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Commodities Briefing 05.Feb 2016

Posted on 05 February 2016 by VRS |  Email |Print

Global equity markets rose on Thursday as diminished expectations of U.S. interest rate hikes this year pushed the dollar lower, which in turned boosted the prices of many commodities.
The dollar fell for a fourth day on the latest batch of soft U.S. data, while comments from a U.S. Federal Reserve policymaker on Wednesday were viewed as a sign further rate hikes could be delayed. Those comments were buttressed on Thursday by Robert Kaplan, the new head of the Dallas Fed, who said the central bank should be “patient” on rate increases………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Two of Australia’s biggest companies are slashing costs further and writing down the value of their resources businesses amid a deepening rout in commodities prices. South32, the diversified mining group spun out of BHP Billiton last year, on Thursday outlined plans to book a US$1.7bn writedown on the value of its manganese, coal and alumina assets stretching from Australia to South Africa and Brazil.
The group said it would cut 620 jobs at its manganese joint venture in South Africa and would detail further job cuts in its results statement later in February………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

The agricultural sector has been in negative territory for five years, putting specific food and food input companies at attractive valuations, according to Baring. Oil aside, other commodities such as food inputs have also fallen out of favour. The cumulative one-, three- and five year returns for the agriculture sector have all been double-digit negative.
But James Govan, manager of the Baring Asset Management’s Global Agriculture Fund believes opportunities this year are emerging in the agricultural value chain, particularly in the health and wellness niche, driven by the demand for healthier food………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

The global oil market will rebalance later this year, paving the way for a recovery in crude prices from their lowest level in more than a decade, according to Royal Dutch Shell’s chief executive.
Striking a bullish stance as the Anglo-Dutch oil company reported an 80 per cent slide in profits last year, Ben van Beurden argued on Thursday that the “unprecedented” volatility in oil prices did not reflect fundamental supply and demand………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Morgan Stanley has downgraded its outlook for oil prices, expecting low prices to persist for longer than previously thought as the supply and demand imbalance looks set to continue for at least another two years.
The bank lowered its average 2016 Brent price forecast to $30 per barrel, down from $49 previously. Morgan Stanley now expects an average price of $40 per barrel in 2017 as oversupply persists, before climbing past $50 by the end the year to average $70 by 2018………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

As oil prices continue to cause market uncertainty, and with low fuel prices wreaking havoc on some countries’ economies, notably Russia’s, the world’s top oil producer has been at the forefront of trying to figure out whether or not a production cut should be implemented in order to support and stabilize prices.
An Organization of the Petroleum Exporting Countries (OPEC) delegate recently said, “It is all in the hands of the Russians now.” Oil production in Russia hit a post-Soviet high in January, which means Russia is adding fuel to the oversupplied oil market fire. Russia itself is sending mixed signals as to how much it’s willing to cooperate with geopolitical foes, like Saudi Arabia………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Saudi Arabia on Thursday cut prices for its best-quality crude oil destined for customers in Europe and Asia amid uncertainty about whether the Organization of the Petroleum Exporting Countries will meet to discuss action to raise oil prices.
The move to lower prices would help the world’s largest exporter of crude defend its most lucrative markets against encroachment from rival producers such as Iran, which is ramping up its output now that Western sanctions have been lifted………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

After a year of secret diplomacy and hushed-up talks around the world, Opec’s Saudi Arabia and rival Venezuela were persuaded to cut a deal by non-Opec Mexico that eased the acrimony and led to a much-needed rise in oil prices.
It was 1998, trust had long broken down within Opec and it took outside mediation as a last resort to stop the squabbling to clinch deals at secret meetings in Riyadh, Madrid and Miami. Now, with oil prices touching their lowest level since 2003, Opec officials and deal-brokers are looking back nearly two decades and asking whether a behind-the-scenes deal to curb oil output between Opec and non-Opec Russia could be struck………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Representatives of 6 member-states of the Organization of the Petroleum Exporting Countries (OPEC) are ready to participate in an emergency meeting on coordinated reduction of oil production with non-OPEC members, Venezuela’s Oil Minister Eulogio del Pino said during his visit to Tehran on Thursday.
According to the minister, such OPEC member-states as Iraq, Algeria, Nigeria, Ecuador, Iran and Venezuela as well as non-OPEC members Oman and Russia have given their consent. “The idea is not only to hold the meeting but to reach particular results,” he was cited as saying by Iran’s news agency Shana………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Amid the market volatility in 2016, gold futures prices are already up nearly 8 percent this year. After posting three consecutive years of losses and falling to the lowest level in six years back in November, gold prices are once again on the rise as investors seek shelter from the global volatility in the commodity known for its safe haven appeal.
On Wednesday, bullion hit an intraday high of $1,146 per ounce, the highest level since October. What if prices keep rising over the next one month?……………………………………….Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

The price of an ounce of gold climbed again overnight in New York, adding 1.3% to US$1,156.20 an ounce. A falling U.S. Dollar did take the shine off a touch based in the local money, but the FX rate of AUD / USD 0.7196 has Aussie Dollar Gold back over A$1600 an ounce.
Not only are domestic Australian gold producers benefiting from higher gold prices in Australian Dollar terms, but they are also reducing costs from lower fuel bills and a greater access to labour………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

There aren’t many places in the UK where you can walk in off the street and buy gold as a retail customer. A new store in London’s St James’s Street a stone’s throw from the Ritz wants shoppers.
“There is unquestionably a physical renaissance going on,” says Ross Norman, of Sharps Pixley, flanked by cabinets showing gold roses and gold watches under a large chandelier. “People want the physical [gold], they don’t want the paper. It’s suggestive of an environment where trust is less than it used to be.”……………………………………….Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Gold is continuing its impressive 2016 rally into early February. The recent surge may be coming to the end of the line, at least for the short term. Gold has not only reached overbought levels, but it is also missing an important silver lining of support behind its advance.
Gold is continuing its impressive 2016 rally into early February. But the recent surge may be coming to the end of the line, at least for the short term. Gold has not only reached overbought levels, but it is also missing an important silver lining of support behind its advance………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

A lot is riding on the demand side of the equation when it comes to metals’ price performance this year. Demand is the bigger wildcard with signals thus far being mixed in gold and silver bullion markets. The outlook for supply is more certain, and it isn’t pretty.
Endeavor Silver, one of the largest primary silver mining companies, announced last week that it expects to reduce production of the white metal by roughly 30%. The company’s El Cubo mine is not profitable despite efforts to reduce costs. Endeavor plans to halt development and exploration at the mine and process accessible ore only. By year end, the mine will be placed on “care and maintenance.”……………………………………….Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

The SPDR Gold Shares, the largest bullion-backed exchange traded fund in the world, is off to a solid start to 2016 and while GLD and rival gold ETFs have a long way to go to snap out of what has become a lengthy bear market, momentum is building for gold.
Speculation of higher interest rates weighed on gold ETFs last year, but traders have lowered expectations for multiple rate hikes this year. Even if rates rose a couple basis points, the continued low rate environment is good for gold, which does not pay a yield and would struggle to compete with yield-generating assets when rates rise………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Exchange-traded funds backed by equities saw outflows of $16 billion in January, while fixed income backed ETFs benefited. According to latest “U.S ETF Flash Flows” report from State Street Global Advisors (SSGA), the drop in equity ETF holdings was due to the confluence of concerns around oil, China, and the potential threat of a global recession. As a result, ETF investors sought out other asset classes such as U.S. Treasuries and gold in January.
In the report, SSGA noted that equity ETFs saw outflows of approximately $16 billion as fixed income ETFs attracted over $13 billion of inflows. Financial and Technology ETFs saw outflows of $2.4 billion and $2.6 billion respectively, while defensive sectors such as Utilities ($916 million) and Consumer Staples ($661 million) attracted inflows………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

The euro is now at its highest level in over a year, and this has to be more bad news for Mario Draghi. The European Central Bank’s own calculation of the single currency’s effective exchange rate against a trade-weighted basket of 38 other currencies stood at 119.9056 on Thursday. That means that the real-world value of the euro has risen faster than the more commonly tracked exchange rate against the dollar.
Trade-weighted, the euro is at the highest level since Jan. 2, 2015, about three weeks before the ECB president officially announced his quantitative-easing program. Just measured against the greenback, the single currency is at its highest level in more than three months………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

A devaluation of Saudi Arabia’s currency could cause such political instability that Riyadh has little choice but to stick to its promise to use vast foreign exchange reserves to defend the riyal’s 30-year-old peg to the U.S. dollar.
Currency traders have been betting against the Saudi peg, and those of other regional oil producers, in the wake of oil’s price collapse. Societe Generale said on Thursday it saw at least a 25 percent chance of a near-term devaluation or 40 percent if oil prices stay at current levels throughout 2016. But in Saudi Arabia’s largely dollar-denominated economy breaking the peg would immediately raise the price of goods, hitting living standards………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Kenya’s stock market will launch an emissions trading platform that it hopes will help local companies sell their carbon credits to foreign buyers, local media reported. The Nairobi Securities Exchange (NSE) said it wants to help publically-listed Kenyan firms such as the country’s largest utility KenGen, Mumias Sugar, East Africa Portland Cement and grid operator Kenya Power, to sell their CERs, Business Daily Africa (BDAfrica) reported on Tuesday.
No firm date was given for the launch and Carbon Pulse’s attempts to obtain more information from the bourse was unsuccessful………………………………………..Full Article: Source

Posted on 05 February 2016 by VRS |  Email |Print

Finally, through a company created to save the planet AND make money, I actually understand what “carbon credits” are all about. Airdrie-based Carbon Credit Solutions (CCS) Inc. partners up with folks (mostly farmers) who can create Alberta government-approved carbon credits. It assists in “making” these carbon credits, then buys and sells them, hopefully for a profit.
Making a profit can’t be that difficult, not when the monetary value of these Alberta carbon credits should jump by 50% in a year’s time. That’s when the Notley government says it will raise the levy, basically a tax on excess carbon emission, from $20 to $30 a tonne on companies pushing too much CO2 up their smokestacks. (A tonne of CO2 is roughly the amount of CO2 an average coal-burning power plant sends up its smokestack every hour.)……………………………………….Full Article: Source

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