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Commodities Briefing 02.Oct 2013

Posted on 02 October 2013 by VRS |  Email |Print

The Federal Reserve has expanded its scrutiny of banks’ physical commodities operations to encompass businesses run by Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) that Congress had previously authorized.
The Fed is examining all legal and regulatory exemptions that allow banks to participate in the commodities markets, said a person briefed on the process who asked not to be named because the review is confidential. The appraisal, intended to minimize potential risks to the financial system, widened since the Fed said in July that it’s reconsidering its landmark 2003 decision to grant some lenders, such as Citigroup Inc. (C) and JPMorgan Chase & Co., permission to expand into raw materials………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Several of America’s largest enterprises including Boeing Co (BA.N) and United Parcel Service Inc (UPS.N) warned the Federal Reserve on Tuesday that restricting Wall Street’s trading in physical commodity markets could harm their business.
The U.S. Federal Reserve is reexamining a decade-old decision to allow banks to trade in raw materials, as well as their associated derivative markets. Critics of the decision say it has given banks too much sway over the supply chain………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Commodity assets under management rose to a four-month high in August as prices of raw materials increased and investors slowed the pace of selling precious metals, Barclays Plc said.
The value of commodity assets under management rose to $363 billion in August, up $13 billion from the prior month, according to an e-mailed report from the bank, which tracks index and exchange-traded products and medium-term notes. Assets were still below a peak of $458 billion in June, the bank said………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

The biggest rally in commodities in a year may stall in the fourth quarter as supply of everything from copper to corn expands, tensions in the Middle East ease and the Federal Reserve refrains from tapering stimulus as it seeks more evidence of sustained growth.
Six of 15 commodities will drop by the end of 2013, seven will gain and two will move less than 1 percent, according to the median of estimates from 144 analysts surveyed by Bloomberg News. Cocoa, gasoline and cotton will lose the most as natural gas, coffee and soybeans lead the winners. Goldman Sachs Group Inc. says raw-material prices will be mostly lower in a year………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Switzerland is obliged to hold a vote on banning speculation in agricultural commodities after a left wing political initiative gained enough signatures to force it to under Swiss law.
The timing of the national vote is not clear and is pending official guidance from the government. Under the Swiss system, parliament can propose alternative legislation which is typically more moderate and also subject to a national vote………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

OPEC’s Secretary General said he was comfortable with the market outlook for 2014 and a forecast drop in demand for OPEC oil was not large, indicating the group may not make big changes to output policy at a December meeting.
The Organization of the Petroleum Exporting Countries expects demand for its crude to fall to 29.61 million barrels per day (bpd) in 2014, down 320,000 bpd from 2013, due to rising supply outside the producer group………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

World oil markets are adequately supplied but oil prices of $110/barrel pose a risk to the still fragile global economic recovery, International Energy Agency chief economist Fatih Birol said Tuesday.
“I wouldn’t say how much they should go down but where they stand today, $110/barrel, this is definitely not good news for the countries that import a lot of oil, and also natural gas whose price is indexed to oil prices,” Birol said in an interview on the sidelines of the annual Oil & Money conference………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

OPEC oil output has fallen in September to the lowest in almost two years because of work at Iraq’s main export outlet, according to a Reuters survey, although record Saudi Arabian output prevented a larger decline.
Supply from the Organization of the Petroleum Exporting Countries has averaged 30.07 million barrels per day (bpd), down from 30.32 million bpd in August, the survey of shipping data and sources at oil companies, OPEC and consultants found………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

A rise in output of North American tight oil will not trouble OPEC, the group’s secretary general said on Tuesday, maintaining his view that the new supply source will not significantly impact the group’s market share.
Abdullah Al-Badri, attending the annual Oil and Money conference in London, referred to forecasts of rising production of tight oil, also known as shale, but said that would not be a problem for the 12-member OPEC. “I do not think that with this quantity OPEC is in trouble,” Badri said………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Gold prices will stabilise after this year’s sharp drop and reach more than $1,400 a troy ounce in 2014, according to a closely watched survey of industry forecasts by the London Bullion Market Association.
The results of the annual survey from around two dozen of the world’s largest bullion dealing banks and trading houses show many analysts and investors view this year’s decline as a correction rather than the start of a bear market………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Gold prices, which have fallen more than 20 percent this year, are expected to have rebounded to $1,405 an ounce by November 2014, delegates to the London Bullion Market Association’s annual conference forecast on Tuesday.
Silver, this year’s biggest faller with a 30 percent drop, is also forecast to rise to $25 by November next year. Platinum prices are expected to stand at $1,675 an ounce, and palladium at $837 an ounce. Gold has dropped this year on the back of expectations that a steadier macroeconomic environment will lead the Federal Reserve to curb its bullion-friendly stimulus measures and boost other assets like stocks at gold’s expense………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

The anticipated unwinding of US quantitative easing and expectations of improving but unspectacular economic growth leave little room for a rebound in gold prices over the next few years, while a further decline remains a real possibility, Fitch Ratings says.
Our ratings of gold producers incorporate a base case gold price assumption of USD1,200 per troy ounce for the next two years, but a stress scenario of USD1,000/oz would put some gold miners’ ratings under significant pressure without substantial cost cutting and cash conservation measures. (Press Release)

Posted on 02 October 2013 by VRS |  Email |Print

Gold is expected to decline into 2014 as investors shift into other asset classes amid speculation that the U.S. Federal Reserve will slow stimulus, according to the Australian government forecaster.
Prices may average $1,275 an ounce next year from $1,439 in 2013, the Canberra-based Bureau of Resources and Energy Economics said in a report today. That compares with the bureau’s estimates in June of $1,340 for 2014 and $1,444 for this year. Spot bullion has averaged about $1,457 in 2013………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Gold prices, which have fallen more than 20 percent this year, are expected to have rebounded to $1,405 an ounce by November 2014, delegates to the London Bullion Market Association’s annual conference forecast on Tuesday.
Silver, this year’s biggest faller with a 30 percent drop, is also forecast to rise to $25 by November next year. Platinum prices are expected to stand at $1,675 an ounce, and palladium at $837 an ounce………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

The commodities market will offer scant relief to metal producers struggling with overcapacity and low prices in the coming months, according to the head of Finland’s equity-asset manager.
Outokumpu Oyj (OUT1V), Rautaruukki Oyj (RTRKS) and Talvivaara Mining Co. must continue adapting themselves to low steel and nickel prices, Kari Jaervinen, managing director of Solidium Oy, which owns stakes in all three companies, said……………………………………….Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

BlackRock exchange traded funds (ETF) platform iShares has launched a new currency-hedged Japanese ETF which was listed on the London Stock Exchange (LSE) on Tuesday. The new product is the iShares MSCI Japan USD Hedged UCITS ETF (IJPD) and has a total expense ratio of 0.64%.
iShares said the offering will allow investors to mitigate currency risk in a single trade in a volatile foreign exchange environment. The product will give investors access to Japan whilst minimising the impact of movements in the yen to US dollar exchange rate………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Unilever’s warning that “significant currency weakening” in emerging markets would cause quarterly sales growth to slow reminded investors this week that currency effects will weigh on European third-quarter corporate results.
Over the past two years fast-growing sales in emerging markets have provided a much-needed cushion for large European multinationals, offsetting stagnation or decline in their core home markets………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Cuba is the only country in the world that mints two national currencies, a bizarre system that even President Raul Castro acknowledges is hamstringing the island’s socialist economy and must be scrapped. Exactly how to do that is the problem.
Months after Castro made currency unification a centerpiece of a forceful address to parliament, no details have been made public. But a pilot program operating under the radar might hold clues to a way out………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

The European Union’s plan to keep its curbs on pollution from airlines is the main hindrance to an international agreement on a carbon market for the industry, according to a senior Indian official.
An accord discussed by the International Civil Aviation Organization shouldn’t authorize EU measures prior to the global deal unless they are mutually agreed with other states, said Prashant Sukul, India’s representative to the United Nations agency. Envoys from more than 190 countries meeting in Montreal are trying to iron out differences over the first-ever commitment to a carbon tool for the $708 billion industry………………………………………..Full Article: Source

Posted on 02 October 2013 by VRS |  Email |Print

Climate change has become one of the leading risks to food security, with droughts, floods and hurricanes expected to result in production and price volatility, a report from the UN’s agriculture agencies has warned.
The 2007-08 food crisis, when the surge in food costs sparked riots across developing countries, had its roots in a series of droughts around the world, including Argentina and Vietnam………………………………………..Full Article: Source

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