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Commodities Briefing 24.Jul 2012

Posted on 24 July 2012 by VRS |  Email |Print

Nearly five years after it began investing in commodities, the biggest public pension fund in the United States has yet to make any money in the asset class — highlighting the difficulty even the largest and most sophisticated institutions encounter in wringing returns from investments in agriculture, metals and energy derivatives.
The California Public Employees’ Retirement System (CalPERS) had assets valued at $236 billion at the end of March 2012, including $3.6 billion linked to commodity prices, according to the latest quarterly performance report presented to CalPERS investment committee in May………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Dominic SchniderCommodities bulls betting on further easing from major central banks to revive sagging prices may be setting themselves up for disappointment. According to commodities analyst Dominic Schnider, loosening monetary policy may release more liquidity into financial markets but that’s not going to be the main driver of prices.
Global demand continues to be the key driver of the natural resources sector, and as long as appetite from China – the world’s biggest consumer – remains weak, prices will remain soft………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

As the European economy shows no sign of pulling itself up by its own bootstraps, and with the US hardly faring any better, markets have been heavily dependent on Chinese demand to bolster commodity prices. But the predictions from a Chinese central bank adviser over the weekend did little to give markets confidence that the People’s Republic would be able to sustain its role in propping up demand in commodity markets.
Song Guonqing, an academic member of the People’s Republic of China’s monetary policy committee warned that Chinese growth may slow to 7.4 per cent and that inflation may create a drag on returns for industrial producers, curbing any expansion………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Expectations for oil market balances in Q3 have become more constructive as 2012 has progressed. There has been no weakening trend in expectations caused by shale oil or European demand, as those effects have been more than offset elsewhere and have also been less of a surprise in forecasts than normally assumed, said Barclays Capital in a snippet.
The recovery in prices has continued, with the OPEC basket regaining $100 and Brent pushing on towards $105 on firmer data and more positive sentiment………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Gold prices to reach its all time high of $2000 an ounce in the first quarter (Q1) of next year, according to Deutsche Bank’s precious metal forecast for next year. Silver prices to average $42 per ounce in the Q1 of 2013, they added.
Global gold prices were up on Friday but lower for the week. The most-active August gold contract on the Comex division of the New York Mercantile Exchange settled at $1,582.80, down 0.58% on the week………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Residential construction and non-mining investment will overtake the resources sector within five years, forcing thousands of mining employees out into the cold, according to another economics forecast predicting a downturn in mining.
BIS Shrapnel’s report released today says there is a 25 per cent chance that commodity prices will plummet so far it would cause Australia’s economy to enter a recession, with attached falls in interest rates and the Australian dollar failing to counter the decline………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Few things have expanded the investing toolbox of the average investor more than exchange-traded funds. Over the past 20 years, ETFs have gone from being simple index-fund clones of popular stock market benchmarks to encompass just about any asset class imaginable, from international bonds to stocks of every flavor, location, and size.
Yet with nearly 1,500 ETFs available that hold a total of roughly $1.2 trillion in assets, the ones that have drawn some controversy lately are a seemingly innocuous pair of new commodity-oriented funds, as Barron’s reported last week………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

The benefits of commodity investing have been well-documented in recent years, as this asset class has become a more widely-accepted part of every investor’s portfolio. These assets are typically used for their appeal as inflation hedges as well as their low correlation to the overall stock market.
When most investors think of these kinds of assets, big name commodities like gold and silver come to mind, yet their are a number of other options that present equally compelling investment theses. One of those investments is timber, a commodity that has proven its worth over time……………………………………….Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

The Midwest remains under a record heat wave, sending shock waves through agricultural commodities. Supplies are threatened and crop failure is being discussed as summer wears on. June was the fourth-hottest month ever, according to the National Oceanic and Atmospheric Association.
Most analysts forecast higher prices, as the drought is expected to continue into late July. Soybeans have reached record highs, and corn is also near a record high on commodity futures exchanges………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

With global markets in a state of flux, currency-hedged ETFs have come into their own. This has certainly been the case with dollar-hedged ETFs, which have tended to outperform their unhedged counterparts this year.
The reason for the outperformance has been the strength of the dollar versus other currencies. So far this year, the greenback is up against a host of other currencies. Indeed, as of July 13, it was up 5.8% versus the euro, 1% versus Japanese yen, and 9.2% versus the Brazilian real………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Gold spot prices and the exchange traded funds that track their movements are beginning to dull as traders shift to a deflationary outlook.
SPDR Gold Shares ETF (GLD) has been lackluster in recent weeks. Gold weakened following Federal Reserve Chairman Bernanke’s reluctance to inject more money into the economy and failing to meet the market’s expectations for more quantitative easing……………………………………….Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

In the highly controversial and anticipated launch of the first physically-backed copper exchange traded fund, the U.S. Securities and Exchange commission is extending the consultation period for the new copper ETF offering.
After opposition escalated in the week ahead of lastThursday’s ruling deadline, SEC regulators asked JP Morgan Chase, the company that has filed for the new JPM XF Physical Copper Trust, copper fabricators and hedge funds, who oppose the creation, to weigh the merits of such a physically-backed copper ETF, reports Josephine Mason for Reuters………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

The Kotak Group-promoted ACE Commodity Exchange’s daily turnover touched a record Rs 1,332 crore on July 23. “The turnover on the exchange today hit a record high of Rs 1,332 crore,” the exchange statement said.
The ACE, which was launched as a national-level commodity exchange in 2010, offers trading in eight agri commodities — castor, chana, mustard seed, guar seed, guar gum, refined soy oil, soybean and sugar………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

The story about corn and its astronomical ascent in recent weeks is by now well-documented. In other words, corn is quickly becoming yesterday’s news as some traders start looking for the next big thing among agricultural commodities.
Soybeans have that potential. Supply and weather dynamics have aligned favorably for increased upside in soybeans, a product that the U.S. produces more of than any other country………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Agricultural commodity price spikes have never been friends to stocks like Dean Foods – down eight days in a row for a drop of more than 24%. But over the past few days, this selling has spread to some of the premium, 21st century grocers like Whole Foods Market and The Fresh Market.
These specialty food retailers are overexposed not just to potential price volatility due to rising commodity prices, but to the potential of customers turning away from healthier, more expensive food options as the economic recovery and job growth remain tentative………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

The government on Monday unveiled a detailed plan for its greenhouse gas emissions trading scheme, apparently seeking a smooth start of the program in light of persistent fears from industries about increased environmental costs.
A prior notice was issued on the enforcement ordinance which contains key details of a national carbon exchange system which will launch in January 2015. It is a follow-up measure after the National Assembly on May 2 passed the legislation for the so-called cap-and-trade scheme with near unanimity………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

Price control mechanisms and tightly regulated markets are among the measures China is considering for its emissions trading schemes in a bid to avoid the price volatility and scandals that have hit Europe’s $148-billion scheme.
As seven cities and provinces in China are preparing to launch the country’s first emissions trading schemes to halt the nation’s spiraling greenhouse gas emissions, the international carbon market is reeling from a huge over-supply and record low prices………………………………………..Full Article: Source

Posted on 24 July 2012 by VRS |  Email |Print

China is considering price control mechanisms and tightly regulated markets for its emissions trading schemes (ETS) in a bid to avoid the price volatility and scandals that have hit Europe’s ETS, as surveys show the country has reached European per-capita emission levels.
The schemes will aim to halt the nation’s spiralling greenhouse gas emissions, while the international carbon market is reeling from huge over-supply and record low prices………………………………………..Full Article: Source

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