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Commodities Briefing 24.Oct 2013

Posted on 24 October 2013 by VRS |  Email |Print

The bust of agricultural commodities over the past couple of years has brought down the cost of betting on the world’s growing need for food and clothing. Since the recession, the so-called soft commodities have been influenced by much more than supply and demand.
Fuelled by speculative trading, prices of food and cotton hit extremes, peaking in 2011 before dropping off almost across the board. But fundamentally, not all that much has changed the outlook for commodities like coffee, cocoa, sugar and cotton………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

The latest production reports by mining giants BHP Billiton and Rio Tinto show just how much the commodity market has changed in the past year. BHP and Rio’s quarterly statements underline that mining is now a game of producing the highest volumes at the lowest costs, while at the same time scaling back on spending.
This seems like a logical response to concerns over slowing demand growth from top consumer China, whose appetite for commodities drove a decade-long boom in developing projects to boost supply. ……………………………………….Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

The U.S. derivatives regulator will meet next month to adopt a rule that will curtail Wall Street’s ability to speculate with commodities, a measure investment banks are fighting in court. The Commodity Futures Trading Commission is revising the rule on so-called position limits, even as its lawyers are preparing to defend an earlier version knocked down by a U.S. court last year.
But Mark Wetjen, one of the CFTC’s four commissioners, said this week that the dual strategy of pursuing the appeal and a new rule at the same time was not necessarily the best, and that the agency could drop the appeal………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Fitch Ratings says EMEA oil and gas companies may see prices come under pressure in 2014 if US-imposed economic sanctions on Iran are eased as a result of improving relations between the two countries. This could see Iran increase the supply of oil on world markets by around 800,000 barrels per day leading to a downward impact on prices.
In its 2014 Outlook published today, Fitch also says it expects industry operating costs for equipment, facilities, materials and personnel (both skilled and unskilled), among others, will continue the upward trend started in 2010 as demand for these products and services remains stable. ……………………………………….Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Many hedge funds do not care how high prices are. They only want oil to move. Using complex options trades such as “straddles”, which gain value when markets go up or down, they “buy” volatility. A straddle involves buying both a bullish call option and a bearish put option at the same strike price – say, $110 a barrel.
Clive Capital has thrown in the towel. Deep into its third year of losses, what was once one of the world’s largest commodity hedge funds shut down late last month. The closure is symptomatic of a broader trend – or more accurately, the lack of one. Hedge funds once feasted on wild action in oil. Now, volatility has fallen to historic lows. Plodding prices have forced traders to experiment with new ways to make money. ……………………………………….Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Forty years ago this month, Syria and Egypt launched a Yom Kippur surprise attack on Israel to regain land and prestige lost in the 1967 Six-Day War. Israeli forces were nearing Damascus and Cairo when a ceasefire took hold.
But as the Soviet Union resupplied its Arab clients and President Nixon resupplied Israel, Arab members of the OPEC oil cartel, led by Saudi Arabia, announced a 5 percent monthly cut in oil output, then embargoed oil exports to the U.S. and later others. OPEC provided 35 percent of America’s oil at the time………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

At the end of September, Citigroup put out a research report for the gold and silver mining sector, and if you’re an investor in the space it does not make for good reading. The report concentrates on the rising costs but falling revenues of the mining industry and sets out how this is going to/has already affected many gold miners.
We all have our own opinions, that’s what makes us Foolish; nonetheless it is helpful to know what the big players in the industry think about certain matters, and information within this report could be helpful………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

The bullion business seems to have lost glitter in the past couple of months. An increase in the import duty, exorbitant commissions charged by gold importing agencies and a lack of availability for domestic jewellers has left bullion traders wading through choppy waters.
Traders have sought relief from the central government. Recently, representatives of the All India Bullion and Jewellers Association (AIBJA) met the director general of foreign trade and senior government officials, including the revenue secretary and the economic affairs secretary, to air their grievances………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Gold has seen a nice run the past few days, with gold bullion climbing to the $1,340-per-troy-ounce area. Some speculators attribute this action to dollar weakness. There’s also the matter of traders short-covering now that the economic reports that were delayed while the government was closed are starting to come back into play.
Short-term trading action aside, many more variables influence the price of gold than whatever’s happening in Washington or on Wall Street………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Strong precious metals advocate, Eric Sprott, thinks there is something haywire in the gold supply/demand statistics published regularly by the World Gold Council and relying on data compiled for it by Thomson Reuters GFMS. In Sprott’s view, and this is accompanied by his own research figures, the GFMS data is flawed – yet it tends to be the industry standard taken as the definitive position by gold follower around the globe.
In this context, Sprott has written an ‘Open Letter’ to the World Gold Council, putting forward his company’s own take on the real position in the gold supply/demand equation and draws the conclusion that global gold demand exceeds available new supply by a substantial margin………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Premiums added to aluminum prices in the U.S. and Europe rose amid surging orders to remove the lightweight metal from warehouses monitored by the London Metal Exchange, Harbor Intelligence said.
The surcharge reached 9 to 9.8 cents a pound in the U.S. Midwest, against 8.5 to 9.5 cents two weeks ago, according to the Austin, Texas-based researcher. The European premium rose to $190 to $200 a metric ton from $150 to $170, it said. Waiting times for withdrawals lengthened at the two biggest global repositories as bookings soared, according to Harbor………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

We’re not talking about a matter of a couple pennies. One camp has it zinc prices will near double within the next few years while the other maintains it will merely plod along.
Take recent forecasts from Citigroup and Credit Suisse. Citi sees zinc at 84 cents a pound next year, 93 cents in 2015 and 95 cents for the longterm. Credit Suisse takes a similar view. It pegs zinc at 80 cents in 2014, 85 cents in 2015, 90 cents in 2016 and 85 cents in the longterm………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

After a sustained dullness in commodity exchange trade funds (ETF) sector, Q3 2013 proved to be a turning point for the industry driven by a combination of price increases and the largest quarterly inflows into non-gold commodity ETFs since Q1, 2012, according to ETF Securities Ltd.
On a sectoral basis, agri commodities, energy and platinum, silver led precious metals witnessed better inflows compared to industrial metals that lagged behind. Total assets in commodity ETFs rose by US $8.4 bn to US $135.9 bn………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Charles Schwab is seeing more of its clients warm to exchange traded funds as investors are embracing equity funds while departing some bond and commodity plays. At the end of the third quarter, ETF assets custodied at Schwab reached $179 billion, up 22% on a year-over-year basis, a clip that is enough to outpace industry growth of 19%, Schwab said in its third-quarter Investor Snapshot released Wednesday.
Retail Traders captured 6% of the 12-month ETF Flows, while retail investors and RIA Clients split the remaining 94%. U.S. and International Equity ETFs represented almost 90% of the ETF flows in Q3, a consistent trend across all client segments, according to Schwab data………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Markit Equities Research has published figures suggesting Europe’s ETF industry attracted some $9.4bn in net inflows in the first nine months of 2013. The inflow figure covers some 2,370 ETFs, Markit said. Together with returns from existing assets, the sector has seen its total AUM rise above $388bn in value.
Segmenting the figure by type, Markit said that net inflows to European equities ETFs hit some $11.4bn. However, commodity ETFs saw net outflows of about $10.1bn over the period………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Gold exchange traded funds (ETFs) continue to witness outflows in Q3, 2013 but it was moderated subtantially compared to Q2 while Silver ETFs saw the largest inflows in Q3, 2013 with US $706 mn of net inflows, according a Quaterly ETF Report of ETF Securities Ltd.
Gold ETFs witnessed outflows of US$3.2 bn compared to record outflows of US $19.6 bn in Q 2, 2013. On a monthly basis, gold outflows have been moderating at a relatively steady pace since peaking at US$8.7bn in April 2013………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

The Multi Commodity Exchange of India Ltd. formed a panel to run the nation’s biggest platform for commodities as authorities widened a probe into trading practices at a related spot bourse.
Pravir Vohra and G. Ananth Raman have been appointed as independent directors to the board, Multi Commodity, also known as MCX, said in an exchange filing today. Parveen Kumar Singhal, a deputy managing director, will act as the chief executive until a managing director is named, it said………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

Grupo BTG Pactual, the Brazilian investment bank founded by billionaire Andre Esteves, is working on a bid for JPMorgan Chase & Co’s physical commodities business, said a person with direct knowledge of the matter.
BTG is in the early stages of reviewing the financial information, said the person, who requested anonymity because the process is private and didn’t specify how big the offer will be. Brian Marchiony, a JPMorgan spokesman, declined to comment on potential bids, as did an official for Sao Paulo-based BTG, in keeping with company policy………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

The commodity-linked currencies of Australia, New Zealand and Canada fell against the dollar Wednesday, weighed down by fears China will tighten monetary policy. The Australian dollar tumbled 1% against the buck after short-term Chinese rates jumped. The SHIBOR overnight interest rate rose to 3.78% Wednesday, the highest level since Sept. 23.
Foreign-exchange strategists at Societe Generale in London noted that the People’s Bank of China has withdrawn 44.5 billion yuan ($7.2 billion) from the financial system since Oct. 17. That alongside the seven-day repo rate rising to above 4% has generated “fears of Chinese policy tightening,” the strategists said………………………………………..Full Article: Source

Posted on 24 October 2013 by VRS |  Email |Print

In a rare display of economic reality from the government in Havana, Cuba has announced plans to scrap its own hard currency, the convertible peso. Cuba’s president Raúl Castro told the nation’s parliament of the plan to eliminate the dual currency, as part of a strategy “to update our economic and social model”.
The country’s official newspaper, Granma, gave more details of the “advance toward monetary unification” – in other words, allowing foreign tourists and businesses to transact exclusively in the island’s basic currency………………………………………..Full Article: Source

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