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Commodities Briefing 02.Dec 2013

Posted on 02 December 2013 by VRS |  Email |Print

As the world moves towards the end of 2013, some of the uncertainties facing the global economy have turned less-pronounced. Global growth signals are picking up momentum and fiscal headwinds are moderating with many analysts looking for stronger growth in the US and Europe during 2014. Geopolitical tensions have somewhat eased with the announcement of an interim deal with Iran.
On monetary policy, especially the US Fed tapering, it is clearer than before that reduction in asset purchase would begin at the earliest. This week’s key data focus will be on the US labour report. But even before the turn of events, in recent months, commodities as an asset class have not been the most favourite. Investor appetite has been weak. Return on investment has been far from attractive………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

The commodity slump that spurred bear markets in everything from gold to corn to sugar this year will deepen by the end of December as prices head for their first annual loss since 2008, if history is any guide.
The Standard & Poor’s GSCI Spot Index of 24 raw materials fell in December 83 percent of the time since 1971 when the benchmark gauge was posting losses for the year through November, data compiled by Bloomberg show. The average December loss was 3.9 percent, which if it happened this time would mean a 7.8 percent drop for the year………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

During the last five years, many commodities hit record high prices as there appeared to be a global shortage looming. These price explosions were primarily driven by rapidly increasing consumption in China and other developing countries, but came at different times. Nearly every commodity we follow in this column made a record high price between 2008 and now, but many have fallen back to earth due to innovation, the power of supply and demand or recessions.
In 2008, crude oil prices hit a record high over $147 per barrel as global fuel consumption boomed and new sources of oil were harder and harder to find. Since then, the global economic crisis and advances in fuel economy have undercut fuel demand, while the rapid development of shale oil in the United States increased domestic production by nearly 30 percent………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

The past year has not been a good one for commodity investment. Passive commodity indexes have delivered disappointing returns, while a number of high-profile commodity hedge funds have been forced to close. What is the outlook for investor interest in commodities?
Nonetheless, some investors will remain sceptical, says AllianceBernstein’s Ruff. “A lot of investors feel burned by commodities in whatever form they had invested in the past couple of years, from strategies such as commodity trading advisors to managed futures. They have not had a good run and the passive indexes haven’t done well either.”………………………………Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

At a private dinner early in November a group of executives from one of the world’s largest commodity traders was asked to predict the price of oil in a year’s time. Without exception the forecasts, scribbled on place cards without consultation, were for Brent crude to fall well below the $100 a barrel level it has traded above for most of the past three years.
Those predictions reflect a growing consensus in the oil market. From US shale to an easing of sanctions on Iran, the coming years are expected to provide a huge boost to global output, inverting the structure of the oil market in which supplies have long been rationed by a handful of producers………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Opec is one of the few forums where senior officials from opposing Middle East superpowers Iran and Saudi Arabia regularly sit face-to-face. Vienna will this week see some of the oil industry’s most powerful decision-makers converge on the city when the Organisation of Petroleum Exporting Countries (Opec) convenes for its final quota-setting meeting of the year.
Opec gatherings can often appear like the plot of a James Bond film with an exotic cast that includes Venezuelan, Iranian, Saudi, Libyan and Iraqi oil men plotting around a table how to control the world’s energy supplies. In reality, these meetings, in recent years at least, have been far more mundane………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Oil ministry officials from Tehran to meet executives from European oil companies and industry experts in London early next year to present the terms upon which they will be invited back.
Iran is stepping up its engagement with European oil companies ahead of inviting them back to the country amid signs that a recent deal over its nuclear programme could see economic sanctions lifted next year………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

The Organisation of Petroleum Exporting Countries meets here this week to decide on the cartel’s oil output against a backdrop of slowing crude demand and unrest in member nation Libya.
Supplying about one third of the world’s oil, the cartel is expected to maintain its output ceiling of 30 million barrels per day when it meets at its Vienna headquarters on Wednesday, even though it is currently producing under the limit………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Up to 18% of the world’s electricity could be generated with wind energy by 2050, but the massive jump from 2.6% today would require the nearly 300 GW of current wind capacity worldwide to increase eight- to tenfold and cost nearly $150 billion a year, the International Energy Agency (IEA) said in an updated assessment of the world’s wind power.
The Paris-based autonomous energy agency now sees a much larger penetration of wind power than the 12% by 2050 share forecast in its previous 2009 edition of the “Technology Roadmap: Wind Energy.” Forecasts put China as the world’s future wind power leader, overtaking European members of the Organisation for Economic Co-operation and Development by about 2020 or 2025, with the U.S. ranked third………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Gold prices in the global market are expected to continue their downward movement this year and in 2014 on likely US Fed tapering. For the time being, continuing outflows, lower than expected physical demand, firm equities and a jump in short positions are putting pressure on the yellow metal prices.
The Barclays Global Macro Survey noted that 60% of investors believe that equities would be the most profitable asset class in the next three months………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

End of a 13-year boom as US economic upturn sees investors confidently selling gold and buying shares. November brought more bad news for believers in the eternal power of gold: the commodity saw its sharpest monthly price fall since June. This month’s 6% drop makes 2013 a terrible year for gold, and is set to mark the end of a 13-year boom. Gold is heading for its first annual fall since 2000 after shedding a quarter of its value this year.
Things were so different in September 2011, when it hit a record price of $1,921 an ounce, a gain of more than 550% in just over a decade. Investors had piled in during the financial crisis: the price of gold traditionally rises when assets such as shares, bonds and cash are threatened………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Gold and silver have a 6000 year history for their use as a currency, and until the last century, the price of gold and silver maintained a healthy valuation ratio of 1 ounce of gold to every 15 ounces of silver.
This purchasing power ratio is strengthened by the fact that there are 17 ounces of silver for every 1 ounce of gold in the earth’s crust, although physical silver stocks have dwindled as the metal is used in a wide variety of industrial applications………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

The S&P 500’s (SPY) tremendous gains in 2013 have left many investors uneasy about sustained future growth. Goldman Sachs (GS) recently released their market forecast for 2014. The firm’s Chief US equity strategist, David Kostin stated the S&P 500 would continue its record-setting rally into 2014, reaching 1900 by the end of next year.
As bullish as this seems, this is only a 6% gain from where the market is now versus the index’s 26.38% return YTD. Kostin expects the market to reach 2,100 in two years, a gain of 17% and 23% to 2,200 by the end of 2016………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Anew tax on non-food items, a crisis in a promoter group firm, increase in margins and a trading closure of non-farm products on Saturdays have culminated in trading volumes on MCX, the country’s largest commodity exchange and the only listed one, having fallen by a whopping 70% over the past five months.
Average daily volumes during November plunged to Rs 15,369 crore from Rs 48,179 crore in June, a decline of 68.1%. This, in turn, took MCX’s turnover to a five-year low last month………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

The digital currency bitcoin has exploded in popularity since it began four years ago. Where once a single bitcoin was worth a few cents online, it is now pushing on $1,000 per coin, creating millionaires in the process.
There have been many reported cases where people mined thousands of relatively worthless bitcoins as a hobby years ago, only to now realise they are rich. One IT worker even , only to later find out his haul would have been worth $8.2 million………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Bitcoin’s rapid rise in value and profile has spawned over 60 different ‘altcoin’ digital peer-to-peer currencies. Bitcoin’s recent meteoric rise in value to over $1,000 has shone the spotlight on alternative currencies, but bitcoin is not the only new digital currency vying for relevancy in 2013.
Like bitcoins most of these currencies are mined by computers solving hard mathematical problems. The “coins” do not exist physically, of course, as the currencies are virtual existing only as computer files………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Brazil’s real declined the most among major currencies as concern the nation’s fiscal deterioration will lead to a credit rating cut made the currency less attractive to investors.
The real depreciated 0.8 percent to 2.3360 per dollar at the close in Sao Paulo and lost 4.1 percent in November, its biggest monthly decline since August. Swap rates on contracts maturing in January 2015 climbed three basis points, or 0.03 percentage point, to 10.66 percent, extending their monthly increase to nine basis points………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

As the Australian Senate prepares to vote on a repeal of the carbon price scheme, a Chinese province will introduce this month the world’s second-largest emissions trading scheme.
Guangdong province, the country’s largest province with a population of more than 100 million, will cap greenhouse gas emissions and issue carbon permits to big polluters from December 10………………………………..Full Article: Source

Posted on 02 December 2013 by VRS |  Email |Print

Australia’s newly elected leaders, claiming a mandate to dump the old government’s climate policies, would actually protect programs the defeated Labor party was using to prepare for emissions trading.
Environment Minister Greg Hunt is working to shield the agencies that monitor and regulate greenhouse gases from cuts proposed for other climate units, according to a policy paper he issued on Oct. 24. The outline reaffirms a pledge to pare Australia’s emissions by 2020 and calls for a “carbon buy-back fund” that might include penalties as well as credits based on industry targets, Hunt said in an e-mail last week………………………………..Full Article: Source

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