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Commodities Briefing 22.Mar 2012

Posted on 22 March 2012 by VRS |  Email |Print

Services in commodities hedging provided by banks will shrink and the terms will be stricter because of new regulations adopted since the global financial crisis, Greenwich Associates said.
Regulations such as Dodd-Frank and Basel III will establish stricter capital reserve requirements and require mandatory central clearing for over-the-counter derivatives that will reduce bank profits, the Stamford, Connecticut-based researcher said……………………………………….Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Andrew AwadLarge companies looking to hedge their exposure to rising energy costs are employing a larger number of banks to execute their commodity trades due to tighter credit markets, a survey released by Greenwich Associates showed on Wednesday.
The consultancy’s global survey of more than 300 large firms showed that their relationship with their lenders is now almost as important as the bank’s commodity market expertise, with airlines and large industrial companies putting an increasing premium on access to credit……………………………………….Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Banks across Europe are making preparations to create a new programme in order to try to resolve the ongoing problems in the continent’s commodities sector.
According to the Financial Times, lenders - including the major French firms BNP Paribas and Societe Generale - are currently attempting to come up with a new type of securitised vehicle that will bundle together commodity trading houses………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

French banks are stepping back into funding commodities trades, after pulling back on lending last year due to a dollar liquidity shortage. But this time, it’s securitised. As the FT reports: Commodities bankers and industry executives said the securitisation would allow the industry to access fresh credit.
But investors have been cautious about the new products, which the French banks including BNP and Societe Generale want to launch by the end of the year………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

The government’s commodities forecaster has boosted medium-term iron ore production and price forecasts, defying concerns that a slowdown in China will weigh on mining revenue and that prices could be in for a sharp decline.
The Bureau of Resources and Energy Economics forecasts that iron ore prices will fall from about $US140 a tonne to $US109 in the next five years, putting it among the more bullish forecasters………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Data analysts Raw Materials Group on Wednesday defended Chinese investment in foreign resources projects, stating that the Asian major’s effect on the resources industry was less than popularised.
Speaking at the second day of the Global Iron and Steel Conference, in Perth, Raw Materials Group chairperson Magnus Ericsson said that Chinese investment accounted for only 1% of all the minerals produced around the world………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

The Japanese government has announced it will hold talks with the EU and US in a bid to find alternatives to the rare earths minerals monopolised by China.
Discussions are due to take place next Wednesday (March 28th), with Japanese authorities determined to reduce their dependence on the rare earths commodities, AFP reported………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

High-frequency traders have caused U.S. commodity futures prices to disconnect from market fundamentals of supply and demand since the 2008 financial crisis, according to one of the authors of a forthcoming U.N. report.
Also known as black-box players, they plug algorithms into computers to generate numerous, lightning-speed automatic trades that are designed to make money from arbitrage on razor-thin price differences and movements………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Venezuelan oil minister says Western sanctions against Iran’s oil sector are “detrimental” to the stability of world oil prices and should be discussed by OPEC member states.
Speaking to reporters during a visit to Venezuela’s oil-rich area along the eastern Orinoco river basin on Wednesday, Rafael Ramirez noted that Iran sanctions are “a direct aggression on an oil producing country.”……………………………………….Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

The latest movement in Brent and WTI crude following the mild retreat after the Saudi oil minister Ali Naimi said on Tuesday that his country stood ready to increase production if necessary. We want to note something quickly about his comment that “high prices are unjustified today on a supply demand basis”.
Obviously geopolitics has much to do with oil price movements lately, but Naimi’s explanation doesn’t entirely jive with what some analysts are saying………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

“Has the Earth ever run out of a natural resource?” This intriguing question was posed to me nearly two years ago by producer Niall McGee of Canada’s Business News Network (BNN).
Many of you are aware that I am a frequent guest on BNN speaking about supply and demand fundamentals of commodities and evaluation of junior resource companies………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Gold demand in India stayed weak, the world’s biggest consumer of the yellow metal, as prices edged higher as a protest against duty hikes on bullion entered its fifth day on Wednesday.
The strike, which started on Saturday, is in protest over a series of measures taken by the government, which includes hiking of import duty along with an excise on non-branded jewellery………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Gold traded broadly steady on Wednesday, as a boost from a modestly stronger euro against the dollar offset slow consumer demand and an erosion in holdings of the metal in exchange-traded products.
Holdings of gold in the world’s largest ETPs fell by more than 100,000 ounces, following outflows from most of the major funds, marking the biggest one-day decline in three months, reflecting some of the investor shift away from bullion………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

The value of gold imports by India, the largest importer of the yellow metal, is expected to touch $100 bn by 2015-16, according to Associated Chamber of Commerce and Industry (ASSOCHAM).
“The recent hike in customs duty to four per cent will not be enough to control gold imports. Every ounce of imported gold means that the country’s savings flow out to other countries and create jobs there”, the report says while adding that $100 billion imports will put pressure on India’s current account and widen the deficit. As such ASSOCHAM advises higher import duty on gold………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Gold prices are unlikely to exceed its intraday peak hit in 2011, CPM Group stated ahead of its release of the “Gold Yearbook 2012”on March 27, 2012. Gold prices had hit an all time highs around $1920/oz in 2011, but has failed to break through the level ever since.
Meanwhile, demand for gold is seen easing on improving investor sentiment. US economic data has bee mostly encouraging, indicating a possible strong recovery and is attracting investors into the equity markets………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Silver prices may rebound to $40-50 levels aided by strong growth in global solar photovoltaic (PV) market, said Barclays Capital in a research note.
“We find that although demand is set to grow, end consumption is unlikely to be a game changer, as the uptake of photovoltaic (PV) solar cells have been and will need to be supported by government subsidies unless costs are reduced significantly from current levels………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Larry D. Spears writes: With few exceptions, most leading financial gurus agree that every portfolio should include some physical gold. But while the yellow metal itself is great as a long-term hedge against turmoil and inflation, it’s a lousy trading vehicle.
Here’s why. For shorter-term trading purposes, most gold investors look first to the futures markets, generally focusing on either the CME Group’s full-size COMEX contract, which represents 100 ounces of the metal, currently valued around $165,000, or its little brother, the 50-ounce miNY gold future………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Global regulators are starting to crack their whips on exchange traded funds, but the Canadian industry isn’t very worried.
While global oversight of ETFs is evolving, are detailed here, the focus is on tightening the leash for sophisticated ETFs that employ derivatives and counterparties. Here in Canada, many of these issues have already been addressed because our regulatory documents govern such problems………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Investors have enjoyed the bull market that has been 2012, as a number of asset classes have experienced marked gains. But many are also aware that the growth in major equity benchmarks could come to a screeching halt at any time, especially if (and when) euro zone fears spark up again.
To protect their portfolios against unpredictable markets, many investors have turned to income investing over the past few years, using dividends to procure the majority of their gains. But finding strong yields in an environment with record-low interest rates can be a tall order………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Conventional wisdom holds that the decision to invest in an exchange-traded note depends on a straightforward calculus, the trade-off between credit risk and the ETN’s tracking and tax benefits. Unlike an exchange-traded fund, an ETN is essentially an uncollateralized loan to an investment bank, with all the risks that entails.
On the other hand, the banks promise exposure to an index’s return, minus fees, regardless of how hard it is to own the index’s underlying assets. On top of that, many (but not all) ETNs are taxed like stocks, regardless of the ETN’s true exposure, thanks to a quirk in U.S. tax law………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

Currency-focused hedge funds are off to their strongest start since 2003, driven by more aggressive bets on currencies from emerging markets and commodities exporters.
Funds specializing in currency bets returned 1.34% last month, the third monthly gain in a row, according to Parker Global Strategies’s Currency Managers Index, which tracks the performance of funds in which it invests. The index is up 2.56% in the first two months of 2011, the best returns over that period in nine years………………………………………..Full Article: Source

Posted on 22 March 2012 by VRS |  Email |Print

A counteroffensive of sorts may be underway this year in what has seemed like a one-sided “global currency war” as developing economies slow, Western money-printing pauses and the heat comes out of pumped-up emerging market currencies.
The three-year-old “war”, as Brazil dubs the devaluationist policies of developed nations seeking relief from home-grown credit crunches, may well just come full circle and burn itself out as a result………………………………………..Full Article: Source

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