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Commodities Briefing 15.Nov 2013

Commodities revenue at top 10 banks seen dropping 14pct this year
Commodities: A sweet deal
Yellen says Fed looking at possible commodities, bank rules
How does Fed policy affect commodity markets?
To get transparent commodity pricing, China must give up control: Clyde Russell
3 major reasons why China’s commodities super-cycle is toast
Oil benchmark price gap widens on stockpile increase
For IEA, shale has no long-term impact on oil price: Kemp
Oil supply now comfortable but could tighten - IEA
IEA sees steady decline in OPEC output
Seasonal demand could push up oil prices: IEA
Oil guru explains the cure for high oil prices in one very simple paragraph
Platts oil-price system prone to collusion, EU official says
Russia’s gold purchases are surging as the metal’s price has slumped
World gold demand cannot stop falling gold prices
Silver price outlook uncertain - Thomson Reuters GFMS
The silver market in 2013
Investors flock to silver coins
Bullion may see volatility on global economic data
Precious metals markets: Welcome to ‘The Matrix’
Platinum ‘rich man’s gold’ is palladium: Tomorrow’s?
Profit from China’s metal mania
PwC’s five hurdles to ETF growth
Will 2014 mark the return of the gold ETF investor?
Oil stocks vs. oil ETF – which is a better buy?
Currency wars redux: Is U.S. dollar next?
Warsaw climate conference: No discussion on agriculture in ongoing session
UN carbon emissions reduction system awash in cash as it claims to face hard times
Carbon markets ‘need to be linked’ for cross border trading

Posted on 15 November 2013 by VRS |  Email |Print

Commodities revenue at Goldman Sachs Group Inc., Morgan Stanley (MS) and the other companies making up the 10 largest investment banks will fall 14 percent this year, according to analytics company Coalition Ltd.
Revenue will drop to $4.7 billion from $5.5 billion in 2012, Coalition said today in a report. In 2013’s first nine months, commodities revenue at the banks slid 18 percent from a year earlier to $4 billion, the report showed………………………………………..Full Article: Source

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The US government’s vast assets include office buildings, mineral resources, aircraft carriers and national parks. This year it added mountains of sugar.
Warehouses from North Dakota to Louisiana are piled high with 296,500 tons of the sweet crystal, since October 1 the property of the Department of Agriculture. In coming days, the agency says it plans to sell off its stocks at a “substantial loss per pound”. Sugar has cost taxpayers $278.2m in 2013………………………………………..Full Article: Source

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The Federal Reserve may issue new rules for Wall Street’s role in commodity markets once it winds up a review of banks’ raw materials trading, the prospective new head of the U.S. central bank told lawmakers.
The Fed said in July it was reviewing a decision to allow regulated banks to trade in physical commodities, leading to banks’ ownership of assets like oil storage tanks and power plants and accusations of price manipulation………………………………………..Full Article: Source

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Monetary policy surprises can have a big impact on commodity markets, but the exact nature of the price movement depends on the direction of the change in monetary policy and the raw material in question.
New research from the Federal Reserve Bank of Atlanta finds that when the central bank surprised markets with tighter policy between 1990 and 2008, gold and platinum prices rose the most. When policy went the other way–when the Fed surprised with growth-stimulating rate cuts–prices for crude and heating oil were the biggest beneficiaries………………………………………..Full Article: Source

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China’s leadership plenum may have disappointed with sparse details about economic reforms, but there was enough to suggest the potential for major changes in way the country buys and trades commodities.
The key elements from this week’s meeting of the ruling Communist Party’s Central Committee were that markets would take a “decisive” role and that this would happen by 2020………………………………………..Full Article: Source

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Some would argue the super-cycle is already over and in terms of double-digit growth, it almost certainly is. But even Chinese growth of 7% today is sucking up commodities at a faster rate than 10-12% was in 2007, simply because it is 7% of a much bigger GDP number.
Miners have taken heart from recent rises in the rate of GDP growth to sustain their belief the economy has bottomed and will continue to rise into next year. And indeed it may: as we wrote recently, the Chinese economy is benefitting from a mini-stimulus this summer that supported investment in infrastructure and seems to have boosted the fortunes of the crucial construction industry………………………………………..Full Article: Source

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The gap between US and global oil prices widened to the most in nine months on Thursday after government data showed a further increase in crude stockpiles in America. Nymex December West Texas Intermediate fell more than 1.5 per cent to a five-month low of $92.51 before recovering to trade at $94.15.
The Energy Information Administration said commercial crude stockpiles had climbed 2.6m barrels to 388.1m barrels in the week to November 8. Analysts had forecast an increase of 1m barrels. Inventories at Cushing, the main delivery point for WTI futures, also increased, rising 1.7m barrels to 38.2m………………………………………..Full Article: Source

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Shale will not significantly boost oil production or bring down prices in the long term, according to the International Energy Agency (IEA). The surprising findings are contained in the latest version of the agency’s annual World Energy Outlook (WEO).
Worldwide production of light tight oil (LTO) from shale and other formations requiring fracking is expected to grow from 2.0 million barrels per day in 2012 to just 5.8 million bpd by 2030, before declining slightly to 5.6 million bpd in 2035………………………………………..Full Article: Source

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Oil markets look well supplied in the short term but prices could rise in the next few months due to a seasonal increase in demand and production problems in some OPEC producers, the West’s energy watchdog said on Thursday.
The International Energy Agency (IEA) said in its monthly report oil was likely to stay volatile with prices responding to political turmoil in Libya, security problems in Iraq and stronger northern hemisphere winter consumption………………………………………..Full Article: Source

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The International Energy Agency said in its monthly market report, released Thursday, oil production from OPEC declined in October for the third straight month.
The IEA, which has headquarters in Paris, said cuts from Saudi Arabia helped push oil production down from members of the Organization of Petroleum Exporting Countries for the third month in a row last month………………………………………..Full Article: Source

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The International Energy Agency warned Thursday that a seasonal upswing in demand could put upwards pressure on oil prices in the near-term. “If seasonal cycles in crude and product demand are any guide, the recent easing of prices may be relatively short‐lived,” the agency said in its monthly report on the oil market.
Since the beginning of the month, the price of December Brent crude futures on London’s ICE Futures exchange has fallen just over 1%. On the New York Mercantile Exchange, light, sweet crude futures for December delivery has fallen nearly 3%………………………………………..Full Article: Source

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The FT’s Izabella Kaminska flagged an important nugget in this morning’s Schork Report from oil markets guru Stephen Schork. It explains why massive oil discoveries like American Shale seemingly come from nowhere.
Schork recounts how his group was meeting with a prospective client in Vienna, home of OPEC, in 2008, when U.S. crude contracts had hit $147 a barrel………………………………………..Full Article: Source

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Platts’s oil-price reporting system “could be prone to collusion or distortion,” according to the European Union official in charge of the benchmark probe that led to raids on the premises of BP Plc (BP/), Royal Dutch Shell Plc (RDSA) and Statoil ASA. (STL)
“The mere set up could be prone to collusion or distortion because it doesn’t take much to basically have strange reporting” by companies that participate in the pricing system, Celine Gauer, director at the European Commission’s antitrust unit for the energy industry, said today at a conference in Brussels………………………………………..Full Article: Source

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Since the great gold crash of March 2013, it’s been tough times for the yellow metal. A troy ounce of gold is now worth 22% less than it was in January. Despite voracious bottom-feeding from China that continued in Q3, gold demand fell 21% last quarter, compared with Q3 2012, says the World Gold Council, which cited people selling shares in gold exchange-traded funds (ETFs) as the biggest reason.
But one country is still aggressively building up its gold holdings. Russia’s central bank added another 18.7 tonnes (20.6 tons) to its gold reserves in Q3 2013. The 1,015 tonnes it now has marks the first time it has crossed the 1,000-tonne mark………………………………………..Full Article: Source

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The World Gold Council is out with its third-quarter gold demand trends. Despite soft gold prices, the council maintains that gold demand remains strong, even with many of the negative factors.
The total supply of gold in the third quarter was down 3% from the same period a year ago to 1,145 tonnes. Modest growth of 4% in gold mining production was seen during the third quarter. There was an 11% contraction in recycling, as lower average prices failed to attract sellers………………………………………..Full Article: Source

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Silver prices should be underpinned by improving industrial demand in 2014, but they will tumble on gold’s coattails if the U.S. Federal Reserve begins tapering its stimulus, a top analyst at metals consultant Thomson Reuters GFMS said on Tuesday.
Strong investment demand in silver coins and exchange-traded funds, and Indian consumers’ substitution to silver from gold should provide support, said Andrew Leyland, manager of precious metal demand at Thomson Reuters GFMS………………………………………..Full Article: Source&sn=Detail

Posted on 15 November 2013 by VRS |  Email |Print

There are several factors, some positive and others negative, that will affect the price of silver going forward. First up, let’s have the not-so-good news facing the silver price.
In 2013, total supply of silver is expected to climb by around 0.7%, much of this is thanks to the 7% or 28 Moz (million ounce) increase in mine supply but offset by the 8% decline in scrap silver supply………………………………………..Full Article: Source

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Silver coins are gaining favor among investors and sales could rise to a record high in 2013, thanks to a sharp fall in the precious metal’s price.
Demand for silver, which is sought after by investors and industrial users alike, is expected to rise, consultancy Thomson Reuters GFMS said in a recent report. The industrial sector accounts for about 45% of global silver consumption, it said………………………………………..Full Article: Source

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Testimony from the US Fed chairman nominee Janet Yellen stated that, unless the US economy recovered, there would not be any tapering of its stimulus programme. This made US equities end on a positive note and so, we are seeing all the Asian markets trading in the green, barring China due its local influence. The emerging nation’s currencies are also appreciating against the US dollar. The comment by Janet Yellen has also impacted the bullion sector.
Gold bullion, which was trading below $1270 at the futures market, is now seen trading higher by $15 at $1285. Likewise, silver too has advanced by 1.65 percent and is hovering near $20.78. We believe that the market should continue to follow the expectations raised by the comment unless there any fresh trigger pops up………………………………………..Full Article: Source

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There will be few readers who are not at least partially familiar with the stylish, thought-provoking film classic, The Matrix. For those readers not among that group; The Matrix is a sci-fi drama which postulates a future where intelligent machines have seized control of the planet, and enslaved humanity – by hooking-up all of them to a gigantic virtual-reality machine.
These human Drones (the energy-supply for the Machines) are entirely oblivious of the fantasy-world in which they dwell (as slaves). They waste away their lives, content to be Drones in the Matrix. At this point, informed readers have already heard enough to know this comes very close to describing our own “reality.”……………………………………….Full Article: Source

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The Platinum Group Metals (PGMs) are a family comprised of 6 metals - platinum, palladium rhodium, iridium, osmium and ruthenium. But for our purpose today (and for most investors), we are only interested in the first two - platinum and palladium.
Platinum is usually more expensive than gold. But for well over a year, it actually traded for less - substantially less. One could purchase a troy ounce of platinum for $150 or so less than a troy ounce of gold. (As a side note, during the time of this unusual inverted pricing relationship, in expectation of the “norm” reestablishing itself, I placed a long platinum/short gold spread trade. Of course, this did indeed take place and I was able to make a good profit on the trade.)……………………………………….Full Article: Source

Posted on 15 November 2013 by VRS |  Email |Print

Iron-ore cargos to China are soaring – another sign that the Chinese economy just won’t call it quits. In fact, the economic news on China keeps getting better. Its economy is expected to grow 7.6% this year – nearly three times the pace of growth in the United States. As a result, China’s imports of coal, oil, iron and other metals are rising. And this means mega-profits for some well-positioned companies.
Chinese leaders just pledged to enact market-driven fiscal and land reforms, relax investment controls and let the market play a “decisive” role in allocating resources………………………………………..Full Article: Source

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The market for exchange-traded funds keeps on growing, hitting a record $1.6 trillion in the U.S. at last check. The swift ETF expansion defies your blogger’s mid-2012 prediction of a slowdown to merely above-average growth.
So here’s a stab at what could slow the juggernaut down, courtesy of PwC’s asset-management strategists. The group see five potential roadblocks in a report published this morning the bulk of which, I should point out, is very positive on the outlook for the ETF business………………………………………..Full Article: Source

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In the first nine months of the year, physical gold ETFs saw almost 700 tonnes in redemptions.
But, according to Marcus Grubb, MD Investments at the World Gold Council, recently “We have almost seen a cessation of outflows and, in fact, we had some net inflows globally in the last two to three weeks into November.”……………………………………….Full Article: Source

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Oil stocks have become commonplace in many long-term portfolios, but an oil ETF is another way to bet on the price of crude. Why do so many investors have their eyes on oil stocks? Because global energy demoil stocks oil etfs xom cvxand is skyrocketing as our world’s population continues to grow and modernize.
In fact, integrated oil stock Exxon Mobil (XOM) predicts that global demand for energy will increase roughly 30% by 2040. The bulk of that gain will be led by economic growth from non-OECD countries and developing nations………………………………………..Full Article: Source

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Who wants a strong currency? If that question was for an opinion poll of finance ministers and central bankers, the response would be a firm no one. But in reality, no poll is needed. The last couple of weeks’ action has spoken louder than words.
Forex traders were once again reminded that when a currency makes strong gains the chances of verbal or monetary intervention are probably not far off. Losses on long positions can swiftly follow. Those long the U.S. dollar (USD) should be cautious………………………………………..Full Article: Source

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India and other developing countries have succeeded in ensuring that there will be no discussion on agriculture in the ongoing climate change negotiations in Warsaw, a development that could well prove a pyrrhic victory.
Discussion on ways to deal with the impact of climate change on agriculture, such as variations in rainfall and temperature, has now been pushed for talks scheduled for mid-2014. The discussions, which will be taken up by the United Nations’ climate changes technical committee,, will focus on adapting to climate change and emission reduction that such measures are likely to entail………………………………………..Full Article: Source

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The United Nations-administered cap-and-trade system for reducing greenhouse gases is sitting on a cash hoard of close to $200 million, even as it warns of hard times ahead that could impede its mission.
The cash cushion for the Geneva-based organization known as the Clean Development Mechanism, or CDM, amounts to more than 400 percent of the $45 million reserve that it considers a normal set-aside for rainy days, according to its recently published business plan for 2014-2015………………………………………..Full Article: Source

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Emissions trading systems around the world need to be linked together according to International Emissions Trading Association (IETA). In its annual Greenhouse Gas Markets report the association said 2013 had been a good year for the development of carbon markets around the world.
Although trading volumes had fallen in the European and Kyoto markets, it said new ones had opened in California and Shenzhen and more were ready to launch in South Korea, China and even Kazakhstan………………………………………..Full Article: Source

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