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Commodities Briefing 03.Aug 2011

Posted on 03 August 2011 by VRS |  Email |Print

The global commodity markets, in general, and metals market, in particular, are currently groping for direction, buffeted as they are by a clutch of uncertainties. Macroeconomic concerns have not waned and are currently dictating the direction of prices.
The Organisation for Economic Co-operation and Development (OECD) leading indicators have pointed to a slowdown in most major economies. Europe, the US and China are currently the focus of global attention, and whatever is happening in these countries does not inspire much confidence about robust growth prospects……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

A new report from the FAO blows the myth about increased grain consumption from developing countries leads to higher global demand and higher prices.
Ever since the global food crisis of 2007-08, a perception has persisted in many parts of the world that one of the main underlying reasons for the price spikes in major food items – especially food grain – is the increased demand from countries such as China and India. If anything, this perception has become even more widespread since prices started rising again, especially since early 2010……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Renowned commodities bull Jim Rogers says he sees higher returns from agriculture than other commodities, and has predicted more international turmoil as food prices continue to rise.
Rogers said the commodities bull market that started in 1999 had a long way to run, mainly because of a generally lacklustre supply response. “Agriculture prices are still, on a historic basis, extremely depressed, and in my view I’ll probably make more money in agriculture than other things,” the 68-year-old Singapore-based investor and author told The Australian yesterday……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

The rest of the country is slowly waking up to the potential of agriculture. In an effort to focus on the positives in our economy, financial guru Eddie Hobbs had a well-known US investor, Jim Rogers, on his radio show last week.
Mr Rogers made vast fortunes in partnership with George Soros in the 1970s by focusing on investing in commodities. The US billionaire now says that the golden era for the financial sector or “money shufflers” as he calls them, is over. He predicts it will be better to be a farmer or miner than a banker or MBA-type in the years to come……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Britain’s Barclays joined big U.S. investment banks in disclosing a weak performance of its giant commodities trading division, lagging behind European rivals.
The disclosure contrasted with France’s BNP Paribas, which became the latest European bank to report strong earnings in commodities trading following Credit Suisse and Deutsche Bank………………………………………Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

The Reserve Bank’s index of commodity prices edged up 0.9 per cent in July, from June, to a fresh all-time high as rising prices for gold and thermal coal augured well for export earnings.
That gain followed an upwardly revised increase of 1.7 per cent in June. The index was up 28 pe rcent in special drawing right (SDR) terms, compared with July last year, thanks mainly to increases in iron ore, coking coal and thermal coal export prices……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Credit Suisse on Tuesday recommended investors unwind long positions in metals and increase exposure to gold.
Credit Suisse analysts said they no longer expected a rebound in industrial commodity prices in August. They cited weak economic data in the United States and Europe and the likelihood of continued poor data from the two continents over the next couple of weeks……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Gold rallied to a fresh all time high of over $1640 today following a rash of poor economic data from the US, Europe and China which suggests that the global economy growth is sliding.
Despite news that the US had tentatively reached an agreement to extend the debt ceiling, this important news seems to have now been eclipsed with the markets also very much concerned that the US may see a downgrading by credit agencies. In short, persistently weak economic data coupled with rising global risk sentiment is giving a lift to gold……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

The end of the U.S. debt ceiling saga gives way to other worries, opening the door for much higher gold prices. It took until the last minute but the threat of economic Armageddon finally spurred Democrats and Republicans in Congress to reach a compromise to raise the debt ceiling.
The new legislation will increase the debt ceiling by $2.1 trillion to $2.4 trillion in three installments, and all but ensures that there won’t be a need to raise the ceiling again before 2013 or after the next presidential election……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

The answer to the question “where will gold prices go in 2011″ is one of the most sought after predictions on Wall Street. Gold prices rose 400% in the past decade and made a record breaking run in 2010, rising 26% and hitting an intraday high of $1,637.50 an ounce.
There are many factors that move the gold price. In 2010, one of the most popular reasons was investors buying gold as a hedge against financial disaster in Europe as European Union nations like Greece and Ireland teetered on the brink of default………………………………………Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

The most important news of the day is gold hitting successive new highs, while the western world struggles with resolving their debt loads and the East entrenches for the inevitable negative impact of a resolution.
It is not clear whether deleveraging will cause more inflation or a deflationary depression. However, one thing is clear; gold has always done well in either an inflationary or deflationary environment……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

As to be expected, the price of gold has fallen from its recent record highs after President Barack Obama said congressional leaders agreed on a plan to prevent a default, curbing demand for the metal as a protection of wealth.
Obama announced that leaders of both parties in the U.S. House and Senate had approved an agreement to raise the nation’s debt ceiling by $2.1 trillion and cut the federal deficit by as much as $2.5 trillion over a decade……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

The world’s biggest gold producer, Barrick Gold, will be an aggressive developer and explorer for copper but it copper division will never get close to matching the company’s gold business.
The regional president of Barrick (Australia Pacific) Ltd, Gary Halvorsen, told the Diggers & Dealers Forum in Kalgoorlie that, based on total cash costs, the company achieved a margin of $US1,011/ounce on gold production for the half year to June……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

A year ago, it was China’s announcement of its second half export quotas that sparked a frenzy in the world of rare earth elements. The world woke up to a perception of acute shortages in ingredients vital to our western quality of life, and the prices of individual rare earths rose dramatically.
Export prices (FOB) for the so-called light rare earths (LREE) samarium and cerium showed gains of over 2,500% in 2010. The share prices of companies looking for rare earths in the ground followed suit, and made a number of early adopters significantly wealthier……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Global rare earth monopoly China may further tighten regulations on rare earth exports, reported Wall Street Journal.
Industry participants said several measures are being discussed, including a proposal to bring more byproducts under quota restrictions and another to have separate quotas for light and heavy rare earths, according to WSJ……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Imports of uranium slowed during the first half of this year, amid industry uncertainty caused by Japan’s Fukushima nuclear crisis. China imported 5,356 tons of uranium in the first six months of 2011, a 13 percent year-on-year drop, according to figures released by the General Administration of Customs.
In the corresponding period last year, China imported 6,065 tons of the nuclear fuel, 2.5 times the amount for the previous year……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Crude oil prices settled in negative territory Tuesday as worries about a weakening economic recovery in the U.S. and troubles in Europe took precedence over the passage of a debt ceiling deal that would help the country avert a default.
West Texas Intermediate light sweet crude oil for September delivery shed $1.10 to settle at $93.79 a barrel, while Brent crude oil futures for September delivery fell 25 cents to $116.56……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Saudi Arabia will sell crude to Indian refiners in August after Iran said it may no longer provide them with oil, people familiar with the situation said last week. Iran has said it resolved the payment dispute.
Organisation of Petroleum Exporting Countries (Opec) July crude output rose to the highest level in almost three years. Rabigh Refining and Petrochemicals said a cracking unit started after maintenance and that the company’s facilities will reach full capacity by August 15……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Former Iranian Revolutionary Guards Commander Rostam Ghasemi is one of four names on a list submitted to the Iranian Parliament for approval as the country’s new oil minister—a position that also includes the presidency of OPEC.
Ghasemi is currently the subject of comprehensive international sanctions. But, if appointed, he could play a major role in determining the global oil price……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Consumers should expect more fuel price hikes given global oil supply issues and growing demand, experts yesterday said, warning that the government’s response of pushing alternative sources came with challenges.
“The possibility for price correction is certainly low this year. The release of oil by the International Energy Agency (IEA) is not causing much of an impact,” said Jorge Montepeque, global director for market reporting at energy information provider Platts, at a forum in Manila……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Agricultural and other commodities are growing and maturing as an investment class, comparable now to more established asset classes such as equities.
The value of such commodity-based ETFs swelled by 41% in 2010, as investors poured in money. In Q1 of this year, ETFs with exposure to agricultural commodities saw $3.6 billion in net inflows, according to fund manager Blackrock. In contrast, more traditional commodities such as precious metals saw net outflows of $2 billion……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

IntercontinentalExchange Inc.’s (ICE) July daily trading volume jumped 14% from a year earlier, though it declined from June. ICE said its average daily volume rose to 1.3 million contracts in July, up from 1.2 million a year earlier yet down from 1.7 million in June.
Its biggest product, Brent crude futures and options, saw volume climb 30% from a year ago. Gasoil futures and options saw volume improve 9.8% from the year-earlier period……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Until recently, alternative managers have been well diversified. However, as the space has grown, most managed futures products have become much too correlated to broad commodity indexes.
If investors only get exposure to a broad commodity index when investing in most managed futures programmes, then they will eventually opt to invest in the indexes themselves to achieve the same benefits with fewer costs……………………………………….Full Article: Source

Posted on 03 August 2011 by VRS |  Email |Print

Air transport associations and 21 airlines from home and abroad expressed strong opposition at a seminar on Monday against an EU plan to force countries into its Emissions Trading Scheme (ETS).
Starting Jan 1, all airlines flying to Europe will be required by the EU to be included in the ETS, a system that compels polluters to buy permits for each ton of carbon dioxide they emit above a certain cap. Those who do not join the system will face fines and flight suspensions……………………………………….Full Article: Source

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