Guide to Commodities 2013

The recent fortunes made by investors in rare earth metals and gold are just two shining examples of what an extremely profitable investment class commodities can be. From aluminum and platinum to zinc and silver, oil and gas to cocoa and wheat, this Guide to Commodities from the Economist Intelligence Unit is a comprehensive overview of the forces at work in the world of commodities.

The price volatility of so many commodities over the past decade has underlined their economic importance and how dependent we are on them: the price of gold has soared to new peaks (before tumbling in the last few weeks) as currencies have endured a crisis of confidence, demand from China has pushed metal prices up, instability in the Middle East and North Africa has had its effect on the oil price and food prices have been increasing in parallel with worries about whether there is enough to feed the world. Read the rest of Guide to Commodities 2013 » » »

The Multiplier Effect

If you want to really use your buying power to make a environmental difference, make sure that any “green” criteria for vendor selection are widely publicized so that your suppliers’ competitors hear about them too.
In this way, encouraging a change in one supplier can have a “multiplier effect” on many others.

via Negotiating Nugget | Propurchaser.

Oversupply Driving Down Raw Materials Costs

So far this year, U.S. oil futures are down 13%, while cotton prices have fallen 19%. Sugar is 20% lower. Copper is off 21% from its February 2011 record.
A glut of raw materials from crude oil to copper to Palm Oil and cotton is driving down prices and dimming the outlook for commodities over the next few months.

Stores of crude in the developed world are forecast to end 2012 at a two-year high, thanks largely to a slowdown in world demand growth and an unexpected surge in production in the U.S. In China, copper stockpiles are at record levels as the country’s slowing economy limits use of the metal. Cotton bales held in warehouses are predicted to reach an all-time high next year.

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Commodities Erase 2012 Gain on Global Economic Woes

Commodities declined, erasing this year’s advance, on speculation that demand for energy, industrial metals and some agricultural products will slump because of the sluggish global economy.

Cotton futures fell the most in 10 weeks, and crude oil dropped to the lowest since mid-July. Gasoline declined for the ninth straight session, the longest slump since at least October 2005. Copper dropped to the lowest since Sept. 7.

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Steel: Demand to slow down in 2013

The Worldsteel Association, which includes almost all of the global steel producers, released its October 2012 Short Range Outlook (SRO) for 2012 and 2013. Steel demand will slow down further in 2013: it will only be 2% in 2012, 3, 2% in 2013, against 6% over last year.

What strikes first is the slowdown in emerging countries: 3% additional steel consumption in 2012, a little more next year. It is far from the 10% growth a year for the last ten years. Among these countries, it’s in China that the growth will slow down most. Steel demand in China is expected to increase by 2.5% to 639.5 Mt in 2012 after 6.2% growth in 2011. In 2013, Government stimulus measures are likely to moderately improve the economic situation. This follows sluggish exports resulting from the global economic slowdown. Thus China’s apparent steel use is expected to rise by 3.1% and will reach 659.2 Mt in 2013.

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USDA releases new Crop Production report

USDA released today its October Crop Production report which shows corn production down slightly from September forecast, soybean production up 9% and cotton production up 1%.

Corn production is forecast at 10.7 billion bushels, down slightly from the September forecast and down 13 percent from 2011. This represents the lowest production in the United States since 2006. Based on conditions as of October 1, yields are expected to average 122.0 bushels per acre, down 0.8 bushel from the September forecast and 25.2 bushels below the 2011 average. If realized, this will be the lowest average yield since 1995. Area harvested for grain is forecast at 87.7 million acres, up less than 1 percent from the September forecast and up 4 percent from 2011. Acreage updates were made in several States based on administrative data.

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Corn supply down, prices jump

Corn supply hit its lowest in eight years as the USDA reported in the Grain Stocks Report and Small Grains Summary Report , signaling stronger demand for the grain. So, Corn prices surged the most in three months.

Corn Stocks Down 12 Percent from September 2011

Old crop corn stocks in all positions on September 1, 2012 totaled 988 million bushels, down 12 percent from September 1, 2011. Of the total stocks, 314 million bushels are stored on farms, down slightly from a year earlier. Off-farm stocks, at 675 million bushels, are down 17 percent from a year ago. The June – August 2012 indicated disappearance is 2.16 billion bushels, compared with 2.54 billion bushels during the same period last year.

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Commodity Index Extends Slide to Lowest Since October

“We’re getting very weak data going into June and the markets don’t like it. Economies are slowing and demand will fall.”
Commodities extended their decline, falling to the lowest level in almost eight months, after U.S. employers created fewer jobs than economists estimated and Chinese manufacturing slowed.

Crude oil for July delivery fell $3.30, or 3.8 percent, to $83.23 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 7. Prices fell 17 percent in May, the biggest slide since December 2008.

Brent oil for July settlement slipped $3.44, or 3.4 percent, to $98.43 a barrel on the ICE Futures Europe exchange in London. It was the lowest close since Jan. 27, 2011. Brent is down 8.3 percent this year.

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Commodities Rally Over?

The changes to the supply-and-demand picture, and the recent declines in prices, have ignited a debate over whether the so-called super-cycle in commodities is over—or, at least, is heading for the back-end of the cycle. Raw-materials markets are notorious for going through such periods of scarcity and then glut, sending prices on wild rides.

Commodities fell to nearly two-year lows last week, measured by a widely used benchmark, prompting investors to ponder whether the massive rally that began in 1999 may be faltering.

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Commodities Erase Gain for Year in Worst Run Since 2008

Commodities fell for an eighth straight session, wiping out gains for the year, after data from Asia showed a further slowdown in industrial output.
The Standard & Poor’s GSCI Spot Index of 24 commodities headed for its longest slump since December 2008.

It dropped to 640.46, the lowest since Dec. 22. As of 3:15 p.m., the measure had fallen 0.9 percent at 641.92, down 0.5 percent since Dec. 31. The last annual decline was in 2008, before a rally that saw the gauge double over the next three years.

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