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Commodities Briefing 21.Nov 2013

Posted on 21 November 2013 by VRS |  Email |Print

If your focus is asset allocation and you’re not concerned with market timing, you don’t need to bother reading any further. As the research on efficient frontier shows, including commodities in your asset allocation is a benefit in the long run in terms of return for a given level of risk. However, if you do shift your allocation actively, there are technical reasons to have little or no allocation to commodities markets right now; i.e. avoid commodities.
As the recovery from the depths of the financial crisis found its legs, a lot of us were lulled into thinking risk-on always involved buying stocks, the euro and commodities. And for a while it did. But that nice, clean risk-on/risk-off phenomenon which was easy for market reporters to write about (and the high correlations that drove hedge funds crazy) ended earlier this year. ………………………………..Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

China, the world’s No. 1 consumer of so many raw materials, apparently looks set to carry on buying following bold reforms announced at the third plenum of the communist leadership. But it could be a long wait before they buoy commodity currencies if indeed they ever will.
Some of the reforms announced are ground breaking: The one child policy is to be relaxed. Measures are to be taken to make it easier for rural citizens to live in most of the big cities. And the market is to be given a greater role in allocating economic resources by 2020…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

“Water, water everywhere, nor any drop to drink.” This line from Samuel Taylor Coleridge’s poem “The Rime of the Ancient Mariner” is apropos not only for those lost at sea but for the Earth in general.
The Earth is indeed the “water planet,” with more than 70% of its surface covered with the liquid. However, more than 97% of this water is unusable salt water, meaning freshwater accounts for less than 3% of the world’s supply. Of that total, more than 70% is frozen, resulting in a very limited supply of usable freshwater. Only 0.007% of all of Earth’s water is available for human use. ………………………………..Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Let’s put Australia in perspective. According to data from the US Department of Agriculture and the Australian Bureau of Statistics, from 2010 to 2013 the entire annual Australian wheat crop of 24 million tonnes represented between 20 per cent and 25 per cent of China’s annual domestic consumption of 125 million tonnes. China is the world’s largest wheat producer and has been largely self-sufficient until this year.
Similarly, Australia’s total annual beef production of 21mt is less than 40 per cent of China’s annual domestic consumption of about 57mt and less than 20 per cent of the US annual domestic consumption of about 115mt…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Top oil exporter Saudi Arabia remains unconcerned by surging U.S. shale output, which threatens to eat into OPEC’s market share, and sees no need to cut production to support prices, its deputy oil minister said on Wednesday.
“We need to make sure that the world economy comes out decisively on a growth pattern and, if that can be established, I think that the world economic growth will be sufficient to handle growth from all sorts - shale oil, shale gas, tight oil and including renewable,” Prince Abdulaziz Bin Salman Bin Abdulaziz told a conference in Dubai…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

When Americans take to the road this Thanksgiving holiday they will be paying about 6% less for gasoline than they paid a year ago. That’s because the price of crude oil has fallen.
Increased oil production due to fracking–the technology that breaks up shale rock buried deep inside the earth to release oil and natural gas reserves–has boosted U.S. oil output, and, in turn, reduced prices. Crude oil is trading near $93 a barrel, a five-month low, and gasoline prices are averaging $3.21 a gallon for regular unleaded, according to AAA. Natural gas is trading at $3.55 per million BTU, a few cents below the year-ago price…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

I had lunch at the House of Commons. As you do. (I’ve always wanted to begin a Money Morning like that.) MoneyWeek editor-in-chief Merryn Somerset Webb and I were the guests of MPs Steve Baker and Douglas Carswell, two gentlemen whose thinking (fewer taxes, simple taxes, lower taxes, for example) is pretty much in line with that of MoneyWeek.
After marvelling at the fact that bitcoin had touched $800 earlier in the day, the conversation quickly moved on to everyone’s favourite subject: what could derail the recovery? What threats loom over Western economies?………………………………..Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

The International Energy Agency and six emerging economies including China and India agreed to pursue stronger cooperation, the IEA said on Wednesday in a bid to strengthen ties with non-members whose share in global oil demand has grown rapidly.
The initiative to form an “association” between the West’s energy watchdog, combining 28 developed economies, and non-members is aimed at boosting ties on energy security, data sharing and energy market analysis, the Paris-based group said…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Iron ore, gold, soybeans and copper will probably drop at least 15 percent next year as commodities face increased downside risks even as economic growth in the U.S. accelerates, according to Goldman Sachs Group Inc.
The risks are strongest for iron ore, and follow increases in supplies, analysts including Jeffrey Currie wrote in a report that identified the New York-based bank’s top 10 market themes for the coming year. The price pressures will mostly become visible later in 2014, the analysts wrote…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Sudden drop in the precious metal on the day it emerges the UK regulator is investigating alleged rigging of the price raises questions about the market. Traders in London were left scratching their heads on Wednesday morning when a rapid-fire 10-second spell of selling sent gold prices quoted on a Bloomberg monitor down suddenly by about $10 (£6) to trade near $1,260 an ounce.
IG Markets commented that the fall came suddenly following a 2,000-contracts sell order hitting the market, but the incident shows how markets don’t always comply to the logic of traders reacting to big news events that are publicly disclosed and that we all know about…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Gold shipped from Hong Kong to the mainland, used as a proxy for Chinese demand as bullion imports are a state secret, nearly tripled to 855 tonnes in the year to September. Gold shipped from Hong Kong to the mainland, used as a proxy for Chinese demand as bullion imports are a state secret, nearly tripled to 855 tonnes in the year to September.
China, set to pass India this year, as the world’s top gold consumer, has imported a fifth more bullion than data from its traditional conduit Hong Kong show, as it brings in the metal via other routes…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Looking at the chart of silver from today’s point of view, we see that at the end of the previous week, the white metal (similarly to gold) moved higher after Federal Reserve Chair Nominee Janet Yellen told that monetary stimulus tools shouldn’t be removed too soon. If you recall, several days ago we wrote that gold could move higher but that that would just be a counter-trend move and would likely be followed by further declines.
On Monday, two top Fed officials from opposite sides of the policy spectrum, fueled expectations that the Federal Reserve could taper its bond-buying program. Their comments pushed the price of silver to slightly above $20…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 134 million tonnes (Mt) in October 2013, an increase of 6.6% compared to October 2012.
China’s crude steel production for October 2013 was 65.1 Mt, up by 9.2% compared to October 2012. Elsewhere in Asia, Japan produced 9.5 Mt of crude steel in October 2013, an increase of 7.7% over October 2012. South Korea’s crude steel production was 5.9 Mt in October 2013, up by 5.2% on October 2012…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Hopes for a prolonged QE program under the leadership of Janet Yellen - nominated Fed chairperson - has spread optimism globally across commodities. This has resulted in a weakening dollar and higher prices for crude oil and refined crude products like gasoline.
The average price of gasoline bounced to nearly $3.20 per gallon from its 33-month low of about $3.17 earlier last week. Immediately following Yellen’s testimony which suggested to many that the stimulus would be kept intact at least for the short term, gasoline price gained almost a penny in last Wednesday trading. This marks the biggest one-day gain since October 16th………………………………..Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Multi Commodity Exchange (MCX) and the People’s Republic of China-based Dalian Commodity Exchange (DCE) have signed a memorandum of understanding to boost co-operation. The agreement is designed to facilitate potential collaboration in areas such as knowledge-sharing, research and price risk management.
The move will also foster the development of communication channels for the sharing of information between the exchanges, MCX said in a press statement…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Danske Commodities A/S, a closely-held Danish energy trader, is taking advantage of growing electricity-price volatility by expanding its operations, even as banks and utilities are reducing staff to cut costs.
The Aarhus, Denmark-based company has hired nine power traders and one carbon trader this year from Barclays Plc, Axpo Holding AG, EON (EOAN) SE, Enel SpA and NEF Asset Management, Torben Nordal Clausen, Danske Commodities’ chief executive officer, said by telephone on Nov. 19…………………………………Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Gary Thomas plans to get rich off virtual currencies—but not bitcoin. The electrical engineer is betting big on newcomers like alphacoin and fastcoin. Mr. Thomas started trading the digital currencies from his home outside Boston earlier this year. He said he is convinced this is his ticket to fortune, even after an earlier attempt—investing in Internet stocks during the dot-com bubble—ended in disaster.
“I think this is a point in history that will never be repeated,” said Mr. Thomas, who is in his 50s. “These things will take off like nobody will imagine.”………………………………..Full Article: Source

Posted on 21 November 2013 by VRS |  Email |Print

Carbon trading, once seen as a burgeoning industry, is evaporating in Europe with at least 10 banks in London alone scaling back or closing their trading desks. The sector was seen as having great potential when it was created in London’s Square Mile financial quarter in 2006 as the main provider for Europe’s trading scheme.
But in the past four years alone the Climate Markets & Investors Association has found the number of workers on the trading desks had fallen 70 per cent as carbon prices have plummeted…………………………………Full Article: Source

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