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Commodities Briefing 22.Jun 2011

Posted on 22 June 2011 by VRS |  Email |Print

The emergence of a global middle class is a developing trend that could result in another rally in commodity prices in the next few years, argues Robeco in a white paper.
The pattern of rising commodity prices over the past decade supports the view that the rapidly expanding global middle class has a strong appetite for commodities, argues Dutch asset manager Robeco……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Rising commodity prices may have been partly responsible for the stress on economies, but the bigger trouble could be the ‘financialisation’ of commodities markets. “The gyrations in commodity prices are often interpreted as early indicators of the changing prospects of the global economy”, especially in emerging markets, the Indian banking regulator RBI said.
“Increased financialisation of the energy and commodities market has caused fears that genuine hedgers might get ‘crowded out’. ………………………………………Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The European sovereign debt crisis and fears of a slowdown in China’s economy have dampened investor confidence across a number of asset classes, according to the latest Barclays Capital Global Macro Survey.
The survey, which interviewed 862 institutional investors this month, revealed that only 15% of investors viewed commodities as an attractive asset class compared to 41% in the first quarter……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

FICC-like revenues have been cause for worry at a lot of top banks this year. But at least one area within that category has been hot: Commodities trading. It’s something that has rebounded nicely, though it remains to be seen whether commodities revenues can provide a stable medium-term boost that banks desperately need.
Top banks like Goldman Sachs, JP Morgan, Morgan Stanley and others raked in $2.7 billion in commodity and other trading revenue in the first quarter, the highest in at least two years, according to OCC data……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Commodity prices over the next decade are set to remain at a higher level than the past, according to an OECD-FAO report produced ahead of this week’s G20 summit of agriculture ministers in Paris.
In real terms, prices over the next decade are predicted to average up to 20% higher for maize and 15% higher for rice, compared to the previous decade, while wheat prices should remain at the same level. This is likely to have a knock-on effect on higher meat prices……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The world’s top economies will try on Thursday to overcome differences and honour pledges to crack down on food price spikes which are again hitting consumers and fuelling unrest.
A surge in agricultural commodities prices in 2007-2008 that triggered riots in some countries over food price rises led to a commitment by the Group of 20 nations to contain price volatility……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Farm ministers from the Group of 20 leading economies will meet in Paris on June 22-23 to review steps to tame food price volatility. French President Nicolas Sarkozy blames speculators for spiralling commodity prices and wants G20 members to adopt a string of principles to crack down on all types of commodities trading.
Here are the main proposals put forward by France, which holds the G20 rotating presidency this year……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The Centre for Global Energy Studies (CGES) sees little change in oil prices for the rest of the year after revising down its latest price forecast following this month’s OPEC meeting.
The benchmark price of Dated Brent was expected average $118.9 per barrel in the third quarter of 2011, little change from the second quarter, before marginally increasing to an average of $130.8 in the final three months and falling back to $116 in the first quarter of next year, according to a copy of CGES’s new monthly report obtained by IRNA………………………………………Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The ICE Brent and WTI crude oil prices fell sharply last week, and further losses are expected according to analysts at London based Standard Chartered.
The commodities note says: “The rapid tumble on Wednesday undermined efforts to push above resistance levels, and leaves a cap in place in the contracts. More importantly, bear flag risk is building, and sustained losses look more likely to build now.”………………………………………Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

High crude prices may derail growth in China and India, the two nations that have helped the global economy overcome the financial crisis, the International Energy Agency said.
“High oil prices are a significant risk to derailing the economic recovery not only in the OECD countries, but also in China and India,” the IEA’s Chief Economist Fatih Birol told Reuters……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

A BP economist said Tuesday that the Organization of Petroleum Exporting Countries needs to boost crude output to offset oil production suspended by civil unrest in Libya and to cool down oil markets.
“To maintain a market balance, our numbers suggest that OPEC production needs to be in the ballpark of 1 million barrels per day higher than it is now,” Mark Finley, BP’s general manager of global energy markets, told reporters after a presentation of the company’s 60th annual Statistical Review of World Energy at Rice University……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Has Ali al-Naimi lost his magic touch? Amid OPEC’s cold war, it seems the Saudis have been left in a bind. But as the saying goes: he who laughs last laughs longest.
On June 8, Mr. Naimi, the Saudi oil minister that normally sets the tone of the gatherings of the Organization of Petroleum Exporting Countries, failed to convince the majority of his fellow members to increase output together by 1.5 million barrels a day……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Rising oil prices and impact of geopolitical unrest on economic recovery and energy security propel natural gas into prominence.
The International Energy Agency ( IEA) estimates that natural gas will overtake coal as a fuel source by 2030 and account for 25 percent of the global energy mix by 2035. Dr Fatih Birol, Chief Economist of IEA, painted the positive outlook for natural gas against a backdrop of global uncertainties impacting the energy sector at the second instalment of the Energy Market Authority (EMA) Distinguished Speaker Programme……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

BofA Merrill Lynch said an investment demand required to sustain gold prices in a range of $1,500-2,000 per ounce could be feasible in the next five years.
The brokerage believes investment has had a critical influence on the gold market and investor buying is the key to its long-run supply and demand balances……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

It seems that Newmont Mining Corp, the world’s No.2 gold producer, believes that the burgeoning demand from Asia’s newly minted middle class will send the yellow metal up to $1,600 this year and even higher in 2011.
The Newmont story reminded me of another news item that I’d read just days before - a news-service poll of analysts that said that the current Wall Street consensus was for gold prices to reach $1,700 an ounce in 2015……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

2008 offers a guide to what a worst-case scenario in financial markets could do to gold. Meanwhile, Greek yield spreads remain near records as markets await the passage of austerity measures.
Last week was a tumultuous period for the financial markets, with U.S. stock markets once again hitting multimonth lows, while many commodity prices sagged notably. But once again, gold and silver were largely left out of this volatility. Indeed, price action for the duo last week is best described as boring, but that’s likely a good thing in the current environment……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Is the nickel market, which has slumped more than 25% from its February high, a bellwether for a broad decline in base-metal prices?
Not so, say analysts. They argue that in driving down the price, investors are focusing on expectations that supplies should balloon a year from now, leaving the market with a surplus of nickel……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

London Metal Exchange rules are creating delivery bottlenecks for aluminum that are boosting prices and causing seven-month delays at Detroit warehouses, commodity researcher Harbor Intelligence said.
Warehouses monitored by the LME, the world’s largest metals exchange, are obliged to deliver a minimum of 800 metric tons to 1,500 tons daily, even as global stockpiles of aluminum rose almost fivefold to 4.58 million tons since the end of 2007……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The front of the copper curve is now in backwardation for the first time since February, but just barely so. For much steeper backwardation, look to lean hogs. Has oil moved into backwardation yet? What does corn’s roll yield look like? How do you know when it’s time to buy—or sell?
Each week, we investigate the futures curves of the U.S.’ most important commodities, helping investors better understand the market and seize buy-and-sell opportunities as soon as they arise……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The cost of many rare earth elements has defied analysts’ predictions with steep price increases since the beginning of the month. For instance in the last week, the price of dysprosium has risen from around $700 per kilogram up to $1,470.
Bloomberg’s Jason Scott also reported on June 16th that the price of europium “has risen to as much as $3,400 a kilogram from between $1,260 and $1,300 [per kilogram].”………………………………………Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The Forward Market Commission (FMC) has expressed its displeasure over the “non-cooperative and adamant” stand of the Central Electricity Regulatory Commission (CERC) on the issue of regulating power trading on exchanges.
The FMC, the regulatory authority for commodity markets, which functions under the Ministry of Consumer Affairs, Food and Public Distribution, also indicated that it is expected to resolve the issue of regulating gold exchange traded funds soon……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Citigroup is reviving its commodities role with a big hiring drive and tougher regulation in Europe and the United States means the focus will be on Asia, its global commodities head said.
Citi is finding it hard to attract staff to London because of high taxes, uncertainty on regulation and a general atmosphere of distrust of banks, Stuart Staley , Citi’s global head of commodities, said at the bank’s London head office……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

The Singapore Exchange , Asia’s second-largest listed bourse operator, has hired veteran gasoline trader Julie Heng to head their effort to become the region’s top commodities exchange, the company said on Tuesday.
Heng joins from European trading house Mercuria Energy in Singapore, where she set up and headed the gasoline trading desk after two decades with Shell and Esso……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Schroders has postponed plans to launch its Schroder Opus commodity investment trust, which was to be to run by its specialist absolute return multi-manager firm.
While Schroders says this was owing to investor sentiment being uncertain about commodities, an expert has suggested the investment trust was too expensive……………………………………….Full Article: Source

Posted on 22 June 2011 by VRS |  Email |Print

Most commodity prices rose Tuesday on hopes that Greece will be able to avoid a default on its debt. Metals and grains settled higher and energy products were mixed ahead of a confidence vote for Greece’s embattled prime minister. The results are scheduled to be announced after U.S. markets close.
If Prime Minister George Papandreou wins parliamentary support, it is expected he will be able to implement budget cuts sought by European leaders before they agree to loan Greece more money……………………………………….Full Article: Source

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