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Commodities Briefing - Category | Commodity Crisis more

How bad is July proving for commodities?

Posted on 29 July 2015 by VRS  |  Email |Print

Concerns about a slowdown in China, renewed strength in the US dollar and persistent supply concerns have combined to make it an ugly July for commodities. But just how bad has it been? The S&P GSCI total return index, which tracks the price of 24 commodities, has fallen through the bottom it reached during the the financial crisis and is at its lowest level since February 2002, writes Mamta Badkar.
Its 13.6 per cent decline this month makes July the seventh worst month on record for the index which dates back to 1970, according to data from S&P Dow Jones Indices. All of the 24 commodities in the index are down for the month, with the exception of lean hogs. Losses for the commodities in the index have only been so widespread once before - in September 2008………………………………………..Full Article: Source

Speculators show global commodities rout still not over

Posted on 28 July 2015 by VRS  |  Email |Print

Speculators have confirmed what everyone else has been thinking: expect more falls in commodities, as worries about China and higher interest rates combine with waning sentiment to suggest markets are heading further south. But while more losses are certain, their scope could be limited because a large number of speculators have already made bets that prices will fall.
Commodities from iron ore, to oil, grains and gold have shed value as the current extended price boom, or “super-cycle”, wanes. Losses are not new, with oil and gold having peaked in July 2008 and September 2011 respectively, while iron ore has been on a downtrend since January 2011 and has shed more than 70 percent since that time………………………………………..Full Article: Source

China growth fears crush oil and commodities

Posted on 28 July 2015 by VRS  |  Email |Print

Oil prices continued their steep slide Monday, with a barrel of U.S.-produced crude hitting a 52-week low of $47.20 a barrel as investors reacted to the biggest one-day stock sell off in China since 2007, and worries about an oil glut gained steam amid fears of an economic slowdown in China.
China, the world’s second-biggest economy, is no longer growing at a double-digit percentage pace as it was a few years back, and investors around the globe are questioning whether the government’s reported 7% growth in the second quarter truly reflects the state of China’s economy………………………………………..Full Article: Source

As Commodities Tumble, Don’t Count Out Gold

Posted on 28 July 2015 by VRS  |  Email |Print

The commodity collapse is undeniable. Just look to 2015 year-to-date returns: Oil has shed 16%, Nickel is down 25%, wheat has lost 15%, and sugar has plunged 28%. Yet the plunge in commodity prices doesn’t seem to be occurring in unison with the pace of global economic activity.
Precious metals seem the most oversold as judged by CFTC managed money speculative positions – perhaps the reasoning for Monday’s $9 bounce in COMEX August futures, which have gold at $1094.50, or $22.20 higher than Friday’s contract low price of $1072.30………………………………………..Full Article: Source

Global Growth Worries Pummel Commodities

Posted on 27 July 2015 by VRS  |  Email |Print

Investors are bailing on commodities amid mounting worries about the pace of global growth. New data showing China’s factory activity hit a 15-month low and a leaked Federal Reserve memo betraying concerns about how fast the U.S. is growing added to concerns Friday and accelerated the selloff of commodities—from oil to gold to copper.
Money managers reduced bets on higher oil prices to their lowest level in 2½ years, while ramping up bets on lower copper prices to their most bearish in two years, according to weekly data from the Commodity Futures Trading Commission. Money managers also turned net-bearish on gold futures and options this past week for the first time ever in data going back to 2006………………………………………..Full Article: Source

Scoreboard: Commodities stampede

Posted on 27 July 2015 by VRS  |  Email |Print

The rush to exit commodities turned into a stampede last week as a weakening Chinese economy and a surging US dollar put the fright into traders and led commodities to post-crisis lows. The sea of red in the Friday session was an all-too-familiar sight for miners as oil, gold and copper all slid in the wake of the softest reading on the Chinese manufacturing sector for 15 months.
It ensured the UK-listed stock of BHP Billiton settled at its third six-year low of the week after yielding a further 3.8 per cent. Fellow Anglo-Australian mining giant Rio Tinto also touched a six-year trough after giving back 3.5 per cent, while Glencore dived 4.5 per cent to a record low and Anglo American stumbled 3.5 per cent to a 12-year nadir………………………………………..Full Article: Source

Commodities slump: Is there trouble ahead for the global economy?

Posted on 24 July 2015 by VRS  |  Email |Print

There’s gobs of money chasing assets these days but there’s no “bubble” in commodities, which are tanking. It’s not just gold, which gets a lot of headlines; nearly all major global industrial commodities are back to 2009 levels — including coal, gas, oil, iron ore and copper. Agricultural commodities such as wheat, coffee and sugar have also fallen on hard times.
The dollar’s rally has certainly been a factor in the price action, with the greenback advancing versus other major currencies amid speculation the Fed will start raising rates sometime this year. The other big story is China, which reported better-than-expected second-quarter growth of 7% last week, a development that notably didn’t change the downward trend for commodity prices………………………………………..Full Article: Source

Commodities Hit The BRICs

Posted on 24 July 2015 by VRS  |  Email |Print

Aside from $ trillions in monetary stimulus from the world’s major central banks, a major source to the recovery from the 2008-9 global financial crisis emerged from the BRICs economies. The dependence on commodities exports from Brazil, Russia and China proved instrumental in these economies’ rapid comeback thanks to the cushion from rapid gains in agricultural and energy prices from 2002 to 2008.
But now that agricultural commodities have crashed, metals crumbled and energy plummeted, what becomes of the BRICs engine to the world economy? Russia continues to depend on oil and gas with 83% of exports coming from commodities. Brazil never diversified away from its dependence on iron ore, soya, coffee and sugar and boasts a 64% commodities/exports ratio………………………………………..Full Article: Source

Commodities to hit rock-bottom in 2015 before ‘modest recovery’, says World Bank

Posted on 24 July 2015 by VRS  |  Email |Print

Commodity prices – including major Australian exports like iron ore and coal – are expected to hit rock-bottom in the second half of 2015 before picking up in 2016, according to the World Bank’s third-quarter commodity markets outlook.
A major exception is gold, which the bank has forecast will still be trading below current prices in 2025. “Most commodity prices declined in the second quarter of 2015 due to ample supplies and weak demand, especially in industrial commodities,” said the World Bank report. “These trends are expected to persist for the rest of the year, with a modest recovery in 2016.”……………………………………….Full Article: Source

Another grim year for commodities as global supplies rise: World Bank

Posted on 23 July 2015 by VRS  |  Email |Print

The outlook for commodities remains grim for this year, except that oil will fall a bit less than previously forecast, the World Bank said. Average prices for fuels such as crude, natural gas and coal will tumble 39 per cent from 2014, while those for materials like metals and fertilisers will fall about 12 per cent, the Washington-based lender said in its quarterly “Commodity Markets Outlook” released Wednesday.
“All main commodity price indices are expected to decline in 2015, mainly due to abundant supplies, and in the case of industrial commodities, weak demand,” the bank said in the report. Commodities are trading at their lowest in 12 years following a decade-long bull market fuelled by growth in developing nations such as China and India. The bank said that metals and coal consumption in particular may slow in China as the nation shifts to a more services-oriented economy and enacts policies to curb pollution………………………………………..Full Article: Source

Commodities plunge to 13 year-low dragged down by mining shares

Posted on 23 July 2015 by VRS  |  Email |Print

Commodity prices continue to plunge, as falling mining shares dragged a commodity index down to its lowest point since 2002. Bloomberg’s commodity price index, tracking gold, crude oil and other raw materials, has plunged by 40 per cent since 2011. Today the index fell to 95.5 points, its lowest point in 13 years.
Mining shares are down sharply, with Glencore falling five per cent, and Anglo-American 6.5 per cent. Commodities have underperforming, with gold recently down to its lowest level since 2010. Oil has continued to slide, with prices down 60 per cent over the year. Global benchmark Brent crude is trading at $56 a barrel, and US benchmark WTI has dipped below $50 every day this week………………………………………..Full Article: Source

An investor’s guide to navigating a commodities roller coaster

Posted on 23 July 2015 by VRS  |  Email |Print

It has been a rough ride for commodities traders so far this year. Prices for many commodities are suffering from sizable losses, but there are ways to help make the road smoother.
Frank Holmes, chief executive officer and chief investment officer at U.S. Global Investors, spoke with MarketWatch recently to offer a few hints on the best ways to navigate the commodity landscape. Holmes, a well-known fund manager, and natural-resources and emerging-markets expert, was in town for the San Francisco Money Show………………………………………..Full Article: Source

Banks see second quarter revenue dip from commodities

Posted on 23 July 2015 by VRS  |  Email |Print

Pinning down the financial performance of energy commodity trading at top financial institutions is complicated by the manner in which banks segment their operations and lump together certain revenue numbers. While differences exist from bank to bank, for the most part the big banks place commodity trading within their fixed-income unit of their investment bank division.
Low commodity prices, less volatility, and thus lower volumes traded, have all had an impact. A review of some of the numbers just released for the second quarter of 2015 at three top banks suggests that commodity trading in Q2 took a big hit. This follows a first quarter in which fixed-income numbers rose on what bank analysts said at the time was bullish volumes………………………………………..Full Article: Source

As Commodities Tumble, Asia-Pacific Economies Grasp for Growth

Posted on 22 July 2015 by VRS  |  Email |Print

The swift decline of prices for commodities from crude oil to coal exposes how some Asia-Pacific economies reliant on those exports have struggled to find new sources of growth. The Federal Reserve’s plans to raise interest rates later this year, coupled with a resurgent U.S. dollar, sparked the current rout in commodities prices.
Yet China’s slowing demand had started the trend as early as 2012. Since then, policy makers from Australia to Indonesia have called for plans to develop new sectors of their economies. The latest tumble highlights the shortcomings of those overhauls, analysts say. The problem is that new industries haven’t yet filled the hole left by commodities-driven growth, said Paul Dales, chief economist for Australia and New Zealand at Capital Economics, a research firm………………………………………..Full Article: Source

Commodities are “in a mess” – pity the investor tied to yo-yo prices

Posted on 22 July 2015 by VRS  |  Email |Print

Worldwide, commodities investors in the primary sector – still struggling after the banking crisis of 2008 and the eurozone quaking that began in 2012 – were faced with the worst performance in precious metals and agricultural products this week. The falls were prompted by a stronger dollar as fears that the Greek debt impasse were irrelevant, and queries over a growth slowdown in China.
The gold price is at its lowest in two years, and this fact and allied falls in other commodities has driven linked equities and hedge funds south – some after years of buoyancy. The Bloomberg Commodities Index dropped to a 13-year low Monday, weaker than after the banking meltdown of 2008 and the euro-zone crisis of 2012. From oil to copper to sugar, little has escaped the rout in the year’s worst-performing asset class………………………………………..Full Article: Source

Four signs of pain in commodities

Posted on 21 July 2015 by VRS  |  Email |Print

Oil has been reeling for about a year; now gold is getting slammed - not pretty for commodities investors. The Bloomberg Commodities Index dropped to a 13-year low Monday - weaker than after the banking meltdown of 2008 and the euro-zone crisis of 2012. From wheat, to copper, to natural gas, little has escaped the rout.
“Commodities are a mess,” Walter “Bucky” Hellwig, who helps manage $US17 billion at BB&T Wealth Management, said. “We are not looking to add to positions.” It’s the year’s worst-performing asset class, with the Bloomberg gauge down more than 7 per cent. In Monday’s drop, the value of holdings in exchange-traded products for gold plunged to its lowest since 2009. During a stretch of about 15 minutes in Asian trading hours, prices of the metal fell the most in two years………………………………………..Full Article: Source

Commodities crash could turn Australia into a new Greece

Posted on 20 July 2015 by VRS  |  Email |Print

The commodities boom made Australia the lucky country but rising debt and a slump in Chinese demand for resources signal tough times ahead Down Under. Last month Gina Rinehart, Australia’s richest woman and matriarch of Perth’s Hancock mining dynasty delivered an unwelcome shock to her workers in Western Australia: accept a possible 10pc pay cut or face the risk of future redundancies.
Ms Rinehart, whose family have accumulated vast wealth from iron ore mining, has seen her fortune dwindle since commodity prices began their inexorable slide last year. The Australian mining mogul has seen her estimated wealth collapse to around $11bn (£7bn) from a fortune that was thought to be worth around $30bn just three years ago………………………………………..Full Article: Source

Commodities firms facing tough times in fundraising amid oversupply and weak demand

Posted on 20 July 2015 by VRS  |  Email |Print

China still has great demand for energy and metals to feed its urbanising and industrialising economy, but it is facing challenges in raising funds for new mining projects, with the commodities and energy sectors lingering at the bottom of a down-cycle.
Its demand for products from the core industrial polluters - power, steel and cement - also comes as President Xi Jinping is making ambitious pledges to cut carbon emissions and as influential international investment funds have led a backlash against carbon-intensive mineral projects - particularly coal - divesting holdings and cutting billions of dollars from available funding that China needs. Amid oversupply in most commodities, depressed prices have translated into poor profits or losses for energy and metals producers across the whole supply chain, causing investors to shy away from their shares………………………………………..Full Article: Source

Global Economic Turbulence Rattles Commodity Prices

Posted on 17 July 2015 by VRS  |  Email |Print

The influx of global economic crises has had a bearish impact on numerous commodities, including energy, ferrous metals, and even precious metals. Supply and demand economics over the long-term have contributed to the problem, with rising energy production and long-term slowing of demand in China.
There are a few bright spots that traders may want to consider, including wheat, canola, and possibly ethanol, as well as precious metal mining equities. There has been no shortage of bad news for the global economy over the past couple of months — this precariousness has taken a toll on many economically-sensitive commodities………………………………………..Full Article: Source

Falling Oil Prices Stress Commodity Bearishness

Posted on 16 July 2015 by VRS  |  Email |Print

For almost 3 months now, oil prices have moved in a very narrow range. However, this month prices fell 15% in a matter of days, breaking that range and stressing the bearish sentiment among commodity investors. Some analysts point out that the decline was caused by a jump in rigs drilling for oil in the US.
Another factor to watch is the historic Iranian nuclear agreement with the US and five other world powers. This deal might have risen the bearish sentiment as Iranian oil output is expected to increase. Oil from Iran will take time to return, and will not have a market impact before next year, but given that the global petroleum market has an oversupply of about 2.5 million barrels per day, the mere prospect of new oil doesn’t help market sentiment………………………………………..Full Article: Source

Iron ore, commodities to fall: Citi third quarter outlook takes bearish view

Posted on 15 July 2015 by VRS  |  Email |Print

Citi expects iron ore prices to fall into the $US30s in the second half of 2015, with the prices of other commodities – coal, oil and grain – also expected to weaken. Citi’s third quarter outlook, titled Sorting through the asset market bargain bin, stated that “rebounding Australian exports, lower Chinese steel production, mine re-starts and ramp up of new supply are expected to push iron ore prices below $US40 per tonne.”
Iron ore was most recently trading at $US50.30 per tonne after falling to $US44.59 earlier in the month. “The iron ore market continues to suffer from the three Ds: weak Chinese steel demand, cost deflation, and deleveraging among traders and steel mills.”……………………………………….Full Article: Source

Commodity prices swing on China equities

Posted on 13 July 2015 by VRS  |  Email |Print

Commodities from metals to iron ore and oil followed the fortunes of China’s stock markets this week, plunging to multiyear lows before recovering some ground. Iron ore fell 11 per cent in just one day, while all of the major industrial metals traded on the London Metal Exchange fell over the week, apart from lead. Copper was among the hardest hit, touching a six-year low of $5,240 per tonne.
The correlation with China’s stock markets is a sign of how much commodities depend on growth in the country, the world’s largest consumer. The price of Brent crude, the international benchmark, fell more than 6 per cent over the week to $58.22 a barrel. Signs that US production could be more resilient and the prospect of more barrels from Iran should a nuclear deal lead to the lifting of sanctions has also put pressure on prices. Another factor was the uncertainty over the crisis in Greece………………………………………..Full Article: Source

Global Concerns Have Market Volatility Up, Commodity Prices Down

Posted on 10 July 2015 by VRS  |  Email |Print

Whether real or orchestrated, this certainly has given some cause for concern to US equity markets. While there are obvious legitimate concerns economically, they don’t seem to warrant this type of movement up and down movement in US markets, making one look toward the algorithms and a lack of mid level trader liquidity as a culprit in the massive swings that we are starting to see.
It seems like a good time to make certain risks are quantified through long options or stop loss tools as these markets are not only unforgiving but also multi directional in the same session………………………………………..Full Article: Source

China’s troubles hit commodities prices

Posted on 09 July 2015 by VRS  |  Email |Print

China is once again at the center of the commodities story, but not in a good way this time. The country’s stock-market slump and concern over Greece’s economic crisis have helped send commodities toward multiyear lows, choking off a nascent recovery in prices from oil to iron ore, and dragging down shares in resource companies and currencies of producing nations.
Though prices stabilized somewhat Tuesday after a broad selloff on Monday, commodities as an asset class have fallen into an extended funk this year, as fears about an excess of products like aluminum and coal have taken hold. The S&P GSCI–an index that tracks a diversified basket of commodities–is down 36% over the past year, and had fallen 6.4% this month as of the close of trading on Monday………………………………………..Full Article: Source

Commodities Plunge on Fears of China Cutback

Posted on 09 July 2015 by VRS  |  Email |Print

Prices for a raft of commodities sank to multiyear lows this week, as China’s inability to stem the slide in its domestic equity markets intensified fears about economic growth in one of the world’s largest consumers of oil, metals and food.
Coming after a brief period of rising prices, the sudden downturn served as a reminder to investors of the weak fundamental outlook for several commodities already beset by weak demand and excessive supply………………………………………..Full Article: Source

Commodities continue to see volatility, China scare persists

Posted on 09 July 2015 by VRS  |  Email |Print

The global commodity market witnessed sharp volatility on Wednesday after tumbling in early trade due to concerns that a persistent slide in China’s stock market may have broader damaging impact on other markets as well.
Earlier in the day, the Bloomberg Commodity Index, which tracks the prices of 22 commodities (from oil to natural gas), dropped as much as 0.8% to 96.8069, its lowest level on a closing basis since late 2001 and slightly over an intraday low of 96.258 on March 18………………………………………..Full Article: Source

How much worse can the commodity bear market get?

Posted on 09 July 2015 by VRS  |  Email |Print

While the world worries about China, Europe worries about Greece and the UK worries about Osborne’s budget, today here at Money Morning we turn our heads to something more useful – industrial metals. Although at the moment, judging by their price, there aren’t so many who want to use them.
We’re talking copper, zinc, and iron… The commodity bear market is now in its fifth year. Yet it seems like only yesterday that we were in a commodity supercycle. Years of under-investment, a failure to make significant new discoveries, and insatiable Asian demand for raw materials meant that the price of any metal would just ‘go up’. Precious metal, industrial metal, rare earth metal – the market was indiscriminate………………………………………..Full Article: Source

China fears CRASH in gold market next to come

Posted on 09 July 2015 by VRS  |  Email |Print

The crumbling Chinese stock market is crashing into the global metals market. Copper plummeted to six-year lows and gold took its biggest hit in nearly two months on Tuesday as alarms continue to sound about China’s health. At first glance, it may not make sense for trouble in China to impact precious and industrial metals. But it’s important to remember how turbulence in one asset class can cause trouble in another.
Chaos has gripped Chinese stocks in recent weeks, sending the previously red-hot market nose diving 25%. The ferocious selling has forced investors who bought stocks with borrowed money to pay back loans by dumping other assets — including gold and other commodities………………………………………..Full Article: Source

Commodity Slump Goes From Bad to Worse Amid China, Greece Spasms

Posted on 08 July 2015 by VRS  |  Email |Print

Commodities are going from bad to worse. Raw materials were already among the year’s worst-performing asset classes. Now they’re bearing the brunt of economic spasms from China to Greece. “Some markets looked fragile anyway,” said Kevin Norrish, director of commodities research at Barclays Plc.
The past two days wiped 4.2 percent off the Bloomberg Commodities Index, which tracks 22 raw materials. It was the biggest such decline since September 2011. Here’s how that breaks down and why: Oil has the biggest footprint in broad-based commodity indexes………………………………………..Full Article: Source

China’s Troubles Hit Commodities

Posted on 08 July 2015 by VRS  |  Email |Print

China is once again at the center of the commodities story, but not in a good way this time. The country’s stock-market slump and concern over Greece’s economic crisis have helped send commodities toward multiyear lows, choking off a nascent recovery in prices from oil to iron ore, and dragging down shares in resource companies and currencies of producing nations.
Though prices stabilized somewhat Tuesday after a broad selloff on Monday, commodities as an asset class have fallen into an extended funk this year, as fears about an excess of products like aluminum and coal have taken hold. The S&P GSCI—an index that tracks a diversified basket of commodities—is down 36% over the past year, and had fallen 6.4% this month as of the close of trading on Monday………………………………………..Full Article: Source

Industrial Metals Drive Commodities Down on China, Greece Woes

Posted on 08 July 2015 by VRS  |  Email |Print

Copper tumbled to a six-year low and nickel plummeted the most since 2010 as industrial metals led a plunge in commodities after China’s equity rout and turmoil in Greece eroded prospects for raw-material demand.
The Bloomberg Commodity Index of 22 prices fell 1.5 percent to close at 97.6 after touching 96.48, the lowest since March 18. Aluminum and lead entered bear markets. Freeport McMoRan Inc., the world’s top publicly listed copper producer, posted the fifth-biggest drop among companies in the Standard & Poor’s 500 Index. Glencore Plc, the largest commodity trader, slumped to a record in London………………………………………..Full Article: Source

The Commodity Rout Cannot Be Ignored

Posted on 08 July 2015 by VRS  |  Email |Print

If you didn’t know any better and you just looked at the commodities markets, you could easily presume that we could be going into a worldwide recession led by Greece. Think about it. You have copper in total breakdown mode. Copper still matters. It isn’t some made-up metal, it’s for real. You have Alcoa (AA) plummeting.
We will hear from it tomorrow, and I like it longer term, because it is transforming itself into a higher value-added metals company, not just an aluminum company. Tomorrow, though, we will not hear glowing things about aluminum. We know that the oil collapse is vicious, the worst we have seen during this moment, a free-fall as if many longs are caught and are forced to liquidate………………………………………..Full Article: Source

Commodities prices fall as Grexit fears build

Posted on 07 July 2015 by VRS  |  Email |Print

As stock markets decline and Greek bond yields soar, commodities markets are also mourning the result of Sunday’s referendum where Greece voted against accepting the terms of an austerity-focused bailout.
The price of Brent crude, the global oil benchmark, has slipped down 1 per cent to $59.7 a barrel. Copper traded on the London Metal Exchange has fallen 2.7 per cent to $5596 per tonne, as the red metal, which is viewed by many investors as a proxy for economic growth, takes the brunt of fears over the stability of the eurozone………………………………………..Full Article: Source

Oil, Commodities Tumble as Investors React to Greek Vote

Posted on 07 July 2015 by VRS  |  Email |Print

Risk aversion dominated energy and commodity markets in Asian trade Monday as prices fell sharply, led by oil and industrial metals, on heightened fears of Greece’s exit from the eurozone. Even gold, traditionally viewed as a safe-haven by investors, failed to live up to that epithet as a broad-based selloff hit the markets.
On Sunday, Greeks overwhelmingly voted against their international creditors’ conditions for further bailout aid, adding to uncertainty around the country’s eurozone membership and heightening risks of market contagion. “Markets are due for a bumpy ride as the face-off ensues,” Singapore-based Phillip Futures said………………………………………..Full Article: Source

China Woes Sink Commodities

Posted on 07 July 2015 by VRS  |  Email |Print

Commodities are on track for their worst day since November as a steep sell off in China’s stock market takes a toll on investors outlook for raw-materials demand. The S&P GSCI, an index that tracks a broad basket of commodities, was recently down 4.3% at 415.42 with oil and copper futures leading the declines.
The losses come after China’s government halted new companies from selling shares to the public and announced plans to establish a fund to stabilize the country’s stock market over the weekend. The Shanghai Composite has lost more than a quarter of its value since setting a high on June 12………………………………………..Full Article: Source

Fail: Gold can’t even rally on a currency crisis

Posted on 07 July 2015 by VRS  |  Email |Print

Gold, the world’s oldest currency and the most basic store of wealth, used to be where the world turned when times got rough. But after a Greek referendum that put the future of the euro in question and an equity bear market in China, bullion has barely budged.
Gold futures was little changed through midday Monday after jumping immediately after the Greek “no” vote in overnight trading. Gold is now down almost 2 percent for 2015 and virtually unchanged over the last one month amid these financial shocks. In the past, when a country got ready to abandon a currency, gold typically would fill that void………………………………………..Full Article: Source

Commodities fall saves China’s blushes

Posted on 06 July 2015 by VRS  |  Email |Print

China’s economy would have grown at less than 6 per cent in the first quarter of the year were it not for the collapse in global commodity prices, according to data reviewed by the Financial Times. The latest evidence of a Chinese economic slowdown, which comes amid sharp falls in the country’s equity markets, will add to growing doubts over whether Beijing can achieve its 7 per cent growth target for the year.
At its first-quarter briefing in April, China’s National Bureau of Statistics (NBS) reported that gross domestic product had risen 7 per cent, but did not provide a breakdown of the figure into its three components — consumption, investment and net exports………………………………………..Full Article: Source

How would the possible Grexit hit commodities?

Posted on 06 July 2015 by VRS  |  Email |Print

The Greek government’s decision to hold a referendum on the latest creditor package shocked the bond and equity markets. Should there be similar fundamental or financial shocks for commodity prices? From a fundamental perspective, no. Greece as an economy contributes 0.4% of global GDP and its largest impact on the commodity markets – shipping – is unlikely to see disruptions as a result of the referendum.
The financial, or theoretical, perspective is different. We believe the fear of contagion and impact on currency markets will be felt most acutely in gold, crude oil and the base metals. For gold, the rush to a safe, tangible commodity has an obvious appeal………………………………………..Full Article: Source

Bank for International Settlements warns of emerging market risks

Posted on 29 June 2015 by VRS  |  Email |Print

Economists and foreign investors may have overestimated the potential economic output of a quintet of Latin American countries by 2 percentage points, leading to the possibility of sharp financial outflows when reality sinks in. Separately, “massive borrowing” by emerging market companies has also left them vulnerable to funding reversals if and when investor sentiment towards EMs reverses.
These are among the warnings from the Bank for International Settlements, commonly known as the central bankers’ central bank, in its annual report, released on Sunday. Amid slowing economic growth across much of the emerging world, the BIS says that a “moderation” of growth from the very high rates seen in recent years is “probably unavoidable”………………………………………..Full Article: Source

Latin America: The loss of El Dorado

Posted on 29 June 2015 by VRS  |  Email |Print

After the commodity boom, the region needs a new formula for growth. It was wonderful while it lasted. For much of this century Latin America saw robust economic growth, a big fall in poverty and a swelling of the middle classes. Now the good times are over. Emerging markets everywhere are subsiding like a cooling soufflé. But Latin America has gone stone cold. The IMF expects growth of just 0.9% in 2015, which would be the fifth successive year of deceleration.
Many economists are talking of a new normal of growth of only 2% or so a year—less than half the region’s pace during the boom. What has gone wrong? The short answer is that the great commodity supercycle triggered by the industrialisation of China is over. Rising exports of minerals, soya beans and fuels lifted many South American economies. Without that fillip the region has converged downwards to the 2.4% long-term growth rate of Mexico, which is not a big commodity exporter………………………………………..Full Article: Source

How Asia avoided a commodity crisis

Posted on 29 June 2015 by VRS  |  Email |Print

Edmund Harriss, manager of the Guinness Asian Equity Income fund, says Asian countries have proved resilient to recent financial and commodity crises by becoming integrated manufacturing hubs that are not dependent on commodities
The BRIC economies have been a popular investment concept, but the economies of Brazil and Russia have proved too dependent on commodities. This was to their advantage as prices rose, especially during the China investment boom, but as this slowed, falling commodity prices left their economies cruelly exposed. Both notably failed to broaden their industrial bases in the good times. Their currencies have now weakened and both are struggling with recession and inflation………………………………………..Full Article: Source

When commodities trade at negative prices…

Posted on 22 June 2015 by VRS  |  Email |Print

Here’s something that doesn’t happen every day. The price of propane in Edmonton, Canada — home of Tar Sands production — is trading at a negative price. Which means, if you’ve got propane in Edmonton Canada, chances are you’re having to pay people to take if off your hands right now. Whilst the above is specific to Edmonton, the wider US picture for propane isn’t much better.
The EIA reported a 1.865 mb net build in propane and propylene inventories last week, raising total US stock levels to 80.66 mb or a y/y storage surplus of 29.419 mb, write the BNP Paribas analysts………………………………………..Full Article: Source

Falling commodity prices slow New Zealand economy

Posted on 19 June 2015 by VRS  |  Email |Print

New Zealand’s economy grew slower than expected in the quarter ending March, prompting analysts to forecast another interest rate cut next month. Gross domestic product (GDP) rose by 0.2 percent in the March quarter, down from 0.7 percent in the previous quarter, the government statistics agency said Thursday.
The lower growth reflected a 2.9-percent fall in primary industries, the largest fall since September 2010, according to Statistics New Zealand. “Oil and gas were big factors in the lower GDP growth this quarter,” national accounts manager Gary Dunnet said. “There was less extraction and exploration, as international prices fell.”……………………………………….Full Article: Source

Commodities still ‘on life support’ as rally flatters to deceive

Posted on 04 June 2015 by VRS  |  Email |Print

Asset allocators are refusing to be swayed by a recent rally in commodity prices, saying the bounce is far from sustainable for a sector which remains “on life support”. The price of Brent crude oil dropped from $114 a barrel last summer to below $46 in early January, but has since rallied to above $62.
Commodities portfolios have mirrored that rise: some resources funds have rebounded 8% since Brent’s low on 13 January, according to FE. However, fund of funds managers say they are not tempted to view resource funds’ short-term rebound as the start of a more significant recovery for the sector………………………………………..Full Article: Source

SocGen Deal Reflects Commodity Troubles

Posted on 28 May 2015 by VRS  |  Email |Print

Société Générale SA told Jefferies LLC that it’s interested in buying its Bache commodities-trading unit — but only parts of it, Christian Berthelsen and Tatyana Shumsky report. It’s an indication of how unattractive raw-materials trading is amid fewer profits and more regulation. SocGen expects to take more than 300 of Bache’s top clients by revenue, including producers and end users of materials ranging from crude oil to aluminum.
But many brokers on Jefferies Bache’s energy team are moving to U.K. brokerage ED&F Man Capital Markets after SocGen decided to absorb just a third of client assets. “This year has been a reality check for the industry,” said Matt Simon, head of futures research at consulting firm TABB Group LLC. “It’s a simple case of what the profitability is going to be. There’s lower commissions, fewer instruments you can profit on, stronger capital commitments and growing pressure on the business.”……………………………………Full Article: Source

Commodity price drop not over, no strong rally in oil: DBS

Posted on 22 May 2015 by VRS  |  Email |Print

A painful consolidation across commodity markets has longer to run and prices need to sink further below the cost of production to lure buyers and cut huge global stocks, an executive at DBS Group Holdings said on Thursday. DBS, Singapore’s biggest bank, stepped into commodities after the 2008/2009 financial crisis and said two years ago it aimed to double business annually.
“Production expansion from the bull era is catching up with the market and it will need some time to digest the oversupply. Prices … need to come down to the level that would shut down production and encourage more consumption,” Leong Chean Wai, DBS head of commodity derivatives, told Reuters………………………………………..Full Article: Source

Commodities Rally Hit by Stronger Dollar

Posted on 20 May 2015 by VRS  |  Email |Print

Commodity prices tumbled on Tuesday, as a resurgent dollar and concerns about weakness in China’s economy pushed investors out of everything from crude oil to copper and corn. The S&P GSCI index, which tracks prices of 24 commodities, recorded its biggest one-day drop in more than a month and ended at its lowest since April 28.
Before that, commodities markets, led by a recent rebound in crude oil, staged a surprising two-month rally that had pushed the index to its highs for the year. Driving the gains was a faltering greenback, which many short-term investors took as a signal to scoop up raw materials………………………………………..Full Article: Source

Big banks flag dangers of financial bubble in oil and commodities

Posted on 12 May 2015 by VRS  |  Email |Print

Barclays warns that the latest commodity boomlet has charged ahead of economic reality across the world: ‘Watch out: this rally may not last’. The big global banks have begun to warn clients that the blistering rally in oil and industrial commodities in recent weeks has run far ahead of economic reality, raising the risk of a fresh slump in prices over the summer.
Barclays, Morgan Stanley and Deutsche Bank have all issued reports advising investors to tread carefully as energy and base metals fall prey to unstable speculative flows in the derivatives markets………………………………………..Full Article: Source

Continued Weakness in Commodity Markets May Signal Long Term Easing of Prices

Posted on 23 April 2015 by VRS  |  Email |Print

Well-supplied markets are continuing to drive down prices of commodities, across the board, says the latest issue of the World Bank’s Commodity Markets Outlook (CMO). Most indices edged further down during the first quarter of 2015, with food down 7.3 percent, crude oil down 13 percent and metals down 9 percent compared to the fourth quarter of 2014. Prices are expected to stay weak for the rest of this year, with only a marginal recovery expected in 2016.
“Surplus production and subdued demand due to weak global growth are continuing to depress commodity prices. The slowdown in emerging economies, coupled with a strong U.S. dollar, will likely keep the lid on prices. Although weaker prices will mean lower revenues for commodity exporting countries, they will help reduce current account and fiscal deficits in many commodity-importing countries,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group……………………………………Full Article: Source

BlackRock says more commodities pain on the way for Australia

Posted on 22 April 2015 by VRS  |  Email |Print

The steep slide in commodity prices has yet to take its full toll on the Australian economy, BlackRock Australia head of fixed interest Stephen Miller says. “I am a bit more negative on the economy than most,” Miller told The Australian Financial Review.
“The reason is that the expectations of capital expenditure numbers that were released in late February were very worrying. As expected, mining investment fell off a cliff. But there was very little evidence that investment in other parts of the economy was occurring to take its place. “I think that the decline in commodity prices has yet to flow through to the economy. Just as higher commodity prices provided a massive income boost in the period up to 2013, they’re now providing a massive income contraction.”………………………………….Full Article: Source

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