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Commodities Briefing 16.Dec 2013

Posted on 16 December 2013 by VRS |  Email |Print

The latest OECD composite leading indicators (CLIs) released last week point to an improving economic outlook in most major economies. The CLIs are designed to anticipate turning points in economic activity relative to trend and currently they show signs of an improvement.
While the lead indicators for the US point to growth around trend, in the Euro area a positive change in momentum is seen. However, in the emerging economies while it shows growth around trend, a tentative positive change in momentum is seen for China, Russia and India………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

The golden era for commodities is far from over and declines in previously overheated prices offer opportunities for trading houses to extend ownership of assets while still betting on continued growth in China and Africa, top player Trafigura said.
In its first fully public annual report since being set up 20 years ago, Trafigura said 2013 has been a year of “reappraisal in commodities” as many resource markets appeared to move into large surpluses while global growth looked insufficient to absorb increases in supply………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Deutsche Bank’s decision to quit trading in most commodity markets is another sign of the excess capacity across the commodity-trading sector and likely foreshadows further consolidation over the next two to three years.
Deutsche, rated one of the top five commodity banks globally, will cease trading in energy, agriculture, base metals, coal and iron ore, while retaining its precious metals business and popular index funds………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Speculators got the most bullish on commodities since October, buying more gold, cotton and soybeans, before prices fell the most in six weeks on signs of surplus supply.
The net-long position across 18 U.S.-traded commodities rose 8.9 percent to 677,505 futures and options in the week ended Dec. 10, the highest since Oct. 29, U.S. Commodity Futures Trading Commission data show. Gold wagers rose for the first time in six weeks. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 1.3 percent last week, the most since Nov. 1………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

U.S. equities outperformed commodities this year by a long shot, but commodities have a good chance to regain investor favor in 2014 after three consecutive years of declines. “Something has got to give in 2014,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
As the investing game draws to an end for the year, the near final score is: commodities down roughly 9%, based on the Dow Jones-UBS Commodity Index. The Dow Jones-UBS Commodity Index Total Return Exchange-Traded Note DJP +0.05% has lost 10% year to date. The S&P 500 Index, on the other hand, has surged 25%, on track for its best year since 2003………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

The changing global crude outlook is manifesting itself in more than one way. Possibility of glut has spurred a number of analysts to project a price crash – in not too distant a future. Indeed there are ifs and buts to it – but most are of the view that the world is heading toward a glut-like scenario. Downward price trajectory is imminent and a buyers’ market could be just round the corner, some are now insisting.
Fadel Gheit, the Cairo born analyst working for Oppenheimer, now believes oil prices are in a bubble. 20-30 percent of the current oil price reflects a “supply risk premium” that will disappear when Iran’s nuclear issue is finally resolved, he is underlining………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Over the past few years a glut of oil has built up at Cushing, Oklahoma, which has depressed West Texas Intermediate, or WTI, oil prices. Midstream companies saw a major opportunity open up in front of them, and TransCanada was one of those players who decided to act.
If at first you don’t succeed: At first, TransCanada tried to build the massive Keystone XL pipeline, which failed to win regulatory approval. Because the proposed pipeline crossed over the border, TransCanada got caught up in red tape. This pipeline operator doesn’t just stop when a roadblock is thrown in its way, however, and it is trying to work around the obstacles………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

The happy paradox of U.S. energy markets is that the domestic fossil-fuels boom has been overwhelming destructive federal government policy. The latest example of emerging common sense is Energy Secretary Ernest Moniz’s suggestion last week that the U.S. may need to reconsider its 40-year ban on most oil exports.
“Those restrictions on exports were born, as was the Department of Energy and the Strategic Petroleum Reserve, on oil disruptions,” Mr. Moniz told reporters at the Platts Global Energy Outlook Forum in New York………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Saudi Arabia has started OPEC’s difficult year early. In the same month that the Organization of the Petroleum Exporting Countries, a group of some of the world’s largest oil producers, said it would keep its output ceiling unchanged, the body’s biggest producer and de facto leader “is done with its role as swing producer.”
As The Wall Street Journal’s crack OPEC team reports, Saudi Arabia has essentially promised to steady markets for the past two years. But now, with pressure growing over a possible output cut to steady markets, the Saudis are signaling they are no longer willing to go it alone………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Australia is to become a global gas superpower by the middle of the decade and eliminate its current account deficit for the first time in almost 40 years, according to Morgan Stanley. ”Liquefied natural gas (LNG) exports from Australia could be the next big thing,” said the bank in a new report.
It predicted a ”huge ramp-up” in LNG output that could transform the country’s economy, claiming that Australia could overtake Qatar to become the world’s biggest exporter of LNG as soon as 2017, rather than 2030 as widely assumed………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

China’s changing coal consumption is threatening the existence of Australian coal mines. As China rallies to war to work for cleaner air, the most visible casualties of this war would be the Australian coal mines which are at risk of getting stranded, if not all together abandoned.
“Demand below expectations, and lower coal prices as a result, would increase the risk that coal mines, reserves and coal-related infrastructure could become mothballed or abandoned,” a new study by Oxford University, commissioned by HSBC Bank, said………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Investors are dumping gold-backed exchange-traded products at the fastest pace since the securities were created a decade ago, mirroring the steepest price drop in 32 years.
Holdings in the 14 biggest ETPs plunged 31 percent to 1,813.7 metric tons since the start of January, the first annual decrease since the funds started trading in 2003, data compiled by Bloomberg show. The removals erased $69.5 billion in the value of the assets as prices fell by the most since 1981. A further 311 tons will be withdrawn next year, according to the median of 11 analyst estimates compiled by Bloomberg………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Bullion, which is normally considered a safe haven investment instrument and has an appeal as jewellery, failed to live up to its potential and is all set to end 2013 with a dismal performance. This is set to halt the unprecedented rally of over a decade, when investors across regions reaped the benefits.
At the time of writing this report, spot gold was trading at $1,227, down 27 per cent from previous year’s close of $1,675, while silver is down 36 per cent year to date at $19.5………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

The single most important factor has been a massive decline in the investment demand for gold. In 2013 investors have bought about 30 million ounces (30 Moz) gold on a net basis globally. That’s down from about 39 Moz in 2012 and 31 Moz in 2011, but it is still at a very high level compared to historic investment demand. The net purchases are down 24% because some investors are selling gold.
There are people who buy gold and hold gold. One person recently told me, “I’m not a gold investor; I’m a gold stacker.” They buy gold as a long-term portfolio diversifier, a safe haven, a hedge against financial calamity and also an investment for other reasons………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

As we come close to this year, it is time to take a look at the most volatile and valuable commodity traded on the global commodity exchanges. The hottest commodity that swung between bear and bull markets in 2013 was gold. Several commodity analysts lost their forecasting grip on gold as the yellow metal plunged in the middle of the year, before recovering to regain the lost ground.
Those gold bulls who had predicted that gold would only continue to boom in 2013 had their mouths shut when the yellow metal fell to a record low this year. As we wait for the birth of 2014, the commodity that is being hotly talked about is gold, and gold only………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

The Chinese have taken the other side to the great Western financialization by importing its inflation and gaining control of its bond market. In addition, they have built a massive infrastructure capable of supporting its billions of upwardly mobile.
The Chinese have already cut back significantly on U.S. debt purchases. They have also rotated out of long-term debt in conjunction with the operation twist of the Fed. (The Fed sold short-terms notes in order to buy further out along the curve………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

The refined lead market is expected to continue to tighten next year, with an 84Kt deficit driving a decline in the global stock-to-consumption to its lowest level since the 2011, said London based Barclays in its recent market report.
“Resultantly we project the LME cash price to average $2,350/t in Q4 next year, which would represent an attractive 15% upside from the lows in the current quarter,” the bank projected………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

In the view of Metal Bulletin Research (MBR), one of the biggest events this year for base metals was the rotation of investment capital out of commodities and into higher yielding asset classes such as equities and bonds.
This happened in the second quarter as the US Federal Reserve started to talk about tapering its quantitative easing (QE) programme, as the dollar strengthened and emerging market growth came off the boil………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

Gold futures plunged another 2.6% Thursday as strong retail sales data stoked speculation the Federal Reserve could move to taper its $85 billion-per-month asset-buying program at its policy meeting next week.
Tapering talk, as it has for all of this year, punished gold and the exchange traded funds that are backed by physical holdings of bullion. The 2.6% drop for gold futures for February delivery was the largest drop for the most active contract since Oct. 1, according to Bloomberg………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

One of the more unnerving facts about retirement investing is the illusion of knowledge. As we get older and more wise to the world, the tendency is to believe that we understand how things work.
Relationships, at least the relationships of others, have more obvious outcomes. The motivations of those around us become easier to predict. Often, we are in the prime of our career lives, a time of fewer mysteries and more opportunities to make an impact………………………………………..Full Article: Source

Posted on 16 December 2013 by VRS |  Email |Print

With India’s first bitcoin exchange gearing up to start operations hopefully by next March, hundreds of investors, enthusiasts and banking officials gathered here on Sunday, on a mission to convince the government that the virtual currency is enduring and serious.
Started in 2008, bitcoin is the most prominent amongst a group of digital currencies — money that exists in the form of computer code —that do not have a central issuing authority. These virtual currencies are stored in electronic wallets and can be traded on online exchanges and converted into cash………………………………………..Full Article: Source

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