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Commodities Briefing 26.Nov 2013

Posted on 26 November 2013 by VRS |  Email |Print

Like any other asset class, commodities take cues and direction from a variety of factors and developments in the world markets. Since these are raw materials, their core application is in the specific sectors that they are used in, but as they are traded on the global platform now, their role has expanded from a commodity to a trading and investment avenue, and an important asset class.
So, while the macroeconomic changes affect the commodity price movements, the movement in commodity prices also impacts the global economy, making it an inter-dependent global phenomena………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

We’ve argued before that the 2005-2007 commodity bull-run could have been the product of an unwitting self-manufactured squeeze, as the industry rushed to monetise as much inventory as possible to benefit from higher than usual interest rates and as inventory levels dropped. (All pretty much unwittingly, of course.)
As prices increased, the economy choked. But here’s an interesting addition to that view by way of Ing-Haw Cheng and Wei Xiong in a paper on the financialization of commodity markets………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

Commodity hedge funds have had a tough run in 2013, and next year may offer no light at the end of the tunnel. Top hedge fund managers told the Reuters Global Investment Outlook Summit that the outlook for commodities next year is not good. In particular, they are down on gold, in the belief that inflation is a long-term, rather than short-term, bet.
China is the primary concern, managers said. The world’s largest copper user, iron-ore buyer and oil importer has seen its industrial sector slow recently, with further weakness expected next year………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

The International Energy Agency (IEA) has toned down previous estimates of the impact of North American shale fields on oil prices, suggesting oil will rise steadily to $145 per barrel (pb) by 2035.
The 2012 World Economic Outlook’s central policy scenario produced a price of $125pb in constant dollars by 2035. Earlier this year the agency estimated that US oil production had grown 50% since 2008………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

It would be difficult for Iran to revive its oil output to former levels quickly even if international restrictions on its exports are lifted, International Energy Agency (IEA) head Maria van der Hoeven said on Monday.
Van der Hoeven was speaking to reporters in Moscow after Iran and six world powers reached a deal on Sunday to curb Tehran’s nuclear program in exchange for limited relief on sanctions………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

Oil prices are heading lower after the U.S. and other world powers announced over the weekend an agreement with oil-rich Iran on its nuclear program.
While the agreement between Iran and the six world powers does not allow Iran to export more oil, it potentially could make it easier for Iran to sell the oil it is allowed to sell under the 2012 sanctions. That would increase the global oil supply and possibly push down oil prices………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

In the 2013 edition of the “World Energy Outlook”, published this month, the IEA raised its forecasts for non-OPEC supply and lowered its ‘call on OPEC crude’ estimates. It highlighted that the growth in oil production in North America and Brazil will likely reduce the world’s dependence on Middle Eastern oil in the near term, but OPEC is expected to play a more dominant role after 2020.
Elsewhere, it left its forecasts for global primary energy demand growth unchanged, with China, India and the Middle East expected to largely contribute to the increase………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

Hedge funds got less bullish on gold, cutting their net-long position to a four-month low, before prices capped the biggest weekly retreat since September. Net holdings in futures and options tumbled 20 percent to 44,291 contracts in the week ended Nov. 19, the lowest since July 9, U.S. Commodity Futures Trading Commission data show.
Short bets rose 16 percent to the highest since Aug. 6 and long wagers slid 2.5 percent. Net-bullish wagers across 18 U.S.- traded commodities fell 12 percent as investors became the most bearish on copper since July and cut their silver holdings by the most in five months………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

As the gold price continues to decline, gold miners are struggling to remain profitable. Indeed, as I write the price of gold is nearing three-year lows of $1,200 per ounce. During the second quarter of this year, about 25% of 67 gold-producing companies, representing roughly 44% of worldwide gold output, were losing money on a cash-flow basis.
This has led to deep cost cutting throughout the gold industry. The question remains, however, how much further can these cost cuts go?……………………………………….Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

Gold miners have worked hard to cut costs to offset a falling gold price, but Goldman Sachs expects the price to fall again in 2014 leaving them with limited options. According to the US broker, cost cutting initiatives undertaken by the gold companies it covers have led to many mines with cash costs now below the spot gold price.
Goldman, though, expects the spot price in 2014 to fall to $1,144/oz, at which level more than 50% of these miners would burn cash………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

The two gold biscuits an Indian man in Bangkok’s Chinatown holds in his right hand are no bigger than a Swiss army knife. He has just bought them on Yaowarat Road for $15,000, but in his native Mumbai they are worth $16,500. They can travel in a computer bag or “if you are really worried about customs”, he says pointing at a shop which sells plain golden necklaces, “you buy those and put them around your wife’s neck.”
Earlier this year the Indian government imposed quotas and increased taxes on gold imports, but it takes more than that to limit Indians’ love of gold. Although the country’s statisticians report that Indians officially buy a lot less of the precious metal—148.2 tonnes from July to September, a third less than in the same period last year—there has been a surge in gold smuggling………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

Precious Metals ETF Trading: It’s been a week since my last gold & silver report which I took a lot of heat because of my bearish outlook. Friday’s closing price has this sector trading precariously close to a major sell off if it’s not already started.
On a percentage bases I feel precious metals mining stocks as whole will be selling at a sharp discount in another week or three. ETF funds like the GDX, GDXJ and SIL have the most downside potential. The amount of emails I received from followers of those who have been buying more precious metals and gold stocks as price continues to fall was mind blowing………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

The deficit between platinum supply and demand should widen to nearly 889,000oz this year before narrowing to around 402,000oz in 2014, HSBC says.
But, this doesn’t mean necessarily that platinum prices will head higher. According to the bank, while it expects the tight supply picture to drive prices in the future, it has cut its average price forecasts for this year and next to $1,500/oz and $1,625/oz respectively from 1,580/oz and 1,725/oz………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

The precious metal space has been stressed for much of 2013 as investors shunned safe haven investments for high growth equities backed by the surging financial markets and Fed tapering concerns.
While gold and silver remain the favorites of investors, the most popular white metal - platinum - is gaining increased traction of late. In fact, platinum has outperformed its two cousins - gold and silver - so far this year. The price of platinum has fallen 8.4% in the year-to-date time frame compared to losses of 24% for gold and 33% for silver……………………………………….Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

The consumer staples sector has been generally weak over the past few quarters due to a difficult consumer spending environment that emanated from slow job growth and tightened credit availability. In addition, difficult operating conditions in Europe and a slowdown in some major emerging countries threatened growth.
Most of the large consumer staples stocks have somehow managed to increase their earnings on the back of cost controls, innovation, acquisitions and share buybacks, but only a few have been able to deliver impressive top-line growth – thus signaling a lack of real growth………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

Scotland “would need, and should want” its own separate currency, one of the world’s leading business news outlets has argued. In an editorial yesterday, Bloomberg knocked back the SNP government’s proposal for a pound-sharing union across the UK after independence, questioning why London would want to get “entangled” in such a deal with a foreign government.
It also warned that a sovereign Scottish state “would resist” the kind of political “union” with the rest of the UK that such a deal would require if it was to succeed………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

China will launch two new pilot carbon trading schemes this week in Beijing and Shanghai as it strives to cut soaring rates of greenhouse gas, reduce choking smog and determine the best system for a nationwide roll-out.
China, the world’s biggest source of climate-changing carbon emissions, is under domestic pressure from its population to counter air pollution and has pledged to cut the 2005 rate of CO2 emissions per unit of GDP growth by 40-45 percent by 2020………………………………………..Full Article: Source

Posted on 26 November 2013 by VRS |  Email |Print

China will begin rolling out carbon trading schemes by deploying two preliminary measures in Beijing and Shanghai, Reuters reports. As part of seven different carbon trading programs that China plans on implementing in various regions across the country, Beijing and Shanghai each got their own plan for carbon credits from the Chinese government.
According to the plan, firms that pollute above a certain level will have to purchase the right to emit carbon from other firms or from the government, setting up a market for the purchase and sale of emissions. The news comes in the wake of an international conference on climate change in Warsaw, during which China pledged to do its part to curb carbon emissions, Bloomberg reports………………………………………..Full Article: Source

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