regulatory scrutiny in metals markets had tarnished its reputation; the gains from shipping oil around the world no longer seemed worth the risk. On Friday, history repeated itself…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Friday’s news that JP Morgan Chase is considering either selling or spinning off its physical commodities trading business had a negligible effect on oil futures on Monday, but market experts argue that it could hamper liquidity going forward. Dennis Gartman, publisher and editor of the Gartman Letter, theorized that JP Morgan was being “pressured” to leave the physical commodity trading business.
“It’s sad that they are forced out by our government or forced out by public opinion,” Gartman said, adding that any reduction in the physical activity in the marketplace would reduce liquidity and lead to greater volatility as it relates to the oil futures market…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Revenue from petroleum exports in the Organization of the Petroleum Exporting Countries broke a new record in 2012 but the earnings of some members are declining amid higher budgetary needs, underscoring a deepening rift between producers benefiting from higher oil prices and those who don’t.
Mounting inequalities within OPEC come ahead of an expected debate later this year over whether it should formally cut its production for the first time in five years. In its annual statistical report, OPEC said its oil exports revenue, which include crude, natural-gas liquids and products, rose by 9.2% to $1.261 trillion in 2012, compared to a previous record of $1.155 trillion the previous year…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

OPEC’s petroleum exports jumped in value by almost 10 percent in 2012 year-on-year and the producers’ GDP climbed 12 percent, according to the group’s latest report, an income surge that looks harder to repeat this year.
The gains, announced in OPEC’s Annual Statistical Bulletin 2013, reflect record prices and steadily climbing output last year from many members of the Organization of the Petroleum Exporting Countries. An increase in cash flow is a big advantage for producer countries…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Iraq’s oil revival is stalling, and unless momentum is regained, Baghdad will report an output decline for 2013, its first after two years of robust gains, much to the relief of rival Gulf producers.
Swift work since 2010 at Iraq’s southern oilfields by the likes of BP, Exxon Mobil and Eni raised output by 600,000 barrels per day (bpd) to 2.9 million bpd in 2012, turning Iraq into the world’s fastest growing exporter…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

“Higher Oil Prices Threaten Global Economy” – AP, March 10, 2011. This may be a headline of the distant past, but it was written at a time when crude oil traded just above $100/barrel. In fact, on March 10, 2011 crude oil ended the day at 102.58.
Oil above 100 usually captures the media’s attention one way or another. Some outlets consider it a sign of a strengthening economy, others a stone around the neck of car-driving consumers. Interestingly, this time around, 105 oil hasn’t tickled the media’s reporting need yet…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

The price of gold is rising after recent sharp falls. Is it becoming a solid investment again? Last week saw the price of gold climb strongly, bringing July’s total gains to around 10pc. Gold ”bugs” – those who are committed buyers – pointed to market data, including the prices of contracts by which traders speculate on gold’s future price, as evidence that ”a corner had been turned”. Is this really the case?
What has happened to the gold price? Having peaked in autumn 2011 at almost $1,900 an ounce, the price fluctuated between $1,600 and $1,800 for much of the next year, before beginning a sharp decline from October 2012. Last month it fell below $1,200…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Gold equities have been in the middle of a perfect storm for the past 18 months or so, sending share prices – and valuations – to historic lows in some cases. Issues over costs led to a significant disconnect between gold and gold miners in 2011 and 2012, so when bullion itself took a spectacular tumble earlier this year, gold funds fell from already depressed levels.
This, combined with the waning sentiment towards natural resources in general, has seen the HSBC Global Gold index fall more than 46 per cent since the beginning of 2012, with many gold funds not too far behind…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Money managers have increased their long bets on the yellow metal considering sharp rally seen in the metal over the past one week. The gold prices have shown uptrend in recent weeks, which prompted hedge funds to take long positions in recent data shared by the US commodities regulator.
The US Commodity Futures Trading Commission data showed that money managers increased their net-long position by 26% to 70,067 futures and options as of July 23. The fourth consecutive weekly gain is the longest streak since October. Bullish wagers across 18 U.S.-traded commodities gained 7.4 percent to 615,140. Investors more than doubled bets on lower corn prices to a record net-short holding…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

A drop in China’s refined base metals imports in the first half of this year seems to support falling Purchasing Managers Index (PMI) results, suggesting the slowdown in China’s economy is set to continue. In the words of Yasuo Yamamoto, a senior economist at Mizuho Research Institute in Tokyo, this is “….starting to become more dangerous,” a Reuters article reports.
“China’s economic growth rate will probably fall below 7 percent in the fourth quarter this year and may fall under 6 percent in some quarter next year,” Wang Jian, a senior researcher with the China Society of Macroeconomics, a research body affiliated with the National Development and Reform Commission (NDRC), is also quoted as saying…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

While low valuations, divestitures and cash-strapped juniors have set the stage for a buyer’s market, mining and metals companies aren’t necessarily biting.
In a report on mergers, acquisitions and capital raising in mining and metals for 1H13 made public Monday, EY suggests non-traditional investors—primarily state-backed investors and financial investors, such as private capital and investment funds—are “increasingly targeting the resources sector as valuation have plummeted, in an attempt to capture upside once confidence returns to the sector.”………………………………..Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Falling metals prices are exacting a heavier toll on Australia’s mining sector—once the engine of the country’s economy—with two midsize producers the latest to warn of hefty writedowns.
OZ Minerals Ltd., which runs one of the country’s largest copper mines, and gold producer Evolution Mining Ltd Monday warned of a combined hit to their bottom lines of up to 640 million Australian dollars (US$593 million). Each blamed sharp falls in prices of commodities like gold, Australia’s third-biggest export, as the U.S. edges toward tighter monetary policy and China’s economy cools…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

For academics, the term “troubled currency” might be a term of art. But for people who are faced with such a currency, they know a troubled currency when they see one. Today, this is the case for millions of people around the world – most notably in Iran, North Korea, Argentina, Venezuela, Egypt and Syria.
A troubled currency is one in which users have lost confidence. When users no longer think a currency will retain its purchasing power, they attempt to dump it for a stable foreign currency (or commodities)…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

The continuing fall of the local currency has not only worsened the Afghan economy but also dampened the Afghan spirit to rebuild their country, particularly at a time when they are preparing for the pull-out of all foreign forces in 2014.
The recent fall of the afghani has caused concerns not only among government officials but also among ordinary Afghan people. “It is a cause of concern for everyone, particularly for the government employees and people whose incomes are paid in afghanis, “said Sayyed Massoud, a Kabul University lecturer…………………………………Full Article: Source

Posted on 30 July 2013 by VRS |  Email |Print

Substantial step taken to clean up environment and save energy. On July 18, one month after China launched its first pilot carbon-trading program in Shenzhen, Guangdong province, the city began consulting local businesses and government departments about its draft regulations for the project. The regulations emphasize that carbon credits are corporate assets.
The launch ceremony of the Shenzhen Emissions Trading Scheme saw Shenzhen Energy Group sell 10,000 metric tons of carbon credits to PetroChina International Guangdong at 28 yuan ($4.60) per ton. Hanergy Holding Group also bought 10,000 tons at 30 yuan per ton. Both businesses purchased the credits for investment purposes…………………………………Full Article: Source

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