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Commodities Briefing 05.Aug 2013

Posted on 05 August 2013 by VRS |  Email |Print

Commodities investors are missing out on the party. Since its recent peak in September 2012, the Dow Jones-UBS Commodity Index, which includes 20 products such as natural gas, gold and copper, has fallen about 14%.
During the same period, the S&P 500 stock index has taken off, returning close to 20% including dividends. And even amid all the talk of a bond-market crash, a broad-based bond-market exchange-traded fund such as iShares Core Total U.S. Bond Market has lost only a few percent, while exchange-traded funds that own riskier bonds, like high-yield ones, have in some cases made money………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

After eight years, the Oil Drum is closing down, giving up the long struggle to alert us all to ‘‘peak oil’’ and the dangers of an energy crunch. The theme has gone out of fashion, eclipsed by shale and US fracking.
The demise of Britain’s leading website for oil dissidents has been seized on by critics as an admission that peak oil is a Malthusian myth. It comes amid a spate of reports from global banks announcing the death of the commodity supercycle, slain by creative technology………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

With the inevitability of the Federal Reserve QE (quantitative easing) “tapering” looming near and the slowdown of global economies, many analysts and traders are wondering, “Has the commodity bull cycle come to an end?”
In June, the World Bank cut its forecast for global economic growth from 2.3 percent to 2.2 percent, claiming slower than expected expansion in China, India and Brazil along with persistent problems in Europe. Many investors fear the sharp rise in borrowing costs, which has been brought on by the cash crunch in China’s money market due to a crackdown in currency speculation………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Commodity funds are like a B-movie that gets rave reviews on Wall Street because of the high fees they generate. Stay away from this asset class and you’ll be better off for it in the long term.
Commodities are like dead money. They do not pay any interest or dividends and are not expected to earn any return over the inflation rate. A bar of gold does not generate any cash and will never turn into two bars of gold. Year after year it just sits there, costing you money in storage, insurance and perhaps a management fee if you invest in a gold ETF………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

As a general rule, commodities would be considered a riskier type of investment. That doesn’t mean they shouldn’t be in your portfolio, although it should be a commodity that you have some knowledge and familiarity about.
Commodities are sometimes viewed as a hedge against inflation, so it would imply that commodities would be held for the longer term. As it relates to your retirement portfolio, commodities might deserve a place but normally their allocation would be relatively modest (i.e. 5-10% in any commodity) due to their volatility………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Blythe Masters was triumphant. The JPMorgan Chase executive had just sealed a deal that would propel her bank to the top of Wall Street’s commodities league table.
JPMorgan paid $1.7bn and assumed $3.3bn in debt to buy the global oil, gas, coal, power and metals businesses of RBS Sempra Commodities, a trading venture. While JPMorgan was strong in commodity derivatives, Sempra was at root a physical house moving molecules through a storage and warehousing network stretching from Baltimore to Singapore………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

The world’s 10 largest investment banks suffered a 25% plunge in their commodities revenues in the first half of the year as the units continued to suffer from regulatory scrutiny and lower market volatility.
The early calculations from research provider Coalition mean combined revenues fell from $3.6 billion in the first half of last year to $2.7 billion, according to Financial News analysis………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Prices for New Zealand’s main commodities rose in July, the first lift in three months, driven by gains in wool and most dairy products, while a fall in the local currency lifted returns, the ANZ Bank’s commodity price index showed on Monday.
The index rose 0.6 per cent from June, taking the annual rise to 25.7 per cent. The index is 5 per cent below a record high touched in April. Prices for most dairy products rose, along with wool, logs, and animal skins, which offset a dip in cheese, aluminium, and some fruit prices………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

As someone who cheers for the success of this great country, I desperately want to believe in the concept of America’s energy independence. In the past decade we have been inundated with predictions of the U.S. becoming the next Saudi Arabia of oil and natural gas production.
Fracking, tar sands, shale gas, et al., are supposed to bring about a manufacturing renaissance and trade surplus in the near future. But, as of now there isn’t much evidence we are headed in that direction………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

The dawn of the oil age was fairly recent. Although the stuff was used to waterproof boats in the Middle East 6,000 years ago, extracting it in earnest began only in 1859 after an oil strike in Pennsylvania. The first barrels of crude fetched $18 (around $450 at today’s prices).
It was used to make kerosene, the main fuel for artificial lighting after overfishing led to a shortage of whale blubber. Other liquids produced in the refining process, too unstable or smoky for lamplight, were burned or dumped………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

When it comes to uranium market sentiment, “it’s all about Japan,” says David Talbot, senior mining analyst at Dundee Capital Markets. With restart applications trickling in and reactor construction underway throughout the world, a turnaround looks less like an “if” and more like a “when.”
In the meantime, Talbot sees many investors sitting on the sidelines. In this interview with The Energy Report, Talbot discusses the catalysts that could trigger the next uranium boom and the companies that could make investors wish they had arrived at the party a little earlier………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Hedge funds lowered bullish gold bets for the first time in five weeks as signs of accelerating U.S. growth contributed to the longest retreat in prices in a month.
Money managers cut their net-long position by 6.5 percent to 65,517 futures and options by July 30, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts rose 6.8 percent, the biggest increase in six weeks. Net-bullish bets across 18 U.S.-traded commodities contracted 15 percent as investors cut wagers on higher crude prices for the first time in a month and more than doubled bearish bets on copper………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

In the fixed income space, the most hated area of the bond market has been long-duration Treasuries. In the equities space, the most hated area of the stock market has been emerging markets.
In the commodities space? It’s been gold. Historically, gold tends to do well in negative real rate environments. The collapse in bond prices, concerns over European gold selling to raise cash by government institutions, and fears over India’s demand for the precious metal has caused many to aggressively sell………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Gold prices are expected to remain within the range of US$1,050 to US$1,550 per ounce, said Public Gold Group founder and chairman Datuk Louis Ng Chun Hau.“The commodity’s price will not dip lower than the US$1,050 level as the mining cost for gold is also getting higher due to elevating prices of crude palm oil and machinery.
“The average mining cost for one ounce of gold is currently equivalent to about US$1,400,” he told a press conference at the half-day gold investment seminar entitled ‘Gold As An Investment Tool — Discover The Potentials’………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Silver, gold’s shiny and less expensive cousin, is both a bullion for sentimental hoarding and an industrial metal. Both factors could play out in the next few months, say experts. The path is risky for investors, say analysts, because riding piggyback on the back of gold is hurt by an emotional downturn, while an economic slowdown weakens industrial demand.
“Downside risks for silver is higher as that commodity not only takes its cues from movement in gold and other precious metals, but also from industrial metals,” said Reena Rohit, chief manager for non-agricultural commodities at Angel Broking………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

One of the largest issues many have with technical analysis is linking an understanding of their fundamental “beliefs” with prices on a chart. By fundamental, we include simply the knowledge of any number of known factors, shortages, record buying of coins, people generally positive about the “news,” as a few simple examples.
There is a need for a hand-to-eye type of association between existing fundamental “beliefs” and current prices………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

The London Metal Exchange and Goldman Sachs have been accused of “monopolistic behaviour” in a US class-action lawsuit over controversial metals storage.
The lawsuit alleges “anti-competitive and monopolistic behaviour in the warehousing market in connection with aluminium prices,” LME owner Hong Kong Exchanges and Clearing (HKEx) said. Superior Extrusion filed the lawsuit last Thursday………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

After natural gas hit 2013 highs in the early second quarter—and leading many to believe that natural gas was back on track—the commodity soon fell back to Earth. The product has struggled under weak commodity conditions, high supply levels, and uncooperative demand figures, pushing it within striking distance of the year’s lows.
Some are forecasting that this trend can continue in the near term, especially based on recent weather. Temperatures have been below average across much of the Midwest and the Northeast, with forecasts calling for moderate temperatures in the days ahead……………………………………….Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

The turnover of 22 commodity bourses fell by 42 per cent to Rs 4,07,670 crore in the first fortnight of July mainly due to sharp fall in business at MCX following the imposition of commodity transaction tax (CTT) on the futures trading of non-farm items and some processed food.
The turnover of these commodity bourses stood at Rs 7,08,342 crore during the June 16-30 period, the immediate fortnight before the introduction of CTT. CTT of 0.01 per cent has been made effective from July 1 on the futures trading of non-agri commodities and processed foods. The government has exempted 23 agricultural commodities from the new tax………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Syrian traders who price goods in foreign currency will face up to 10 years in jail, the government announced on Sunday in a move aimed at stemming the increasing dollarisation of an economy crippled by two years of civil war.
A decree issued by President Bashar al-Assad “forbids the use of anything other than the Syrian pound as payment for any type of commercial transaction or cash settlement”………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Iran’s new president will have to deal with an economy that is showing signs of foundering, according to a Washington Post report published over the weekend. Western sanctions are cutting ever deeper into the Islamic republic’s financial lifelines and increasing pressure for a nuclear deal with the West, the report noted, citing newly released data.
The figures show accelerated financial hemorrhaging across multiple sectors, from plummeting hard-currency reserves to steadily falling oil exports, Iran’s main source of foreign cash. U.S. officials and analysts say the tide of bad news will complicate the task awaiting Hassan Rouhani, the incoming president, but it could also increase Iran’s willingness to accept limits that would preclude it from developing nuclear weapons………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Global cotton production is estimated at 25.6 mn tons for 2013-14 while consumption is forecast at 24 mn tons leaving a surplus of 1.6 mn tons, according to International Cotton Advisory Committee (ICAC).
World trade in cotton is estimated at 9 mn tons and world ending stocks are forecast at a record 19.8 mn tons or an eye-popping 83% of projected mill use. World production will have exceeded consumption by a cumulative 11 million tons between 2010/11 and the end of 2013/14, resulting in a doubling of world ending stocks in four seasons………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

Tony Abbott has kicked off the Coalition campaign by pledging anew that his first order of business would be to scrap carbon pricing should he win the September 7 election. The Coalition Leader revealed he had written to secretary of the Department of Prime Minister and Cabinet, Ian Watt, as well as Clean Energy Finance Corporation boss Jillian Broadbent to advise that he would immediately introduce legislation repealing the carbon tax were he to become prime minister.
He urged Ms Broadbent to make no new payments or grant approvals once the caretaker provisions applying during the campaign period came into effect later today………………………………………..Full Article: Source

Posted on 05 August 2013 by VRS |  Email |Print

If you listen to the rhetoric, Labor is offering a con based on invisible substances and their coalition opponents a fig leaf lacking all credibility.The war of words on climate change has never lacked venom in Australia, and the debate around the “carbon tax” has circled endlessly in the lead-up to this year’s federal election.
But there’s more to climate policy, and some voters may not know Labor and the coalition actually agree on a number of points when it comes to global warming………………………………………..Full Article: Source

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