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Commodities Briefing 29.May 2015

Posted on 29 May 2015 by VRS |  Email |Print

The Reserve Bank of India (RBI) on Thursday advised banks to create awareness among their borrowers for hedging agricultural commodity price risk. “Banks should encourage hedging by the agri-borrowers by creating awareness amongst them regarding the utility and benefits of hedging through agri-commodity derivatives,” RBI said in a notification to all banks. “This would help to develop strong risk management capabilities to manage agri-commodity price risk,” it added.
At the same time, said RBI, “banks must keep the sophistication, understanding, scale of operation and requirements of their agri-borrowers in mind while advising on the availability and use of these instruments.” To begin with, banks were asked to encourage large agricultural borrowers such as agricultural commodity processors, traders, millers and aggregators to hedge their commodity price risk…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Those hoping for a bit of oil price stability after the past few months’ volatility may be disappointed. Next week’s Organisation of Petroleum Exporting Countries (OPEC) meeting is widely expected to be another case of the cartel sitting on its hands, and maintaining levels of oil production despite historically low oil prices.
This shouldn’t be any surprise to markets – yet there are other warning signs ahead. After the last meeting in January, crude prices (WTI crude) fell to a six-year low of less than $45 a barrel, then recovered to around $65 a barrel, as the growth in U.S. supply – the main reason why OPEC has been so stubborn about cutting output — slowed in response to lower prices…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Crude supply from non-OPEC producers will continue growing for another two years, according to an OPEC draft report seen by Reuters. Increased production, mainly shale in North America, is a ‘turning point’ in the restructuring of global markets, it said.
“Since June 2014, oil prices have experienced a significant reduction, reaching levels even lower than the crisis experienced in 2008, yet non-OPEC supply is still showing some growth,” OPEC’s long-term strategy report says, Reuters reported on Thursday. Supply from rival non-OPEC producers will grow at least till 2017, the document said. The OPEC report comes ahead of the group’s landmark meeting in Vienna on June 5 where it’s expected to make a decision on production quotas…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

The North American oil boom is proving resilient despite low oil prices, producer group OPEC said in its biggest and most detailed report this year, suggesting the global oil glut could persist for another two years. A draft report of OPEC’s long-term strategy, seen by Reuters ahead of the cartel’s policy meeting in Vienna next week, forecast crude supply from rival non-OPEC producers would grow at least until 2017.
Sluggish global demand for oil means the call on OPEC’s crude will fall from 30 million barrels per day (bpd) in 2014 to 28.2 million in 2017, effectively leaving the group with two options - cut output from current levels of 31 million bpd or be prepared to tolerate depressed oil prices for much longer…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Despite almost a year of low oil prices, the world’s biggest producers say that the North American oil boom shows no signs of abating, leading analysts to suggest that the global oversupply of oil could continue for at least another two years.
The Organisation of Petroleum Exporting Countries (Opec) will meet in Vienna next week to discuss its long-term strategy. A draft report seen by Reuters predicts that rather than contracting, oil production will continue to increase over the next two years as rival non-Opec producers – especially those in the US – expand their operations…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

U.S. oil production surged to a 43-year high, despite a price war that resulted in a more than 50 percent reduction in active U.S. oil wells. Oil prices saw downward pressure in volatile trade Thursday morning, after the Department of Energy reported a draw down in crude inventories of 2.8 million barrels for the week ended May 22.
The DOE also reported that U.S. production rose to 9.566 million barrels per day, surpassing the previous peak of 9.422 million set in March. While no weekly data is available beyond 1983, the production number is the highest, if translated to a monthly basis, since May 1972…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Gold lacks direction at present but could break lower to test $1,100 in the very near term, ANZ said. “The right signals might be just around the corner,” the bank said in a note on Thursday. “To us, a downside break of the $1,180-1,220 per ounce range looks imminent.”
Gold has predominantly traded in a $1,175-1,225 range this year and was last little changed from the start of 2015 at $1,189 per ounce. But the US Federal Reserve is on course to raise interest rates this year or early in 2016, which would raise the opportunity cost of holding gold and push investors into more yield-bearing assets…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Many people think about gold as a percentage of a country’s total reserves. They are surprised to learn that the United States has 70% of its reserves in gold. Meanwhile, China only has about 1% of its reserves in gold. People look at that and think it shows an imbalance. But the way I see it, those are not very meaningful figures.
The figures are not meaningful because all countries’ reserves are a mixture of gold and hard currencies. The currencies can be in bonds or other assets. The US doesn’t need other currencies. We print dollars, so why would we hold euros and yen?………………………………..Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

The gold price was steady on Thursday, as dollar strength continued to cap gains and the yellow metal remained under the psychologically important $1,200 level. Spot gold was last at $1,188.80/1,189.50 per ounce, a $1.10 increase on the previous day’s close, as the metal was content to tread in well-worn ranges.
“Overall, we feel that a long-term base is being formed here, paving the way for the next bull leg in the super-cycle; but current conditions favour a slip to the lower end of the range,” Triland said in a note. Meanwhile, the metal’s status as a safe haven asset waned today amid renewed optimism over Greece staying in the eurozone…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

NCDEX, the leading national commodity exchange, today announced the launch of a new national market for gold. The “Gold Now” platform is the first transparent and convenient online market for buying and selling gold. Aligned with the “Make in India” campaign of the government, the platform will accept gold recycled in exchange-approved refineries as Good Delivery. This is intended to reduce the dependence on imports.
Samir Shah, MD & CEO, NCDEX, said, “With the launch of the Gold Now national marketplace, we are creating an ecosystem that is at par with international standards and which will help the bullion and jewellery industry improve its efficiencies.”………………………………..Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

If the vision of Elon Musk comes to fruition, cobalt will become an important commodity for the mining industry in the future. The billionaire genius recently unveiled Powerwall, a home battery that give homeowners the ability to get off the commercial power grid entirely by storing surplus electricity generated from solar panels during the day or from the utility grid when rates are low.
Unlike Tesla’s electric cars, Musk has stated Powerwall will use a more powerful battery consisting of nickel, manganese and cobalt. If the home battery takes off like many people expect it to (there are 38,000 reservations for the home battery pack so far), Tesla may require up to 10,000 tons per year of cobalt………………………………..Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Copper and aluminium recovered from recent losses on Thursday as the dollar weakened against the euro and optimism grew over a Greek debt deal, but some analysts were cautious over whether gains could be sustained due to plentiful supplies. Most other base metals also rebounded from a recent downturn that had been partly due to a stronger dollar, which makes commodities priced in the U.S. currency more expensive to buyers using other currencies.
The euro has gained against the dollar after Greece expressed confidence this week it will soon seal a cash-for-reforms deal. “We’ve had a bit of a bounce this morning. One of the reasons is because the dollar has stopped appreciating, in the short term at least,” said Stephen Briggs, metals strategist at BNP Paribas in London…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

The price of iron ore rose to its highest level in nearly three months, as declining stockpiles at China’s major ports sparked concerns about a temporary shortage of the raw material. A benchmark price for iron ore, published by The Steel Index, rose to US$62.60 a metric ton on Wednesday, up 0.8% from Tuesday and its highest level since March 2. The price is up 9% from a week earlier.
Iron-ore stockpiles in China have been dwindling as steelmakers build up their stores of the raw material, resulting in limited availability for some types of ore, analysts say. Inventories at the country’s port facilities last week declined to 84.9 million tons, from 86.6 million tons the week earlier, according to data provider Mysteel. Port stocks were roughly 100 million tons at the start of 2015…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

EY’s Canadian Mining Eye index fell 1% in Q1 2015, compared to a 12% decline in Q4 2014. With a weak global macroeconomic backdrop, most players are working on controlling expenses, as declining grades will put continued pressure on costs.
The Canadian Mining Eye tracks Canadian mining sector performance of 100 TSX and TSXV mid-tier and junior companies with market capitalizations at the end, broadly falling between CDN$2.1 billion and CDN$160 million…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Investors are cautiously pulling money out of energy producers for the first time in eight months, taking short-term gains after oil rebounded from a six-year low. More than $1.55 billion has been withdrawn this month from exchange-traded funds concentrated on energy stocks such as Exxon Mobil Corp. and Chevron Corp. It’s on pace for the first monthly setback for the group since investors began pouring into the sector in October with an eye toward profiting from an eventual recovery in prices.
“The thesis that oil is too cheap and it has to go higher maybe is not as compelling a case with oil at $60 as it was when it was at $42,”said Ryan Issakainen, a strategist at First Trust Advisors LP in Wheaton, Illinois…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Exchange traded fund investors are exiting energy sector bets for the first time in eight months after oil prices rebounded off a six-year low. Investors have yanked over $1.55 billion from energy stocks exchange traded funds, setting up the first monthly outflows from the sector since October, reports Jim Polson for Bloomberg.
Month-to-date, the Energy Select Sector SPDR experienced $628.6 million in net outflows, Vanguard Energy ETF lost $9.5 million and iShares U.S. Energy ETF saw $533.2 million in outflows, according to ETF.com…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Silver prices have remained stuck at historical lows for the past three years, but hedge funds have decided now is the time to pile in. Last week, hedge funds snapped up silver at the fastest pace since 1997, increasing their net long position to a three-month high according to data from Bank of America Merrill Lynch.
Large speculators increased their net long position to $4.4 billion as of May 19, up from $2.4 billion in the previous week, according to the bank’s research. The data, gathered from the U.S. Commodity Futures Trading Commission, is released every Friday, but reflects positions as of Tuesday’s close. The regulator requires traders to hand over data on their significant positions in major markets. Bank of America Merrill Lynch looks at a section of this data, which includes trading by speculative investors………………………………..Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Christine Lagarde’s people say China’s currency is no longer undervalued. Jacob Lew’s argue it still is. There’s a lot at stake in the debate: The yuan can’t gain status as a global currency reserve if China is thought to be manipulating its value. So who should we believe, the head of the International Monetary Fund or the U.S. Treasury Secretary?
It’s worth asking Ben Bernanke. Now that the former Federal Reserve chairman is in the private sector, he can say what he really thinks — and, as he pointed out in a recent speech in Seoul, it’s not wise to ignore political factors when managing the rise of the Chinese economy…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

Around the same time as Accenture’s call for the UK government to regulate bitcoin wallets, Citi suggested that officials should look into creating their own digital currency. This has been revealed in the Treasury’s release of a document entitled “Digital Currencies: Response to the Call for Information”.
This report summarizes all the submissions received by the government after it urged the public to assist them in understanding the workings of the digital currency industry. The Treasury received more than 120 responses and has outlined the proposals and the government’s next steps…………………………………Full Article: Source

Posted on 29 May 2015 by VRS |  Email |Print

California carbon permits covering emissions this year sold for$12.29 a tonne at the cap-and-trade program’s May auction, up 8 cents from what they fetched at the previous auction in February, the program’s regulators said on Thursday.
The auction, the state’s third held in conjunction with its trading partner the Canadian province of Quebec, saw the partners sell all 77 million 2013 and 2015 permits put on the block. They also sold 9.8 million permits covering 2018 emissions for the minimum price of $12.10 a tonne, regulators said. Over 90 percent of all the permits sold at the auction were purchased by large-emitting companies required to participate in the program, the regulators said…………………………………Full Article: Source

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