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Latin America’s China Addiction (Part 2): Are Commodity Prices Showing Signs Of Recovery?

[Source] : Seeking Alpha

Click here to read part 1 of this story 

China’s economic soft-landing has had a significant impact on economic growth across the globe and particularly in Latin America where mining and commodities production are key drivers of economic activity. In the first article of this series the linkage between Latin American economic growth, commodities exports and Chinese economic growth was illustrated. This showed that China’s slowing economy and decreased demand for commodities has been a key catalyst for the fall in economic growth across the region. It has also been a key catalyst for the plunging share prices being experienced by many resource companies, which include some of Latin America’s largest publicly tradable companies like Vale (VALE) and Petrobras (PBR).

Market outlook on commodities growing more optimistic

However, markets have been taking a more optimistic view of China and commodities over the last month. This growing optimism is based on signs that the contraction in Chinese economic activity is easing along with increasing speculation that the Chinese government will take action to boost growth. This has led to considerable speculation that there will be a recovery in commodities prices, which should see a renewal of economic growth in Latin America.

One of the key drivers of this growing optimism has been the slowing contraction of the Chinese manufacturing sector, with the Chinese purchasing managers’ index (PMI), rising in July to a five month high. There has also been renewed confidence in the iron ore mining sector with Australia’s third largest iron ore producer Fortescue Metal’s Group (FSUMF.PK) recently reporting an 8% increase in profit, along with positive statements from both Rio Tinto (RIO) and Vale concerning the future direction of iron ore prices. However, with the exception of crude oil it appears that this optimism is misplaced with commodity and basic materials prices continuing to fall.

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Jim Rogers (commodity guru) talks, people (should) listen

China Easing Moves ‘A Mistake’: Jim Rogers 

[Source] : CNBC

Image courtesy of Wikicommons

“I think they’re a mistake and there’s still inflation in China,” said Rogers on CNBC Asia’s “Squawk Box” on Wednesday, referring to cuts in China’s reserve requirement ratios (RRR) and interest rates earlier this year.

“Yes, the property bubble has popped and prices have started coming down but not enough in my view. The most recent statistics show that Chinese property market is starting to recover,” he said.

Click here to read the complete article

Jim Rogers Says Silver Is A Better Investment Than Gold

[Source] : Seeking Alpha

By Jared Cummans

Jim Rogers is easily one of the most famous investors of all time. His astounding track record has led him to become one of the most successful traders ever, earning deep respect throughout the financial world. Better yet, Rogers is not the least bit shy about speaking his mind, whether he is right or wrong. Some of his previous statements included the fact that anyone who doesn’t invest in commodities is a fool, that gold will surely drop 20% from its current levels, and now, Rogers has stated that silver is a better investment than gold.

Gold investing has long dominated the precious metals space, as investors have used this ultra-popular metal as both a trading/speculative instrument as well as an integral part of a longer term strategy. While silver still has a large presence in the financial world, it is not often that a big name steps into the limelight and touts this white metal over its gold counterpart.

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China sends ripples through global financial, commodity and FOREX markets

China made a few noteworthy headlines this weekend, sending ripple affects through everything from Forex markets to cotton trading desks around the world.

Hong Kong Wins Battle for LME

HONG KONG—Hong Kong Exchanges & Clearing Ltd. 0388.HK +2.65% said Friday it entered into a deal to buy the London Metal Exchange for £1.39 billion (US$2.16 billion), giving the city’s stock exchange instant entry into commodities trading amid China’s growing appetite for metals.

It muscled out shortlisted IntercontinentalExchange Inc. ICE +4.67% as the allure of China swung the balance. But the deal still awaits approval from the U.K.’s Financial Services Authority and shareholders representing at least 75% of LME’s ordinary shares.

Click here to read the full article from the WSJ

 

China’s Cotton Order Jolts Market

NEW YORK—Cotton futures reached a nearly one-month high, rising nearly 10% this week after China shocked the market with a huge purchase from the U.S.

The sale indicated that demand isn’t dead for the widely used fiber—especially from China, the world’s largest cotton consumer. Prices had touched a 31-month low earlier in the month due to overproduction and a sagging economic outlook.

The purchase “caught people off-guard,” said independent cotton analyst Mike Stevens.

Click here to read the full article from the WSJ

 

Deutsche Bank Makes Cross-Border Yuan Payment

BEIJING—A pilot scheme intended to make it easier for companies to settle trade in the Chinese yuan officially kicked off Friday, with Deutsche Bank AG completing the first cross-border yuan payment transaction under the program.

The new program, launched by the Shanghai branch of the People’s Bank of China on a trial basis, aims to streamline the process for settling cross-border trade in the yuan by exempting qualified companies from submitting original trade documentation to support each payment. Information on the program has recently been circulated among banks in Shanghai, bankers said, though the central bank hasn’t yet made a public announcement on the initiative.

Click here to read the full article from the WSJ

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Rare question and answer Xinhua Exclusive on China- Latam relations

Thank you Xinhua News. Please click here to access the article from Xinhua News.

 

China to deepen ties with Latin-America
2012-01-17 17:26     chinadaily.com.cn

Yang Wanming, director-general of the the Department of Latin American and Caribbean Affairs of the Chinese Foreign Ministry, exchanged views with chinanews.com readers online on Tuesday afternoon.

 

China to deepen ties with Latin-America

Yang Wanming, director-generalof the Department of Latin American and Caribbean Affairs of the Chinese Foreign Ministry, answers questions from chinanews.com readers online on Jan 17, 2012. [Photo/Chinanews.com]

 

Topic: China-Latin America cooperation in culture

Q: How do China and Latin America cooperate in the field of culture?

A: China has opened 32 Confucius institutes in Latin America, covering almost all Latin American countries. Both sides also send art troupes to visit one another and conduct people-to-people exchanges. Many Chinese people like their football, music and dances and engage in studying Spanish and Portuguese. Many Chinese books have also been translated into Spanish and sold in Latin America.

Topic: Cooperation in energy

Q: What’s the current situation with Sino-Latin American energy cooperation? Some people think China is plundering energy resources there and uses it as a way to curb the US.

A: China is trying to carry out comprehensive cooperation with Latin American countries and its efforts have been well welcomed by them. The cooperation not only benefits the two parties, but also contributes to global peace, stability and prosperity. It started late and is on a relatively small scale, but has been developing fast. China imported 20.73 million tons of crude oil from Latin American countries in 2010, which accounts for 8.7 percent of China’s total import in that year. Venezuela has become China’s 4th largest oil provider. The two parties will explore cooperation on new energy. It’s totally based on equality and mutual benefit and will do no harm to the third party.

Topic: US view on China-Latin America relationship

Q: The relationship between China and Latin American countries has developed so fast. What do you think of the feeling in the US to this?

A: In recent years, the independence of Latin American countries is growing and its economic growth momentum becomes more diverse than before.

The rapid development of China-Latin America relations is on the basis of mutual benefit and win-win for both sides and is within the needs of Latin American countries’ diversified diplomacy and development strategy.

It will not only benefit development of both, but also contribute to the world’s stability and development.

China and the US have already established a consultation mechanism on Latin-America, and through four different consultations, the two parties have enhanced their mutual trust on this issue.

And the US has repeatedly stressed in their consultations that strengthening relations between China and Latin American countries will be good for Latin-America’s stability and development.

Topic: Chinese workers kidnapped in Colombia

Q: It was reported that several Chinese employees were kidnapped in Colombia by unidentified armed militants. How are they now? Could you release some information about the rescue efforts?

A: Four Chinese workers were kidnapped by some unknown armed militants in Caquetá province in Colombia on June 8, 2011. We have urged the Colombia authority to spare no effort to carry on the rescue work under the premise of guaranteeing the safety of hostages. Since then, the Chinese embassy in Colombia has kept in close cooperation and contact with Colombia’s relevant departments. The rescue work has not finished yet, but the safety of the four hostages can be guaranteed. Chinese companies are facing more risks as they go global on a larger scale. We need to increase our political backup and diplomatic guarantee to them, strengthen the consular protection and safeguard their legitimate interests. Meanwhile we advise Chinese people in Latin America to improve their sense of safety and precaution.

Q: How about China-Mexico relations?

A: China and Mexico are both developing countries and are working at enhancing people’s living standards. They hold the same positions on many international issues and regularly cooperate on these..

China and Mexico have some trade friction over trade imbalance problems, but we hope both sides can deal with the problems reasonably and from a development point of view.

We hope both can take active measures to promote the diverse, comprehensive and healthy development of the two countries’ economic and trade relations.

February 14 marks the 40th anniversary of diplomatic relations between China and Mexico. We believe the relations can become more comprehensive, steadier and healthier with the two countries’ joint efforts in the future.

Q: Can you talk about the relationship between China and Brazil?

A: Brazil is one of the biggest countries in Latin America and one of the emerging powers in the region. The China-Brazil relationship is one of the most important between China and Latin America.

In recent years, the strategic partnership between China and Brazil has made considerable progress. They maintain a good momentum of high-level exchanges and the political mutual trust is deepened.

Their economical cooperation is also deepening constantly, which has brought tangible benefits to people of both countries. Bilateral trade volume exceeded $80 billion in 2011. Investment cooperation in finance, energy, steel, and machine manufacturing has also made great progress, and is expanding constantly.

China and Brazil have active exchanges in science, technology and culture as well.

The cooperation in the fields of Earth resource satellites, agricultural technology and aviation is progressing continuously. And the cooperation in culture and education is also very close.

China’s Confucius Institute Headquarters opened two Confucius Institutes and a Confucius school in Brazil and Brazil’s important media institutions have sent many journalists to work in China.

China and Brazil are both developing countries and have broad and consistent interests on major international issues. The Chinese government attaches great importance to relations with Brazil and believes the two countries’ cooperation in various fields will make great progress with their joint efforts.

 

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Commodity Markets; weekly roundup

Rogers International Commodity Index

Rogers International Commodity Index (Oct 26-30, 2009)

(Oct 26-30, 2009)

VALUE as of 10/30/09

Rogers Internatioanl Commodity Index

21.7

Dow Jones-UBS Commodity Index

131.86

METALS

Copper (USD/lb)

2.92

Zinc (USD/lb)

0.97

Aluminum (USD/lb)

0.83

Lead (USD/lb)

1.03

Nickel (USD/lb)

8.22

Gold (USD/oz)

1045.7

Silver (USD/oz)

16.34

Platinum (USD/oz)

1329.00

Palladium (USD/oz)

325.00

ENERGY

Crude Oil (USD/bbl)

76.99

Natural Gas (USD/MMBtu)

5.012

AGRICULTURE

Corn (USD/bu)

366

Rice (USD/cwt)

14.36

Soybeans (USD/bu)

978

Wheat (USD/bu) *CBT

494

Live Hog (USD/lb)

56.7

Live Cattle (USD/lb)

85.68

*metals commodity prices obtained via Kitco Metals
*energy commodity prices obtained via Yahoo Finance
*agriculture commodity prices obtained via Yahoo Finance
*wheat futures via Bloomberg

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As promised… China steps up overseas investments in commodities

Aug 14, 2009 — State-owned Yanzhou Coal Mining Co. buys Australia’s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion), reports Bloomberg

Aug 13, 2009 — Sinochem Corp., China’s biggest chemicals trader, makes an offer to buy to buy Emerald Energy Plc for 532 million pounds ($881 million). Giving Sinochem Corp., access to oil fields in Syria and Colombia, reports Bloomberg

“The Chinese don’t have enough nickel, don’t have enough oil, and they don’t have enough copper. There’s a crisis coming. They are going around the world buying up what they can. They’re preparing for a rainy day.” Jim Rogers, chairman of Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist”, said in a telephone interview yesterday.

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[Commodities] — Is the rally over?

Commodity Rally May Falter on Supply, Speculators

June 29 (Bloomberg) — Commodities, heading for the first quarterly advance in a year, may struggle to repeat their gains in the next three months as supply expands and speculators sell.

Nickel may average 29 percent less in the third quarter than now, crude oil 16 percent, copper 14 percent and gasoline 10 percent, analyst estimates compiled by Bloomberg show. Hedge funds and speculators cut their bets on higher prices by 23 percent in the two weeks ended June 23, the first back-to-back drop since March, based on an index using U.S. Commodity Futures Trading Commission data. The World Bank said June 22 the global recession will be deeper than it expected three months ago.

“Commodities have gotten a little ahead of themselves,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. “As long as there’s uncertainty about growth, that’s going to be headwind commodities won’t be able to overcome.”

Commodities rose 14 percent this quarter, led by nickel, oil and sugar, after three consecutive declines, according to the Reuters/Jefferies CRB Index of 19 raw materials. This year’s 57 percent advance in oil costs, combined with widening budget deficits, may cause another global slump, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

Click here to access the full article from Bloomberg

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Laying the foundation for a tri-nation Boliviaran mining giant in South America

[South-South Cooperation] – Ecuador, Venezuela, Bolivia

The Ecuadorian government announced plans yesterday of the establishment of a joint mining company with the country of Venezuela and possibly Bolivia. You can read all the vague details in this article from Chinamining.

“We are going to build a great mining company in association with Venezuela and perhaps with Bolivia to exploit some veins of mine ore returned to the State from private hands,”said Ecuadorian Minister of Mines and Petroleum Derlis Palacios.

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Jim Rogers: "We are going to have serious food shortages in a few years"

Jim Rogers sits down with Bloomberg host Haslinda Amin in his home base of Singapore. Haslinda gets a full twenty minutes to test his patience while she asks what his opinions are on investing in a variety of investment categories. Commodities. Currencies. North American Natural Gas. Yen Carry Trade. Agriculture. Equities. ETF’s.

As usual, Jim Rogers is sticking to what he knows best-raw materials. If you’re a new reader, or have not heard of Jim Rogers definitely run a search on the right of his name to bring up past posts and videos including him.

Part 1 /3

[youtube=http://www.youtube.com/watch?v=2x7LbA9hx6Y&hl=en&fs=1&color1=0x2b405b&color2=0x6b8ab6&border=1]

Part 2 / 3

[youtube=http://www.youtube.com/watch?v=kPxKuKrdNTM&hl=en&fs=1&color1=0x2b405b&color2=0x6b8ab6&border=1]

Part 3 / 3

[youtube=http://www.youtube.com/watch?v=oWLjEEEIEL0&hl=en&fs=1&color1=0x2b405b&color2=0x6b8ab6&border=1]

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