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Commodities Briefing 29.Jul 2009

Posted on 29 July 2009 by VRS |  Email |Print

From WSJ: The oil speculators are back—that is, back in the cross-hairs of the political class. On Tuesday, Commodity Futures Trading Commission Chairman Gary Gensler uttered the Pentagon-like phrase that “every option must be on the table” to curb “excessive speculation.”
If you’re wondering what makes speculation “excessive,” in Washington the answer is this: Speculation becomes excessive when prices move in a politically inconvenient direction. Which brings us to the real meaning of the three days of theater, er, hearings that Mr. Gensler is conducting this week………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Independent: Financial regulators on either side of the Atlantic are set to clash over the role of futures traders in major swings in the oil price as the US commodities watchdog gets ready to clamp down on “excessive speculation”.

In some quarters, both last year’s ballooning $147 (£90) per barrel high, and June’s eight-month high of more than $70, are blamed on traders speculating in the futures markets………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Fortune: Word is that the Commodities Futures Trading Commission is set to do an about-face on the role speculators play in setting oil prices.
According to the Wall Street Journal, a CFTC study set to be released next month will find speculators to blame for last year’s high prices. Presumably, the study will provide some intellectual justification for the Obama administration’s plan to rein in oil speculators………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Forbes: A year ago, the world’s major oil companies were at the peak of a commodities boom–fueled by volatility in other areas of the financial marketplace–that had pushed up the price of black gold to nearly $150 per barrel.
The recession put paid to that particular bubble, and on Tuesday BP revealed its second-quarter profits had halved over the year, to $3.1 billion, more or less in line with the 50% decline in oil prices over the year………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Guardian: Oil industry forecasts are being revised downwards and recovery from recession could take longer than expected, a report from Greenpeace finds.
The demand for oil has hit a short-term peak in the west and industry predictions of how long it will take to recover are getting longer, research from Greenpeace shows………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Thestreet.com: The recent uptrend in precious metals shows no signs of abating. Precious metals offer protection against a downward spiraling market and the demand for them grows when consumer confidence wanes and employment numbers remain weak.
Most recently, a report said that Swiss banks are running out of storage space for gold bullion held by investors, a sign that the global demand for gold is still strong………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Mineweb.com: The price of copper has jumped over 70% since the beginning of 2009 but, there is still uncertainty as to where it is going next.

According to an analysis put out by Numis Securities, while “it is tempting to infer this price strength as suggestive of an improvement in underlying demand,” especially considering there is strong demand for copper from China, which saw record imports of the refined metal over the last few months and significant restocking by the country’s State Reserve Bureau………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Seekingalpha.com: Due to the Global Economic Crisis as well as a relatively strong rise in the yuan last year, China saw a large drop in exports.
This hurt the country’s export-focused business model and created a sharp rise in unemployment. In order to mitigate social unrest, Beijing responded quickly (and wisely) with a 4 trillion yuan (US$586 billion) stimulus package………Full Article: Source

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From Purchasing.com: Many commodity economists are citing copper’s 67% price increase from a cyclical low last December as a gauge of economic recovery.
However, some market insiders suggest copper’s price inflation may be a bubble created by excessive first-half Chinese purchasing–especially since there is no sign of global demand growth………Full Article: Source

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From Hardassetsinvestor.com: It’s the world’s fourth-most consumed metal by weight, and the twelfth-most abundant in the Earth’s crust. All steels contain it. And the U.S. is 100% reliant on imports of it. But who has ever heard of manganese?
Manganese is a brittle, hard gray-white metal that looks much like iron, and is present in practically everything made of steel………Full Article: Source

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From Commodityonline.com: Investment demand continues to be steady with gold holdings by the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, standing at 1,086.61 tonnes as of July 24, down 47.42 tonnes from a record marked on June 1.

Sales of New Homes in US increased by 38K to 384K in the month of June, the Commerce Department said yesterday………Full Article: Source

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From Moneymorning.com: As you review your investment portfolio to size up your current exposure to gold, keep one key point in mind: When it comes to profits, there’s no rush like a speculative gold rush.

And that’s just what we have at hand. Inflationary fears are on the march the world over. And most of those worries are due to the trillions of dollars in stimulus spending the world’s central bankers have engineered……..Full Article: Source

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From CNBC: The silver market is outpacing gold this year, and for those looking to buy into the metal, there’s now a new method.
ETF Securities, the largest provider of commodity-based exchange-traded funds (ETFs) in Europe, recently created a new ETF for silver………Full Article: Source

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From Bloomberg: Gold fell the most in almost three weeks as the dollar rebounded against the euro, eroding demand for the metal as an alternative investment. Silver also declined.

Gold and the dollar have moved inversely every month since April, resuming a pattern in five of the past seven years. The greenback rose as much as 0.7 percent against the euro, partly on revived demand for the safety of the world’s main reserve currency………Full Article: Source

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From Wealth-bulletin.com: The US wealth management arm of UBS has stopped recommending exchange-traded funds that short stocks or use leverage to its clients, in the wake regulatory pressure to the clarify the products to investors confused over the returns they provide.
UBS said in a statement yesterday that it will no longer suggest to clients that they put their money into these ETFs………Full Article: Source

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From Citywire.co.uk: The gold price sank by -5.4% in June as the prospect of an economic recovery and fears about deflation took the shine off the precious metal.
It has moved down as low as $906 per ounce in July and many expect this crowded trade to unwind further and certainly fall below the $900 barrier in the near term………Full Article: Source

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From Indexuniverse.com: There is a lot of evidence to suggest that European firms are making a big push into the Asian region. But what is the driving force behind this move and why are European ETF issuers and traders at its forefront?
And, more broadly, what opportunities and challenges does Asia present?……..Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Reuters: Exchange-traded funds have captured cash at a slower pace this year as the recession has limited investors’ nerve and resources, but industry analysts expect the securities’ rapid growth to soon resume.

ETFs, portfolios that resemble individual stocks and are traded on exchanges, have been the investment industry’s red-hot asset class since being introduced in 1993………Full Article: Source

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From Thestreet.com: While investors can use ETFs to go triple long or triple short or invest in specific countries or commodities, some products should be avoided.
ETFs empower investors by allowing them behind the velvet rope of investing and into a world of exotic strategies………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Greenfaucet.com: As for the currency ETFs I am a fan of these and have traded them twice and expect to do so again.
A while back I held the Currencyshares Swedish Krona and then after that the Currencyshares Euro. These were both across the board trades, I’ve done a couple of narrower things with the Australian dollar as well………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Bloomberg: Currency-trading volumes may take years to recover after a plunge in risk appetite sparked by the global financial crisis drove away hedge funds and speculators, according to foreign-exchange analysts.

Daily trading in London dropped 25 percent in April from a year earlier, with volumes in North America slumping 26 percent, according to surveys released yesterday by the Bank of England and Federal Reserve Bank of New York. Trade in Tokyo slid 16 percent, data compiled by the Foreign Exchange Market Committee in Tokyo showed………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From AP: The dollar rebounded in late trading Tuesday from a year low against the euro overnight as a measure of U.S. consumer confidence fell, distressing investors.

The greenback also gained steadily against most other European currencies, but dropped against the yen and some emerging-market currencies………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Bloomberg: Brazil’s real may strengthen to 1.8 per dollar by year-end as faster economic growth lures foreign investment and higher demand for commodities boosts the country’s exports, according to JPMorgan Chase & Co.

JPMorgan strategists changed their forecast for the real from 2 per dollar after boosting their estimates for 2009 foreign direct investment in Brazil to $26 billion from $20 billion………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Structuredproductsonline.com: Credit Suisse has made three new hires in its commodities business, including Dan Raab, who formerly looked after the global development of American International Group’s (AIG) commodity index.
The bank has tapped Merrill Lynch for the remaining hires, which are in its Fixed Income Group, as it focuses on building its commodity indexing business………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Indexuniverse.com: XShares Advisors LLC has announced that it plans to close the AirShares EU Carbon Allowances Fund.

Entering July, the exchange-traded product had just $4 million in assets. ASO launched in December 2008 with nearly $5 million in seed money as an asset base………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Bernama: Bursa Malaysia Bhd plans to introduce a fully electronic web-based Syariah commodity trading platform next month.

Its chief executive officer Datuk Yusli Mohamed Yusoff said the Commodity Murabahah House (CMH) is the world’s first fully Syariah compliant commodity trading platform………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Reuters: The New York Mercantile Exchange will impose what it calls “hard expiration position limits” on seven of its natural gas financially settled contracts effective with the October contract expiration.

In a notice to members issued in June, the exchange said the amendments were being implemented in response to a Commodity Futures Trading Commission (CFTC) rule making, anticipated to be in force by September, that will require exempt commercial markets to establish hard position limits………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Asianinvestor.net: Standard Chartered Bank will provide clearing and settlement to the new Singapore Mercantile Exchange (SMX) when it goes live in the fourth quarter.

The bank will be the first bank to provide electronic funds transfer and settlement processing to the exchange’s members. It will also provide banking services to SMX employees………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Marketwatch.com: Index funds and speculators are not distorting commodities prices, Craig Donohue, chief executive officer of CME Group, said ahead of Tuesday’s testimony to a hearing held by the Commodity Futures Trading Commission. Donohue is one of the witnesses appearing at the hearings.
“We have not seen any empirical evidence that index funds and speculators distort prices,” Donohue said in a statement………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From FT Alphaville: Gensler said that a quarter of the time those breaches will have been triggered by commercial players, but roughly 75 per cent will have been triggered by funds. It’s important to remember, however, that accountability limits are not position limits — meaning the only consequences are warnings rather fines.

This is presumably why the likes of the United Natural Gas fund — known to be breaching accountability limits — have now headed into the unregulated OTC bilateral market………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Theaureport.com: About 15 years ago, when China started becoming a significant buyer of copper, the pattern started to change.

This pattern shows copper prices rising from January through May and then trading pretty much sideways for the rest of the year, with modest peaks and valleys along the way. A similar pattern is drawn to represent the past five years………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From Bloomberg: Raw sugar prices may reach a 28-year high in the next six months as a production shortfall in India, the world’s biggest user, worsens a global deficit for a second year, the nation’s largest producer said.

Sugar may reach 25 cents a pound as the South Asian nation lifts imports to meet a deficit of 6 million metric tons to 7 million tons in the year starting Oct. 1, said Kushagra Nayan Bajaj, joint managing director at Bajaj Hindusthan Ltd………Full Article: Source

Posted on 29 July 2009 by VRS |  Email |Print

From AP: Prices for most commodities fell Tuesday amid a stronger dollar and a report suggesting consumers are still nervous about the economy.

Metals and energy prices took the biggest beatings after The Conference Board said consumer confidence weakened more than expected in July. Sagging consumer confidence means Americans are likely keeping their wallets shut, which could hurt the economy’s ability to rebound. Prices for commodities suffer when demand for basic materials and other goods is weak………Full Article: Source

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