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Commodities Briefing 06.Dec 2013

Posted on 06 December 2013 by VRS |  Email |Print

After two years at the helm of the world’s worst-performing asset class, managers of commodities funds could be forgiven for feeling unloved. Wall Street analysts, big-picture strategists and powerful consultants have turned cold on oil, metals and grain futures as a decade-long rally peters out.
And investors are listening, with many now reluctant to commit further funds. Some are heading for the exits………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

The biggest banks are employing the fewest commodity traders, salespeople and analysts in at least four years as tighter regulations and the second drop in prices since 2001 spur cutbacks.
Total headcount in commodity units at the 10 largest banks, from Goldman Sachs Group Inc. (GS) to Barclays Plc, stood at 2,290 at the end of September, about 4 percent less than at the end of 2012, according to data starting in 2009 from Coalition, the London-based analytics company. Pay for those workers may drop 13 percent on average this year, a fourth straight decline, said Options Group, a recruitment company………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

A new report from the Economist Intelligence Unit argues that the industrial commodities supercycle isn’t over: continued demand from China (slower, but from a larger base), ongoing global urbanisation, and structural factors such as higher energy and extraction costs will continue to support prices in the medium term.
In the pits? Mining and metals firms and the slowing of the supercycle by the Economist Intelligence Unit and sponsored by National Australia Bank, focuses primarily on iron ore, base metals and coal………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

In the face of falling commodity prices, many mining projects are being scaled down or canceled which will result in lower supply and higher prices as soon as 2015-16, managing director and head of Latin American economics at Goldman Sachs, Alfredo Ramos, told BNamericas.
“Investment in mining and other commodity sectors is being canceled or scaled down in anticipation of potentially soft/lower commodity prices in the near future,” Ramos said. In Chile, the world’s largest copper producer, nine mining projects had been suspended from the portfolio as of end-June, involving US$27bn in investment, according to local industrial association Sofofa………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Deutsche Bank AG pulled the plug on its global commodities trading business on Thursday, cutting 200 jobs as it becomes the first major bank to exit the once lucrative sector due to toughening regulations and diminished profits.
Germany’s largest bank, which was one of the top-five financial players in commodities, said in a statement it will cease trading in energy, agriculture, base metals, coal and iron ore, retaining only precious metals and a limited number of financial derivatives traders………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Recently, the Energy Information Administration released its weekly reports on the status of various liquid fuels in the United States, covering the week that ended November 29. The reports cover natural gas and petroleum, presenting data about the production, storage, and prices of the fuels.
Changes in the data can reflect natural variations, seasonal trends, long-term market effects, and current events in regions of the globe where liquid fuels are produced, processed, and sold. This week was highlighted by fears over energy price declines that could continue well into 2014………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Opec may meet twice a year in its secretariat building in central Vienna, but the activity around delegates’ hotels in the days beforehand arguably reveals much more about the internal dynamics of the cartel.
Judging by the scenes in the Austrian capital this week Saudi Arabia remains king of Opec, but Iran is well and truly back………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will increase crude shipments through late December as refiners boost purchases to meet winter heating demand, according to tanker tracker Oil Movements.
OPEC, which supplies about 40 percent of the world’s oil, will raise sailings by 710,000 barrels a day, or 3 percent, to 24.22 million barrels in the four weeks to Dec. 21, the researcher said today in a report. That compares with 23.51 million in the period to Nov. 23. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

The prospect of revitalized oil production in Iraq and Iran may add to tensions between those two countries and Saudi Arabia over export quotas. On Dec. 4, representatives of the Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna to discuss a number of topics. OPEC is facing two challenges.
First, OPEC’s historically biggest consumer — the United States — is rapidly increasing its own domestic production. At the same time, OPEC must deal with plans to expand oil production envisioned both by Iraq and Iran, which could lead to lower prices than the cartel desires. Ultimately, however, emerging markets in Asia will set global demand, and their energy thirst will determine the scale of the problem OPEC faces………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

India will overtake China by 2020 to become the largest source of global oil demand, the Paris-based International Energy Agency (IEA) predicted on Wednesday.
“China dominates the picture within Asia, before India takes over from 2020 as the principal engine of growth… The shifting geography of demand is further underlined by India becoming the largest single source of global oil demand growth after 2020,” IEA observed………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

OPEC has often been criticized in the past for failing to cut crude output until the tide of oversupply is washing up at its shores. On Wednesday, the cartel ignored all the latest tidings of doom and gloom and rolled over for at least another six months the 30 million b/d output ceiling that has been in place since January last year. What else could it have done?
Undoubtedly, there is a long list of possible developments that could put heavy downward pressure on oil prices. Firstly, non-OPEC production is expected to continue climbing as the shale boom in the US continues to bear fruit – the International Energy Agency last month forecast a 1.8 million b/d year-on-year increment in 2014, on the heels of an already notable 1.3 million b/d increase in 2013………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Selling gold that has yet to be mined to lock in a fixed price - a practice used by mining firms that went out of vogue as prices surged - may make sense for them again after a more than 20 percent drop in prices this year.
Hedging, or selling production forward, shields mining companies from falling prices but stops them benefiting from gains. It fell out of favour during gold’s 12-year bull run, which peaked in 2011 with prices near $2,000 an ounce………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Is gold still in a bull market or a bear market? Opinions differ but in reality the answer to both questions could well be yes. It all depends where you start from! Over 12 years gold has risen from $250 to around $1,230 at the time of writing – definitely a bull market then?
Over the past two and a bit years gold has fallen from around $1,900 to $1,220. That looks as though it may be a bear market then? Well yes – or is this just a major correction in a secular bull market? To an extent it depends on whether you are a gold bull or a gold bear as to which viewpoint you take………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Gold is getting hammered, and the pain in the sector is putting gold bulls in a panic. The yellow metal is down more than 27% year to date, and in just the past month, gold prices have tumbled more than 7%.
The latest decline in gold came on Tuesday, when it traded lower by as much as 2.7%, breaking down below very weak support levels around $1,225. About the only hope for gold longs here is to pray for a bad jobs number Friday, as that may keep the Federal Reserve from tapering sooner rather than later………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

After 12 years of gains in the gold price, investors are now facing the true reality of unlucky number 13. Gold is set to end the year down for the first time in over decade. Having hit an all-time in September 2011, gold has failed to return to that spot. Silver has had a similar experience, touching $50 in 2011 and it is currently floundering below $20.
Meanwhile there are repeated calls for 2014 to be the year for both platinum and palladium, the industrial metals of the precious metals. Which is the right metal to invest in and should you invest in more than one?……………………………………….Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

One of the most interesting ideas that came out of the last Federal Reserve meeting at the end of October is a serious issue for everyone, including the Federal Reserve and the eventual impact of monetary policy. And that idea is that slow productivity growth might actually be the new norm.
Since the Great Recession, worker productivity has been running at roughly half the rate that the U.S. experienced over the 25 years prior. The problem is that potential gross domestic product (GDP) growth comes from a combination of productivity and the labor force………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

More private equity investment is on the horizon for the mining sector, Deloitte South Africa mining industry leader (assurance) Tony Zoghby said on Wednesday. In 2012 alone, eight mining funds raised private equity of $8.5-billion as mining majors wrote off asset value of $75-billion in impairments.
Zoghby and Deloitte South Africa mining industry leader (advisory) Abrie Olivier were speaking at the presentation of Deloitte’s sixth ‘Tracking the Trends’ yearly report, which outlined how mining companies would next year continue to face rising costs, falling commodity prices, supply-and-demand imbalances and decreased productivity levels………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Investing in gold has been pretty rough this year. The pain became more acute when it came to investing in gold mining ETFs as these often trade as leveraged plays on gold. The precious metal was badly beaten down in the first nine months of the year be it in physical or equity form.
Let’s see how things shaping up now for the near-term and long-term investment purpose: Thanks to the lingering uncertainty in the taper timeline, especially after the Fed’s latest comments that a scale back in QE might be in the cards in next few FOMC meetings, investors fled precious metals in droves………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Investors continued to turn their backs on commodity exchange traded products (ETPs) in November with some $2.1 billion in global outflows, capping a dismal year for the gold-dominated asset class which has lost out to a rallyin equities.
Some $37.3 billion was pulled from commodity ETPs globally in the first 11 months of the year, according to data from BlackRock, the world’s biggest asset manager. This puts commodity ETPs on course for one of their worst years on record. “It’s been a tough year,” said Nitesh Shah, a research analyst at ETF Securities, an issuer of ETPs. “There’s been a change in mindset by a number of investors.”……………………………………….Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

The combination of US$17.0 billion in net inflows and positive market performance pushed assets in the global ETF/ETP industry to a new record high of US$2.4 trillion at the end of November, according to preliminary findings from ETFGI’s November 2013 Global ETF and ETP industry insights report.
Net inflows into global ETFs/ETPs in November were weaker than the US$32.6 billion of net inflows in October and the US$35.7 billion net inflows in September………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Market regulators should focus more on non-sophisticated hedge funds rather than concentrate on so-called sophisticated players, said Paul MacGregor, Managing Director of Product Strategy at FFastFill during the latest Opalesque 2013 Chicago Roundtable.
The Opalesque 2013 Chicago Roundtable was sponsored by FFastFill, Eurex and Taussig Capital. “Maybe we should tell the regulators to focus a little bit more then on the non-sophisticated large players in the marketplace as opposed to sophisticated players and high frequency guys, which they love to spend a lot of time focusing on,” McGregor said………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Standard Chartered Plc (STAN) hired Paul Horsnell, formerly head of commodities research at Barclays Plc, as global head of commodities research.
Horsnell joined this week and is based in London, reporting to Will Oswald, global head of fixed income, credit and commodities research, Standard Chartered said in an e-mailed statement today. Horsnell replaces Han Pin Hsi, who left the bank, Standard Chartered spokesman Shaun Gamble said by e-mail………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

The euro crisis has put most people off currency unions. But not in Africa, it seems. In November the leaders of five countries of the East African Community (EAC) agreed to form a monetary union within ten years.
A month before West African politicians agreed on a plan to introduce a new shared currency, the eco, over the next few years. It should eventually subsume West Africa’s existing currency bloc—but not its central African cousin………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Financial reform is coming to China. The country’s leadership has made clear through recent pronouncements that it intends to liberalise the country’s capital account and take other measures to increase the role of market forces in the financial system. That has set off a flurry of speculation about how quickly interest rates on bank deposits might be set free and the yuan made fully convertible.
The answer, it seems, is not very quickly. On December 2nd the People’s Bank of China (PBOC), the country’s central bank, issued a set of guidelines on how financial reform will proceed inside the new Shanghai Free Trade Zone (SFTZ)………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Predictably, the November round of UN climate talks generated nothing but hot air and cold comfort. Representatives of 189 countries spent two weeks in Warsaw negotiating the shakiest of timetables for meeting the lamest of environmental goals. No emission cuts were agreed and zero funding was pledged to the Green Climate Fund.
Time and again, these diplomatic pow-wows have demonstrated global governments’ inability to mitigate man-made climate change with top-down solutions, or to price environmental costs and risks with any sense of urgency………………………………………..Full Article: Source

Posted on 06 December 2013 by VRS |  Email |Print

Europe may decide in the next five months to extend a freeze on emissions limits for foreign flights to as long as 2020, a European Union adviser said.
EU lawmakers will consider the position of nations, including the U.K., that are unwilling to have the bloc’s emission limits imposed on flights outside the region, Pierre Dechamps, an adviser for energy and climate change at the Bureau of European Policy Advisers, said today. The bureau reports to European Commission President Jose Manuel Barroso………………………………………..Full Article: Source

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