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Commodities Briefing 10.Dec 2013

Posted on 10 December 2013 by VRS |  Email |Print

Has the commodities supercycle restarted? Or is it really still rolling over? The Jefferies CRB Global Commodity Equity Index is up around 7% from the summer’s lows as investors have become considerably more optimistic about the global economy’s prospects.
During the first half of the year, commodities had softened amid worries about U.S. and Chinese growth–the former because of the government’s budget impasse and concerns about the Federal Reserve removing monetary accommodation and the later because of China’s government’s aim to dampen rampant credit creation………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Financial products like fixed income, equity and currency have always been in the limelight. However, in the past decade, there has been a major shift towards commodities because of the need to diversify the investment portfolio during times of uncertainty, geopolitical tensions and financial crises.
In recent times, the global markets have witnessed a flux of events that have heightened uncertainty, leading to increased volatility. According to earlier research studies, 15-20 per cent of commodities in a portfolio leads to a better risk-adjusted return. Therefore, the benefits resulting from investment or trading in the commodities space cannot be neglected and must be considered before making the right investment or trading decisions………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Expanded supply, brought about by technical innovation and investment, has helped moderate commodity prices over the past year after a decade of demand from China helped push up prices.
Economists for years warned that rising demand for natural resources by China and other emerging markets would outstrip supply, leaving the world short of everything from nickel to coal, copper and corn………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Soft commodities look a better bet for gains than grains in 2014, with cocoa to hit three-year highs, Commerzbank said, forecasting a waning performance by livestock futures.
Among the main grains and oilseed contracts, only Chicago corn will managed headway next year, boosted by the prospect of a drop in US sowings next year, as weak prices prompt farmers to seek alternative crops………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

China’s iron ore imports rebounded in November from the previous month to a fresh record, customs data showed on Sunday, as steel mills purchased more on improving steel demand driven by a more promising economic outlook. Crude oil imports also rebounded from a 13-month low in October to 5.73 million barrels per day (bpd) in November, the fourth highest daily imports this year, as refineries restarted following maintenance.
Soybean imports surged 44 percent from October to more than 6.0 million tonnes last month, driven by good crushing margins and healthy demand. China’s total exports handily beat forecasts in November, adding to recent evidence of a stabilisation in the world’s second-largest economy as its leaders embark on an ambitious restructuring plan………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Oppenheimer oil analyst Fadel Gheit believes oil prices are in a bubble. Gheit says 20-30% of the current oil price reflects a “supply risk premium” that will disappear when Iran’s nuclear issue is finally resolved.
“We believe the current oil price bubble will burst eventually and the question is not if, but when and to what level,” writes Gheit in a note to clients. “Oil prices in the $75-$85 range would help spur global economic growth, keep inflation low, boost consumer confidence, and still fund many new oil projects. Settling the nuclear issue could open Iran’s vast oil and gas resources to western oil companies, increase supplies, lower oil prices and squeeze speculation out of the picture.”……………………………………….Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

2014 could shape up as a transformation year for oil, with prices falling on increased supply of North American crude and overproduction within OPEC. The cartel met last week in Vienna and agreed to keep production unchanged at 30 million barrels of crude per day (b/d). This target will be challenged as sanctions on Iran are loosened, adding a potential 4 million b/d of crude to an already oversupplied market.
With fiscal troubles throughout OPEC’s membership and new supply opportunities arising, the group’s target of 30 million b/d will be challenged and could lead to a sharp drop in the price of Brent crude oil………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

A senior official of the International Energy Agency (IEA) has urged governments in the region to make policies to ensure that there is effective and efficient use of their energy resources.
Speaking at the Qatar Energy and Water Efficiency conference yesterday, Robert Tromop, the head of Energy Efficiency at the IEA, said the recommendations on the energy efficiency that the Paris-based 28-member agency has made are applicable to not only the member-countries but also to the rest of the world, including many high requirement countries and energy rich ones………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

The price of gold is on track for its largest annual fall in 30 years after declining 27% in the last 12 months. The drop has resulted in a bludgeoning in the share price of Australia’s listed gold miners.
Newcrest Mining , which was worth $24 per share at the start of this year is now able to be picked up for just $7.20 — down 70%. Silver Lake Resources has lost almost 90% of its value to sit at $0.39. Investors have been truly hung out to dry. But is there more pain to come, or will prices bounce back and ?revert to mean??……………………………………….Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Hedge funds are the least bullish on gold since 2007 as signs of faster U.S. economic growth bolster the case for the Federal Reserve to trim stimulus and cut demand for haven assets.
The net-long position in gold fell 16 percent to 26,774 futures and options in the week ended Dec. 3, the lowest since June 2007, U.S. Commodity Futures Trading Commission data show. Short bets rose 6.2 percent to 79,631, within 0.6 percent of the record reached in July. Net-bullish wagers across 18 U.S.-traded commodities climbed to a four-week high………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Negative sentiment regarding gold and fears over the U.S. Federal Reserve Board “tapering” its QE3 stimulus program have pushed the gold price down to US$1,241 per oz. at presstime from close to US$1,700 at the start of the year.
But Jeffrey Christian, managing partner at commodities consultancy CPM Group, says all the factors that have encouraged investors to pile into gold since the early 2000s are still in place………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

There’s a silver lining to the beating gold took this year: sidekick silver suffered the worst slump of any other metal in 2013. “Silver has had a terrible year,” says PwC Canada’s year-end mining report Metals Mired in Global Uncertainty.
Known as “poor man’s gold”, the lower-profile metal – used in everything from the auto industry to electronics and jewelry – has tumbled 40 per cent compared to a 30 per cent price drop in bullion, notes the annual study released Monday………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

This could be just the news that the gold bugs wanted to hear. More and more traders have lost faith in bullion.
The latest data from the Commodity Futures Trading Commission, as noted by Bloomberg, show that in the week to December 3, speculative investors were at their least bullish since 2007………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Amidst write downs, a drop in commodity prices and lower revenues, gold, silver and copper were among the most closely watched metals in the mining sector. They were also some of the hardest hit metals in 2013, according to professional services firm PwC’s new ‘Gold, silver and copper’ report.
PwC on Monday said gold had been the big mining story of the year. The metal, which reached $1 900/oz in 2011, fell to about $1 200/oz this summer and prices were currently hovering not far above that………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Barclays said Monday that it believes it unwise for market participants to get too bearish on base metals price performance heading in to 2014, as demand growth looks set to post some modest gains.
“One positive for commodity markets is that demand growth is holding up much better than many expected it would a relatively short while ago, and should improve further in most markets next year,” the bank said in an outlook piece published Monday………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Australian Mining has investigated the current state of Australian metals and looks into how they will perform in the coming year. In the fourth part of this five part series we look at iron ore. Iron ore spent the last few years as the darling of the mining boom.
It was also the main factor in the rapid decline of the boom as prices spiralled quickly, taking much of the investor confidence with it. This in turn dragged the rest of the industry down as investors rapidly departed………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

[Y]ear-to-date trading flow data suggest more than $38Bn of aggregate net outflows for passive index swap and listed commodity-linked ETFs. This retrenchment compares to total net inflow estimates of $25Bn during the same 48-weeks in 2012 or about a $63Bn year/year downswing. Passive index net redemptions for the short holiday trading week ending 3rd December are assessed at $1.7Bn amid a 0.5% total return for the DJ-UBS index.
For our previous report, we issued figures for October passive retail and institutional commodity AUM to just below $273Bn. Adding estimates for actively managed commodity investments would lift this total to $339Bn; a drop of 2% month/month and 18% year/year………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Money drained out of gold exchange traded products last week as better US economic news sparked renewed tapering speculation. ETF Securities’ gold products posted their largest weekly fall since June, losing £222m, despite rising demand for the metal in China and the US.
US economic indicators, such as the unexpectedly-strong jobs and manufacturing figures, point to a sustained recovery and QE tapering early next year, ETF Securities’ weekly report says………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Exchange-traded funds enable investors to reach into nearly every corner of the market with a single convenient and diversified U.S.-traded security. Energy equities represent one of these corners of the market, where it’s important to remain diversified given the volatility present in many of the underlying commodities moving the market.
Fortunately, there are many ETFs that are uniquely suited to help investors build exposure into their portfolios………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Was the Chinese yuan “fundamentally misaligned?” That’s the label the International Monetary Fund was on the verge of slapping on Beijing’s currency in September 2008 after a hard-fought and year-long battle led by the U.S. Treasury.
But just seven days before the IMF board meeting scheduled to tackle the highly controversial issue, the global financial crisis detonated. The Lehman Brothers bankruptcy, followed by escalating market turmoil, jettisoned any chances of success. The IMF meeting was cancelled………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

The Swiss Parliament is considering a postulate that asks for bitcoin to be treated as any other foreign currency. The goal of the postulate, introduced by representative Thomas Weibel, is to eliminate ambiguities and increase legal certainty related to bitcoin.
If it is approved by parliament, it will be submitted before the Federal Council, Switzerland’s principal executive institution. If the Federal Council agrees that bitcoin should be treated like other foreign currencies, it will also evaluate how to implement the postulate………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

European Union lawmakers are set Tuesday to approve a long-sought fix to the bloc’s struggling system for trading carbon-emission rights as Germany and other nations have recently indicated support for the plan to make it more expensive to pollute.
The Emissions Trading System was designed to put a price on greenhouse-gas pollution by utilities as the bloc seeks to cut carbon-dioxide emissions by 20% by 2020 versus 1990. But because of an initial oversupply of the emission rights and Europe’s economic slowdown, a surplus of roughly two billion credits has sent their price to €4.50 ($6.17) per metric ton now from a high of nearly €30 per ton five years ago………………………………………..Full Article: Source

Posted on 10 December 2013 by VRS |  Email |Print

Britain’s unilateral carbon tax should be scrapped before it causes blackouts, pushes up household bills and makes the UK uncompetitive, ScottishPower argues.
Keith Anderson, chief corporate officer, warns that the “carbon price floor” (CPF), which taxes companies for burning fossil fuels, will make Britain’s remaining coal plants “largely uneconomic by around the middle of the decade”………………………………………..Full Article: Source

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