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Commodities Briefing 01.Nov 2013

Posted on 01 November 2013 by VRS |  Email |Print

In this segment of The Motley Fool’s financials-focused show, Where the Money Is, analysts Matt Koppenheffer and David Hanson discuss the importance of commodity trading and financial innovation at firms like Goldman Sachs.
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Posted on 01 November 2013 by VRS |  Email |Print

Hedge funds took their positioning on rising agricultural commodity prices to the highest in 10 months, encouraged by ideas of strong demand for US wheat exports, and a dent to Brazilian sugar output from rains.
Managed money, a proxy for speculators, lifted its net long on the top 13 US-traded agricultural commodities to 498,748 contracts as of October 15, Agrimoney.com analysis of data from the Commodity Futures Trading Commission shows…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will cut crude exports through mid-November as rising U.S. output allows the nation to curb purchases from the Middle East and Africa, according to Oil Movements.
OPEC, which supplies about 40 percent of the world’s oil, will reduce sailings by 80,000 barrels a day, or 0.3 percent, to 23.78 million barrels in the four weeks to Nov. 16, the tanker tracker said today in a report. That compares with 23.86 million in the period to Oct. 19. The figures exclude two of OPEC’s 12 members, Angola and Ecuador…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

The U-S.-led shale boom will have a lasting impact on global energy prices and push crude oil prices down to $80 a barrel, according to an analysis by Germany’s BND intelligence agency obtained by Reuters on Thursday.
The BND said the U.S. shale boom would have a greater impact on global markets than it predicted in a previous analysis earlier this year. “The effects from the unconventional production of oil and natural gas in the United States will be pronounced over the next 10 to 20 years,” the report said…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

North Dakota’s governor said he was frustrated with the way in which federal regulators were monitoring pipeline safety. An oil spill in the west of the state went unnoticed until a farmer discovered it in his field last month. Regulators, the governor said, don’t monitor rural areas the same way they do elsewhere.
On Capitol Hill, meanwhile, supporters of a controversial pipeline bill say more infrastructure is needed and fast in order to keep up with the oil boom under way in the central United States. That measure, however, does little to allay the safety concerns about the spider web of oil and natural gas pipelines already in place across the country…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Energy producers on average need oil prices of about $96 a barrel to break even on wells drilled in Permian layers known as the Cline Shale and Mississippi Lime, says Mike Kelly, an analyst at Global Hunter Securities.
Other areas of the Permian need a price of just $70 to $74. That compares with average break-even prices of about $78 a barrel in the Eagle Ford Shale a few hundred miles east of the Permian and $84 in the Bakken of North Dakota…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

The World Gold Council is obviously a pro-gold group, but they frequently offer great insight into the world of gold. We even noticed that at the start of 2013, their report was full of such less bullish comments that it seemed to tell you to expect a bad year or a much less-good year for gold.
Now the World Gold Council is signaling that the direct economic impact of gold in 2012 was $210 billion in value added to global GDP. The new report was put together by PwC and was commissioned by the World Gold Council. It showed that the direct economic contribution of gold in the world’s major gold producing and consuming countries measured the entire value chain of the gold industry. Mining and refining were considered, along with consumption at the economic level…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Despite demand, gold jewellery sales are likely to decline by up to 60 per cent this festive season due to stock crunch following restrictions on imports, according to industry experts.
“Demand is definitely there for gold jewellery and coins. However, we do not have enough stocks in the market to cater to the demand of this festive season as there were no import since the last 2-3 months,” Kumar Jain, Mumbai Jewellers Association Vice-President, told PTI…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Barclays has revised upward its copper forecasts for the fourth quarter and 2014, although it lists a downside risk to prices down the road. “In the copper market, China has been taking advantage of strong supply growth following years of scrambling around for the metal,” the bank says.
A Chinese stocking cycle for base metals is in full swing. “However, the danger is the more China buys now, the less it may need later on,” Barclays says. “We see this as a risk to prices, especially in 2014. In the meantime, however, as long as China keeps on buying, prices will be supported…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Monetary inflation, by whatever euphemism and at multiple stages in its cycle, has clear benefits to some but major disadvantages for the majority. Sadly, the impact of the final leg of the century-long monetary experiment may be far uglier than many would like to imagine.
Inflation and the Big Banks: Obviously, moderate to runaway inflation is horrible for the middle class and poor. Inflation is less of an issue for large financial institutions who get first dibs on newly created credit via primary dealer status. More dollars inflate the nominal size of their balance sheets — a positive in the eyes of shareholders…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

From fund giant BlackRock to activist shareholder Julian Treger, mining investors seeking predictable returns and better cash flows are stepping into mine finance.
Mine developers often face funding gaps because of a shortage of bank finance and lacklustre public markets. This has left alternative sources of financing - royalty deals, stake sales or debt that converts into shares - accounting for an increasingly significant proportion…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Investors seeking exposure to good news about China’s economy are striking where it’s hot—in iron-ore and copper markets. Long considered to be one of the most direct ways to bet on Chinese economic growth, prices of these industrial commodities have risen in recent months amid a flurry of positive signals out of the world’s second-biggest economy.
These indicators have dovetailed with a ramp-up of Chinese demand for the commodities. China’s imports of iron ore soared to a record 74.6 million metric tons in September, according to the latest available data from China’s General Administration of Customs. That has pushed prices up nearly 20% since May, to about $131 a ton, according to data provider the Steel Index…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

After more than a year, the World Trade Organisation has finally ruled that the rare earths exports restrictions placed by China, the world’s dominant supplier of the precious elements, defies the very core rules of the organisation.
The ruling, however, comes a tad late just when the world has learned to adjust to the apparent supply nightmare, including recycling the precious commodity and scouting other potential suppliers, effectively lessening dependence on China…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Glencore Xstrata beat market forecasts with copper output that rose more than a third in the quarter, boosted by improvements in its Congolese and Chilean mines, and metals helped its trading arm perform “in line” with its expectations.
Copper and coal production accounts for over two-thirds of profit from the industrial side of Glencore’s business, and output at both climbed in the quarter and the nine months to the end of September - offsetting expected weakness in nickel and zinc, where ageing or costly mines have closed…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

In October 2011, as the futures broker MF Global teetered on the brink of collapse, it dipped into client accounts in an effort to avert bankruptcy. But the action failed to save the broker, and its implosion left thousands of clients short a total of $1.6 billion.
Two years after MF Global’s bankruptcy, regulators have sought to restore confidence in the industry, tightening rules that force brokerage firms to better safeguard client money…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Three out of the seven active commodity exchanges in the Czech Republic are in danger of losing their licence and administrative proceedings due to breaches of law are under way with them, daily E15 writes Wednesday.
Two of them are exchanges trading in energies so that only one exchange enabling electricity and gas purchases for final consumption would be left. The Industry and Trade Ministry leads proceedings against the Commodity Exchange Profit due to some 20 breaches of the law on commodity exchanges…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Jignesh Shah resigned from the board of Multi Commodity Exchange of India Ltd., the nation’s biggest commodity trading platform, amid an investigation into the failure of a related spot bourse.
Shah, 46, quit as non-executive vice chairman with immediate effect, according to a filing yesterday from the company he founded in 2003. He said he’s leaving to help ensure investors aren’t harmed by “mud-slinging” over the probe…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

On this Halloween, the combination of weaker German data and dovish comments from an ECB official spooked investors out of euros. The currency is in the midst of a nosedive against the U.S. dollar that began 3 days ago. The sell-off gained momentum when investors realized that the Fed was less dovish and the ECB more dovish than they had previously anticipated.
This contrast led to an adjustment in positioning seen only in the euro and Swiss Franc as the dollar is trading lower this morning against all other major currencies. Support in the EUR/USD is at 1.36 and even if this level is breached, we do not expect the currency pair to trade lower than 1.3475……………………Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Many emerging market currencies are vulnerable to severe sell-offs the day the U.S. Federal Reserve reins in its quantitative easing program. The timing of the so-called Fed taper – and possibly an emerging market crisis – is complicated by several factors.
Many emerging market countries have over-dosed on easy money from the central banks of developed countries. Some have ended up becoming addicted to those capital flows as current account deficits have swelled along with the misallocation of assets…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

No businesses in Europe relocated production to regions without greenhouse-gas emission curbs between 2005 and 2012, according to a study for the European Commission on a process known as carbon leakage.
“We found no evidence for any carbon leakage” in the past two trading periods of the European Union’s emissions program, said Ecorys, the Rotterdam, Netherlands-based consultancy that wrote the study published on the EU’s website. “However we think there are indications that this can change in the third period” that started this year, Ecorys said…………………….Full Article: Source

Posted on 01 November 2013 by VRS |  Email |Print

Commodities are physical assets and include metals such as gold, silver and copper, oil and gas, and so-called ‘soft’ commodities such as wheat, sugar and cocoa beans. ‘Commodities are often referred to as the “fifth” asset class, after the conventional investment asset classes of cash, fixed interest securities, equities and property,’ says Martin Bamford, managing director of IFA Informed Choice.
The sector has little correlation with the stock market and currencies, which means if equity markets fall, then the price of commodities won’t necessarily plummet. Bamford adds: ‘They tend to behave differently from these conventional asset classes, which means they can be very useful for the purposes of diversification within an investment portfolio.’……………………Full Article: Source

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