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Commodities Briefing 10.Aug 2011

Posted on 10 August 2011 by VRS |  Email |Print

Commodities plunged to their lowest level in eight months, extending two weeks of losses, on concern that the global share-market rout will slow the economy, eroding demand.
“The market is now worried about another global recession,” Natalie Robertson, commodity analyst at Australia & New Zealand Banking Group, said by phone from Melbourne. “The S&P downgrade of the credit rating has fuelled a lot of those concerns. The market is also focusing on the European situation.”………………………………………Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

So much for commodities as a safe haven, it seems. Equity-market plunges have stolen the headlines, but commodity prices, measured by the Dow Jones-UBS Commodity Index are down nearly 5% this month too.
The selloff, though, is not uniform. Precious metals, especially gold, and agricultural commodities have held up relatively well in the past week while oil and base metals have both fallen by around 9%………………………………………Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

There has been a lot of growth over the last decade in funds that take long positions in commodity futures contracts in order to offer investors an asset that follows raw commodity prices. I’ve been looking into some of the data that have been used to measure the size of those positions.
Hedge fund manager Michael Masters received a lot of attention in 2008 with his testimony before the U.S. Senate on the role that “financialization” of commodity futures markets may have played in the big increases in commodity prices being seen at the time……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Jim Rogers said that the UK and some Eurozone countries are likely to see their credit ratings cut over the next few months.
The investment veteran thinks that the debt problems can only get worse and that the only weapon left in the policy-makers’ arsenals is more quantitative easing as they are too fearful of letting the bankruptcies rip……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

During the stormy days of November 2008 when Wall Street shook and liquidity dried up, the US Federal Reserve kicked off quantitative easing, a method of infusing money into the economy by purchasing government bonds.
Across 16 months, the Fed pumped in $1.25 trillion of newly-generated money, a lot of which made its way to emerging markets including India, driving up stocks and commodities……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

No sooner than global financial markets participants “catch their breath” from the ongoing turmoil in European and US markets, investors and speculators will soon turn to worrying about how the economic slowdown in Europe and the US will affect China’s economy.
The results of such musings are not likely to prove edifying for commodity markets……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Gold and the Swiss franc once again hit record levels as investors poured money into an ever-narrowing range of “safe” assets.
The precious metal soared more than 3.5 per cent to hit a record nominal high of $1,780 a troy ounce, while the Swiss franc benefited as the dollar slumped in the aftermath of the US Federal Reserve’s decision to keep rates at historic lows for the next two years……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

The OPEC group of petroleum exporting countries slightly lowered its forecast Tuesday for 2011 and 2012 crude oil demand, citing concerns for the economic health of developed countries.
In its monthly report, the cartel said demand for crude was expected to reach 88.14 million barrels per day (mbd) in 2011, down from a previous estimate of 88.18……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Opec cut its forecast for oil demand this year, giving ammunition to member countries that have pushed to hold back supplies from the world market.
The group is split between price hawks and doves, but the recent 20 per cent drop in prices and a weaker demand outlook have already prompted some countries to express concern……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Amid volatility in the stock market, the first-ever downgrade of the nation’s credit rating by Standard & Poor’s and a slowing economy, there is one potential silver lining for President Barack Obama: falling oil prices.
“This is really the classic good-news, bad-news story,” said Stuart Rothenberg, editor of the Washington-based Rothenberg Political Report. “Oil prices are politically important because, for consumers, they’re one of the obvious indicators of prices in general and how far their dollar is going to stretch.”………………………………………Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Gold prices settled at a record Tuesday, slicing through the $1,750-an-ounce milestone as a selloff in global stock markets drew safety-seeking investors to the metal.
The contract traded as high as $1,782.50 an ounce, according to FactSet Research, an intraday record for the metal. Gold has gained 23% this year, its 10th straight year of gains, and so far this week has risen 5.5%……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Platinum isn’t accustomed to being outshone by gold. But amid this week’s turmoil, the price of platinum briefly dipped below that of the yellow metal for the first time since 2008.
The metals now stand at rough parity around $1,740 an ounce whereas, on average, platinum has cost 1.8 times as much as gold since January 2000. So is platinum due for a rally?………………………………………Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Contrary to some commentators who say “gold’s extraordinary run is nearly over” or “the gold-price bubble will soon pop,” I believe the yellow metal’s price has far to go, perhaps to the end of the decade or even longer, before the great gold bull market comes to its ultimate cyclical end.
Right now, there are plenty of rock-solid fundamentals that suggest the gold market is healthy with plenty of room to move higher. Moreover, the world economic and geopolitical environment remains very supportive – and seems likely to remain pro-gold for years to come……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

In recent months we’ve been talking and writing about a potential acceleration in gold. The chart said we were close and in all honesty gold has actually been in a state of gradual acceleration since the 2008 low.
Furthermore, we’d noted that in most secular bull markets, accelerations usually begin in the 11th or 12th year and are totally obvious by the end of the 13th year. Given the move of the past five weeks, there is no reason to think otherwise. An acceleration in the bull market has begun and will take gold to $2,000/oz and quite a bit higher in the next 18 months……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Is it too late to buy gold? It soared to a record $1,700 an ounce Monday after the United States suffered its first-ever debt downgrade at the hands of Standard & Poor’s.
With gold rising 30 percent this year and nearly 400 percent over the past decade, it’s reasonable to ask when the fever might break……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Customers refrained from making fresh gold purchases and physical demand for the yellow metal was weak, with market participants scrambling to raise cash to meet margin calls in a battered stock market.
The price of gold has crossed another milestone in India. Continuing its record-breaking rally, the price for gold futures hit another high of $580.24 per 10 grams, with speculators creating fresh positions. Investors, though, remained wary and shied away from making fresh purchases………………………………………Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

David Morgan maps out a path for silver that could sink as low as $5/ounce and then bounce up to $75/oz. to establish a new base level and comments on Silver Institute reporting standard.
The silver version of the Gold Institute Revised Production Cost Standard is an attempt to create an apples-to-apples yardstick for silver production across the sector. In the past, companies used different metrics to arrive at cost/oz. estimates……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

China’s production of key industrial metals, including crude steel, aluminum, lead and zinc eased compared to a month earlier, as inflation worries and sector-specific oversupply weighed on producers.
China’s metals output is a barometer of industrial strength, which has increasingly come under pressure from a hawkish domestic monetary policy and sliding global growth……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Commodities have seen steadily increasing demand thanks to the diversification and inflationary hedging benefits that they provide. At the same time, population growth and fundamental economic drivers in the emerging markets should serve as tailwinds for commodity prices over the long-run.
The proliferation of exchange-traded products has afforded investors convenient broad commodity exposure, but there are a number of access vehicles to turn to……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Investors have been directing cash to new exchange traded funds that invest in commodities and emerging markets bonds to hedge against a weaker U.S. dollar, according to a report.
These ETFs can offer investors a safe haven from a depreciating greenback. Investors are worried economic weakness could trigger more fiscal stimulus from the Federal Reserve and further debase the dollar……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Hedge funds cut bullish bets on crude oil by the most in more than six months on growing concern that the faltering economic recovery will sap energy demand.
The funds and other large speculators cut wagers that prices would rise by 16 per cent by the end of last week, the most since January 25, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. Crude dropped 5.8 per cent on the New York Mercantile Exchange in the period covered by the data……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Quotations for rice futures contracts were established for the first time Tuesday on the Tokyo Grain Exchange, where futures trading for the crop resumed Monday for the first time in 72 years.
The bellwether Koshihikari brand from the Kanto region for delivery in January exchanged hands at ¥17,280 per 60 kg, while the brand’s November and December deliveries traded at ¥17,400 after soaring by the daily limit of ¥1,000 from the reference price of ¥16,400……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Europe’s emerging-market currencies were volatile Tuesday following steep losses overnight, as fear and panic over the U.S. economic outlook and debt contagion across the euro zone left investors rushing for the exits.
The South African rand–which typically trades in line with Eastern European currencies–was among the biggest losers–falling to its weakest level against the dollar since July 2010–in Asian trading hours before recovering some ground to trade………………………………………Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

How does recessionary trends affect global food industry, do people drastically cut spending on foods? How has food inflation in emerging nations affected food consumption among poor?
Developing world is often worst hit by rising food prices but available data shows the developed world continues to spend as much on food as it used to although drastic budget cuts and resulting recessionary trends could impact Europe and US markets soon……………………………………….Full Article: Source

Posted on 10 August 2011 by VRS |  Email |Print

Already, water rights are bought and sold in arid areas of the globe as resources are stretched by climate change and a rising global population. Markets in water rights are likely to evolve as a rising population leads to shortages and climate change causes drought and famine.
But they will be based on regional and ethical trading practices and will differ from the bulk of commodity trade……………………………………….Full Article: Source

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