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Commodities Briefing 27.May 2016

Posted on 27 May 2016 by VRS |  Email |Print

Only hours after Brent oil prices shot past $50-a-barrel for the first time in months, Japanese Prime Minister Shinzo Abe warned that the past few difficult years for commodities in general could be a red flag for another global financial crisis. Abe made the comments while hosting a meeting of the Group of Seven leaders on Thursday in Ise-Shima, Japan, according to a report from Reuters.
Abe showed his fellow leaders data charting a 55% drop in global commodity prices between June 2014 and January 2016. He said that’s similar to how much prices fell between July 2008 to February 2009 after Lehman Bros. went bankrupt and triggered a global financial crisis………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Despite appearances that the entire commodities sector is continuing on a major downslide, one resource remains steadfast – sugar. Sugar has been one of the best-performing commodities so far this year – largely driven by a global supply shortage, after wallowing in a five-year surplus.
Supply woes are pushing futures prices higher, while demand continues to increase on a global basis. In fact, the International Sugar Organization – along with most analysts – forecast global deficits through 2017………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Oil’s advance through $50 a barrel in line with a softer dollar is energising the commodity sector, but bourses are otherwise under pressure as the latest global rally struggles to maintain momentum.
After a mixed Asia-Pacific session, the pan-European Stoxx 600 equity index is slipping 0.2 per cent while US futures point to the S&P 500 easing 0.1 per cent to 2,088, writes Jamie Chisholm. The cautious mood in stocks is encouraging buyers of government bonds, nudging down Treasury yields. The gold price is higher, and so is the yen………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Data suggests global glut is easing due to fall in US output and supply disruption in Canada, Libya and Nigeria. Oil prices have broken through the $50 per barrel mark for the first time in almost seven months after storage figures suggested that the glut in global crude supplies was easing.
Many analysts have predicted that the recovery, which will help the North Sea oil industry and could steady the global economy but hurt motorists through higher petrol costs, could be short-lived. The price of Brent crude edged up 0.9% to $50.2 a barrel, boosted by data from the US government showing a sharper than expected fall in crude stocks last week, and it later fell back slightly………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Oil prices, which have been on a jagged rise to near $50 a barrel, are poised to hit a sweet spot for global growth, traders, economists and investors say. On Thursday oil prices rose above $50 a barrel for the first time since November as a combination of supply disruption and declines in U.S. oil inventories raised hopes the oversupplied market was inching toward a better balance.
That puts crude back within a range between $50 and $60 in which almost everybody benefits, economists and investors say. In a so-called goldilocks scenario, oil is not too pricey for consumers and industry, which have benefited from cheap crude for almost two years. But it is priced well enough to help profits in the beleaguered oil industry………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

A series of unexpected disruptions in the world oil market has driven crude to the $50 per barrel level more swiftly than expected — a factor that makes OPEC and its meeting next week less relevant. Both international Brent and West Texas Intermediate crude futures crossed above $50 Thursday, though analysts expect prices to temporarily head lower again in the next couple of months as some supply returns and demand drops off as it does every year after summer driving season peaks.
By year end, however, $50 or above is expected to be the norm. Oil production in the last several weeks has dropped by several million barrels a day due to everything from forest fires in Canada to rebel attacks in Nigeria………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Abdalla Salem el-Badri has been set to retire since 2013 but has stayed on because the fractious oil cartel has been unable to agree a new leader. The Organization of the Petroleum Exporting Countries is likely to choose a new secretary-general at its meeting next week, the only concrete action the cartel is expected to take, said national delegates of the group.
The 13-nation group that controls more than a third of the world’s crude-oil output has been unable to agree on much since petroleum prices began a long swoon nearly two years ago. Once able to swing production up or down to influence prices, OPEC has stayed on the sidelines during this downturn as an American oil boom floods the market and prices remain far below what the group’s members want………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Saudi Arabia is not politicizing the oil problem and is acting solely on economic reasoning in discussion of oil prices and production output, Saudi Foreign Minister Adel al-Jubeir said Thursday. In an interview with Russia Today television, al-Jubeir dismissed assertions that Riyadh was using the oil issue to achieve political goals and insisted that Saudi Arabia approached the current situation on the global oil market solely from the economic standpoint.
“The market determines the oil price depending on demand and offer. The goal of Saudi Arabia is to protect its share of the market and not to support producers that have high oil prices,” the minister stressed………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Specialist gold funds have clocked up incredible gains since the start of the year, with some doubling investors’ money. The rally, thanks to a 20pc rise in the gold price, puts them among the best performers of the 3,500 or so collective investments available to British investors.
Investec Global Gold, MFM Junior Gold, Ruffer Gold and Blackrock Gold & General are all among the top performers, while WAY Charteris Gold & Precious Metal and the Smith & Williamson Global Gold & Resources fund have also delivered stand-out performance………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year they collectively added 483 tonnes—the second largest annual total since the end of the gold standard—with Russia and China accounting for most of the activity. The second half of 2015 saw the most robust purchasing on record, according to the World Gold Council (WGC).
Not every top bank is a net buyer. The Bank of Canada has liquidated close to all of its gold, mainly in coin sales, while Venezuela is in the process of doing the same to pay off its debts, but most of the world’s central banks right now are accumulating, holding and/or repatriating the precious metal………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

China’s decision to buy its second gold storage vault in London last week was another step towards total dominance of the market. The vault is in a secret location and was bought by Chinese state-owned bank ICBC Standard Bank from Barclays. It could store $90bn of gold at today’s prices, and follows the purchase of a lease on another vault in the capital earlier this year from Deutsche Bank.
London has been a hub for metals investment for hundreds of years, but times have changed and the big banks are pulling back from trading them. Now China is pushing into the gold market in a big way. The reasons why are unclear, and gold continues to spawn more conspiracy theories than the moon landing, but what is known is that China has been amassing the yellow metal at a rapid pace over the last decade………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Market participants expect the US dollar gold price to head lower over the next week, with signals from the US Federal Reserve on a possible rate hike and speculative unwinding the likely key drivers, the S&P Global Platts Gold Sentiment Survey indicated this week.
The poll of 20 industry participants showed that the majority of those who responded were bearish on the outlook for the gold price over the course of the coming week. This is the second week of the market being polled, and like the first week it shows lower price forecasts………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

A new code for precious metals has been created that will apply to all precious metals markets participants and will provide guidance for best practice, the London Bullion Market Association (LBMA) said. The new code will replace the Bullion Market annex currently within the Non-Investment Products (NIPs) code, it said in a release on Thursday.
The final global Foreign Exchange Code will be published in May 2017 and it will replace the FX element of the NIPS code, which focuses on best practice in the global wholesale foreign exchange markets, it added. The new FX Code is being jointly produced by central banks and market participants………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Platinum and palladium are exclusively used in emission-curbing autocatalysts. Those demands impact the price direction for these metals. Platinum has increased approximately 13% year-to-date. Palladium, however, has erased its losses from 2015 and now has a year-to-date loss of 2.7%.
The last month has adversely impacted palladium, which fell about 9.8%. Platinum fell a marginal 0.14%. The beginning of the year remained slow for palladium. This is likely due to industrial metals rather than precious metals. The volatility in palladium is close to 31%, while platinum’s volatility is around 23%. Palladium is the most volatile among the four precious metals………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Precious metal miners have been following metals fairly closely. Miners are often known to amplify the returns of previous metals, as they take directional moves from these metals. Because 2016 brought positive sentiment for precious metals due to increased safe-haven bids, miners also recovered their 2015 losses.
However, these metals have been pulled back, and the losses in mining stocks are once again amplified. Royal Gold (RGLD), GoldCorp (GG), Gold Fields (GFI), and Alacer Gold (ASR) rose by 53.7%, 45.2%, 30%, and 24.3%, respectively, on a YTD (year-to-date) basis. Crucial contributors to the miners’ rally in 2016 have been safe-haven bids on gold and silver………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Zinc rose the most in two weeks and industrial metals rallied after oil climbed above $50 a barrel for the first time this year, helping buoy investor sentiment on the global economy.
Zinc is up 17 percent this year, the top performer among the six main metals on the London Metal Exchange, as supply cuts begin to take effect and inventories of the metal fall to the lowest since 2009. Zinc demand will benefit to the extent that China continues to rely on infrastructure growth for overall economic support, Goldman Sachs Group Inc. said in a May 19 report………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

The rally in the price of metals is over and few see it coming back soon, including the miners themselves. Copper, iron ore and other metals and resources rallied through much of this year, but this month headed lower once more. Those declines will continue, given uncertainty over Chinese growth, the oversupply in many metals and resources, and a strengthening U.S. dollar, mining executives say.
That will put further pressure on the share prices of miners, which rebounded with metals. Analysts are also bearish, but the negative call from once bullish miners underscores just how poor sentiment is in metals markets, even after five years of declines………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Code from the Bank for International Settlements backs information sharing in scandal-hit FX market. Raucous currency traders will have to follow much stricter rules when describing market conditions under a new code of conduct designed to restore public confidence in a foreign exchange market hit by scandal.
The code laid out by the Bank for International Settlements on Thursday represents an industry-wide attempt to lay down common standards, conduct and behaviour across all levels of the world’s largest and most liquid market, where $5.3tn is transacted daily………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Today’s the day when regulators give the financial world a glimpse of how they reckon traders in the $5.3 trillion-a-day foreign-exchange market should behave. The code of conduct, or rather voluntary guide, is welcome after the $9 billion in fines and settlements linked to market rigging. Yet banks aren’t likely to wait until 2017 — when the full handbook is released — to decide their future in this business.
The biggest change hitting currency markets is technological: computers are replacing human traders. Not just in the spot market, but also in options and swaps, where electronic trading accounted for an estimated 43 to 57 percent in April, according to Aite Group………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

China’s leaders continue to worry about the country’s economy. The rest of the world should too. On Wednesday, China’s central bank weakened its currency. It set the reference rate for the yuan at the lowest level in five years.
The actual cut was small: only about 0.3%. It didn’t send world markets into a downward spiral like in August, when China devalued its currency by nearly 2%, or in early January, when it cut by about 0.5%. Nevertheless, it’s a warning sign. The reference rate is the level that the People’s Bank of China sets each day, although the yuan is allowed to trade in a range around that price………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

Annual survey of IETA members suggests continued optimism over impact of Paris on expanding carbon markets, but concern remains over low prices. Alongside a host of climate finance pledges, emission reduction targets and green growth plans, the Paris Agreement crucially also included a commitment to support emissions trading mechanisms.
As a result, the wave of positivity towards tackling climate change that has swept up many green policy makers and businesses post-Paris also seems to have taken hold among those involved in carbon trading. Indeed, post COP21, many in the carbon pricing sector are hopeful the Paris Agreement will herald in an expansion of global carbon markets - just as analysts predicted………………………………………..Full Article: Source

Posted on 27 May 2016 by VRS |  Email |Print

An overwhelming majority of respondents to IETA’s annual market sentiment survey expect an expansion of carbon markets, driven by the Paris Agreement. Over 80% of respondents to this year’s survey, conducted by PwC, said they expect existing carbon markets to expand as a result of the Paris Agreement – compared with 58% last year.
This will be driven by developments at both the national and sub-national level, the survey found. By 2025, new emissions trading systems (ETSs) are seen starting up in Canada, Australia, Brazil, Chile, Japan, Mexico, South Africa and Turkey, said respondents. This is in addition to the national ETS in China that is expected to begin next year, as well as the Ontario market, the legislation for which was passed last week………………………………………..Full Article: Source

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