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Commodities Briefing 22.Aug 2013

Posted on 22 August 2013 by VRS |  Email |Print

In June, I posted an article on MarketWatch entitled “Are commodity prices about to explode?” The question mark was there because a lot of ingredients were in place for a major rally, but I also pointed out that we really needed confirmation from some of the key averages.
Now I am going to remove the question mark, because two months later, a substantial number of indicators are crying “commodity bull market”. Take a pinch of salt with the explode part of the headline because there are no known techniques for consistently forecasting the character of a forthcoming price move. I am not ruling it out, merely forecasting that in one way or another prices are likely to be substantially higher by year-end………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

The S&P 500 Index (SPX) has performed well this year and is up over 19% on the year as of July 31st. The Federal Reserves accommodative stance on monetary policy may be one of the reasons for this action.
I assume this to be true due to the sharp but short correction and rise in interest rates we had in June. The markets came right back and hit all time highs in July as the Fed verbally backed off from comments about tapering bond purchases………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

China will surpass the U.S. as the world’s top oil importer in four years, with oil imports costing the Chinese half a trillion dollars by 2020, consultancy Wood Mackenzie said. China’s demand for crude imports is seen rising to 9.2 million barrels a day by 2020, from 2.5 million barrels a day in 2005, the consultancy said Tuesday.
U.S. imports will have fallen to 6.8 million barrels a day from a peak of 10 million barrels in the same period — a 360% increase in Chinese crude imports and a 32% decline for U.S. crude imports. China is also seen as relying more on producers within the Organization of the Petroleum Exporting Countries………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

According to the firm, China’s impressive and dynamic consumption will reach $500 billion in 2020, which will pass the U.S.’s largest dollar amount on imports, $335 billion, by a healthy margin. In barrels per day, this will amount to 9.2 million bpd in 2020, while U.S. imports at that time stand to fall to 6.8 million bpd.
The firm’s Beijing-based president, William Durbin, told Reuters: ”It means the United States is becoming more North America-centric for its supply needs and China more dependent on Middle East and OPEC crude………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

There’s been movement in crude oil prices in 2013 that investors should be watching… Global oil prices diverged yesterday (Tuesday) as market factors both in the U.S. and abroad painted a very distinct picture for energy costs.
Options for West Texas Intermediate (WTI) for September delivery fell $2.14 to settle at $104.96 a barrel on the New York Mercantile Exchange………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

Oil futures continued to trade lower Wednesday, though they pared some losses briefly after the U.S. Energy Information Administration reported a fall of 1.4 million barrels in crude stockpiles for the week ended Aug. 16.
Analysts polled by Platts were looking for a one-million-barrel decline. Gasoline supplies dropped by four million barrels, while distillate stockpiles rose 900,000 barrels, the EIA said. Gasoline stockpiles were expected to decline by 1.5 million barrels, while forecasts called for an increase of 1 million barrels for distillates………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

In a recent note, JPMorgan Chase explained that there are some positive seasonality factors coming into play with gold, and that physical gold demand still remains strong.
During the second quarter, demand for gold bars and coins reached a record high of 507.6 tons, up from 285.9 tons a year earlier and well above the five-year average of almost 300 tons, according to the World Gold Council. In the same period, demand for gold jewelry rose 37 percent to 575.5 tons — new multiyear highs………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

The rout in gold that wiped out $56 billion of value this year is spurring consumer demand in China and India, the biggest buyers, and leading JPMorgan Chase & Co. and Bank of America Corp. to say prices are bottoming.
Sales of jewelry, coins and bars will reach as much as 1,000 metric tons in India and China in 2013, valued at a combined $87.6 billion, the World Gold Council estimates. Prices will average $1,300 an ounce in the fourth quarter, or 5 percent less than now, the median of 17 analyst estimates compiled by Bloomberg shows………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

An abatement in the wave of speculative selling pressure is allowing strong demand for physical gold from Asian buyers to assert its influence over the price and there is a growing case to be positive over the prospects of the yellow metal.
However, a number of factors have hurt gold in recent months, not least position liquidation by star traders George Soros and John Paulson. But those are short-term influences. The elephant in the room for gold continues to be the U.S. Federal Reserve’s plans to taper its $85 billion a month bond purchasing program………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

Given the crunch situation in US Dollar, media reports suggest that India is considering a plan to lease out 200 tons of gold that it bought in 2009 from the IMF.
“Indian Finance Ministry officials have said that they are thinking of leasing out 200 tonnes of gold that the RBI had bought in 2009. This is set to lift the rupee psychologically, while also ensuring increase in gold supply in the market,” a Business Line report said. Gold will be leased in the international markets as per the report………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

India has no proposal to lease gold bought from the IMF according to India’s Economic Affairs Secretary, Arvind Mayaram. His comments came in a text message. The influential in India, Hindu Business Line newspaper, had reported earlier that the government will consider leasing out 200 tons of gold bought from IMF in 2009, citing finance ministry officials it didn’t identify.
With strains in the LBMA gold market, further pressure may be being applied to India to now help with supply after their recent draconian attempted measures to restrict demand………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

Step into the “Wayback Machine” and journey back in time to: 1932: Silver was selling for about $0.25 per ounce (average annual price per Kitco.com). Our $100 bill would buy about 400 ounces.
1962: Silver was selling for about $1.20 per ounce. Our $100 bill would buy about 83 ounces. 1982: Silver was selling at about $10.60 per ounce. Our $100 bill would buy about 9 ounces. (Early in 1980 silver spiked to about $50 per ounce for a day or so and then crashed.)……………………………………….Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

There are today a lot of hidden ties between different business sectors and far-flung parts of the world. And I’m increasingly convinced that many of the global threads in the minerals industry are today running through South Africa.
Most of us know the nation is a critical supplier of gold and platinum. But lesser known is that South Africa also supplies a good chunk of the world’s palladium, chromium, titanium, vanadium, manganese, vermiculite and zirconium. These are key parts of the global mineral supply chain. And they may be increasingly in jeopardy………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

A survey of 24 Chinese copper smelters undertaken by Shanghai Metals Market (SMM) reveals that 53% of the surveyed smelters expect copper price on London Metals Exchange (LME) to rise to USD 7,400-7,500/mt. The expectation is based on positive reports lately and the current liquidity conditions which are more relaxed than June’s levels.
Moreover, Xu Shaoshi, official from the National Development & Reform Commission, confirmed the strong potential investment demand in China, and stated that the government will adopt multiple measures to give consumption and investment full play in the national economy. As such, many still believed pro-growth measures may be introduced despite the absence of massive stimulus………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

Market Vectors filed regulatory paperwork detailing a long-flat futures-based multicommodities index ETF that will make use of momentum as a means to weight constituent commodities, and the fact that it included the fund’s price and trading symbol suggests the fund may be quite close to launch. The filing describes an amended version of a fund that went into registration in 2012.
The Market Vectors Low Volatility Commodity ETF has the look of managed-futureslike ETF strategy, a small pocket of the exchange-traded now inhabited by two funds. It’s an updated version of the Market Vectors Morningstar Long/Short Commodity ETF it first said was in the works in February 2012………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

A number of factors have united in the last 40 years to promote free trade across geographic and political boundaries, from the elimination of restrictive tariffs, capital controls and subsidization of local businesses to technological advances and advanced telecommunication systems.
As companies continue to conduct business outside of their own country they are becoming more exposed to the risk that foreign exchange rates are unpredictable and can fluctuate in adverse directions. As businesses become more exposed to changing currency rates the use of a central marketplace, like CME Group and its suite of FX futures and options, can be more helpful to managing risk. (Press Release)

Posted on 22 August 2013 by VRS |  Email |Print

Eurex, the German derivatives bourse, has agreed a tie-up with the Moscow Exchange as it makes a concerted push into trading foreign currency derivatives and takes on CME Group, the dominant operator in the market.
The group, part of Deutsche Börse, said on Wednesday it would begin trading futures and options on eight currency pairs in the fourth quarter. They include listed contracts in dollar-euro and futures in the dollar-rouble, the third most popular foreign exchange futures contract globally………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

A sharp decline in India’s currency and stock markets, while half a world away, may resonate in Canada as the weakness undercuts demand for commodities. India’s rupee continued its steep fall Wednesday, hitting a record low against the U.S. dollar. At the same time, India’s main stock market index hit its lowest point in almost a year.
Most analysts blame the declines on signals from the United States’ Federal Reserve Board that it will soon begin trimming stimulus spending. Cutting back on that stimulus will shift funds back into the U.S. from emerging markets – including India – which had gained over the past years from strong inward capital flows, as the availability of cheap credit prompted investment in emerging markets………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

Zeti Akhtar Aziz, Malaysia’s central bank governor comments on risk of currency contagion and the country’s narrowing current account surplus. She made these remarks to reporters in Kuala Lumpur after announcing the second-quarter economic growth.
On the risk of currency contagion: “We are seeing highly destabilizing capital flows and this is within our expectation because we earlier saw surges of inflow in our financial system. We received something like 70 billion ringgit in inflows in search of higher returns………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

As the President unveils his aspiring new climate change agenda in Washington, it suddenly dawns that the subject has now turned into a discourse of conservatism versus liberalism.
The plan of cutting U.S. carbon emissions, increasing renewable energy, and accrual of America’s preparedness for major disaster is not only cheered as entertainment in conservative circles, but is also a new marketing strategy in liberal actions as well………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

Trading on California carbon allowances that companies can use beginning in 2016 surged after the state sold out of the permits for the first time.
Futures contracts for a record 1.83 million 2016 allowances for December 2015 delivery cleared today on the IntercontinentalExchange Inc. (ICE), settling at $12.50 each, Brookly McLaughlin, a spokeswoman for the exchange in Atlanta, said by e-mail. The previous high was 960,000 allowances on May 21………………………………………..Full Article: Source

Posted on 22 August 2013 by VRS |  Email |Print

Carbon permits rose on the Shenzhen Emissions Exchange, the first of seven trial markets in China, to a price exceeding those in Europe, according to Bloomberg New Energy Finance.
Shenzhen carbon allowances for 2013 increased to 43 yuan ($7) a metric ton yesterday, up from 28 to 32 yuan a ton on June 18, the first day of trading, said Charlie Cao, a Beijing-based analyst for New Energy Finance………………………………………..Full Article: Source

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