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Commodities Briefing 16.Sep 2013

Posted on 16 September 2013 by VRS |  Email |Print

The big news of this week will, of course, be the FOMC meeting scheduled for September 17-18 where, it is widely anticipated, a decision to taper the $85-billion monthly asset purchase will be taken.
It is a matter of conjecture at the moment what will be the extent or pace of such tapering – by $15 billion or $20 billion or $25 billion or whatever, although market consensus is veering around to a nominal $15 billion reduction as the first step………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Regulators should have better insight into the commodity businesses owned by large Wall Street banks to help them prevent market manipulation, a senior official at the U.S. derivatives watchdog said.
The Federal Reserve is reviewing an exception that has allowed banks to trade physical commodities and even own metals warehouses and oil tankers despite a law that prohibits the mingling of finance and commerce. But Bart Chilton, a member of the Commodity Futures Trading Commission which regulates swaps and futures, said his agency did not even know exactly what the banks owned………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

U.S. lawmakers should revoke an exemption that lets Goldman Sachs (GS) Group Inc. and Morgan Stanley own commodity warehouses and other assets, Commodity Futures Trading Commission member Bart Chilton said.
The Wall Street firms, converted to bank holding companies during the 2008 credit crisis, benefit from “extraordinary treatment” under the exemption included in a 1999 law, Chilton said in remarks prepared for a speech tomorrow to the Michigan Agri-Business Association………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

And so it begins? On Wednesday, the Federal Reserve is expected to announce that it will begin “tapering”, the start, however gentle, of winding down its vast programme of quantitative easing (QE).
Analysts think the US central bank will reduce its $85bn-a-month (£53bn) purchase of assets under what is effectively a money-printing exercise, by up to $15bn a month. This would signal that, slowly but surely, the prop offered to global markets by Fed chairman Ben Bernanke and co is about to be removed………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

The predicted rise in global demand for agricultural commodities may begin to pay off for struggling Australian landholders, with institutional and offshore investors expected to jump on sectors that are most poised for growth.
Global real estate group Colliers International said in a new report that foreign capital will chase land producing wine, cattle and wheat. North Australian cattle properties, the West Australian wheat belt and poultry broiler farming are set to benefit………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Global shipping rates for commodities have climbed to their highest level since January last year according to the Baltic Dry Index, which tracks global freight rates for ships carrying dry-bulk commodities.
The Index is seen as one of the key predictors of economic growth around the world. On Wednesday last week, it climbed 4.6%, taking its rally to around 36% for this month alone, as reported by The Australian………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Garry White, chief investment commentator at Charles Stanley, looks at which areas of the market will be most affected if the situation in Syria deteriorates and there is a subsequent spike in the oil price.
Brent crude prices could spike to $160 a barrel should there be prolonged military action in Syria, Bank of America Merrill Lynch said last week………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

For the ancient Greeks, predictions emerged from Delphi, the omphalos, or navel, of the world. Most moderns probably think that oil price forecasts come from a different orifice.
Academics sometimes explain that oil prices are stochastic (a fancy word for ‘random’), but this is more a way of avoiding the issue than anything else. Politicians and consumers often argue that speculators are to blame for price fluctuations, a long-standing rationalization for an inability to explain why prices don’t do what they want………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Asian oil importers looking for more supplies to help dampen rising fuel costs received short shrift from the world’s top producers at a meeting in Seoul this week. A biannual gathering of Asian energy ministers was clearly divided between exporters enjoying bumper revenues on one side and importers on the other struggling to pay for the oil and gas that fuels their economies.
Benchmark Brent crude prices traded near $112 a barrel on Friday, after spiking above $117 late last month on the virtual shutdown of production from Opec producer Libya and the prospect of US military action against Syria………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

There, in plain sight for all to read, the highly influential New York Times, in an article about the manipulative speculation in ethanol markets and the obscure but phenomenally profitable ethanol credits (having skyrocketed more than 20 times in the last six months) and in turn its impact on the price for gasoline brought us the following observation:
“While banks are by no means the largest players in ethanol credits, Wall Street’s activities in this market reflects a larger effort by financial institutions to exert their influence over loosely regulated markets for basic commodities from aluminum to oil.”……………………………………….Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Speculators got less bullish on gold, selling long contracts at the fastest pace this year as prices fell the most in almost three months on prospects for less central-bank stimulus. Goldman Sachs Group Inc. said the retreat has further to go.
The net-long position held by hedge funds and other large speculators fell 16 percent to 84,929 futures and options in the week ended Sept. 10, U.S. Commodity Futures Trading Commission data show. Long holdings dropped 10 percent, the most since December, and short bets increased 9.8 percent………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

The problem with forecasts from mega players like Goldman Sachs is that their prophecies can become self-fulfilling given their dominance of the investment banking sector. This is not to say that there is a hidden agenda in their analysts’ pronunciations, but there is always the fear that there could be!
Goldman’s infamous ‘sell gold short’ call in April this year immediately ahead of the huge take-down that followed certainly will have raised suspicions on this front, so the market will undoubtedly be taking notice of the banker’s latest reported prognostications………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Jeffrey Currie, head of commodity research at Goldman, says the yellow one could fall below $US1000 an ounce and the bank’s target average for 2014 is $US1050 an ounce.
Sure, it’s been a bad week for gold. The seeming truce on the Syrian chemical weapons issue (no US airstrikes required) and anticipation that the Federal Open Market Committee, which meets tomorrow, will reduce the rate of money printing have induced a market feeling that all is well (no wealth protection required)………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

The phones lit up when Northern Rock failed in September 2007. But demand to buy gold was simply phenomenal when Lehmans failed 12 months later.
The reason? ‘I want to get my money out of the bank,’ said a flood of email enquiries. But instead of forming a queue in an old-fashioned bank run, savers found CHAPS transfers now made a quicker and simpler exit. And in the first financial panic of the digital age, it was still gold – the barbarous relic – that made the perfect safe haven once more………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

A slackening U.S. economy typically means that a slowdown in industrial demand for silver will soon be forthcoming. Nevertheless, the re-monetization of silver would more than take care of any such slump in demand.
Even if new supplies of silver are tapped, there is still a considerable premium associated with finding, buying back, smelting and refining the precious metal. Essentially, the physical market for silver would go completely off exchange………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Platinum prices are hovering between the year’s lows and highs, so investors could be excused for being cautious. But the good news on the metal outweighs the bad. Having bounced off a 3½-year low of $1,300 an ounce in June, platinum has been nudging the $1,500 mark in recent weeks.
Part of the rebound can be traced to a recovery in gold prices, which had dragged all precious metals lower amid fears of imminent and aggressive stimulus-cutting by the Federal Reserve. Since those worries have eased, gold has marched higher………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

When the Bureau of Labor Statistics calculates the “core” Consumer Price Index, food and energy expenses are excluded because those sectors are volatile, making it difficult to track the broader economic trend.
It is the volatility of oil prices which makes this commodity so attractive to traders and investors. While there is a tremendous upside for making profits, the downside risk is also more significant than it is for other commodities such as base metals………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Amundi, the $1tn French asset manager, says it is willing to consider acquisition opportunities as part of its push to become one of the top three providers in Europe’s exchange traded funds market. The admission stokes rumours that it plans to make a play for fellow French ETF house Lyxor.
“We would strongly consider participating in any consolidation process within Europe’s ETF industry,” says Valerie Baudson, managing director of Amundi’s $50bn ETF and indexing operations………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

The total turnover of commodity bourses fell over 17 per cent to Rs 58,98,170 crore till August 2013, mainly due to sluggish trade volumes in almost all items, according to sector regulator FMC.
The business at the 21 commodity exchanges stood at Rs 71,39,917 crore in the same period last year. Much of the fall was in farm commodities, followed by bullion, metals and energy items, said the Forward Markets Commission (FMC) said while releasing its latest data………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

The Shanghai free-trade zone, China’s first, will officially open for business on September 29. Just about every China economy maven has been following the months-long saga regarding the establishment of the zone because in Shanghai the central government will punch a gaping hole in the country’s currency wall.
The renminbi has been convertible on the current account since December 1996. The region-wide crisis that began in the middle of the following year thwarted Beijing’s goal of achieving full convertibility by the turn of the century. Since then, Chinese technocrats have made a series of promises regarding capital account liberalization………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Brazil’s volatile currency, the real, is back in the news. Two years ago, the real hit all-time highs against the dollar. The rise prompted Brazil’s finance minister, Guido Mantega, to accuse the central banks of advanced countries, the Fed in particular, of conducting a “currency war” at his country’s expense.
Now the real is heading back toward the lows it reached in 2008, at the depth of the global financial crisis. One might think that if a strong real is bad, then a weak real must be good, but that has not been the reaction. Instead, the recent depreciation has caused Brazil’s central bank president to complain about the “adverse winds” from a strong dollar………………………………………..Full Article: Source

Posted on 16 September 2013 by VRS |  Email |Print

Labor will not be lectured by Tony Abbott about the coalition’s mandate to scrap the carbon tax, says acting opposition leader Chris Bowen. Especially after the former opposition leader staked his political career on blocking the Rudd government’s emissions trading legislation, he said.
The coalition is demanding that Labor respect its victory in the September 7 election, and not block attempts to repeal the carbon tax. But Mr Bowen said the prime minister-elect was in no position to “lecture other people about mandates”………………………………………..Full Article: Source

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