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VRS - who has written 46083 posts on Opalesque Commodities Briefing.


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The banks where the commodities rout will hurt most

Posted on 31 May 2016

When it comes to souring commodity-related loans putting pressure on banks, the credit ratings of lenders in Singapore, South Korea and Mongolia are the most at risk. That’s the verdict from Moody’s Investors Service, which highlighted the three countries as areas of particular concern, even though the ratings agency does not expect negative bank rating actions for most of Asia Pacific despite the prolonged commodities rout.

Is the worst now over for commodity prices?

Posted on 31 May 2016

The last couple of years have been truly horrific for investors in a number of resources companies. Profits have tumbled, share prices have plunged and investor sentiment towards mining and oil and gas companies in particular has weakened significantly.

Why the commodity slump could be a good thing for Africa

Posted on 31 May 2016

There is an urgent need for diversification of Africa’s economies and while it is having an immediate negative effect, the recent commodities slump is beginning to drive change. For example, some investors in Nigeria who have historically thrown their lot behind the oil and gas industries are now looking to buy large tracts of agricultural land in a bid to mitigate the effects of the slump in the commodities sector.

Is Opec relevant in an oil market of falling prices and overproduction?

Posted on 31 May 2016

The Organization of Petroleum Exporting Countries’ inability to reach consensus amid low point in commodity cycle comes under question before 2 June meeting. As the Organization of Petroleum Exporting Countries (Opec) meets on 2 June, questions are rising about the oil cartel’s continuing relevance.

Crude oil price at $60 per barrel gains more backers

Posted on 31 May 2016

The United Arab Emirates’s economy minister joined forecasters looking for $60 crude this year with demand and production moving more in line. “It’s possible for oil prices to reach $60 or more during this summer” as demand increases in the US, UAE Economy Minister Sultan Bin Saeed Al Mansoori said at a conference in Abu Dhabi on Monday. Crude will end the year higher than $60 a barrel, Mario Maratheftis, global chief economist at Standard Chartered, said.

Sberbank CEO: Oil price of $45 per barrel to boost Russian economy

Posted on 31 May 2016

Russia’s economy may grow next year if oil prices stay at around $45 per barrel, Sberbank CEO Herman Gref said. “If the curernt trend continues, and the oil price will be around $45 per barrel,… next year, most likely, we will be a small growth of the Russian economy,” he said.

Why India could be the oil market’s next big driver of consumption

Posted on 31 May 2016

Oil’s rise to US$50 a barrel earlier this month proved to be short-lived, but at least it suggested that oil prices had established a new and higher range. We might not be looking at a return to US$100-a-barrel WTI anytime soon, but prices seem to have stabilized somewhat, remaining north of US$40 for several weeks now.

Gold Price Forecasts Revised Higher – Citi Says “Buy the Dip”

Posted on 31 May 2016

Gold price forecasts have been revised higher in recent weeks and Citi became the latest bank to revise higher their projections for gold, despite the recent weakness in the price. Citi Research, the research division of one of the world’s biggest banks, raised its gold price forecast to an average $1,280 in the current quarter, $1,300 in the July-September period, and $1,250 in the final three months of the year.

Gold will not fall below $1,200/oz for long – Commerzbank

Posted on 31 May 2016

There is the short-term potential for the gold price to fall below $1,200 per troy ounce due to the high level of speculative interest and renewed Fed rate hike speculation, said Commerzbank . But the price is not expected to fall lastingly below this threshold because such a price level is likely to be viewed by investors as an attractive opportunity to buy, it said.

Mines can put gold price respite to good use

Posted on 31 May 2016

Stakeholders need to address alternative job opportunities for mineworkers, but it can also be expected that mining posts will steadily become more skilled and better paid. A surging gold price and a weakening rand have been good to South African gold producers in the first half of 2016, but how can the much-needed financial respite be used to build more sustainable mines?

Increasingly bearish indicators weigh down lead price

Posted on 31 May 2016

Last year lead was the best-performing base metal on the LME by virtue of dropping by the least over the duration of 2015. The lead price declined 2.8% last year compared to 20%-plus falls in zinc, tin, cobalt and copper and ever volatile nickel’s 42% drop (moly fared just as badly).

Iron ore heads down again — Lower for longer?

Posted on 31 May 2016

The world’s biggest iron ore miners believe that the recent rally in the price of the commodity will not last, because, while demand remains mostly flat, they have committed to maintaining or increasing their supply.

Indian banks to hurt from weakness in metals, mining: Moody’s

Posted on 31 May 2016

Global rating agency Moody’s expects banks in the Asia-Pacific region (excluding Japan) to feel the ripple effects of the problems in commodities-related sector. The asset quality and profitability of banks in Mongolia, Singapore, Korea, Indonesia and India are exposed to the more vulnerable parts of the energy/commodity sectors, such as oil services, offshore marine, shipping and shipbuilders, and metals & mining and steel, says the Moody’s report.

Active ETFs make major leap ahead of passive brethren

Posted on 31 May 2016

Assets in active ETFs grew at more than double the rate of passive ETFs in 2015, Pensions & Investments’ annual money manager survey found. Among managers in Pensions & Investments’ universe of the largest managers of U.S. institutional tax-exempt assets, active ETF assets grew 26.7%, to $24.7 billion.

16 Europe ETFs to Hedge Foreign Exchange Risks

Posted on 31 May 2016

With the U.S. dollar rebounding and European markets recovering, exchange traded fund investors may want to consider a currency-hedged strategy to capture the gains while mitigating the negative effects of an appreciating USD.

China commodity exchange to curb speculation

Posted on 31 May 2016

Dalian Commodity Exchange (DCE) will closely monitor the commodity market to stop illicit trading, said vice general manager Wang Fenghai. Wang said that spot prices of some commodities swung violently this year and he had seen signs of excessive speculation in the trading of coal and metal-related futures since April.

EFSA finalises amendments to commodity exchange draft law

Posted on 31 May 2016

The Egyptian Financial Supervisory Authority (EFSA) finalised the amendments to the draft law 95 of 1992 to establish a commodity exchange in the Capital Market, and intends to discuss them with the parties of the capital market in the coming days, chairperson of the authority Sherif Samy told Daily News Egypt.

Buhari Leaves Traders Guessing on Path for Nigerian Currency

Posted on 31 May 2016

Nigerian President Muhammadu Buhari’s Sunday speech has left foreign-exchange traders with little clue as to the fate of the naira. Far from clarifying the government’s approach on the currency, following central bank Governor Godwin Emefiele’s pledge last week to adopt a more flexible exchange-rate policy, Buhari’s words have left the market as confused as ever.

Chinese currency falls to three-month low

Posted on 31 May 2016

The Chinese currency fell yesterday, heading for the steepest monthly decline since it was devalued last August, after the US Federal Reserve chief said an interest rate increase could come in the next few months.

Tokyo’s cap and trade scheme goes beyond hitting the bullseye

Posted on 31 May 2016

The city-wide Tokyo Cap and Trade Program has stimulated energy efficiency in the commercial and industrial sector so effectively it has achieved double its emissions reduction goal across the 1300 properties covered, according to a recent research report.

Does organic agriculture boost local economies?

Posted on 30 May 2016

For the first time, there is now evidence linking organic agriculture and economic health. The organic industry is one of the fastest-growing sectors of the United States food industry. Organic food sales grew 11 percent to almost US$40 billion in 2015, according to the Organic Trade Association (OTA), while the food market as a whole had a 3 percent growth rate.

Global Oil Market May Recover by End of 2017 - Russian Energy Minister

Posted on 30 May 2016

Global oil market recovery can be expected by the end of 2017, Russian Energy Minister Alexander Novak said Sunday. “It seems to me that by the end of 2017 we will see the end of the respective cycle [of low oil prices] and the recovery of the market,” Novak stated at the Vestifinance forum.

The only certain thing about oil’s price is its uncertainty

Posted on 30 May 2016

A large number of clever people backed by deep-pocketed employers spend a great deal of time trying to work out where the oil price is heading. It’s rather surprising, therefore, how wrong most of their predictions are. Forecasts generally amount to extrapolating the recent past.

Why oil prices will head back toward $20 next winter

Posted on 30 May 2016

One of today’s more fascinating examples of a widespread misunderstandings of cause and effect is that of the relationship between the U.S. dollar and crude oil or, if you prefer, the larger definition of the same problem — the dollar vs. commodity prices.

Oil States Expected to Stick With Saudis : OPEC Reality Check

Posted on 30 May 2016

OPEC members gathering in Vienna June 2 are expected to go along with a Saudi Arabia-led policy focused on squeezing out rivals amid signs the strategy is working. That means the meeting may be less fraught than the previous summit in December, which ended with public criticism of the Saudi position from Venezuela and Iran.

Oil Pessimists Exit Market as Supplies Seen Closer to Balance

Posted on 30 May 2016

The oil market doomsayers are beginning to capitulate. Speculators reduced bets on falling prices to the lowest level in 11 months as oil briefly breached $50 a barrel on signs supplies are coming into balance.

Iran soon to regain its oil market share: Rouhani

Posted on 30 May 2016

Iran will retake its pre-sanction oil market share in the near future, Shana quoted President Hassan Rouhani as saying on Saturday. The president made the remarks in the inauguration ceremony held Saturday morning for the start of new Iranian parliament.

The Real Question for OPEC: Who’ll Be Its New Top Official?

Posted on 30 May 2016

As internal opposition to Saudi Arabia’s plan to squeeze rival suppliers fades, OPEC might not have a big policy question to debate when it meets next week. Nevertheless, the group will still have one thing to argue about: Who will replace Abdalla El-Badri as the next secretary-general?

Will gold continue to shine in 2016?

Posted on 30 May 2016

Gold has been one of the best performing assets of 2016 and is up 15% since 1 January. Gold bugs around the world have been calling this the start of a furious bull market in gold and silver. Today I’m looking at the reasons gold has made this move and whether it will continue.

UBS: Investors Have Opportunity To Buy Gold At ‘More Attractive Levels’

Posted on 30 May 2016

UBS says any further weakness in gold may be a buying opportunity. The metal has fallen some $90 an ounce from its recent highs, leaving it not far from $1,200 psychological support.

Emerging markets should shift from dollars into gold

Posted on 30 May 2016

Managers of the world’s $10tn or so foreign exchange reserves are in a bind. More and more of the global government bond market shows a negative yield. If held to maturity, such bonds will inflict a certain loss. Those bonds that do offer a positive yield are horribly overvalued by historic standards.

High gold price prompts miners’ switch to lower grades

Posted on 30 May 2016

With the price of gold continuing to hold at near record levels, Australia’s gold miners have switched to mining lower grades while also hedging their exposure to ensure ongoing access to the high price.

Funds Step Back From Gold Before Yellen Says Rate Rise Is Coming

Posted on 30 May 2016

Hedge funds decided to take a breather from gold just before Janet Yellen gave investors more reason to ditch the precious metal.

There are signs of life in the iron ore price

Posted on 30 May 2016

After falling below the $50 a tonne level for the first time since February 29 on Thursday, iron ore prices rebounded solidly on Friday, boosted by renewed strength in Chinese futures markets.

Commodities hit by oil and metal falls amid flat pre-holiday trade

Posted on 30 May 2016

Commodities producers were knocked by a sudden reversal in metal and oil prices, as the rally in Brent crude that began earlier this year gave way.

ETFs help London to eclipse China for Swiss gold imports

Posted on 30 May 2016

London has overtaken the traditional gold centres of India and China for shipments of bars from refineries in Switzerland, as the precious metal is sent to UK vaults to back a surge of buying from exchange traded funds.

Smart-index ETFs good for passive investors

Posted on 30 May 2016

Sundeep Sikka, chief executive officer, Reliance Nippon Life Asset Management, believes that one of the main reasons investors should buy passive funds is the massive cost difference of about 150-200 basis points vis-a-vis actively-managed funds. “And for a relatively-low cost, passive funds allow investors to earn broader market returns,” adds Sikka.

Currency tranquillity is calm before storm

Posted on 30 May 2016

It’s all quiet in currency markets, a little too quiet for some traders who warn that an uptick in volatility is just around the corner. Price swings in global exchange rates slid to the lowest since January this week, according to a JPMorgan Chase & Co. index. A three-month measure of dollar volatility versus the euro tumbled to the least since December 2014 while a gauge against the yen fell to a two-month low.

Currency Traders Look Beyond the Pound to Combat Brexit Turmoil

Posted on 30 May 2016

It’s one of the biggest dilemmas facing currency managers: how to protect against the fallout from the U.K. leaving the European Union without losing money should it vote to remain.

Carbon Pricing Under Binding Political Constraints

Posted on 30 May 2016

In a new working paper titled “Carbon pricing under binding political constraints,” MIT Institute for Data, Systems and Society doctoral candidate Jesse Jenkins and Sloan School of Management Assistant Professor Valerie Karplus discuss the political obstacles facing efforts to price carbon emissions — either via a carbon tax or emissions cap and permit trading system — and outline a set of starting points that are both politically palatable and steps toward effective policies to curb climate change.

Carbon trading ‘to expand due to Paris climate deal’

Posted on 30 May 2016

Carbon markets are expected to expand as a result of the Paris agreement. That’s according to 82% of the 146 carbon traders from the International Emissions Trading Association (IETA) surveyed by PwC, which added the figure is up from 58% from 2015.

Are commodities signaling a Lehman-sized meltdown? Japan’s Abe thinks so

Posted on 27 May 2016

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.

The Commodities Market Has A Sweet Tooth

Posted on 27 May 2016

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.

Oil hits $50, global commodities dragged higher

Posted on 27 May 2016

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.

Oil price rises above $50 a barrel

Posted on 27 May 2016

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.

Oil Prices Poised to Hit Sweet Spot for Global Economy

Posted on 27 May 2016

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.

This is what makes OPEC even less relevant

Posted on 27 May 2016

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.

OPEC Likely to Choose New Secretary-General Next Week

Posted on 27 May 2016

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.

Saudi Arabia Aims to Protect Share of Global Oil Market

Posted on 27 May 2016

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.

A 107pc return in six months: Gold funds storm 2016 performance tables

Posted on 27 May 2016

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.

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