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Commodities Briefing 27.Sep 2013

Posted on 27 September 2013 by VRS |  Email |Print

There are a number of factors as to why the commodity super cycle is probably over. First of all, China is slowing down. Their growth rate might be as low as 6% or 7%. Additionally, we have a slow recovery in advanced economies and since there the monetary policy is going to be tightened, however, gradual.

The Fed eventually is going to start tapering, would eventually go away from zero policy rates and that increase in short and long rates is going to soften commodity prices as well. The dollar is going to strengthen over time because economic growth in the US is going to outperform the one in other advanced economies. The Fed is going to exit faster than other central banks………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Ben Yearsley, head of investment research at Charles Stanley Direct, explains why he’s drawn to the Investec Enhanced Natural Resources fund for his commodities exposure. Commodities are an inherently risky place to put your money. They were one of the “must have” investments a decade ago, but have seemingly been in the “must avoid” category in the last few years.
Most commodities, especially industrial metals such as copper, appear intrinsically linked to the appetite of emerging markets; when China does well, commodities have performed strongly, when China wobbles, commodity prices and related share prices fall sharply. So, what are the prospects today?……………………………………….Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Recent declines in commodity prices have raised the idea that the so-called commodity supercycle is over, but not everyone believes that. Month to date futures prices, based on the most-active contracts, for gold have lost around 5%, silver’s down over 7%. Oil and natural-gas futures have lost around 4%.
But “despite recent falls, commodity prices are still near their levels of early to mid-2008, just before the global financial crisis hit,” said analysts at McKinsey & Company, in a recent research note………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Warren Buffett — the Oracle of Omaha — is one of the world’s most renowned investors, heralded for his simple yet effective valuation methods. As such, followers of the legendary investor pay close attention when Buffett places big bets, and they hope that by following his stock picks, they will cash in on Buffett’s guru-like instincts.
In the commodity space, however, Buffett has been quite vocal about his aversion to certain commodities — namely gold . However, Buffett does have meaningful exposure to commodity producers that are involved in a wide array of industries, including oil and gas, solar power, and agriculture………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Why is the US Federal Reserve looking into reviewing whether Goldman Sachs (GS), JPMorgan (JPM) and other banks can hold physical commodities such as gas, aluminum and the infrastructure in which to store them?
Because of facts like these: a Euromoney article reports that according to the Aluminum Association, the US aluminum supply totaled 18.3 billion pounds (8.3 million tons) in 2009, with industry sources putting Goldman Sachs holding some 25% of it………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will increase crude shipments by 1 percent next month as they maximize flows before refineries are shut for maintenance, according to tanker tracker Oil Movements.
OPEC, which supplies about 40 percent of the world’s oil, will raise exports by 230,000 barrels a day to about 23.9 million a day in the four weeks to Oct. 12 compared with the period to Sept. 14, the researcher said today in a report. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

The industry is focusing on liquid-rich plays, but some gassier regions offer solid returns, asserts Joel Musante, senior research analyst for oil and gas exploration and production with Euro Pacific Capital. With oil trading over $100 per barrel, liquids-rich plays are most attractive.
Prices may pull back, even though the surge in merger and acquisition activity suggests that some companies might believe that these price levels are here to stay. Ultimately, producers must consider development costs as well as product types and margins to enhance returns………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Iran has named a veteran oil official as its representative on OPEC’s board of governors, the latest former incumbent to return to a senior oil post under new president Hassan Rouhani.
The appointment of Hossein Kazempour Ardebili as Iran’s OPEC governor was confirmed this week by the Organization of the Petroleum Exporting Countries (OPEC) on its website………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Falling gold prices in recent months have encouraged bargain hunters across Asia to buy more of the precious metal. Gold has traditionally been bought in India and China as insurance against currency fluctuations and inflation.
Perth Mint, which produces 10 per cent of the world’s gold bullion, has been keeping a close watch on gold price movements. The miner’s analysis and strategy manager Bron Suchecki told Radio Australia that it was overwhelmed with interest from Asian buyers when gold had a massive correction early this year………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Here’s a market trend you can almost bank on: Whenever gold prices jump, gold experts come out of the woodwork telling their fervent followers to buy more bullion because gold prices are heading to the moon! It’s a pattern that’s repeated itself multiple times over the past two years. It’s also toxic advice that’s been dead wrong.
In fact, the rallies in gold prices have been brief, but just long enough to fool the gullible masses into believing that prices are still going up………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

After years of paying attention to the price action and not the mainstream market commentary — thanks in large part to Ted Butler and GATA — here are some of the dominate forces that currently seem to be determining price movements in the precious metals:Downside Probability.
Jobs data comes out every few weeks. This almost always puts downside pressure on the market, with about a 90% probability. Also, presidential press conferences tend to have a 70% downside probability. The powers that suppress the precious metals prices cannot have metals surging while the president speaks………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

China, the world’s stronghold of rare earths, is set to go on a splurging spree in October for the precious elements. Six of China’s large rare earths producers have been reported likely to purchase large amounts of the minerals next month.
These companies include Baotou Steel Rare Earth Hi-Tech Co; China Minmetal Rare Earth Co Ltd; China Nonferrous Metal Industry’s Foreign Engineering and Construction Co Ltd; Chinalco Rare Earth Jiangsu Co Ltd; Rising Nonferrous Metals Co Ltd and Ganzhou Rare Earth Mineral Industry Co Ltd………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

An exchange-traded fund (ETF) is an index-tracking fund that trades on a stock exchange and are generally used to track the performance of a specific market index. They change in value throughout the trading day as they mimic the performance of their designated index.
According to Morningstar’s European passive fund analyst team, it is important to know that ETFs are only a part - albeit the biggest part - of a broader family now commonly referred to as exchanged-traded products (ETPs)………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

U.S.-listed ETF assets have climbed $224 billion this year due to price appreciation and net inflows of $133 billion, according to ConvergEx Group. There are more than 1,500 exchange traded products listed on domestic exchanges with total assets of $1.6 trillion. Meanwhile, aggregate daily volume in ETF trading is up 10% from last year, to $63 billion daily.
“The success of ETFs in gathering assets continued in the third quarter of 2013, and with just a few days to go inflows total $59 billion,” said Nicholas Colas, chief market strategist at ConvergEx Group, in a note Thursday………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Long-term trend-following hedge funds are heading for a third straight year of losses unless the commodity and financial markets they trade in settle into a more predictable pattern, which does not seem likely given the Federal Reserve’s mixed signals on the U.S. economic stimulus.
Known generically as “managed futures”, or Commodity Trading Advisors (CTAs), many trend followers were whipsawed in the first half by market gyrations over whether the Fed would cut its bond buying this year. More volatility seems likely; last week, the Fed said it needed more time to decide………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Reserve Bank of India governor Raghuram Rajan’s maiden monetary policy announcement has evoked contrary responses. India’s financial markets and a section of the business community have reacted adversely to his decision to increase the repo rate in his policy statement.
This is understandable. Dr. Rajan had been in favour of lowering interest rates during his brief stint at the Finance Ministry. That and the terrific buzz that accompanied his assumption of office had led to expectations in some quarters that a rate cut was likely………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

East Asia’s local currency bond markets are still expanding, but risks to the outlook are rising given the prospects of a tighter US monetary policy, slower economic growth in Asia and persistent capital outflows, according to the latest Asia Bond Monitor quarterly from the Asian Development Bank (ADB).
“Asia’s bond markets and its borrowers are better placed to stand up to this latest round of global volatility than they were in 1997-1998 but tough times certainly lie ahead,” ADB office of regional economic integration head Iwan J. Azis said in an official release………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

The story of how Brazil’s vast central and north-eastern crop belt was won starts in 1973, when Brazil’s military regime decided to centralise agronomy research and set up the Brazilian agricultural research corporation, Embrapa.
It sent 1,200 bright young scientists abroad to study. When they returned and were set to work, they achieved something of a miracle: they made the cerrado bloom. Until then, Brazil’s savannah with its acid, nutrient-poor soil had been thought impossible to cultivate. It turned out that deep tilling, huge quantities of lime and fertiliser and fast-growing crops bred to suit the local conditions could coax a rich harvest from it………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

United Nations envoys meeting in November should appoint a regulator to link carbon markets emerging from China to California and stimulate investment in emission-reduction projects, according to a carbon lobby group.
A global overseer would coordinate markets and boost private-sector confidence in efforts to cut greenhouse gas, said Anthony Hobley, president of the Climate Markets & Investment Association, whose members include JPMorgan Chase & Co. and Cargill Inc. More than 50 jurisdictions have set up or are considering carbon markets, UN and World Bank data show………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

A handful of European governments have thrown the U.N.’s main market to cut greenhouse gas emissions a lifeline by pledging to finance emission reduction projects that are viewed by the private sector as unprofitable.
Great Britain, Germany, Sweden, Norway and Belgium plan to pay more than current market prices for carbon credits known as Certified Emission Reductions (CERs) from emission reductions projects registered under the Clean Development Mechanism (CDM) in the world’s least developed countries………………………………………..Full Article: Source

Posted on 27 September 2013 by VRS |  Email |Print

Commodity benchmarks are on course in Q3, 2013 to the biggest quarterly gains in a year however, Barclays cautions that it is not due to any real recovery in the global economy. Commodity returns were boosted with the easing of a number of potentially negative factors and the emergence of the some idiosyncratic risks in specific markets such as oil, rather than any convincing evidence of a sustained improvement in the demand environment.
“With the list of issues and events that could potentially wrong-foot investors now a little shorter and positioning much cleaner, we see outcomes for commodity markets in Q4 tied to three key themes,” Barclays said:……………………………………….Full Article: Source

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