Commmodities

[Muthukali]

Silver Hoard Near Record as Hedge-Fund Bulls Recoil: Commodities

At a time when hedge funds are the least bullish on silver in almost four years, investors’ holdings are near a record, siding with the analysts predicting a rally as central banks move to bolster growth.

Speculators cut bets on higher prices by 72 percent since the end of February, mirroring changes in their copper wagers, which turned bearish in May, U.S. Commodity Futures Trading Commission data show. Silver held in exchange-traded products climbed for three months and is now valued at $16.3 billion, according to data compiled by Bloomberg. Prices will average $33.02 an ounce in the fourth quarter, 18 percent more than now, the median of 13 analyst estimates compiled by Bloomberg show.

Hedge funds anticipate slowing growth will curb demand for silver, 53 percent of which is used in products from televisions to batteries. Investors and analysts are bullish on expectations central banks will do more to stimulate economies, expanding consumption and increasing the allure of precious metals as a store of value. Prices tripled as the Federal Reserve bought $2.3 trillion of debt in two rounds of so-called quantitative easing from December 2008 to June 2011.

“Since the beginning of the year it has reacted more like a base metal than a precious one,” said Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “The main negatives are still in industry. We’re waiting for more quantitative easing, and that would be really positive.”

Comex Bourse
After tumbling 29 percent in the four months to the end of June, silver is now little changed for the year at $27.98 on the Comex bourse in New York. The LMEX index of six industrial metals from aluminum to zinc fell 4.3 percent as gold advanced 3.6 percent. The Standard & Poor’s GSCI gauge of 24 commodities rose 2.2 percent since the start of January and the MSCI (MXWD) All- Country World Index of equities gained 7.9 percent. Treasuries returned 2.1 percent, a Bank of America Corp. index shows.

Silver is the most volatile metal tracked by Bloomberg and the price swings are masking what are already historically high prices. While the metal is trading 44 percent below the 31-year high of $49.845 set in April 2011, it averaged $30.38 since the start of January, on track for the second-highest annual level after last year’s $35.27. The two-decade average is $9.97.

For Coeur d’Alene Mines Corp., which gets about 65 percent of its revenue from extracting the metal, that will mean a 35 percent jump in profit to a record in 2012, according to the mean of six analyst estimates compiled by Bloomberg.

Interest Rates
Industrial demand for silver may strengthen as economic growth accelerates. The International Monetary Fund said July 16 it expects the global economy to expand 3.9 percent next year, from 3.5 percent in 2012. The European Central Bank and the Federal Reserve are already holding interest rates at record lows and the People’s Bank of China cut rates in June and July, the first reductions since 2008.

They may need to do more to bolster growth because U.S. factory output contracted in July for a second month, the Institute for Supply Management said Aug. 1. Manufacturing in the euro area shrank for a 12th consecutive month, a Markit Economics report showed the same day. China’s industrial-output growth was the slowest in three years in July, according to government data released Aug. 9.

Silver imports by China, the second-biggest user after the U.S., declined for three consecutive months through June, customs data show. Global fabrication demand, a measure that includes coins, jewelry and photographic film, will be little changed in 2013, Barclays Plc estimates. The bank expects supply to beat consumption for a fifth year, leaving a glut of 4,148 tons as mine production expands to a record 25,835 tons.

‘The Gap’
“Industrial demand may remain weak at least for another six months,” said Jochen Hitzfeld from UniCredit SpA in Munich, the fourth most-accurate precious metals forecaster tracked by Bloomberg in the past two years. “This makes the gap that investors have to absorb even higher,” said the analyst, who anticipates a fourth-quarter average of $28.

Investors bought 790 tons through silver-backed ETPs this year and now hold 18,086 tons, equal to more than eight months of global mine output, data compiled by Bloomberg show. They sold a net 812 tons from ETPs last year. Total assets are now 3 percent below the record 18,639 tons reached in April 2011. Investors probably will buy another 500 tons in 2013, Barclays and Morgan Stanley predict.

There are also signs that industrial demand is improving. Stockpiles in warehouses monitored by Comex fell 6.5 percent since July 3, reaching a four-month low on Aug. 8, bourse data show. Inventories had expanded every month since November to 147.1 million ounces (4,575 tons), the most since 1997.

More Bullish
Hedge funds may be getting more bullish, more than doubling their net-long position, or bet on higher prices, to 9,323 futures and options in the two weeks to Aug. 7, CFTC data show. That’s still 58 percent below the five-year average. Wagers fell to 2,888 contracts on June 26, the lowest since October 2008.

Options traders are divided. The most widely held contract confers the right to buy silver at $50 by November 2013 and the next two biggest allow holders to sell metal at $20 by the same time and November 2012, Comex data show. The five biggest gold options are all for purchases at prices higher than today.

Some investors may be deterred by silver’s price swings. The 100-day historical volatility for futures is at 31.1 percent, more than in gold, platinum, palladium and the main industrial metals traded on the London Metal Exchange, data compiled by Bloomberg show.

Analyst Forecasts
Coeur d’Alene will report net income of $125.9 million this year, from $93.5 million in 2011, the analyst estimates show. Shares of the Coeur d’Alene, Idaho-based company slid 17 percent to $19.95 this year. They will rally 34 percent to $26.74 in 12 months, according to the average of seven analyst forecasts.

Pan American Silver Corp. (PAAS), based in Vancouver, will make $302.5 million next year, from $234.8 million in 2012, the mean of six analyst estimates shows. Shares of the company, which got 51 percent of its revenue from silver in 2011, fell 28 percent to $15.79 in New York trading since the start of January. They will rise 43 percent to $22.63 in the next 12 months, the average of 14 forecasts compiled by Bloomberg shows.

Fed policy makers pledged to do more if needed on Aug. 1 and ECB President Mario Draghi said July 26 he would do whatever it takes to preserve the 17-nation euro. Lower interest rates increase the allure of precious metals because they generally earn investors returns only through price gains.

“People like me who have tremendous confidence in silver and are invested in the market see it rising once the easing begins,” said Jeffrey Sica, the Morristown, New Jersey-based president of SICA Wealth Management, who helps oversee about $1 billion of assets. “I expect an acceleration in the fear trade. Most of the hedge funds who sold will be back once the market gathers momentum.”

To contact the reporters on this story: Nicholas Larkin in London at [email protected].

To contact the editor responsible for this story: Claudia Carpenter at [email protected]

 

[Muthukali]

Gold prices down 100 baht - Thailand

The Gold Traders Association this morning set the buying prices at 23,604.12 baht per baht-weight for gold ornaments and 23,950 baht per baht-weight for gold bar.

The selling prices were set at 24,450 baht per baht-weight for gold ornaments, and 24,050 baht per baht-weight for gold bar.

The gold prices went down 100 baht from Saturday’s close.

The buying prices on Saturday closed at 23,695.08 baht per baht-weight for gold ornaments and 24,050 baht per baht-weight for gold bar.

The selling prices closed at 24,550 baht per baht-weight for gold ornaments, and 24,150 baht per baht-weight for gold bar.

 

[Muthukali]

Paulson, Soros Add Gold As Price Declines Most Since 2008

Billionaire investors George Soros and John Paulson increased their stakes in the biggest exchange- traded fund backed by gold as prices posted the largest quarterly drop since 2008.

Soros Fund Management more than doubled its investment in the SPDR Gold Trust to 884,400 shares as of June 30, compared with three months earlier, a U.S. Securities and Exchange Commission filing for second-quarter holdings showed yesterday. Paulson & Co. increased its holdings by 26 percent to 21.8 million shares.

Gold slumped 4 percent in the second quarter, the biggest such loss since Sept. 30, 2008. Prices fell as European Central Bank President Mario Draghi and Federal Reserve Chairman Ben S. Bernanke failed to increase stimulus measures, damping the outlook for global growth and demand for the metal as a hedge against inflation. The price is down 0.1 percent since June 30.

“It’s all about easing, and people are especially waiting for the Fed since investors expect prices will rise,” if the central bank announces more bond purchases, said Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. “People are willing to hold on to gold to see what the Fed will say.”

The metal surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing.

Paulson, 56, who became a billionaire in 2007 by betting against the U.S. subprime mortgage market, lost 23 percent in his Gold Fund through July as lower bullion prices and slumping mining stocks contributed to declines. Armel Leslie, a spokesman for Paulson, declined to comment. Michael Vachon, a spokesman for Soros, declined to comment.

Erased Gains
Gold erased its gains this year in May as investors favored sovereign debt and the dollar as economic growth slowed. The U.S. currency gained 3.3 percent against a basket of currencies last quarter.

Hedge funds have cut their net-long position, or bets on higher prices, by 66 percent from a record in August 2011. Their holdings fell to 85,510 futures and options on Aug. 7, according to the U.S. Commodity Futures Trading Commission.

Still, prices have rallied for 11 consecutive years, gaining more than sevenfold, as investors snapped up the metal after government and central bank stimulus programs boosted speculation that inflation would accelerate. The metal is up 2.3 percent this year.

Vinik, Mindich
Vinik Asset Management, the Boston-based hedge fund founded by Jeffrey Vinik, who formerly ran the Fidelity Magellan Fund (FMAGX), cut its entire stake in the gold ETF. On March 30, the fund held 2.3 million shares, SEC data show. Eric Mindich’s Eton Park Capital also sold all of its 739,117 shares last quarter, a filing showed.

Jonathan Gasthalter, a spokesman for Eton Park, declined to comment.

Moore Capital Management LP acquired 120,000 shares of SPDR Gold Trust in the second quarter, a filing showed yesterday. The hedge fund held no shares in the gold fund as of March 31.

Global holdings in exchange-traded products rose to a record 2,417.3 metric tons on Aug. 10, according to data compiled by Bloomberg.

Central banks and the International Monetary Fund are the largest bullion owners with 29,500 tons at the end of last year, or 17 percent of all mined metal, World Gold Council data show. Central banks have been net buyers for two straight years, the council said. Purchases this year will probably exceed the 456 tons added in 2011, the WGC estimates.

Holding On
“People expect prices to rise in the third quarter since historically it has been proved that it’s one of the best periods for gold, and investors who see easing coming in from various central banks are either increasing or holding on to their positions,” Donald Selkin, the New York-based chief market strategist at National Securities Corp., which manages about $3 billion of assets, said by telephone.

Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

To contact the reporter on this story: Debarati Roy in New York at [email protected]

To contact the editor responsible for this story: Steve Stroth at [email protected]

 

[Muthukali]

Gold prices down 150 baht - Thailand

The Gold Traders Association this morning set the buying prices at 23,452.52 baht per baht-weight for gold ornaments and 23,800 baht per baht-weight for gold bar.

The selling prices were set at 24,300 baht per baht-weight for gold ornaments, and 23,900 baht per baht-weight for gold bar.

The gold prices went down 150 baht from yesterday’s close.

The buying prices yesterday closed at 23,604.12 baht per baht-weight for gold ornaments and 23,950 baht per baht-weight for gold bar.

The selling prices closed at 24,450 baht per baht-weight for gold ornaments, and 24,050 baht per baht-weight for gold bar.

 

[Muthukali]

Gold prices up 100 baht - Thailand

The Gold Traders Association this morning set the buying prices at 23,649.64 baht per baht-weight for gold ornaments and 24,000 baht per baht-weight for gold bar.

The selling prices were set at 24,500 baht per baht-weight for gold ornaments, and 24,100 baht per baht-weight for gold bar.

The gold prices went up 100 baht from yesterday’s close.

The buying prices yesterday closed at 23,558.64 baht per baht-weight for gold ornaments and 23,900 baht per baht-weight for gold bar.

The selling prices closed at 24,400 baht per baht-weight for gold ornaments, and 24,000 baht per baht-weight for gold bar.

 

[Muthukali]

Gold Poised to Advance for Third Day on Stimulus Speculation

Gold is set to gain for a third day, paring a weekly loss, on speculation governments from China to U.S. may take steps to spur growth. Platinum rose to a five-week high after production disruptions at a mine in South Africa.

Gold for immediate delivery rose as much as 0.2 percent to $1,618.05 an ounce and was little changed at $1,615.20 at 11:05 a.m. in Singapore. The price is down 0.3 percent this week. December-delivery bullion was little changed at $1,618.60 on the Comex in New York.

U.S. jobless claims climbed by 2,000 to 366,000 in the week ended Aug. 11. Unemployment has been above 8 percent since February 2009, the longest stretch in the post-World War II era. Chinese Premier Wen Jiabao said Aug. 15 that there’s ”growing room for monetary policy operation.” Federal Reserve Chairman Ben S. Bernanke may talk about monetary options at a conference in Jackson Hole, Wyoming, at the end of the month.

The data are “supporting the view that the Fed will have to take some assertive action sooner rather than later,” said David Lennox, a resource analyst at Fat Prophets in Sydney. Bullion rose about 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing through June 2011.

Spot platinum gained as much as 0.6 percent to $1,450 an ounce, the highest since July 10, before trading at $1,446. The metal rallied 3.3 percent yesterday amid disruptions at the mine owned by Lonmin Plc, the third-biggest producer.

Several protesters were killed and others injured as police said they fired on striking miners near Lonmin’s Marikana mine yesterday in response to an attack. A six-day work stoppage had already led to deaths of 10 people before yesterday’s clash.

Platinum, used to make autocatalysts and jewelry, is set to climb 3.2 percent this week, the biggest gain since the five days ended June 15.

Spot silver was little changed at $28.2125 an ounce, heading for a 0.3 percent gain this week. Palladium climbed as much as 1.1 percent to $589 an ounce and was last at $588.50.

To contact the reporter for this story: Phoebe Sedgman in Melbourne at [email protected]

To contact the editor responsible for this story: James Poole at [email protected]

 

[Muthukali]

Oil Futures Slide in New York, Trimming Third Weekly Gain

Oil for September delivery slid as much as 0.4 percent in New York, trimming a third weekly gain.

Futures were 29 cents lower, or 0.3 percent, at $95.31 a barrel in electronic trading on the New York Mercantile Exchange at 8:30 a.m. in Singapore. They rose 1.4 percent yesterday to the highest in three months.

To contact the reporter on this story: Jacob Adelman in Tokyo at [email protected]

To contact the editor responsible for this story: Alexander Kwiatkowski at [email protected]

 

[Muthukali]

Speculators Hold Wagers at 11-Month High Amid Rally: Commodities

Speculators held wagers on rising commodities near the highest in 11 months as speculation that China will act to bolster its economy and signs of improving U.S. growth boosted prices for a third consecutive week.

Money managers’ net-long position across 18 U.S. raw materials was little changed at 1.2 million futures and options in the week ended Aug. 14, U.S. Commodity Futures Trading Commission data show. Investors increased bets on costlier corn, soybeans and cattle amid the worst U.S. drought in 56 years, reduced wagers on a rally in crude oil and became more bearish on the outlook for copper.

Chinese Premier Wen Jiabao said there’s “growing room for monetary policy operation” amid easing inflation, state television reported Aug. 15. Confidence among U.S. consumers unexpectedly improved in August and an index of leading indicators climbed more than forecast in July, separate reports showed Aug. 17. China is the world’s biggest consumer of everything from copper to pork to soybeans, and the U.S. is the largest user of crude and corn.

“China saying they’re going to have more economic stimulus is going to have as Jeffrey Sica, the Morristown, New Jersey- based president of SICAmuch of an effect on commodities as actually doing it,” said Wealth Management who helps oversee more than $1 billion of assets. “It’s going to psychologically increase where people think commodities should be priced.”

Feeder Rally
The Standard & Poor’s GSCI Spot Index of 24 commodities rose 1.7 percent last week, the most since July 20. The MSCI All-Country World Index of equities advanced 0.7 percent, and the dollar added 0.1 percent against a measure of six major trading partners. Treasuries lost 0.8 percent, according to a Bank of America Corp. index.

Thirteen of the 24 commodities tracked by S&P rose last week, led by crude and heating oil. Feeder-cattle futures jumped 1.9 percent, the most since mid-May.

The People’s Bank of China may cut benchmark interest rates before altering the required reserve ratios for lenders, because the latter tends to act for a longer period, the Securities Times reported Aug. 17. The country decreased the reserve- requirement ratio for banks three times since November and lowered interest rates in June and July while accelerating approvals for investment projects.

U.S. building permits, a proxy for future construction, increased to an 812,000 annual pace in July, the most since August 2008, the Commerce Department said Aug 16. Production at factories, mines and utilities increased 0.6 percent in July following a 0.1 percent gain the prior month, Federal Reserve data showed Aug. 15.

‘Bad Block’
While U.S. economic data has improved, the world is still “a risky place” as Europe’s fiscal and banking crisis worsens, said Vincent Reinhart, the chief U.S. economist at Morgan Stanley. “We’re the best house on a bad block,” he said in a Bloomberg Television interview Aug. 15. The bank cut its outlook for this year’s global growth to 3.2 percent from 3.5 percent on Aug. 16, and to 3.5 percent from 3.8 percent for 2013.

The 17-nation euro-area’s economy contracted 0.2 percent in the second quarter as a worsening debt crisis and budget cuts drove at least six countries into recession, the European Union’s statistics office in Luxembourg said Aug. 14.

European Demand
“World economies are a driver of demand and European demand in general is down,” said Steve Kahler, the chief operating officer at Teucrium Trading LLC, who helps oversee $140 million of assets. “Anytime you have a macro-economic situation like you have in Europe, it’s going to impact their overall demand.”

Investors pulled $53.1 million from commodity funds in the week ended Aug. 15, the first outflow in three weeks, according to data from Cambridge, Massachusetts-based EPFR Global, which tracks money flows.

“There’s definitely been an August slowdown,” said Brad Durham, a managing director for EPFR. “That’s why these numbers are not particularly decisive in either direction.”

Investors cut their bullish oil bets by 7.2 percent to 152,222 contracts, the biggest drop since May 8, the CFTC data show. Prices jumped 3.4 percent last week, the third consecutive gain, as improving U.S. economic data boosted the outlook for demand amid rising political tension in the Middle East.

Oil Production
The region was responsible for 33 percent of global oil production last year and held 79 percent of proved reserves, according to data from London-based BP Plc. (BP/)

Bullish platinum wagers dropped 17 percent, the most since May 22, to 7,096 contracts, the CFTC data show. Prices rallied 5.2 percent last week, the most since January, on concern that clashes between police and striking miners will spread in South Africa, the biggest producer of the metal. Police killed 34 striking workers at Lonmin Plc (LMI)’s Marikana mine on Aug. 16.

A measure of 11 U.S. farm goods showed speculators increased bullish bets in agricultural commodities by 0.6 percent to 851,875 contracts, the ninth gain in 10 weeks.

Money managers raised corn holdings for a 10th consecutive week, by 6 percent to 303,178 contracts. That’s the longest stretch of gains since at least June 2006, when the data starts.

Corn surged 60 percent since June 15, reaching a record $8.49 a bushel in Chicago on Aug. 10, as the drought parched millions of acres of U.S. cropland and pasture.

“Even modest demand growth in the current tepid environment will be sufficient to tighten markets,” Jeffrey Currie, the head of commodities research at Goldman Sachs Group Inc. in New York, said in an interview Aug. 14. “We see commodity prices rising.”

To contact the reporter on this story: Tony C. Dreibus in Chicago at [email protected]

To contact the editor responsible for this story: Steve Stroth at [email protected]

 

[Muthukali]

Bear Market in Tin Shuts 70% of Indonesian Capacity: Commodities

Indonesia idled about 70 percent of tin-smelting capacity in its biggest producing region amid a three-month bear market, curbing the world’s biggest exports and setting the stage for a global shortage.

Producers in Bangka-Belitung province closed about 24 of 28 smelters, the Indonesian Tin Mining Association estimates. Demand will exceed supply by 7,000 metric tons next year, equal to about 60 percent of global stockpiles tracked by the London Metal Exchange, Barclays Plc estimates. Futures will average $22,000 a ton in the fourth quarter, 19 percent more than the price of $18,500 today, according to the median of 12 analyst estimates compiled by Bloomberg.

Tin tumbled as much as 32 percent this year on concern that slowdowns from the U.S. to China to Europe will cut demand for the metal used in everything from cans to televisions and smart phones. Smelters in Indonesia, representing about 40 percent of global exports, started shutting down this month. That may help reduce the nation’s output by as much as 14 percent in 2012, according to St. Albans, England-based ITRI Ltd. The research group also expects a supply deficit in 2013.

“Most smelters have closed,” said Hidayat Arsani, the president of the Indonesian Tin Mining Association. “The price just cannot cover the cost. Ideally, the price should be around $21,000 or $22,000 a ton. If this continues, we can’t work anymore.”

Nickel Slumped
Metal for delivery in three months, the LME’s benchmark contract, fell 19 percent in the past year. Of the bourse’s six main industrial metals, only nickel and aluminum slumped more. The Standard & Poor’s GSCI gauge of 24 commodities gained 3.7 percent and the MSCI All-Country World Index of equities advanced 12 percent. Treasuries returned 3.3 percent, a Bank of America Corp. index shows.

Indonesian smelters also curbed production at the end of last year as prices fell as much as 44 percent in eight months. LME-monitored inventories declined 43 percent in the fourth quarter, the most since 2004. Futures rallied 19 percent in the first three months of this year before retreating once more.

LME stockpiles are shrinking again, reaching 11,630 tons yesterday, 50 percent less than a year ago. Canceled warrants, or orders to remove metal from warehouses, jumped to 6,350 tons on Aug. 14, the most since 1997, suggesting users are soaking up inventory, bourse data show. Barclays and Morgan Stanley estimate the market is in a third year of deficit.

Largest Producer
Any rebound would boost profit for PT Timah, (TINS) the world’s third-largest producer. Shares of the Pangkalpinang, Bangka Belitung-based company slumped 40 percent in the past year in Jakarta trading and will rally 17 percent to 1,521.25 rupiah in the next 12 months, according to the average of eight analyst estimates compiled by Bloomberg.

Slowing growth remains the biggest risk to tin, a market valued at $9.3 billion last year based on consumption. China, which represents about 47 percent of demand, expanded at the slowest pace in three years in the second quarter, and export growth in July collapsed to 1 percent from 11.3 percent in June. The 17-nation euro area contracted 0.2 percent in the second quarter after stagnating in the first three months.

“We’re very pessimistic about consumption,” said Sun Si, an analyst at Beijing Antaike Information Development Co., which has researched industrial metals for two decades. “Macro- economic risks remain, and while we expect an improvement from the end of the third quarter through the fourth quarter, it may not be significant.”

Historical Volatility
Forecasting tin prices may be harder than for other industrial metals because the volume is lower and price swings are common. The LME handled 157,296 tin futures and options last month, compared with 5.1 million for aluminum and 3.1 million for copper. Its 100-day historical volatility is at 26.4 percent, making it the second most-volatile after nickel, data compiled by Bloomberg show.

While a Bloomberg survey of 15 traders and analysts in June 2011 predicted a gain of about 15 percent to $30,000 by the end of the year, futures declined 27 percent. A separate survey in January anticipated a 20 percent gain to $26,000 this year. Prices advanced to $25,880 the next month, then retreated.

Exports from Indonesia dropped 6.4 percent to 55,613 tons in the first seven months of this year, according to data compiled by Bloomberg. Companies in Bangka-Belitung produced about 80,000 tons last year, out of a national total of 105,000 tons, according to data from the government and ITRI, which is predicting a contraction of as much as 15,000 tons in 2012.

Global Stockpiles
Next year’s predicted shortage may cut the ratio of global stockpiles to consumption to a record low of 1.7 weeks, from 2.6 weeks in 2012 and more than seven weeks in 2009, Barclays estimates. The bank expects world output to gain 0.3 percent to 354,000 tons in 2013, from growth of 0.6 percent in 2012.

Global mine supply fell 6 percent in the first five months and a second-half recovery is unlikely unless prices rally, according to Credit Suisse Group AG. Chinese output fell 4 percent to 82,471 tons in the first seven months, according to government data. Exports also may be disrupted by the nationalization of Glencore International Plc’s (GLEN) Colquiri tin and zinc operations in Bolivia and violence in the Democratic Republic of Congo, according to Barclays.

PT DS Jaya Abadi, one of the Indonesian smelters that curbed output, sent its 150 workers on leave until September, according to Sukito Gunawan, a director of the company. The producer in Pangkalpinang will review its options again that month, he said.

Breaking Up
Small-scale miners in Bangka-Belitung, who supply smelters with ore, have also stopped work. Ari Saputra, 22, said that his boss ordered a halt to mining at Batu Belubang beach more than a month ago, and he now earns a living breaking up the bamboo rafts used for dredging ore. The crews extract ore offshore and from riverbeds.

Speculation that policy makers in China and the U.S. will take more measures to support growth may lift prices, according to David Wilson, an analyst at Citigroup Inc. in London. The Federal Open Market Committee said Aug. 1 it will pump in fresh stimulus if needed to boost economic growth and create jobs. China reduced interest rates twice this year, and has cut banks’ reserve requirements three times since November.

Net Income
PT Timah will report an 8 percent gain in net income to 968.14 billion rupiah ($101.8 million) this year before profit drops 12 percent to 852.8 billion rupiah in 2013, the mean of as many as 12 analyst estimates compiled by Bloomberg shows. President Director Sukrisno said in an interview in Jakarta on Aug. 3 that Timah will slow tin sales to the spot market this year and expand stockpiles.

“We are surviving,” said Gunawan, the director at DS Jaya Abadi, who estimates monthly output this year averaged 300 tons out of capacity of 800 tons. “Some say that $17,700 is already the bottom and it will rebound again but it will depend on the European economy. If there’s no concrete action, and meanwhile China is reducing consumption, it may stay as it is.”

To contact the reporters on this story: Yoga Rusmana in Jakarta at [email protected]; Maria Kolesnikova in London at [email protected]

To contact the editor responsible for this story: James Poole at [email protected]

 

[Muthukali]

Gold prices up 50 baht - Thailand

The Gold Traders Association this morning set the buying prices at 23,755.72 baht per baht-weight for gold ornaments and 24,100 baht per baht-weight for gold bar.

The selling prices were set at 24,600 baht per baht-weight for gold ornaments, and 24,200 baht per baht-weight for gold bar.

The gold prices went up 50 baht from yesterday’s close.

The buying prices yesterday closed at 23,695.08 baht per baht-weight for gold ornaments and 24,050 baht per baht-weight for gold bar.

The selling prices closed at 24,550 baht per baht-weight for gold ornaments, and 24,150 baht per baht-weight for gold bar.

 

[Muthukali]

Commodities Begin Bull Market Amid U.S. Drought

Commodities entered a bull market as grains rallied amid the worst U.S. drought in half a century, while the euro climbed on optimism leaders will make progress taming the debt crisis. The Standard & Poor’s 500 Index failed to remain above a four-year high.

The S&P GSCI gauge of 24 raw materials rose 0.9 percent to 675.55 and has jumped 21 percent from this year’s lowest close on June 21. The euro strengthened 1 percent to a six-week high of $1.2488. Ireland’s nine-year bond yield dropped below 6 percent. Germany’s two-year yield rose above zero for the first time in more than five weeks. The S&P 500 slipped 0.4 percent to 1,413.17 after climbing as high as 1,426.68.

The drought that has parched fields in the U.S. Midwest sent soybeans to an all-time high on the Chicago Board of Trade today and the U.S. Department of Agriculture has cut its corn harvest forecast by 27 percent since June. As Luxembourg Prime Minister Jean-Claude Juncker, head of euro-area finance ministers, prepares to visits Greece tomorrow, optimism about Europe’s efforts to fight its crisis wasn’t enough to push the S&P 500 to a new high.

“We’ve come a long way and we’re approaching some long- term resistance points” in the stock market, said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management. His firm oversees $170 billion. “That’s causing people to pause a little bit. We’re going to need some real news to break through these levels and we’re not getting any right now.”

Commodities Gain
Corn, wheat and Brent crude have led the GSCI commodities gauge rally from the closing low on June 21, surpassing the 20 percent threshold that signals a bull market. Silver, soybeans and cotton climbed more than 2 percent to lead gains among 19 of the index’s 24 commodities today. Crude oil added 0.5 percent to $96.40 a barrel in New York.

In Europe, stocks and the euro increased as German Chancellor Angela Merkel and French President Francois Hollande prepare to meet in Berlin on Aug. 23, before holding separate talks with Greek Prime Minister Antonis Samaras later in the week. International creditors may adjust the interest on Greek bailout loans, Norbert Barthle, a senior lawmaker of Merkel’s party, was quoted as saying by the Passauer Neue Presse.

Market Leaders
The S&P 500 has rebounded 11 percent from a five-month low in June as gauges of energy, technology and financial companies climbed more than 12 percent to lead the advance. The index remains about 10 percent below its record high of 1,565.15 reached in October 2007.

Urban Outfitters Inc. rallied 18 percent today after posting second-quarter profit that topped analysts’ estimates as sales gained at all of its main brands. Nordson Corp., which makes equipment used to apply adhesives and sealants in manufacturing, gained 11 percent after forecasting fourth- quarter profit that exceeded projections.

Benchmark indexes pared gains as Apple Inc. (AAPL) retreated from a record, slipping 1.4 percent to $656.06.

Traders also awaited policy clues from the Federal Reserve. Minutes of the central bank’s last meeting will be released tomorrow, and the Fed will hold a summit at the end of the month in Jackson Hole, Wyoming.

Fed Bank of Atlanta President Dennis Lockhart said U.S. policy makers face a risk of easing too much while trying to spur a “disappointing” three-year-old economic recovery.

‘Too Aggressively’
“There is a risk to monetary policy being employed too aggressively and without effect to address economic problems that can be resolved only by fiscal reforms that involve making tough choices about the allocation of public resources,” Lockhart said today in a speech in Atlanta. While “monetary policy can exert a powerful positive influence on an economy,” it “is not a panacea.”

The Stoxx Europe 600 Index (SXXP) climbed 0.4 percent as more than three shares advanced for every one that declined. Julius Baer Group Ltd. added 3.1 percent as the wealth manager founded in 1890 reduced its rights offer to 500 million Swiss francs ($516 million) from 750 million francs. Straumann Holding AG (STMN) tumbled 13 percent, the most since 2008, after the world’s biggest maker of dental implants reported first-half profit that fell.

The euro appreciated against 15 of its 16 major peers, advancing 0.8 percent versus the yen. Concessions are possible for Greece so long as Samaras shows a willingness to meet the main targets set out in his country’s bailout program, a senior lawmaker with Chancellor Merkel’s party said.

Greek Bailout
A precedent for program adjustments was made with the first Greek bailout, when the country secured lower interest rates and longer maturities on bilateral loans than those originally set, Norbert Barthle, the Christian Democratic Union’s budget spokesman in parliament, said today in a telephone interview.

“I’m expecting to hear European leaders expressing their willingness in coming to a consensus in terms of what steps are necessary to make this thing work,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “Any kind of concession toward allowing Greece more time, more lenient terms in the interest rates or financing, would be welcome.”

German 10-year bonds fell a second day, pushing the yield five basis points higher to 1.56 percent. The rate on similar- maturity U.S. Treasuries was little changed at 1.80 percent.

Spain’s two-year note yield fell for a sixth day, dropping 10 basis points as the government sold 4.51 billion euros ($5.6 billion) of bills, meeting its maximum target. Portuguese 10- year bonds advanced, pushing the yield down 35 basis points to 9.25 percent, the lowest since May 2011.

Emerging-market stocks advanced after China injected record funds into its banking system.

The MSCI Emerging Markets Index rose 0.6 percent, the most since Aug. 9. The Shanghai Composite Index gained 0.5 percent. The People’s Bank of China conducted 220 billion yuan ($34.6 billion) of reverse-repurchase operations, the most in a single day, according to a trader at a primary dealer required to bid at the auctions. Benchmark gauges in Russia, India and Taiwan gained at least 1 percent.

To contact the reporters on this story: Rita Nazareth in New York at [email protected]; Inyoung Hwang in New York at [email protected]; Whitney McFerron in London at [email protected]

To contact the editor responsible for this story: Lynn Thomasson at [email protected]

 

[Muthukali]

Oil Gains Third Day on U.S. Stockpile Drop, Stimulus Speculation

Oil rose for a third day in New York after stockpiles declined more than analysts projected and speculation mounted that central banks in the U.S. and China will boost economic stimulus.

Futures advanced as much as 0.9 percent after closing at the highest level in more than three months yesterday. Crude inventories shrank 5.4 million barrels last week, the Energy Department said. They were forecast to drop by 250,000 barrels. Minutes from a U.S. Federal Reserve meeting showed many policy makers backed more monetary easing, while China’s central bank governor, Zhou Xiaochuan, said adjustments to interest rates and banks’ reserve requirements are still possible.

“We had pretty supportive news for commodity markets from the Fed,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The wording was explicit and it seems likely that there is going to be easing. Inventories are heading the right way and the decline was larger than expected.”

Oil for October delivery gained as much as 85 cents to $98.11 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.02 at 11:45 a.m. Singapore time. The contract yesterday climbed 0.4 percent to $97.26, the highest close since May 7. Prices are 0.8 percent lower this year.

Brent oil for October settlement gained 94 cents, or 0.8 percent, to $115.85 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $17.83, from $17.65 yesterday.

Fuel Stockpiles
Oil is extending its rally in New York after rising above long-term technical resistance. Futures yesterday settled higher than the 200-day moving average for the first time since May 10, according to data compiled by Bloomberg. Investors typically buy contracts when chart resistance is breached.

Gasoline inventories in the Energy Department report fell 962,000 barrels versus a forecast drop of 1.35 million in the Bloomberg survey. Distillate supplies, which include heating oil and diesel, rose 992,000 barrels, near the predicted gain of 1 million.

Members at the Federal Open Market Committee’s gathering that ended Aug. 1 indicated monetary easing will be needed “fairly soon” unless there are signs of a durable economic pickup, the minutes showed. Many participants said a new large- scale asset-purchase program “could provide additional support for the economic recovery.”

China Outlook
Zhou’s comments in Beijing leave the door open for further monetary stimulus after the People’s Bank of China added 220 billion yuan ($34.6 billion) to the banking system via reverse- repurchase agreements yesterday. Chinese Premier Wen Jiabao said last week that easing inflation allows more room to adjust monetary policy.

Oil briefly pared gains after a report showed Chinese manufacturing probably contracted at a faster pace this month. The preliminary August reading was 47.8 for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics. If confirmed, it would be the weakest level since November. A reading below 50 indicates a contraction.

The U.S. and China are the world’s biggest oil users, accounting for a combined 32 percent of the world’s consumption, according to BP Plc (BP/)’s Statistical Review of World Energy.

To contact the reporter on this story: Ben Sharples in Melbourne at [email protected]

To contact the editor responsible for this story: Alexander Kwiatkowski at [email protected]

 

[Muthukali]

Gold Bulls Strongest in Nine Months as Hoard Builds: Commodities

Gold traders are the most bullish in nine months after investors’ bullion holdings expanded to a record on mounting speculation that central banks will do more to bolster economic growth.

Twenty-nine of 35 analysts surveyed by Bloomberg expect prices to rise next week and three were bearish. A further three were neutral, making the proportion of bulls the highest since Nov. 11. Investors bought 46.9 metric tons valued at $2.5 billion through gold-backed exchange-traded products this month, the most since November, overtaking France as the world’s fourth-largest hoard when compared with national reserves.

Data released yesterday showed Chinese manufacturing at its weakest since November, signaling the nation may need more action to rebound from six quarters of slowing growth. European leaders are still struggling to contain the debt crisis. Minutes of the Federal Reserve’s most recent meeting showed many policy makers favor more stimulus. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011.

“Additional stimulus is inevitable, the question is how it comes,” said Charles Morris, who oversees about $2.5 billion of assets at HSBC Global Asset Management in London. “There’s no doubt about it, this is gold’s moment. All the long-term trend signals suggest that gold is in a very strong bull market.”

Gold’s Rally
Gold rose 6.2 percent to $1,661.35 an ounce in London this year, reaching a 16-week high yesterday and extending 11 consecutive annual gains. The Standard & Poor’s GSCI gauge of 24 commodities advanced 5.4 percent and the MSCI All-Country World Index of equities added 8.8 percent. Treasuries returned 1.8 percent, a Bank of America Corp. index shows.

Gold ETP holdings overtook France’s reserves on Aug. 21 after rising 85.5 tons this year to 2,442.3 tons, data compiled by Bloomberg show. Only the U.S., Germany and Italy hold more, International Monetary Fund data show. The IMF itself holds 2,814 tons of bullion, placing it between Germany and Italy.

Billionaire John Paulson raised his stake in the SPDR Gold Trust, the biggest gold ETP, by 26 percent in the second quarter and George Soros more than doubled his holdings, U.S. Securities and Exchange Commission filings showed Aug. 14. Investors will buy 150 tons through ETPs this year and next, Barclays Plc estimates.

Fed policy makers said further action would probably be needed “fairly soon” without evidence of a “substantial and sustainable” improvement in the recovery, according to minutes of the July 31-Aug. 1 meeting released Aug. 22. They next meet Sept. 12-13. Monetary easing can devalue currencies and accelerate inflation, boosting the allure of gold, which generally earns investors returns only through price gains.

Technical Indicators
Gold closed above its 200-day moving average on Aug. 22 for the first time since March, and that may be a “shot in the arm” for prices to rally toward $1,700, CMC Markets U.K. Plc said in a report that day. The metal held above the measure from the beginning of 2009 through the end of last year, a period in which it reached a record $1,921.15 in September.

Other technical indicators signal the rally could stall. Bullion’s 14-day relative-strength index (MXWD) was at 70.8 yesterday, above the level of 70 that indicates to some analysts who study such charts that a drop in prices may be imminent.

The increase in prices and ETP holdings has yet to be reflected in speculative wagers in U.S. futures markets. Hedge funds and other money managers cut bets on a rally by 58 percent since the end of February, U.S. Commodity Futures Trading Commission data show. The net-long position fell 4 percent in the week to Aug. 14 and is near the lowest since 2008.

Coin Sales
Physical demand is slowing elsewhere, with sales of American Eagle gold coins by the U.S. Mint dropping 49 percent to 30,500 ounces last month, the lowest since April. The mint sold 19,000 ounces so far in August, data on its website show.

Gold imports in India, last year’s biggest buyer, are set to fall as much as 50 percent in the September to December period from a year earlier, Prithviraj Kothari, president of the Bombay Bullion Association, said Aug. 21. Local prices reached a record yesterday, data compiled by Bloomberg show. That may crimp demand at a time when a below-average monsoon in the country threatens rural incomes.

Bullion should be supported toward the end of this year and the beginning of 2013 on rising seasonal wedding and festival demand in Asia, Ronald Stoeferle, a commodity analyst at Erste Group Bank AG in Vienna, said in a report e-mailed Aug. 22.

Commodities Surveys
In other commodities, 11 of 22 traders and analysts surveyed by Bloomberg expect copper to gain next week and five predicted a drop. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, added 1.3 percent to $7,699 a ton this year.

Five of 10 people surveyed said raw sugar will decline next week and four expect an increase. The commodity slid 15 percent to 19.83 cents a pound since the start of January on ICE Futures U.S. in New York.

Thirteen of 23 people surveyed anticipate higher corn prices next week and five were bearish, while 17 of 23 said soybeans will increase and three predicted declines. Corn jumped 28 percent to $8.285 a bushel in Chicago this year and reached a record $8.49 on Aug. 10 as the worst U.S. drought in half a century damaged crops. Soybeans set an all-time high yesterday and are up 43 percent this year at $17.2725 a bushel.

The S&P GSCI gauge of raw materials entered a bull market on Aug. 21, climbing more than 20 percent from this year’s lowest close on June 21. The global economy will expand 3.5 percent this year and 3.9 percent in 2013, the IMF estimates. Developing nations will grow 5.6 percent in 2012, it predicts.

“In the short-term, it would be difficult to see considerably higher commodity prices without quantitative easing from central banks,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “In the long term, I don’t think that commodities need quantitative easing measures, as they can rise without it. The economy should recover and demand in emerging markets is still relatively robust.”

To contact the reporter on this story: Nicholas Larkin in London at [email protected]

To contact the editor responsible for this story: Claudia Carpenter at [email protected]

http://bloom.bg/OzdY5N

 

[Muthukali]

Gold prices unchanged - Thailand

The Gold Traders Association this morning set the buying prices at 24,195.36 baht per baht-weight for gold ornaments and 24,550 baht per baht-weight for gold bar.

The selling prices were set at 25,050 baht per baht-weight for gold ornaments, and 24,650 baht per baht-weight for gold bar.

The gold prices unchanged from yesterday’s close.

 

[Muthukali]

Gasoline Jump With Oil on Disruptions to Supplies; Yen Weakens

Oil gained the most in a week as Tropical Storm Isaac shut Gulf of Mexico production and gasoline reached a four-month high after a refinery explosion in Venezuela killed 39 people. The yen fell and Japanese stocks rose on speculation policy makers will support economic growth.

Oil climbed 1.6 percent to $97.60 a barrel at 10:53 a.m. in Tokyo and gasoline jumped 4.1 percent to $3.2039 a gallon, the highest since April. Soybeans reached a record $17.605 a bushel. Japan’s Nikkei 225 Stock Average rose 0.4 percent and Australia’s S&P/ASX 200 Index (MXAP) added 0.3 percent. Samsung Electronics Co. slumped 6.8 percent after a U.S. jury ordered the company to pay more than $1 billion to Apple Inc. for infringing patents, dragging the MSCI Asia Pacific Index down by 0.1 percent. The yen slid 0.1 percent to 78.78 per dollar. Futures on the Standard & Poor’s 500 Index advanced 0.1 percent.

China’s Premier Wen Jiabao urged extra measures to support exports as evidence mounts that the nation’s slowdown is deepening. U.S. Federal Reserve Chairman Ben S. Bernanke said policy makers can take additional steps to boost the economy before they meet on Aug. 30 in Jackson Hole, Wyoming. About 24 percent of U.S. oil production and 8.2 percent of natural gas output from the Gulf of Mexico has been shut due to the storm.

“There’s a weather-related premium creeping into the market,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a newsletter in Sydney. The refinery halt “should be a temporary squeeze on prices,” he said.

Wen Comments
About two stocks rose for every one that rose on the MSCI Asia Pacific Index. Sharp Corp., a Japanese television maker that gets 20 percent of sales in China, climbed 2.6 percent.

Bernanke “might fuel hopes that down the road, we could still see monetary stimulus from the Fed,” Vasu Menon, head of content and research for wealth management at Oversea-Chinese Banking Corp. in Singapore, said in a Bloomberg Television interview. “Wen wants to make sure when he hands over the baton that China is in fairly good shape.”

China’s CSI 300 Index slid 0.9 percent as weaker earnings underscored concern about the slowdown. China Petroleum & Chemical Corp. (386), Asia’s biggest refiner, fell 0.5 percent after posting its lowest half-yearly profit since 2008 as the sale of fuels at state-controlled prices reduced earnings.

Industrial profits at Chinese companies fell 5.4 percent in July from a year ago, compared with a 1.7 percent drop in June, the statistics bureau said today. Policy makers have limited the scale of stimulus after interest-rate cuts in June and July as they seek to spur growth without fueling inflation.

“The third quarter is a crucial period for realizing full- year targets on export growth,” Wen said during an inspection tour of Guangdong, the nation’s biggest exporting province, the official Xinhua News Agency said Aug. 25.

Won, Samsung
South Korea’s won slid to a one-month low and bonds gained on concern that Europe is not making progress in resolving the region’s debt woes. German Vice Chancellor Philipp Roesler said in an interview with ZDF yesterday that there can be no additional help for Greece if reforms aren’t carried out.

The won fell 0.2 percent to 1,136.70, while the yield on the benchmark three-year government bond declined two basis points to 2.82 percent. The Kospi Index of shares dropped 0.2 percent as Samsung slumped the most in almost four years.

“Optimism boosted by Bernanke’s comments is countered by Greek concerns, and the Kospi extending declines will put downward pressure on the won,” said Han Sung Min, a currency trader at Busan Bank in Seoul.

The euro was lower against the majority of its 16 peers ahead of a report today that may show German business confidence fell to a two-year low, and before German Finance Minister Wolfgang Schaeuble meets his French counterpart today to discuss Greek budget targets.

Soybeans, Gold
November-delivery Soybeans rallied to a record as the worst U.S. drought in half a century hurt production in the world’s largest grower while export demand increased. Corn rose 1.1 percent and wheat climbed 1 percent.

Cash gold gained as much as 0.4 percent to a four-month high of $1,676.90 an ounce. Silver gained 1.1 percent and copper futures in New York rose 0.3 percent. The London Metal Exchange is shut today for a holiday.

To contact the reporters on this story: Glenys Sim in Singapore at [email protected]; Adam Haigh in Sydney at [email protected]

To contact the editor responsible for this story: Sandy Hendry at [email protected]

 

[Muthukali]

Gold prices up 100 baht - Thailand

The Gold Traders Association this morning set the buying prices at 24,286.32 baht per baht-weight for gold ornaments and 24,650 baht per baht-weight for gold bar.

The selling prices were set at 25,150 baht per baht-weight for gold ornaments, and 24,750 baht per baht-weight for gold bar.

The gold prices went up 100 baht from Saturday’s close.

The buying prices on Saturday closed at 24,195.36 baht per baht-weight for gold ornaments and 24,550 baht per baht-weight for gold bar.

The selling prices closed at 25,050 baht per baht-weight for gold ornaments, and 24,650 baht per baht-weight for gold bar.

 

[Muthukali]

Gold Drops on Speculation Bernanke Will Refrain From Stimulus

By Phoebe Sedgman - Aug 28, 2012 9:49 AM GMT+0800

Gold declined for a third day on speculation that Federal Reserve Chairman Ben S. Bernanke won’t commit the central bank to further stimulus in a speech this week even as investment holdings expanded to a record.

Immediate-delivery gold fell as much as 0.4 percent to $1,658.30 an ounce and was at $1,660.35 at 9:47 a.m. in Singapore. The price reached $1,676.90 yesterday, the highest since April, amid expectations of further easing from the Fed.

Bernanke probably won’t use the Aug. 31 speech at the Fed’s annual symposium in Jackson Hole, Wyoming, to suggest a third round of bond buying is imminent, according to JPMorgan Chase & Co. and High Frequency Economics. Members of the Federal Open Market Committee are monitoring unemployment and other U.S. data, and have been divided about whether to spur expansion.

“Markets are now saying ‘We’re getting close, let’s just wait and see,’” said David Lennox, a resources analyst at Fat Prophets in Sydney. “The data to date continue to suggest his wait-and-see approach is vindicated.”

The central bank’s Jackson Hole summit was the venue for a 2010 speech in which the Fed chairman foreshadowed a second round of so-called quantitative easing.

Holdings in gold-backed exchange-traded products rose to 2,451.63 metric tons yesterday, data tracked by Bloomberg show. The ETP holdings stand at the equivalent of 78.82 million ounces, compared to Italy’s 78.83 million ounces, Bloomberg data show.

December-delivery gold lost as much as 0.9 percent to $1,660.40 an ounce on the Comex in New York, and traded at $1,661.80. Spot silver was little changed at $30.685 an ounce after declining as much as 0.5 percent to $30.5638.

Platinum dropped as much as 0.7 percent to $1,533 an ounce and was at $1,534.50. Palladium fell as much as 0.5 percent to $647.50 an ounce, and was at $649.

To contact the reporter for this story: Phoebe Sedgman in Melbourne at [email protected]

To contact the editor responsible for this story: James Poole at [email protected]

 

[Muthukali]

Oil Rises to Four-Month High on Fed Stimulus Measures

By Mark Shenk - Sep 15, 2012 3:38 AM GMT+0800

Oil climbed to the highest level in more than four months as the Federal Reserve’s plan to buy mortgage securities boosted demand for commodities and stocks.

Futures rose above $100 after the Fed said yesterday that it would make additional purchases of debt in a third round of so-called quantitative easing. The move followed a European Central Bank bond-buying announcement on Sept. 6. Crude also gained on concern that protests in the Middle East and North Africa will disrupt shipments.

“All the factors that financial actors look at are pointing to higher prices,” said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “I’m surprised the price isn’t higher given the news this week.”

Crude oil for October delivery advanced 69 cents, or 0.7 percent, to $99 a barrel on the New York Mercantile Exchange, the highest settlement since May 3. Futures touched $100.42 in intraday trading. Prices increased 2.7 percent this week and are up 11 percent from a year ago.

Brent oil for November settlement climbed 78 cents, or 0.7 percent, to end the session at $116.66 a barrel on the London- based ICE Futures Europe exchange. The European benchmark grade’s premium over November West Texas Intermediate oil traded in New York was $17.33, up from $17.25 yesterday.

Global Benchmark
“There’s a lot of talk of WTI breaching $100 but it’s one of the cheapest light, sweet crude grades out there,” said David Greely, head of energy research at Goldman Sachs Group Inc. in New York. “Brent, which is more of a global benchmark, rose above $117. That’s what gasoline and diesel prices will move on.”

The Fed said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month and that it will probably hold the federal funds rate near zero “at least through mid-2015.”

The central bank bought a total of $2.3 trillion in bonds from December 2008 to June 2011 in two rounds of asset purchases known as quantitative easing. This follows ECB President Mario Draghi’s earlier statement that the bank has agreed to an unlimited bond-purchase program.

“What we’re seeing is primarily due to Draghi’s announcement on unlimited bond purchases last week and the Fed announcement yesterday,” said Mike Wittner, head of oil market research at Societe Generale SA in New York. “Prices have risen over the last month or two in anticipation of quantitative easing and now we’re seeing a second wave of buying.”

Unconventional Tools
Fed Chairman Ben S. Bernanke is enlarging his supply of unconventional tools to attack U.S. unemployment stuck above 8 percent since February 2009.

“This is a significant move by the Fed and it’s lending considerable support to commodity prices,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “A lot of money will be pushed out and commodities are looking like a good place to invest.”

The dollar dropped as much as 1.4 percent to $1.3169 against the euro, the lowest level since May 4. A weaker U.S. currency bolsters the appeal of raw materials to investors. The Standard & Poor’s GSCI Index of 24 commodities rose 1 percent at 3:37 p.m in New York.

Stocks rallied around the world on the Fed move. The S&P 500 (SPX) and Dow Jones Industrial Average increased 0.2 percent each. The MSCI Emerging Markets Index jumped 3.2 percent in its biggest gain since June.

‘Speeding Train’
“The Fed announcement was enough to encourage the risk-on trade and send us to the highest level in four months,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “There are reasons to be concerned about the sustainability of these prices, but you can’t stand in the way of a speeding train.”

The Sept. 11 attack on the U.S. consulate in Benghazi, Libya, in which the U.S. ambassador to the country and three colleagues were killed, bolstered tensions in the region together with demonstrations in Egypt, Tunisia, Sudan, Iran and Yemen. They were sparked by an anti-Islamic video.

The German embassy in the Sudanese capital Khartoum was set on fire after it was stormed by protesters today, German Foreign Minister Guido Westerwelle said.

Iranian Barrels
Output in Iran, the Organization of Petroleum Exporting Countries’ third-biggest oil producer, fell 350,000 barrels to 2.75 million barrels a day last month, the least since February 1990, according to a Bloomberg survey. Sanctions aimed at stopping the Islamic republic’s nuclear program have hindered its ability to export crude.

“We have a tight market in large part because of the loss of Iranian barrels,” Greely said. “The tension in the Middle East continues to escalate supply concerns.”

Countries in the Middle East and North Africa were responsible for 36 percent of global oil production and held 52 percent of proved reserves in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy.

Electronic trading volume on the Nymex was 754,521 contracts as of 3:37 p.m. Volume totaled 760,356 contracts yesterday, the highest level since June 29. Open interest was 1.61 million, the highest level since May 2011.

To contact the reporter on this story: Mark Shenk in New York at [email protected]

To contact the editor responsible for this story: Dan Stets in New York at [email protected].

 

[Muthukali]

Commodities Set for Longest Run of Weekly Gains Since ’10

By Chanyaporn Chanjaroen and Elizabeth Campbell - Sep 15, 2012 5:21 AM GMT+0800

Commodities posted the longest run of weekly gains since 2010 as the Federal Reserve’s third round of monetary measures to boost the U.S. economy spurred speculation that energy and metal demand will increase.

The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 1 percent to settle at 694.21 at 4 p.m. New York time, capping a seven-week rally that is the longest since October 2010. Industrial metals led the gains, and crude oil in New York topped $100 a barrel for the first time since May.

The Fed said yesterday it will expand holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month and keep the benchmark interest rate near zero “at least through mid-2015.” The GSCI index surged 92 percent from the end of 2008 through June 2011 as the Fed bought $2.3 trillion of debt in the first two rounds of quantitative easing and held borrowing costs at a record low.

“The current commodity rally follows assurances by the U.S., EU and China that policies are turning more accommodative,” Sijin Cheng, a commodity analyst at Barclays Plc in Singapore, said in an e-mail. “Market sentiments are quickly shifting to a risk-on mode.”

The GSCI index earlier reached 699.13, the highest since April 3. The gauge is up 7.6 percent this year as the MSCI All- Country World Index of equities climbed 14 percent. Treasuries returned 1.7 percent, a Bank of America Corp. index shows. The dollar dropped 1.7 percent against a basket of major currencies.

Wen’s Pledge
China’s Premier Wen Jiabao said on Sept. 11 that there’s more room for stimulus measures to support economic growth. The country has refrained from easing monetary policy since cutting interest rates in June and July. European Central Bank President Mario Draghi said on Sept. 6 that policy makers agreed to an unlimited debt-purchase program to tame the region’s debt crisis.

A measure of the five industrial metals in the GSCI index jumped 4.4 percent, the most since November 2011. Aluminum, traded on the London Metal Exchange, rose for the 11th straight session, the longest rally in at least 25 years. Nickel jumped 6.1 percent and lead climbed 5 percent, marking the biggest gains in 10 months.

Oil futures for October delivery rose 0.7 percent to settle at $99 on the New York Mercantile Exchange, the highest settlement since May 3. Earlier, the price reached $100.42, the highest since May 4.

Mideast Tensions
Escalating unrest in the Middle East and North Africa, which hold more than half of the world’s oil reserves, fueled concern supplies may be disrupted. Iran is raising tension by expanding its nuclear program, according to Robert Wood, the U.S. envoy to the International Atomic Energy Agency.

“Middle East geopolitical concerns should add a premium of about $5 to $6” to oil, said Jonathan Barratt, the chief executive officer at Barratt’s Bulletin, a commodity newsletter in Sydney.

Raw materials as measured by the S&P GSCI Enhanced Commodity Index Total Return may climb an additional 10 percent, led by oil-supply concerns, Jeffrey Currie, the head of commodity research at Goldman Sachs Group Inc., said on Sept. 6.

To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at [email protected]; Elizabeth Campbell in Chicago at [email protected]

To contact the editor responsible for this story: Steve Stroth at [email protected]

 

[Muthukali]

Bullish Wagers at 16-Month High as Citi Sees Gains: Commodities

By Joe Richter - Sep 17, 2012 11:17 AM GMT+0800

Bullish commodity wagers rose to a 16-month high just before the Federal Reserve’s pledge for more stimulus drove prices to a seventh weekly advance and banks from HSBC Holdings Plc to Citigroup Inc. forecast more gains.

Hedge funds and other speculators lifted their net-long positions across 18 U.S. futures and options by 0.3 percent to 1.33 million contracts in the week ended Sept. 11, the most since May 2011, U.S. Commodity Futures Trading Commission data show. Copper holdings surged 25-fold to 17,509 contracts, the biggest gain on record. Gold bets climbed to the highest since Feb. 28, and silver wagers advanced for a seventh week.

More than $1.4 trillion was added to the value of global equities last week after the Fed announced a third round of bond buying on Sept. 13 to revive growth. Inflation expectations measured by the break-even rate for five-year Treasury Inflation Protected Securities surged to the highest since May 2011. HSBC recommended investors increase their allocation to raw materials on Sept. 12. The U.S. stimulus plan came a week after China and Europe also announced stimulus measures.

“People will see commodities as something they want to hold, because they see these moves as inflationary,” said John Stephenson, who helps manage about C$2.7 billion ($2.8 billion) at First Asset Investment Management Inc. in Toronto. “It’s hugely bullish in the short run, now that all of the central banks seem to be singing from the same hymnal.”

Longest Rally
The Standard & Poor’s GSCI Spot Index of 24 commodities rose 2.6 percent last week, capping the longest run of weekly gains since October 2010. The MSCI All-Country World Index of equities jumped 2.9 percent, the most since January. The dollar slumped 1.8 percent against a measure of six major trading partners. Treasuries lost 0.9 percent, a Bank of America Corp. index showed.

Twenty of the 24 raw materials tracked by S&P advanced last week. Coffee surged 11 percent, the most since January 2006. Natural gas jumped 9.7 percent, the biggest gain since May.

Fed Chairman Ben S. Bernanke is trying to bring down an unemployment rate stuck above 8 percent since February 2009. The central bank said it will make open-ended purchases of $40 billion of mortgage debt a month and hold the benchmark interest rate near zero at least through mid-2015. European Central Bank President Mario Draghi said Sept. 6 that policy makers agreed to an unlimited bond-purchase program, the same week in which China approved a $158 billion subways-to-roads construction plan.

‘Supply Shocks’
Commodities will keep rising because of global stimulus actions and “possible supply shocks,” according to Fredrik Nerbrand, HSBC’s global head of asset allocation. The Fed’s plan for a third round of debt buying, known as quantitative easing, has “accelerated the momentum” for raw materials, Nannette Hechler-Fayd’herbe, Credit Suisse Group’s head of global financial markets research, said in a report Sept. 14. Prices will rise into the fourth quarter, Citigroup analysts led by Heath Jansen said in a report the same day.

The Fed’s plan won’t do enough to restore economic growth, according to James Dailey, who manages $215 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania.

U.S. industrial production shrank last month by the most since March 2009, Fed figures showed Sept. 14. Manufacturing shrank for a third month in August, the longest decline since the recession ended in 2009, a report from the Tempe, Arizona- based Institute for Supply Management showed Sept. 4.

China Slowing
China’s industrial output in August grew at the slowest pace in three years, the National Bureau of Statistics said Sept. 9, and imports unexpectedly fell, the customs bureau said the next day. The country is the world’s biggest consumer of metals and energy. The U.S., the biggest economy, is the top user of corn and crude oil.

The Fed “may be able to change the course of the Titanic by a little bit, but it can’t keep it from hitting the iceberg,” Dailey said. “The hope is that we not only get inflation, but that the policies will actually work in helping the economy. But the data continues to disappoint. It’s not clear how this policy would lead to better jobs numbers.”

Investors added $1.77 billion to raw-material funds in the week ended Sept. 12, the most in 32 weeks, according to EPFR Global. Precious metals accounted for $924 million of the inflows, the Cambridge, Massachusetts-based company said.

Bull Market
The S&P GSCI has jumped 25 percent since reaching this year’s low on June 22, driving the gauge into a bull market in the fastest turnaround since the depths of the financial crisis four years ago. The measure surged 92 percent from the end of 2008 through June 2011 as the Fed bought $2.3 trillion of debt in the first two rounds of quantitative easing and held borrowing costs at a record low.

Copper investors were the most bullish since early April, the CFTC data showed. Prices reached a four-month high on Sept. 14 in New York as the stimulus plans boosted demand prospects. Refined production of the metal fell short of consumption by 241,000 metric tons last year, the International Copper Study Group said last week. Supplies will also trail demand this year and next, Barclays Plc said in a report Sept. 12.

Gold bets jumped 14 percent to 165,724 contracts. Prices in New York, which climbed to a six-month high of $1,780.20 an ounce on Sept. 14, traded at $1,776.10 today. Crude-oil holdings rose for a fourth straight week to 203,324 contracts, the longest increase since February. Futures rose above $100 a barrel last week for the first time since May.

Platinum wagers climbed 11 percent to 24,205 contracts, the highest since May 2011. Futures rose for 10 straight sessions in New York. South African workers at a Lonmin Plc (LMI) mine and nearby operations of Anglo American Platinum Ltd. (AMS), the biggest producer, are holding protests over pay.

“The Fed statement does change things,” said Jack Ablin, who helps oversee about $60 billion of assets as chief investment officer of BMO Private Bank in Chicago. “It really shows the Fed’s unwavering desire to inflate asset prices, and commodities will certainly be part of that.”

To contact the reporter on this story: Joe Richter in New York at [email protected]

To contact the editor responsible for this story: Steve Stroth at [email protected]