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Commodities Briefing - Category | Commodity Crisis more

Pain in global commodities to continue for the long term

Posted on 01 September 2015 by VRS  |  Email |Print

Stocks of leading companies producing iron ore, crude oil, steel, aluminium,and zinc have fallen 40-60% over the past 12 months to fresh lows. This fall has mirrored the 40-60% rout in underlying global commodity prices such as crude, iron ore, and steel. So, is this the time to do value buying or distressed asset buying? Not really.
Investors should avoid them as global demand-supply dynamics can potentially keep commodity prices under pressure for years to come. The top four global iron ore companies have been on a capacity expansion spree since 2012. By 2017, their production is likely to touch 1.2 billion tonnes, a massive 50% increase in supply. This supply will be at the lowest end of the cost curve ($25-40 per tonne, including freight)………………………………………..Full Article: Source

Even a modest slowdown in China sacks the global commodities market

Posted on 31 August 2015 by VRS  |  Email |Print

Until recently, China was a beast whose appetite knew almost no limit. It feasted on the world’s raw materials, buying them in a voracious, globe-spanning spree. Indonesian coal powered villages that morphed into mega-cities. Peruvian copper lined power cables for nearly 100 new mass-transit rail lines. Brazilian and Australian iron ore was turned into steel for skyscrapers rising in Shanghai at a rate of one per week.
So profound was that growth that even the hint of a slowdown is causing convulsions in the many countries that fed China’s rise. The deceleration in Chinese investment and construction, though gradual, has come with a dramatic side effect: a vast lowering in the value of the raw materials that are mined or drilled from the earth. By one major measure, commodity prices across the globe are at their lowest point in a century………………………………………..Full Article: Source

China isn’t the crisis some would have you believe

Posted on 31 August 2015 by VRS  |  Email |Print

Other global economies have plenty to look forward to, despite the blustery conditions in Asia. It is never possible to be sure that we aren’t about to face disaster. Some people seem to have made a living by foreseeing trouble ahead. The American stock market has “forecast” something like 10 of what turned out to be the past two recessions. And there is no reason why the Chinese stock market shouldn’t follow the same pattern.
Stock markets tend to get too much attention in the media. They are exciting, with quite large movements up and down occurring in very short order. By contrast, the processes of the real economy grind away slowly, and often in obscurity, their wonders to perform. But, in the end, it is the real economy that matters………………………………………..Full Article: Source

China’s Economic Slowdown Hurts Oil Market

Posted on 31 August 2015 by VRS  |  Email |Print

The 2015 budgets did take account of the near halving in the previous year of oil prices which had remained broadly stable at $110 a barrel between 2010 and 2015. When the oil price halved past year, from $110 to $55 a barrel, the cause was obvious: Saudi Arabia’s decision to increase its share of the global oil market by expanding production.
Reports earlier this week suggested that Venezuela was seeking an emergency OPEC meeting to discuss strategies about overturning the collapse in prices, which has hit the South American country quite hard. The country suffers from “operating difficulties at existing, mature oil fields”, according to the U.S. Energy Information Administration………………………………………..Full Article: Source

Behind the commodities bust

Posted on 27 August 2015 by VRS  |  Email |Print

First was the dot-com bubble, then the housing bubble. Now comes the commodities bubble. We don’t fully understand the stock market’s current turmoil, but we know it’s driven at least in part by a bubble of raw material prices. Their collapse weighs on world stock markets through fears of slower economic growth and large financial losses.
All bubbles share similar characteristics. There’s a strong, enthusiastic demand for some object (whether stocks, homes, oil or tulips). High demand pushes up prices, which inspires more demand. Prices ultimately reach unsustainable levels so that when spending slows, the bubble implodes. Commodities have now traced this familiar path………………………………………..Full Article: Source

Commodity rout unlike 2008 recession, no China to the rescue

Posted on 26 August 2015 by VRS  |  Email |Print

With the prices of many major commodities currently plumbing depths last seen six years ago, what are the chances of a repeat of the China-led boom that lifted resources out of the 2008 recession funk? To answer the question it’s worth looking at what is the same and what is different about the weakness in commodity prices between 2008-09 and now, and the answer is not much is the same.
The main similarity is simply that prices are weak and have fallen precipitously in a relatively short period of time. Brent crude fell by about 75 percent between the all-time high in July 2008 and the low in December that year………………………………………..Full Article: Source

Commodities crash to ‘99 level on China fears

Posted on 25 August 2015 by VRS  |  Email |Print

Commodity prices hit their post-crisis peak in early 2011, and have generally been sliding since then. They are now down to where they were in 1999, before the 2000s commodities boom began. The Bloomberg Commodity Index of 22 raw materials from oil to metals lost as much as 2.2% to 85.8 points, the lowest level since August 1999.
Crude oil, aluminium, iron ore, copper, zinc, coal and other industrial commodities looked at a rout due to weaker demand from China, one of the world’s largest consumers of raw materials. China accounts for over 40% of global consumption of such commodities. Brent for October settlement declined as much as 5% to $43.28 a barrel on the ICE Futures Europe exchange, the lowest price since March 2009………………………………………..Full Article: Source

Why commodities have crashed

Posted on 25 August 2015 by VRS  |  Email |Print

Commodity prices have fallen to their lowest level since the financial crisis and — by at least one measure — to the lowest this century. While the natural resources sector has been caught up in fears about China’s growth slowdown, each commodity still has its own market dynamics. Here is a quick guide to what is happening.
Growing signs that the oil glut will persist has unnerved traders and investors. But it is China that is spreading real fear. The country has been a bigger contributor to oil demand growth than any other in the past decade, so any slowdown in the Chinese economy may spell bad news for crude consumption………………………………………..Full Article: Source

Chinese jitters: commodities skid to 16-year lows led by oil

Posted on 25 August 2015 by VRS  |  Email |Print

Oil futures led a dramatic fall in commodity prices on Monday, with US crude trading below $40 a barrel as fears over China’s economy sent investors fleeing to safe havens such as gold. The Bloomberg Commodity Index, which tracks 22 raw materials, lost as much as 1.7 per cent to 86.3542 points to its lowest level since August 1999.
Raw materials have slumped this year as concerns have mounted of weakening demand from China, the world’s second-largest economy and top user of everything from industrial metals and energy to food. Fears were piqued when China devalued the yuan two weeks ago, a move that many took as a signal the economy is in worse shape than thought, and which could hurt the Asian giant’s purchasing power for dollar-denominated commodities………………………………………..Full Article: Source

Economy shaky amid delincing commodities, stocks and China slowdown

Posted on 24 August 2015 by VRS  |  Email |Print

We’ve had just over six years of quantitative easing. So how’s that working out? The US oil benchmark, West Texas Intermediate, has dipped below $US40 a barrel, its lowest level since 2009, the year QE kicked in. The Dow lost 1000 points last week, its worst weekly fall since October 2008 (the month after the Lehman Brothers collapse kicked off the GFC).
On Friday copper lost another $US50 to close at $US5040 a tonne; that day, and on Tuesday, it dipped below the critical $US5000 mark. Aluminium fell to a new low of $US1555/tonne. Nickel is back up over $US10,000 but, as it fell to $US9100 the week before, the reports are that traders are sitting on their hands waiting for another big dip. As it was, the metal lost $US215 on Friday to close at $US10,120/tonne. Tin dropped $US400 on Friday, closing at $US14,895/tonne………………………………………..Full Article: Source

Global markets tumble as commodity prices fall into ‘death spiral’

Posted on 21 August 2015 by VRS  |  Email |Print

Britain’s benchmark index falls into correction territory as US stocks suffer biggest fall since February 2014. The FTSE 100 fell into official correction territory on Thursday, one point shy of January’s year-low hit, after an eighth consecutive day of losses.
Fraught with concerns about slowing growth in China and the after-effects of last week’s devaluation of the yuan, investors fled to the side lines, bringing this week’s losses to 2.5pc. The FTSE 100 closed 35.56 lower at 6,367.89………………………………………..Full Article: Source

What risks does the commodities slump pose for income investors?

Posted on 21 August 2015 by VRS  |  Email |Print

Eric Moore, manager of the Miton Income fund, looks at how major resources companies are responding to price falls. Some of the biggest changes in global markets over the last 12 months have come in commodity markets. Compared to a year ago, gold is down 15%, copper is down over 25%, sugar is down by a third, iron ore is down over 45% and the oil price has halved. These are massive moves, which have equally massive implications for equity investors.
For starters, ‘Dr Copper’ and his fellows are suggesting all is not well with aggregate demand, which does not chime with an equity market that remains keen to anticipate a sustained recovery………………………………………..Full Article: Source

Rout in commodities eats into miners’ dividends

Posted on 20 August 2015 by VRS  |  Email |Print

The rout in commodities isn’t only taking a toll on shares of mining companies, it is also driving dividends issued by miners sharply lower. Aggregate dividends from large precious metals miners are set to drop to $1.8 billion this year, more than 60% below the $4.9 billion in payments made in 2011, according to dividend forecasting data compiled by Markit that was released this week.
The reduction comes as prices for metals have been mauled, in part by worries that a slowdown in the Chinese economy will dampen demand for natural resources. The surprise devaluation of the yuan last week by Chinese officials spurred concerns the currency move will hurt imports of metals………………………………………..Full Article: Source

Is China to Blame for the Commodities Slump? (Video)

Posted on 20 August 2015 by VRS  |  Email |Print

Sanford Bernstein Senior Analyst Paul Gait and Bloomberg’s Javier Blas discuss the commodities crunch as oil extends its decline and copper tumbles for a fifth day. They speak to Bloomberg’s Guy Johnson and Caroline Hyde on “Countdown.”.………………………………………Full Article: Source

Indian commodities fall in tandem with global metals

Posted on 20 August 2015 by VRS  |  Email |Print

As global metal prices continue to slide, the cost of these commodities in the Indian market have fallen in tandem, ensuring that end users of commodities in India benefit from the price falls.
While global prices tend to set the direction, domestic metal prices are also driven by growth in the local economy, particularly in sectors such as infrastructure and real estate. This time, sluggish growth in these sectors in India has meant that price falls in India and globally are comparable………………………………………..Full Article: Source

Stumbling dragon, crumbling commodities

Posted on 18 August 2015 by VRS  |  Email |Print

Commodity prices fell sharply last week as China devalued the yuan. But a depreciation of 3-4% is unlikely to affect the demand for commodities in China. Instead, the way to look at it is that both yuan depreciation and low commodity prices are the outcome of low Chinese growth. What matters for commodity prices is, therefore, the outlook on Chinese growth.
Clues about that are available from the International Monetary Fund’s (IMF’s) annual consultations with the Chinese authorities, the report on which was made available last Friday. The IMF forecasts a slowing down of Chinese growth, with its gross domestic product, or GDP, predicted to increase 6.8% this year, 6.3% in 2016 and 6% in 2017. This is substantially below the consensus estimates for 2016 and 2017……………………………………….Full Article: Source

Commodities caught in Federal Reserve crossfire

Posted on 18 August 2015 by VRS  |  Email |Print

After it emerged from bankruptcy protection in 2014, Genco Shipping & Trading was the darling of many hedge funds and distressed investors. But with world trade still virtually flat, Genco’s prospects have not improved much. The circumstances of dry bulk carriers are especially bleak.
In the first week of August, meanwhile, US coal producer Alpha Natural Resources filed for bankruptcy protection. The drop in coal prices is now dragging down metals, including aluminium, copper, iron ore and steel, as well as mining and trading firms………………………………………..Full Article: Source

China’s yuan devaluation spells trouble for these commodities

Posted on 13 August 2015 by VRS  |  Email |Print

China is the world’s largest consumer of commodities and, when it comes to metals, is the largest producer of many, as well. So the country’s surprise decision to devalue the yuan by around 1.9% versus the dollar sent shock waves through commodity markets Tuesday. Analysts at Macquarie offered up a concise explanation for what happened:
“Assume that the metal price in U.S. dollars is constant, then a fall in the yuan against the dollar increases the yuan price of that metal. This should encourage Chinese producers to produce more of the metal, and Chinese consumers to consume less of it,” they said, in a note. “This will mean China needs to import less of the metal (or if it is an exporter, it can export more of metal). This should lower the ‘world price’, i.e. the U.S. dollar price.”……………………………………….Full Article: Source

With Yuan Devaluation, China Digs a Hole for Commodities

Posted on 12 August 2015 by VRS  |  Email |Print

China’s appetite for commodities from gold to crude oil to copper is likely to be hurt in the near term after the country’s surprise decision to devalue its currency. Most commodities are priced in dollars, so a weaker yuan will raise the cost of imports for buyers in China, weighing on demand.
Given China’s role as a huge buyer of global commodities—it consumes nearly half of the world’s annual output of metals, for instance—any drop in demand there is likely to put further downward pressure on resource prices, many of which are already at multiyear lows. “In the short run, this [devaluation] is more bad news for commodity prices. A weaker Chinese currency is likely to mean weaker demand for internationally produced commodities,” said Paul Bloxham, chief economist for Australia and New Zealand at HSBC………………………………………..Full Article: Source

Weaker Yuan Wallops Commodities as Importers to Face Higher Cost

Posted on 12 August 2015 by VRS  |  Email |Print

The devalued yuan is dealing another blow to commodities. Oil and industrial metals fell amid speculation the weaker Chinese currency will hurt demand by making dollar-denominated imports more expensive. The Bloomberg Commodity Index retreated as much as 2 percent on Tuesday after the People’s Bank of China cut its daily reference rate for the yuan by a record 1.9 percent, triggering the currency’s biggest one-day loss since 1994.
Commodities investors were already concerned that demand was slowing in China, the world’s biggest consumer of energy, metals and grains. But the government’s unexpected latest effort to bolster the economy, by cutting the daily reference rate for the yuan by a record, could make matters worse for imports of raw materials………………………………………..Full Article: Source

Rumors of Commodities’ Demise Are Not Being Exaggerated

Posted on 11 August 2015 by VRS  |  Email |Print

Commodities are the gift that keep on not giving. The sector is in the throes of an ‘annus horribilis’, having gotten wrecked over the past few years despite massive liquidity that should have boosted their value. Bullish investor after bullish investor has tried to call a bottom, in a set of calls that now appear ill-conceived and money losing.
In the past week, the S&P GSCI Commodity Index has dropped 3.4 percent in the past week, as crude oil plunged 7 percent to hit multi-month lows, and a host of metals fell alongside it. That, of course, hardly marks the first big drop for the alternative investment group. That widely watched commodity index has fallen 17 percent the last three months, and a whopping 42 percent in the past two years………………………………………..Full Article: Source

Falling commodity prices draw speculators and speculation

Posted on 11 August 2015 by VRS  |  Email |Print

The beauty of falling commodity prices is in the eye of the beholder as investors wrestle with whether to invest into the slide or invest in some kind of defensive strategy. Even with crude oil now hovering around $45 a barrel, there is debate over whether it is time to buy or steer clear of the global commodity.
One thing that is certain: Commodity, energy and precious metals have been among the worst-performing categories this year. Commodity broad basket mutual funds, as tracked by Morningstar Inc., are down 13.7% this year; natural resource funds are down 11.6%; equity limited partnership funds are down 15.5%; and equity precious metals funds are down 23.5%………………………………………..Full Article: Source

Rumors of commodities’ demise are not being exaggerated

Posted on 11 August 2015 by VRS  |  Email |Print

Commodities are the gift that keep on not giving. The sector is in the throes of an ‘annus horribilis’, having gotten wrecked over the past few years despite massive liquidity that should have boosted their value. Bullish investor after bullish investor has tried to call a bottom, in a set of calls that now appear ill-conceived and money losing.
In the past week, the S&P GSCI Commodity Index has dropped 3.4 in the past week, as crude oil plunged 7 percent to hit multi-month lows, and a host of metals fell alongside it. That, of course, hardly marks the first big drop for the alternative investment group. That widely watched commodity index has fallen 17 percent the last three months, and a whopping 42 percent in the past two years. ……………………………………….Full Article: Source

Rumors of commodities’ demise are not being exaggerated

Posted on 10 August 2015 by VRS  |  Email |Print

Commodities are the gift that keep on not giving. The sector is in the throes of an ‘annus horribilis’, having gotten wrecked over the past few years despite massive liquidity that should have boosted their value. Bullish investor after bullish investor has tried to call a bottom, in a set of calls that now appear ill-conceived and money losing.
In the past week, the S&P GSCI Commodity Index has dropped 3.4 in the past week, as crude oil plunged 7 percent to hit multi-month lows, and a host of metals fell alongside it………………………………………..Full Article: Source

China’s Exports Plunge - More Bad News For Commodities?

Posted on 10 August 2015 by VRS  |  Email |Print

China’s exports plunged 8.3% in July, far worse than expected, as China gets a taste of the other side of globalization – whereby a slow down in one area of the world spreads to another, in a vicious cycle of decline.
For years, China has been the largest beneficiary of globalization, riding a virtuous cycle of global growth in China’s three largest export markets – European Union, the US, and Japan. But with the EU floundering in the swamp of stagnation, caused by austerity; with the US barely growing under massive QE and with Japan trying to shake off two lost decades of economic growth, China’s export growth engine is running in reverse in all three regions………………………………………..Full Article: Source

India: Commodities rout brings relief for firms

Posted on 10 August 2015 by VRS  |  Email |Print

Manufacturers see profitability at highest level in a year as raw material costs decline, demand stays steady. Profitability of Indian manufacturing companies rose to the highest level in a year as global commodity prices plunged and demand in Asia’s third largest economy held steady.
The ability of some firms to retain the benefits of lower input costs, rather than pass them on to the consumer in the form of price cuts to help stoke consumption, also reflects a mild improvement in pricing power. Operating profit margin, the difference between revenue and expenses, climbed to 14.67%, the highest since the quarter ended June 2014 and the second highest since at least March 2012, according to a Mint analysis of 142 manufacturing companies that are part of the BSE 500 index and have reported their June quarter earnings………………………………………..Full Article: Source

El Niño Tests How Soft Commodities Weather the Storm

Posted on 07 August 2015 by VRS  |  Email |Print

Investors in soft commodities are used to being slaves to the weather’s twists and turns. With prices now in a depression and the El Niño weather pattern looming, the forecast looks more unsettled than normal.
The possibility that the Federal Reserve will raise interest rates later this year, coupled with a strong U.S. dollar as a result, have weighed on prices of commodities already under pressure thanks to slowing growth in the key Chinese market. Soft commodities haven’t been spared, with sugar trading around six-year lows, dairy at 13-year lows and palm oil down around 13% so far this year………………………………………..Full Article: Source

Commodities point to a stock market correction: Expert

Posted on 06 August 2015 by VRS  |  Email |Print

The bad news for commodities could be spreading. As gold, oil, copper and other commodities tumble to multiyear lows, one expert says the turmoil is far from over. In fact, he said the collapse could mean that a full-blown market correction is just around the corner.
“We’re looking at real weakness in the stock market here in the U.S.,” Andrew Hecht said Tuesday on CNBC’s “Futures Now.” “We’ve had a really good time in that market, and I think it’s overdue for a correction.” Hecht, author of “How to Make Money with Commodities,” said he’s watching three commodities markets in particular: copper, oil and lumber. Hecht said copper is especially signaling a global slowdown, most notably in China………………………………………..Full Article: Source

Poor commodities: An asset without a central bank backer

Posted on 05 August 2015 by VRS  |  Email |Print

Commodity investors stung by the four-year bear market made one simple mistake: investing in an asset class not backed by a central bank. Whereas equities and bonds have benefited from very meaningful support, direct and indirect, from central bank asset-purchase programs, commodities have not.
That may or may not be good policy; certainly you can argue that the current downdraft in commodities prices reflects a singular lack of inflation risk in the global economy. That might argue for more quantitative easing, but given that what we’ve had so far has neither generated much inflation or kindled demand for raw materials, it would be hard to be too sure that more central bank buying of financial assets would help commodities prices………………………………………..Full Article: Source

Commodities swing from bad to worse as China data sinks

Posted on 04 August 2015 by VRS  |  Email |Print

The bad news keeps mounting for commodities after the under pressure sector was dealt a further blow with weaker than expected Chinese factory output revealed for July as iron ore prices head downward again. China’s manufacturers cut production at the fastest rate since 2011 according to the Caixin China Manufacturing Purchasing Managers’ Index, which used to be a survey sponsored by HSBC.
The final result for July came in at 47.8 points on Monday, down from 49.4 points in June. The result was concerning because the revised outcome was considerably worse than the “flash” PMI reading, which less than two weeks ago indicated a better result of 48.2 points………………………………………..Full Article: Source

How to invest in resources while commodities crash

Posted on 04 August 2015 by VRS  |  Email |Print

There is quite a dichotomy in the markets these days as the S&P 500 has been flirting with its all-time high while commodities prices have reached near-decade lows by falling back to 2008 financial crisis levels. And the spread between the two is getting worse.
U.S. equity markets have benefited from investor interest in tech giants such as Google Inc., Apple Inc., Amazon.com Inc. and Facebook Inc., with some of these names rocketing more than 20 per cent in the past month alone due to better-than-expected quarterly results. By comparison, the S&P GSCI index, which measures a basket of 24 commodities, lost 13 per cent of its value in July………………………………………..Full Article: Source

Commodities Rout Erases Billions from Africa’s Biggest Fortunes

Posted on 04 August 2015 by VRS  |  Email |Print

The collapse in commodity prices and the rise of the African middle class has flipped the fortune trends of the continent’s richest people. Commodities tycoons Aliko Dangote and Patrice Motsepe have lost almost $4 billion in 2015, while Nigerian telecom billionaire Mike Adenuga and South African retail mogul Christo Wiese have added almost $2 billion, according to the Bloomberg Billionaires Index.
“The go-go years of African billionaires whose wealth has been built around oil is over,” said Martyn Davies, CEO of Johannesburg, South Africa-based investment research firm, Frontier Advisory. “We have placed far too much emphasis on a handful of people making significant capital through distorted-priced resources. True wealth creation is where billionaires are created from non-resource assets.”……………………………………….Full Article: Source

Oil and Commodities Continue to Slump Worldwide

Posted on 04 August 2015 by VRS  |  Email |Print

Mining companies and oil producers tumbled worldwide as a renewed slide in commodity prices saw oil drop to a six-month low and copper neared a bear market. The Bloomberg World Oil & Gas Index of 65 of the leading producers declined 1.4 percent to its lowest in five years. The Bloomberg World Mining Index of the biggest mining stocks fell 1.5 percent to near its lowest since 2009.
More than $450 billion has been erased this year from the value of both indexes. Commodities dropped after an official gauge of Chinese manufacturing slid to a five-month low and Iran said it will be able to bolster crude production within a week of sanctions ending………………………………………..Full Article: Source

Will commodities crash trigger new financial crisis?

Posted on 31 July 2015 by VRS  |  Email |Print

The equity market has suffered sharp falls in the last two months, and investors are divided on whether the Hong Kong and A-share markets have stepped into the bear territory. Several commodities like gold, base metal and oil are certainly in the bear market territory. And the meltdown in commodity market may trigger a new financial crisis.
The market predicts that the chance for a “lift-off” within this year has increased to 50 percent from the previous one-third, according to recent remarks by Federal Reserve chief Janet Yellen. If that is the case, the Fed could open a “Pandora’s Box”, which could further strengthen the US dollar and trigger a further slide in the prices of commodities………………………………………..Full Article: Source

July slaughter sends commodities to 13-year low

Posted on 30 July 2015 by VRS  |  Email |Print

The downward slide in commodity prices is accelerating, surpassing the low reached during the financial crisis in 2008 and reaching a 13-year low. “This is one of the worst months in history for commodities,” said Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices.
The S&P GSCI index, a measure of a basket of 24 commodities, lost 14 percent of its value this month, with nearly every single component trading in negative territory. Indeed, the magnitude of the losses is shaping up to be the seventh worst in 45 years, data from S&P Dow Jones Indices show………………………………………..Full Article: Source

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

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