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Commodities Briefing 30.Mar 2012

Posted on 30 March 2012 by VRS |  Email |Print

Commodities other than oil will fail to capture much of the renewed investment appetite for risky assets that has buoyed global markets this year until more clarity emerges about demand from top raw materials consumer China.
Investment has flowed into equities, emerging markets, high-yield debt and real estate markets in the New Year after improved U.S. economic data and an injection of cheap loans to European banks boosted sentiment, but most commodities markets got only a brief boost………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Financial institutions offering commodity investments during this once-in-a-generation demand boom are failing on two levels: they are not attracting the money they should and they haven’t realised that Asia is the future.
While this may raise the hackles of investment bankers, hedge funds and producers of commodity indices, the numbers do not lie. There is roughly $30 trillion in global pension funds, yet direct investments in commodities are only a smidgen over $400 billion, which barely qualifies as a spit in the bucket………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Everyone knows why oil prices, at around $125 for a barrel of Brent crude, are so high. The long-term trends are meagre supply growth and soaring demand from China and other emerging economies. And in the short term, the market is tight, supplies have been disrupted and Iran is making everyone nervous.
Saudi Arabia, the only OPEC member with enough spare capacity to make up supply shortfalls, is the best hope of keeping the market stable. The Saudis recently reiterated their pledge to keep the market well supplied as American and European Union sanctions hit Iran………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

The International Energy Agency is concerned that very high oil prices could damage the fragile economy and will continue to monitor the market and remain in close contact with its member countries, the organization’s executive director, Maria van der Hoeven, said Thursday.
The statement, to mark the conclusion of a regular quarterly meeting in Paris of energy experts from all 28 IEA member countries, didn’t directly address comments from a French government official Wednesday, that France has approached the agency about tapping emergency oil stocks to ease high prices. ……………………………………….Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

The International Energy Agency (IEA) is concerned by high oil prices and is ready to respond if market conditions warrant action, the agency said after 28 member country energy experts met on Thursday.
“The oil market has been tightening in recent months,” the IEA said in a statement from its executive director Maria van der Hoeven. “The International Energy Agency, like many others, is concerned by the impact of these high prices while the global economic recovery remains fragile………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Gold stocks are quite popular among hedge funds these days, and with good reason. John Paulson , who is very bullish about gold, made $5 billion by betting on gold in 2010.
As of December 31, 2011, the largest position in the 13F portfolio of his Paulson & Co was the gold exchange-traded fund (ETF) SPDR Gold Trust GLD, in which Paulson had over $2.6 billion invested………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Gold investors have had to endure quite a lot in the last six months. Not only has the gold price barely moved from six months ago, but it has endured an up, down, up, down chopping motion during this period of volatility.
Future volatility in the gold price was something that some investors were calling for at the beginning of 2011, and volatility we got. During the last six months, this most psychological of markets, has endured all sorts of emotional squeezes, take downs and Buffett’s now regular wise cracks………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

UBS lowered its 2102 average gold price estimate to $1,680 an ounce, down from the previous figure of $2,050, the bank said, reflecting the recent swoon in prices. It left its 2013 average estimate for gold at $1,725. Its silver 2012 average price outlook was lowered 4% to $33.40 an ounce, with its 2012 estimate of $27.50 left unchanged.
The bank raised its platinum average price estimate for 2012 to $1,700 an ounce from $1,675 and left its 2013 average estimate at $1,900. The palladium forecast was increased by 5% to $725 an ounce for an average price in 2012; the 2013 price estimate was not changed from the previous forecast of $850………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Around this point in the fractal cycle in the late 70’s, Gold busted out of its channel to rise sharply higher, along with Silver. Silver’s channel top will lie up around $68 to $70 over the coming months which we believe will be reached in 2012.
The next higher angled resistance bands for Silver run from $112 to $115, and then up at the $123 area. By the end of the Silver Bull, we expect to see Silver reach $500+………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Copper traders are the most bearish in two months after stockpiles tracked by the biggest metals bourse rose for the first time in five weeks and Goldman Sachs Group Inc. cut its recommendation on commodities to neutral.
Eleven of 25 analysts surveyed by Bloomberg expect copper to drop next week, the highest proportion since Jan. 6. Seven were neutral. Inventories reported by the London Metal Exchange rose 1.4 percent on March 27, the first gain since Feb. 22………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

The current state of Chinese demand is varied across industries. The spot demand for copper in China is weak, the improvement in Q2 may be tepid and imports are likely to remain strong in March and possibly April before trailing off until later in the year.
Sentiment amongst Chinese fabricators and manufacturers is negative. Orders have been slow to improve following the Chinese New Year and in some sectors are below year-ago levels. Inventories of cathode at consumers are low, but inventories of finished product are higher than usual for the time of year………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Iron ore prices will slowly decline in the next few years as steelmakers cut production to cope with overcapacity and more supply comes on stream, Wood Mackenzie iron and steel consultants said on Wednesday at Reuters Mining Summit.
Average annual prices for ore with 62 percent iron content will fall from about $159 a tonne cost-and-freight China in 2011 to $157 in 2012, $155 in 2013 and $140 in 2014, Wood Mackenzie forecast………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

As those who follow the rare-earths sector will know, on March 13, 2012, the United States, the European Union and Japan (the complainants) filed simultaneous and near-identical complaints with the World Trade Organization (WTO), in which they requested consultations with China (the respondent) on the measures that it has in place related to restrictions on the export of rare earths, tungsten and molybdenum.
The following article presents an overview of the WTO dispute process, the specific details of the rare-earths-related complaints, and looks at how China might respond to the specific complaints made……………………………………….Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Thanks to an improved economic outlook, many commodity ETFs have put up solid performances so far this year. Broad products tracking commodities in multiple sectors have been buoyed by high returns in the oil, base metal, and some precious metals as well.
Due to the strength of these sectors, many of the most popular commodity ETFs have pretty much matched broad stock indexes to start 2012………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Broad based commodities ETFs and agriculture commodities ETFS sold off today as investors anticipated Europe economic slowdown. Typically commodities and commodity ETFs rise when economies grow, as needs for resources increase.
With Spain front and center for a new war against the EU concerning austerity measures, investors likely fled commodities andn commodity ETFs today in face of potential economic instability………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Non-accredited investors will son be able to throw money away in the same manner as high net worth investors. Hedge fund ETFs that mimic some value and activist strategies will soon be here. I shouldn’t have to say that this is beyond stupid but I enjoy hearing myself think out loud. This blog is all about public service.
The incompatibility of hedge fund strategies and ETF strategies is plain. Classic ETFs mimic broad indexes as closely as possible, with a lot of constancy in their holdings and little turnover………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Ever since markets crashed in 2008, investors have been slowly increasing their risk appetites, shifting towards more lucrative and risky asset classes such as commodities. Some investments in this category have flourished, while others haven’t fared so well.
Natural gas is perhaps the first cringe-worthy commodity that comes to mind as investors witnessed its unprecedented free fall over the last few years. But with NG and some of the other big losers comes a potential buy in opportunity at rock bottom prices………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Exchange-traded funds offering exposure to Commodity Producers Equities have become a popular tool for those looking to make an indirect play on natural resource prices. These funds offer investors the ability to easily tap into the lucrative commodities market through a diversified basket of companies, while still reaping the cost efficiency benefits associated with the exchange-traded product structure.
Investors who wish to access the mining sector have a number of options available at their fingertips; and while these products may appear similar, a closer look under the hood reveals some noteworthy differences……………………………………….Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Neal Shear, who spent 25 years at Morgan Stanley, and Jean Bourlot, former commodities head at UBS AG, are starting Higgs Capital Management LLP, a commodities hedge fund in London.
The fund will cover energy, agriculture and metals, Bourlot said by phone from London today. Shear will be chief executive officer and Bourlot will be chief investment officer, he said. Neville Atha, who joins from Jabre Capital Partners, will be chief operating officer………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

The ability of Mexican pension funds to invest in commodities is an important step in the market’s development, as the funds’ investments are highly concentrated in Mexico, a portfolio manager for one of the country’s largest pension funds said Thursday.
Recent regulatory changes will permit the funds, known as Afores, to invest between 5% and 10% of their portfolios in commodity-linked securities………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

At least 20 commodities traders, several senior, have left Goldman Sachs in the past months, dealing a blow to Wall Street’s long-time king of commodities as talent moves to better paying trading houses and hedge funds.
The departures, according to around a dozen insiders and trading sources, mirror the exodus of traders from rival banks over the past two years………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

The group of five emerging economies, Brazil, Russia, India, China and South Africa (BRICS), joined hands on Thursday in calling for a “more representative” international financial architecture with an “increase” in the voice and representation of developing countries.
The heads of states of the five countries - Dilma Rousseff (Brazil), Dmitry Medvedev (Russia), Manmohan Singh (India), Hu Jintao (China) and Jacob Zuma (South Africa) - met at the fourth BRICS summit held at the Taj Palace………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Moscow and New Delhi will switch to trading in domestic currencies in three years, the chairman of Russia’s largest state development bank said on Thursday.
“With China it took us three years to (evolve) from initial conversations to trading in local currencies,” VEB Chairman Vladimir Dmitriev told reporters on the sidelines of the BRICS summit of emerging world powerhouses - Brazil, Russia, India, China and South Africa………………………………………..Full Article: Source

Posted on 30 March 2012 by VRS |  Email |Print

Participants are becoming increasingly bearish in their outlook for the European Union Emissions Trading Scheme according to this year’s Point Carbon survey.
According to results from the 2012 Thomson Reuters Point Carbon survey, carbon market participants are forming an increasingly pessimistic view regarding the European Union Emissions Trading System (EU ETS)………………………………………..Full Article: Source

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