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Commodities Briefing 09.Oct 2013

Posted on 09 October 2013 by VRS |  Email |Print

The commodities super cycle has “mostly ended,” while investors may still be able to find profits in raw materials, said Berdibek Ahmedov of Pacific Investment Management Co. Prices for spot commodities probably will rise in line with inflation, Ahmedov, a senior vice president and real return product manager for PIMCO Europe Ltd., said today in a speech in London.
Inflation expectations are becoming “more and more volatile,” and commodities are still beneficial as a hedge, he said. Investors also may profit by buying and rolling contracts closest to delivery in backwardated markets such as oil, where prices are declining into the future, he said………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Fundamentals have returned to drive commodity markets, metals analyst Robin Bhar said Tuesday at the Societe Generale LME week annual base metals research breakfast. “Since the summer we’ve seen a regime change, fundamentals have returned to markets,” Bhar said in a presentation.
Bhar said that before 2008 about 75% of aluminium’s price movement could be explained by fundamentals, but that this dropped to 63% “post-Lehman”. However, this year around 80% of aluminium’s price movement could be explained by market fundamentals, and as a result base metals markets are no longer so influenced by “risk on, risk off” macro trading………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

John Greenwood, chief economist at Invesco, the US investment group, has predicted that commodity prices will not recover from their long slump any time soon.
In the year since September 2012, the Reuters-CRB index of commodity prices – which has a bias to precious metals such as gold, silver and platinum but excludes oil – has fallen by 14%. The S&P/Goldman Sachs Spot index, which incorporates oil, has lost 8% through the same period………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

A super-cycle during the last decade, driven by high demand from China, created fertile ground for funds making big, directional bets. However, in more recent years clear trends have deserted the market and volatility has reduced, according to hedge fund managers, resulting in mixed performance and some high-profile closures.
The likes of the UK’s Clive Capital and US-based Arbalet Capital have closed, or are closing, but firms including Frere Hall Capital Management and Andurand Capital Management are already emerging as new names to watch………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Commodities traders who buy and sell as much as $5.67 trillion of raw materials a year say the benchmark prices for everything from oil to iron ore to gasoline are wrong as often as 27 percent of the time.
In a Bloomberg News survey conducted during the past eight weeks, 85 traders and analysts said they have little confidence in the assessed prices of crude, metals and iron ore. Regulators, including European Union Competition Commissioner Joaquin Almunia, may examine commodities markets, having already increased investigations of manipulation of benchmarks for interest rates, derivatives, foreign exchange and oil………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

The Commodities Futures Trading Commission (CFTC) is the federal agency responsible both for regulating the commodities markets and publishing weekly data on the state of those markets. The weekly Commitment of Traders report which provides information on open interest in the commodities markets was last published on September 24th.
The opportunities for market shenanigans multiply as the government shutdown continues. Of the CFTC’s approximately 680 employees only 28 are exempted from the shutdown and of those just a handful remain to watch the daily trading in the commodities markets where the usual number is 50………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

A potential surge in oil prices caused by unrest in the Middle East and North Africa may cut global growth by as much as 0.5 percentage point next year, the International Monetary Fund said in its World Economic Outlook.
In the worst case, a disruption in the Middle East would push oil to $150 a barrel, the Washington-based lending agency said in its October World Economic Outlook, leading to “adverse effects on confidence, with capital retreating to safe havens and a persistent decline in equity prices.”……………………………………….Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

The U.S. Energy Information Administration said global oil markets would be better supplied in 2014 than previously forecast, according to its revised outlook on Tuesday.
In its October Short Term Energy Outlook, the EIA projected oil demand growth next year would be 1.17 million barrels per day, a reduction of 20,000 bpd from the September forecast. Growth in supply of non-OPEC oil was revised up by 50,000 bpd to 1.5 million bpd in 2014………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

North American crude oil production will power ahead in 2014 even as supply from other parts of the world falters, according to new estimates by the U.S. Energy Information Administration.
Canada is forecast to raise crude oil and liquid fuels production by 270,000 barrels per day next year, adding to the nearly-400,000 bpd of additional output this year, to reach 4.53 million bpd by the end of 2014………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Gold generally thrives amid disruption and instability, as a safety play in times of uncertainty. Yet on October 1st, the first day of the U.S. government shutdown, gold investors awoke with the price of gold down nearly $40 in the overnight session. Why the surprise move down?
It was mostly a case of “buy the rumor and sell the news.” For nearly three weeks leading up to the government shutdown, gold had been climbing on the possibility of a closure. When it happened, the smart money decided to take some profits………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Before proceeding, please be advised that the statement in the title is not a forecast nor an expectation. The potential for the gold price to double overnight is real and existing, which is not the same as sure.
In a major US dollar devaluation crisis, which would occur if the US would fail to raise the debt ceiling on Thursday October 17th, there should be a significant impact on the gold price. Jim Rickards wrote about this in his book ‘Currency Wars: The Making of the Next Global Crisis’ in which he “envisages a series of ‘black swan’ events that trigger a loss of confidence in the US dollar precipitating a rush to get out of the greenback.”……………………………………….Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Commodity investing has been quite choppy, pretty much across the board. Political gridlock over government funding and the debt ceiling continued to dull the demand for broad natural resources, pushing many commodity ETFs into the red as of late.
In particular, natural gas showed a sharp pullback over the last two week due to the broad commodity trends and natural gas specific concerns such as excess supply and sluggish demand………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Inflows in exchange traded funds rebounded strongly in September after the US Federal Reserve surprised investors with its decision to continue with its extra-ordinary support measures for financial markets.
ETFs (funds and products) attracted global net inflows of $35bn last month, a sharp recovery from July when investors withdrew $16.8bn, according to ETFGI, a consultancy that monitors industry trends………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

India’s battered rupee was the best performing global currency last month amid growing confidence that a currency crisis would be contained and as fears about the Federal Reserve tapering its quantitative easing program ebbed.
The rupee rose about 9 percent against the U.S. dollar in September, also outperforming major global currencies. The rise marks a surprising comeback after the rupee sank to a record low just shy of 70 per dollar in late August, earning it the title of the world’s worst performing currency this year………………………………………..Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Volatility in Asian currencies this year has caused some companies that have otherwise seen big growth in the region to suffer losses and reconsider their hedging strategies. A number of companies have already issued currency-related earnings warnings ahead of the start of the third-quarter reporting season and analysts expect the number to rise.
adidas Group, for example, said last month that profits could be hurt by weaker currencies in emerging markets, while consumer-goods giant Unilever attributed slow sales growth to “significant currency weakening.”……………………………………….Full Article: Source

Posted on 09 October 2013 by VRS |  Email |Print

Europe may need to let airlines use United Nations credits to meet pollution caps after countries spurned the bloc’s plan to apply its carbon market to overseas flights, according to the biggest emissions trading lobby group.
“There’s an opening for the European Union to negotiate with other countries” on airlines’ compliance with its greenhouse-gas limits, said Dirk Forrister, the president of the International Emission Trading Association in Geneva. One option is to allow flights from developing nations to use credits created from UN-overseen projects to reduce emissions, he said……………………………………….Full Article: Source

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