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Commodities Briefing 03.Dec 2013

Posted on 03 December 2013 by VRS |  Email |Print

If the market had its own Ten Commandments, near the top would be “thou shalt revert to the mean”—or, what goes up must come down and vice versa. Commodities bulls betting on this lifting their favorite investment out of its funk need to ask themselves where that mean is, though.
It looks like commodities in 2013 will rack up their second consecutive year as the worst-performing asset class in terms of risk-adjusted returns, according to Deutsche Bank. The Dow Jones- UBS Commodity index is down 10% so far this year……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

Commodities continue to be the worst performing asset class for second year in a row, but it could signal a recovery in returns heading into next year, according to Deutsche Bank.
The bank expects Crude oil to be sensitive to the possibility of Iranian sanctions easing while Natural Gas is bullish on weather-deficit is seen in storage and further upward price movements could mean its decreasing competitiveness with CAPP coal……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

Has the much vaunted super cycle in commodities finally come to an end? Or is it only taking on a different form in response to the narrative unfolding in commodities markets? There are as many answers to these questions as there are informed opinions in the underlying industry.
One of the few certainties is that consumers will complain that they feel the effect of commodity price rises almost immediately but seldom see the benefit of any fall. Some industry specialists express sympathy for this latter view, but point to a number of factors to explain it away……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

Export commodity prices started rising again in November. The Reserve Bank of Australia’s (RBA) index of commodity prices was 0.1 per cent higher in the month, in Special Drawing Rights (SDR) terms, after falling by 0.4 per cent in October.
The price index is measured in terms of special drawing rights (SDRs), an average of four major currencies - the US dollar, euro, Japanese yen, and British pound. The RBA said prices for gold, coking coal and wheat fell……………………………….Full Article: Source

Posted on 03 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% 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%, which if it happened this time would mean a 7.8% drop for the year……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

The OPEC oil cartel on Tuesday increased its forecast for oil demand growth in 2013 on expectations of better-than-expected improvement in developed country economies.
The Organization of Petroleum Exporting Countries said in its November monthly report that demand would average 89.78 million barrels per day (mbpd) in 2013, a slight 0.04 mbpd increase from last month’s forecast. Most of the demand increase came from small adjustments in Europe and North America with non-OECD countries seeing demand forecasts in a slight decline. ………………………………Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

OPEC will probably stick with its current production target as demand for its crude next year will be at a similar level, said three delegates from the group.
The 12-member Organization of Petroleum Exporting Countries will make that decision in two days, when ministers meet in Vienna, the officials said, speaking on condition of anonymity because discussions are private. The three delegates spoke to Bloomberg before Saudi Arabian Oil Minister Ali al-Naimi arrived at his hotel in Vienna……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

OPEC will probably stick with its current production target as demand for its crude next year will be at a similar level, said three delegates from the group.
The 12-member Organization of Petroleum Exporting Countries will make that decision in two days, when ministers meet in Vienna, the officials said, speaking on condition of anonymity because discussions are private. The three delegates spoke to Bloomberg before Saudi Arabian Oil Minister Ali al-Naimi arrived at his hotel in Vienna……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

Ali al-Naimi, the Saudi oil minister, dismissed the idea of cuts to Saudi production on Monday as he arrived in Vienna for an Opec meeting, which is expected to be dominated by the prospects for strong growth in supplies.
Faced with questions about whether Saudi Arabia, the world’s largest crude oil exporter, will have to cut production or reduce exports in order to accommodate growing production elsewhere, Mr Naimi smiled and waved off the suggestion……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

Even with OPEC forecast to keep its output quota unchanged at a meeting this week, falling oil demand and prospects for increased supply from some member states mean the group’s leader, Saudi Arabia, will have to cut production anyway.
The kingdom and its allies Kuwait, Qatar and the United Arab Emirates will need to produce about 2 million barrels a day less in 2014 to prevent a glut, the Centre for Global Energy Studies predicts. That’s equal to annual revenue of about $80 billion at today’s prices. The 12-nation group meets in Vienna on Dec. 4 and will reaffirm its collective limit of 30 million barrels a day, according to 22 of 24 analysts and traders surveyed by Bloomberg News……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

While China has been a key source of gold demand this year, helping to offset selling from exchange-traded funds (ETFs) and a pullback in Indian consumption, the country’s bullion imports may slow in 2014, according to ANZ.
“Caution is warranted in expecting that the import growth of 2013 will be repeated next year. Over the medium-term, rising real interest rates and poorer capital returns for gold will reduce its desirability as a store of wealth,” Victor Thianpiriya, commodity strategist at ANZ wrote in a report……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

”The sky is falling, sell;” “It’s useless, run away;” “There’s going to be deflation, so it won’t serve any purpose to your portfolio”—these are a few of the ways gold bullion is being described these days. The yellow metal is facing scrutiny, and those looking for it are gasping for air.
Looking at all this negativity, should you lose trust in gold and sell, like the mainstream says? The scrutiny against gold bullion is significant, but I remain bullish on the metal in the long run. As it stands, I don’t see demand declining, and as the prices remain suppressed, I expect the supply to decrease……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

This has been a bad year for commodities-related exchange traded funds, with hard assets heading for their first annual lose since 2008, and it could get worse if historical December trends pan out.
Since 1971, the Standard & Poor’s GSCI Spot Index of 24 raw materials has declined in December about 83% of time when the benchmark showed a loss for the year through November, reports Elizabeth Campbell for Bloomberg. On average, the December decline was 3.9%. The S&P GSCI Index is down 3.7% year-to-date……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

There was a time in the not so distant past when better data out of China, such as Monday’s manufacturing survey, would have delivered a wholesale boost to so-called commodity currencies.
But such tight risk-on/risk-off correlations have faded and markets are now more nuanced. Hence the start of the week saw a mild boost for the Aussie and kiwi dollars but further weakness for their Canadian peer……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

Commodity currencies gained sharply on Monday following positive data from China, while the British pound soared on expectations of early policy tightening by the Bank of England.
Investors bought the Australian and New Zealand dollars after a survey on Sunday showed China’s factory growth held at an 18-month high in November, an outcome that was slightly ahead of expectations. Both Australia and New Zealand are highly leveraged to China’s economic cycle……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

European carbon trading volumes fell 31 per cent year-on-year in November despite a record number of permits sold by governments, data compiled by Reuters showed. A total 834.6 million tonnes of carbon dioxide traded on Europe’s main four emissions exchanges last month, up 6 per cent from October but down from a record 1.22 billion transacted a year earlier.
Governments auctioned a record 84.5 million spot EU Allowances (EUAs) on the bourses, while a further 34.7 million options contracts changed hands, the data showed……………………………….Full Article: Source

Posted on 03 December 2013 by VRS |  Email |Print

Believe it or not, the statistics indicate carbon trading is growing – nationally and internationally. As of December 2013, 17 countries have carbon pricing mechanisms either running or planned. According to a recent study by the World Bank these cover greenhouse gas emissions of 10 GtCO2e/y, equal to 21% of the 50 GtCO2e emitted globally.
Historically the UN’s Clean Development Mechanism (CDM) and the European Union’s Emissions Trading Scheme (EU-ETS) have dominated global markets. Both have suffered from plummeting carbon prices in the past year, a result of the economic slump post 2008 and the over-supply of credits……………………………….Full Article: Source

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