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Commodities Briefing 26.Aug 2013

Posted on 26 August 2013 by VRS |  Email |Print

Fears of a slowdown in China, combined with expectations that the US will start to exit stimulus measures, have prompted investors to dump the asset class. Miners have been slashing capital expenditure as a dash for growth over the past few years resulted in a glut of supply. Even copper, which has one of the tightest supply-and-demand balances of any metal, is expected to see a significant surplus this year and next.
There have been pockets of strength, however, particularly in energy markets. This is because of supply disruptions in the Middle East and speculators betting on an economic recovery in the US………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Over the past few months, investors have seen better economic data coming out of Europe. Consumer confidence in the continent has been rising, manufacturing data is improving and the fiscal situation is on the mend. Now, China appears to be strengthening as well, which could signal better times ahead – U.S. Global Investors.
Below are five charts that I believe look bullish for China and commodities. While not meant to be comprehensive, they do point to areas where investors might want to pay close attention………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Despite the agitation over their role, there are valid reasons why banks are involved in physical commodities. In the wake of the financial crisis, opponents of the banking industry are always eager to find new sticks with which to beat the villains of Wall Street. The latest one they have stumbled upon is banks’ participation in physical commodities.
On July 19, the US Federal Reserve Board issued a statement saying it was reviewing a 2003 determination that paved the way for banks to increase their involvement in the transport and storage of physical commodities………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Fact: U.S. oil production this past July was 7.5 million barrels per day. That’s the highest monthly output since 1991. It’s now believed that in the U.S. oil production could exceed imports by October, which would be the first time since 1995.
Production growth is being fueled by places such as the Eagle Ford Shale in Texas, where ConocoPhillips, for example, saw its production skyrocket by 98% in the past year.Despite booming production, oil prices are stubbornly high, and currently well over $100 per barrel. Globally, cracks are being felt in the world oil markets as turmoil in Egypt has oil traders nervous………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Iranian Oil Minister Bijan Namdar Zanganeh has said that the country is not in favor of high prices for crude oil, as it will not manage to sell expensive oil in the international market. “Whenever oil price went high, we could not succeed in selling it,” the Mehr News Agency quoted Zanganeh as saying on Saturday.
High oil price can be a challenge for Iran and a welcome opportunity for our rivals, because they can sell crude oil at higher prices, Zanganeh explained………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

The U.S. is on its way out as the world’s No. 1 oil importer, according to energy market researchers at Woods Mackenzie. That coveted (or not so coveted) title will belong to none other than China. As if anyone would be surprised.
According to the report, China will spend $500 billion a year on crude oil imports by 2020. “The price China pays will far outstrip the peak cost ever incurred by the U.S. of $335 billion annually with U.S. import spend falling to only $160 billion annually by 2020,” Wood Mackenzie said in a press release last week………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Hedge funds and other speculators raised bets on higher gold prices to the most in six months as signs of slowing U.S. growth drove bullion above $1,400 an ounce for the first time since June.
The net-long position increased 29 percent to 73,216 futures and options by Aug. 20, U.S. Commodity Futures Trading Commission data show. Short contracts fell for a second week and to the lowest since Feb. 12. Net-bullish holdings across 18 U.S.-traded commodities jumped 34 percent, the most since July 2010, as wagers on copper and soybeans more than doubled………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Despite the Indian government’s best efforts to curb citizens of the Asian nation’s appetite for gold and a plummeting rupee, the price of the metal continues to rise inside the country. Gold hit a nine-month high on India’s domestic bullion market over the weekend.
Standard gold of 99.5% purity shot up by Rs630 to change hands at Rs31,790 per 10 gm from Friday’s closing level of Rs 31,160………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Gold is the corpse of value…” said Goto Dengo, a character in Neal Stephenson’s novel Cryptonomicon. The sentiment strikes a chord with the aam admi as gold price spikes to new highs.
As part of its strategic initiatives to contain the current account deficit, the Government recently hiked customs duty on gold and platinum from 8 per cent to 10 per cent, and on silver from 6 per cent to 10 per cent………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Despite the stronger dollar index yesterday the Comex gold futures prices ended the day slightly higher, silver followed suit.
Many had expected a more negative reaction from gold, following the Fed minutes however elevated demand in Asia as well as geopolitical concerns have meant the price remains supported. It is also likely that tapering has been priced in already………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Aluminum buyers in Japan, Asia’s biggest importer, will probably win their first reduction in three quarters for fees they pay to producers after premiums in the U.S. and Europe slumped, three executives said.
Premiums for the three months starting in October are likely to fall to the lowest level of the year from this quarter’s $249 to $251 a metric ton over the London Metal Exchange cash price, said the executives, representing buyers and sellers. They asked not to be identified because the talks, which begin this week, are private………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Former Chinese commodities trader Jerry Ren Xiaofeng, who is quietly building a mining empire in the Australian Outback, scoffs at talk the resources boom is over. For him, it has just moved north.
As some mining firms clock up billions of dollars in losses, Ren has secured millions of hectares of exploration rights in Australia’s most remote regions that could soon make him a billionaire, helped by his connections in the world’s biggest consumer of minerals, China………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Gold bullion holdings in the world’s more than 140 gold-backed ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012. During the first seven months of this year outflows totalled some 670 tonnes with more than 400 tonnes recorded in the second quarter following the spectacular collapse in the price of gold.
After burning a $60 billion hole in gold investors pockets, only in August did the selling stop. Investment bank Macquarie explains in a research note where all that gold has gone adding that ETF gold should be considered as part of the physical market………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Investors love complexity. They seem attracted, like moths to a flame, to investment funds that are marketed as “designed for this market.” ETFs, on the other hand, often are the market, a simple benchmark.
You see this trend playing out in the selling of “active” exchange-traded funds, also known managed ETFs. These promise a little extra “zing” from active management. Naturally, that extra zing comes at a fee, so it better be a pretty good boost, right?……………………………………….Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Oil ETFs and Energy ETFs continued to consolidate last week as investors await upcoming Federal Reserve moves. Oil ETFs and Energy ETFs continued to consolidate last week, with the oil spot price losing 1.10% to close at $106.32 per barrel, the United States Oil Fund ETFlosing 1.17%, and the SPDR Sector Select Energy ETF adding .65%.
Investors appear to be waiting for a final Fed decision on easing and tapering come early September, judging by the sideways action of energy ETFs……………………………………….Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Plunging emerging market currencies on the prospect of US stimulus tapering have stirred memories of the 1997 Asian financial crisis, but analysts doubt a similar catastrophe is in the making.
“There are negative linkages (now) but I don’t think that we are in a repetition of the 1990s crisis,” said Jean Medecin, a member of the investment committee at the Carmignac Gestion asset manager………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

South Africa’s currency has been caught in a brutal pincer of dependence on weak European markets, exposure to slowing emerging markets, domestic turmoil and tighter U.S. monetary policy.
The Federal Reserve’s announcement on May 22 that it would eventually roll back stimulus was another gust of wind amid a cyclone for the South African rand. Like other emerging market currencies, the South African unit has had a torrid time of late………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

India’s rupee led declines among the currencies of the biggest emerging-market economies as the Federal Reserve signaled a reduction in stimulus is still on track, spurring a wave of cash to flow back into larger nations.
The Bloomberg US Dollar Index rose for a second week and touched its highest level since August 2. An equally weighted basket of currencies of Brazil, Russia, India, China and South Africa touched its lowest level versus the dollar since June 2010 on concern a paring of stimulus under the Fed’s quantitative-easing strategy would intensify outflows from the currencies………………………………………..Full Article: Source

Posted on 26 August 2013 by VRS |  Email |Print

Prime Minister Kevin Rudd has admitted Labor did not have a mandate from voters to introduce a carbon tax. During the 2010 election campaign, former prime minister Julia Gillard ruled out a carbon tax under her government.
But she went on to introduce a fixed price on carbon pollution, with plans to move to an emissions trading scheme in 2015. Rudd said in the past Labor governments “had got a number of things wrong”………………………………………..Full Article: Source

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