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Commodities Briefing - Category | Commodity Crisis more

Concerns mount over commodities outlook

Posted on 16 March 2015 by VRS  |  Email |Print

Commodities are the worst performing asset class so far this year and a slowdown in China remains a concern for the remainder of 2015. Deutsche Bank’s strategists have outlined that weakness is returning to global oil markets, while US natural gas, precious metals and industrial metals and bulks also continue to face headwinds.
Michael Lewis, a Deutsche strategist, said that commodities were not only the worst performing asset in the year to date, but the only major asset class to have posted negative returns since the end of last year. “Among commodities, energy has been the worst performing sector so far this month,” he said………………………………………..Full Article: Source

Commodities in doldrums waiting for Chinese upswing

Posted on 11 March 2015 by VRS  |  Email |Print

Soft commodities prices will require improved Chinese uptake in order to escape the doldrums, Scotiabank MD for investment banking Elian Terner said.“The story is pretty much China; that’s the elephant in the room,” Terner said. “When China slows down, the commodity markets are all affected whether they are copper, gold, silver, iron-ore, oil and gas etcetera.”
With Chinese gross domestic product growth slipping, the ravenous years of the resource supercycle 2004 to 2011 are on hiatus, while numerous projects conceived during this period are unlikely to be completed until the next upswing………………………………………..Full Article: Source

Global dairy crisis simmers as supply overwhelms

Posted on 23 February 2015 by VRS  |  Email |Print

The weak global diary market, hit by oversupply and a tail-off in Chinese demand that has driven international milk prices down by around 50 per cent, is unlikely to pick up anytime soon, analysts say.
China was one of the world’s fastest-growing dairy markets, but consumption there has dried up after earlier high prices cut domestic demand, leaving excess stocks of imported milk powder. “It might be another six months before it (the outlook) improves,” said Susan Kilsby, dairy analyst at NZX Agri, noting there should be a seasonal rise in milk production in the European Union, the United States and China in the spring………………………………………..Full Article: Source

The impact of falling commodity prices on the global economy (Video)

Posted on 06 February 2015 by VRS  |  Email |Print

The falling commodity prices have had significant impact on the global economy both at a macro and microl level, in this respect there has been concern that the oil and gas industry has developed faster than legislation. KPMG has put out a report that calls for continued reforms in the oil and gas sector despite a slowdown in exploration project. Mark Essex the director for international advisory services at KPMG joins CNBC Africa for more.……………………………………….Full Article: Source

10 consequences of the commodity crash

Posted on 05 February 2015 by VRS  |  Email |Print

Probably the most dramatic aspect of the early 2015 global economy is the historically low level of commodity prices. Crude oil prices have fallen by 50 per cent since June. But oil is not the only commodity that has stumbled. Since their peak in February 2011, copper prices have dropped 38 per cent and iron ore prices have fallen a staggering 63 per cent.
Predicting the future is a dangerous occupation. Most observers – and the market -did not foresee the dramatic fall that has occurred. Some analysts and the forwards market expect prices to go even lower, before increasing to $65 per barrel in the next two to three years, while others believe prices will slowly rise to $100 per barrel within the same time frame………………………………………..Full Article: Source

Global turmoil roils commodities

Posted on 02 February 2015 by VRS  |  Email |Print

Foreign currencies, crude oil, and other markets felt shocks this week as momentous changes came in foreign lands, including Russia, Saudi Arabia, and Greece. Crude oil prices dropped to a fresh five-year low this week, breaking under $44 per barrel. Plunging petroleum is putting pressure on Russia, which is dependent on oil prices closer to $100 to balance its budget.
As a result, Russia’s bonds have been downgraded to junk status, indicating a significant threat that Russia will default on its debts. This announcement puts further pressure on the already-troubled economy, raising borrowing costs and causing their currency, the ruble, to tumble………………………………………..Full Article: Source

Will commodity continue to slide?

Posted on 29 January 2015 by VRS  |  Email |Print

Bloomberg Commodity Index has declined by 28% from April 2014 till date. Commodities were underperformers last year while the same is expected to continue this year. The Bloomberg commodity index is hit hard by tumbling oil prices followed by metals. The fall in oil started with geo political concerns in Middle East dragging prices from the high of $115 to $70.
With falling oil prices to its lowest level OPEC continues to stand on its production cost which made it eventually weaker, quoting at $45 per barrel, at six year low Metals faltered on the back of slow down in China. China which is Worlds second largest economy and largest consumer of metals was hit hard in manufacturing sector which came below the level 50 separating it from expansion and contraction………………………………………..Full Article: Source

Commodities Signaling Global Growth Warning

Posted on 27 January 2015 by VRS  |  Email |Print

Commodities across the board are signaling there are major risks to global growth. Whether it is copper hitting a 5-and-a-half year low, or oil or even soft products, grains and meats, it is clear that commodities are sending clear economic warning signs. Now we have the results of the Greek election, with the anti-austerity party Syriza taking power, as well as the failure of peace talks in Ukraine and a Russian offensive that will no doubt bring more growth slowing sanctions.
Don’t just blame the dollar for commodity weakness; it is what the dollar is saying about growth in the rest of the world that really matters. Crude closed near a 6-year low on Friday as King Salman of Saudi Aribia, in his first kingly proclamation, assured the markets that there would be no change in oil ministers or oil policy. What that means is OPEC price war continues………………………………………..Full Article: Source

China slowdown may further deflate commodity prices

Posted on 27 January 2015 by VRS  |  Email |Print

Slowing GDP growth in China is leading to weaker demand for commodities, contributing to lower global commodity prices, QNB has said in a report. According to the Chinese National Bureau of Statistics (NBS), real GDP growth slowed to 7.4% in 2014, below the government target of 7.5% and the slowest annual growth rate in 24 years.
To boost growth, the government is trying to push the economy towards a more consumption-led growth model, but this could take some time, QNB said. The IMF expects the slowdown to continue, which could push commodity prices down further in 2015 and beyond. This will add to the deflationary pressures that are threatening the global economic recovery………………………………………..Full Article: Source

Prices of Russia’s Top Export Commodities Fall Amid Oil Price Drop

Posted on 27 January 2015 by VRS  |  Email |Print

While the plummeting price of oil has occupied headlines in recent months, it’s not the only commodity of key importance to the Russian economy whose price is dropping. In fact, all nine of the World Bank’s key commodity price indices are currently in decline, pulled down by abundant supplies, disheartening global growth forecasts and the appreciation of the U.S. dollar, the World Bank said in a report.
At the present time, the World Bank sees little hope for a rebound. “[This year] is a rare case in which all nine key commodity price indices are expected (as of January) to decline for the year,” the report said………………………………………..Full Article: Source

Declining Commodity Prices Ahead With Weak Global Economy

Posted on 22 January 2015 by VRS  |  Email |Print

Oil may be holding above $40.00 per barrel, but investors shouldn’t get too comfortable. The chart foreshadows oil prices could falter and maybe even drop below $40.00. It’s true that speculation has influenced the direction of oil to some degree, but much of the negative sentiment has to do with a declining global economy that shows some despair.
And while gross domestic product (GDP) growth in the U.S. is pretty decent, what we are witnessing in the global economy cannot be saved by what is happening domestically. That suggests weaker oil prices ahead—along with weaker commodity prices overall………………………………………..Full Article: Source

Why commodities are taking a beating again

Posted on 15 January 2015 by VRS  |  Email |Print

Commodities took a beating Wednesday, as prices for everything from industrial metals to grains slid on global growth concerns. Copper, which is often seen as an important indicator of global growth because of its use in industry, fell as much as 5 percent on Wednesday.
A host of other commodities, including palladium, rice and oats, also saw multiple-percentage point drops on the day. Although separate factors weighed on each asset, some factors affected the international commodities market. That said, some expressed that the pain could soon be drawing to an end for traders………………………………………..Full Article: Source

Expect ‘a rough 6 months’ for commodities: Analyst

Posted on 15 January 2015 by VRS  |  Email |Print

Volatility in commodities will continue as long as Saudi Arabia’s next moves are unclear, RBC Capital Markets’ chief commodities strategist told CNBC on Wednesday. Meantime, Helima Croft said, she expects “a rough six months.”
In an interview on “Squawk on the Street” Croft said she thinks the Saudis will be prepared to keep prices down only for the next six months to “bleed out as much non-OPEC oil production as they can.” “We have a situation where the crown prince’s son is quite senior in the oil ministry, and there are some reports in The Wall Street Journal that he’s not entirely happy with the lower-for-longer strategy. So I think we should look if there is a shift in Saudi strategy,” Croft said……………………………………….Full Article: Source

World Bank cuts global economic outlook despite oil price drop

Posted on 15 January 2015 by VRS  |  Email |Print

The World Bank on Tuesday lowered its global growth forecast for 2015 and next year due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices.
The global development lender predicted the global economy would grow 3 percent this year, below a forecast of 3.4 percent made in June, according to its twice-yearly Global Economic Prospects report………………………………………..Full Article: Source

Commodity price falls trigger big drop in assets

Posted on 08 January 2015 by VRS  |  Email |Print

Last year will go down as one of the most difficult years ever for commodity investments, according to Barclays, which says steep price falls and liquidations triggered a $50bn decline in assets under management.
Commodities recorded their biggest annual loss since the global financial crisis in 2008 with the spot Bloomberg Commodity Index, which tracks the performance of 22 products including oil and copper, falling almost 17 per cent per cent to its lowest level in five and a half years………………………………………..Full Article: Source

The long shadow of the commodity bust

Posted on 08 January 2015 by VRS  |  Email |Print

The commodity boom of the past decade had all the hallmarks of a typical bubble: massive retail participation (through ETFs, mutual funds etc…), large pension fund involvement, a widespread belief that ‘this time, things were different’ and that a ‘commodity super-cycle’ was unfolding.
But like all bubbles, this one too has come to an end. There were plenty of potential triggers in the shape of (i) the Federal Reserve’s decision to stop printing money; (ii) China’s slowdown and associated anti-corruption drive which means that managers at state firms have no incentive to bid up commodity-producing assets;……………………………………….Full Article: Source

Australia trade deficit widens as commodities drop

Posted on 07 January 2015 by VRS  |  Email |Print

Australia’s trade deficit widened in November from October as falling prices for key resources such as iron ore overshadowed rising commodity export volumes as mining companies continued to ramp up production.
The seasonally adjusted trade deficit widened to A$0.93 billion from a revised A$0.88 billion in October, according to the Australian Bureau of Statistics. It is the eighth trade deficit in a row. Economists had been expecting a shortfall of A$1.6 billion in November………………………………………..Full Article: Source

Commodities price supercycle ends after century of price falls

Posted on 07 January 2015 by VRS  |  Email |Print

Commodities Supercycle: In the past decade, the rise in commodity prices have undone the decline of the previous century, rising to levels not seen since the early 1900s. Despite current declines, research by McKinsey Global Institute shows that demand for energy, food, metals, and water should rise inexorably as 3bn new middle-class consumers emerge in the next two decades. The global car fleet, for example, is expected almost to double, to 1.7bn, by 2030.
The plunge in the price of oil has got the greatest attention globally but several other key commodities have also been falling. Brent crude, the international benchmark and US oil, known as West Texas Intermediate (WTI), lost more than half of their value since mid-2014 and on Monday WTI fell below $50 a barrel for the first time since April 2009, before finishing the day at $50.05………………………………………..Full Article: Source

Not just oil: Are lower commodity prices here to stay?

Posted on 07 January 2015 by VRS  |  Email |Print

Oil isn’t the only commodity that’s gotten cheaper. From nickel to soybean oil, plywood to sugar, global commodity prices have been on a steady decline as the world’s economy has lost momentum. That lower demand helps explain, in part, why nearly everything from crude oil to cotton has been getting cheaper.
Sure, some commodity prices are rising. Local supply constraints have pushed prices higher in some parts of the world; transportation costs can also have a big impact on local prices. In the U.S., for example, a drought in California caused the price of vegetables and other food products to spike last year………………………………………..Full Article: Source

Commodities fall biggest since 2008

Posted on 06 January 2015 by VRS  |  Email |Print

Commodity prices suffered their greatest fall in six years in 2014 and dealt a hit to the Australian economy, but there is scope for optimism. Multinational bank HSBC has calculated that commodity prices fell 30 per cent in 2014, with oil’s plunge the biggest driver. The price falls are reducing Australia’s export earnings by tens of billions of dollars.
The news is not all bad, with HSBC predicting a slight recovery this year for iron ore, the nation’s most valuable export, and extra income from the ramp up in natural gas exports………………………………………..Full Article: Source

Commodities see longest losing streak in 23 years

Posted on 02 January 2015 by VRS  |  Email |Print

Global commodity prices marked a fourth straight annual decline in 2014 in their longest losing streak in 23 years, as lingering concerns about global economic growth battered appetite for raw materials, while producers didn’t hold back supplies and worsened a glut.
Brent crude oil led the broader fall in demand by hitting last year its lowest since 2008, gold dropped for a second straight year for the first time since 1998, copper capped the worst losses in three years, iron ore hit a five-year trough and some farm items were hovering around their meanest since 2009, as any credible sign of a demand recovery remained elusive. Despite rock-bottom interest rates in the US, the dollar stayed strong last year, making imports of raw materials less attractive to users of other currencies and further weighing on demand………………………………………..Full Article: Source

Commodities will continue to struggle in 2015: Credit Suisse

Posted on 02 January 2015 by VRS  |  Email |Print

Commodities have had a bad run last year and their losing streak could linger on into 2015, Credit Suisse Private Banking said in a report. Commodity prices fell this year and markets are still facing oversupply, commodity strategy analyst Stefan Graber noted.
He said that the oversuppy was due to “excessive” capital expenditure over the past few years. Since demand for commodities does not seem to be picking up, prices will have to fall further until production declines, he said, adding: “As commodity projects have long lead times, this process will take time.”……………………………………….Full Article: Source

Commodities: More Pain Ahead in 2015

Posted on 23 December 2014 by VRS  |  Email |Print

The sharp drop in oil and rise in the dollar are harbingers of weakness for the asset class. This year has been a tough one for many commodities, mainly due to a strong U.S. dollar. Many investment analysts say the situation isn’t likely to get any easier in 2015.
West Texas Intermediate and Brent crude oil futures, for instance, have lost over 45% of their value since June this year – prompting some investors to call this jolt the “oil shock of 2014.” Plus, the steep decline in oil prices has had an impact throughout the commodities sector, with further fallout anticipated for next year. As an asset class, commodities weakened about 12% in the third quarter of 2014, according to Morningstar. For the 12 months ended Oct. 31, the group is now nearly 7%………………………………………..Full Article: Source

Commodity markets limp into 2015

Posted on 19 December 2014 by VRS  |  Email |Print

A freefall in commodity prices has come to a head at the end of 2014 as crude oil, iron ore and coal prices, among others, took a significant tumble and served to bring one global giant – Russia, the world’s ninth-largest economy – to its knees.
The problem facing most resources is that high levels of production have seen supply outstrip global demand, resulting in low commodity prices. Resource giants with low production costs will weather the storm until supply tapers and prices pick up again. High cost producers will probably fall over. The commodity fall can largely be attributed to slowed demand from China which is switching from an investment-focused economy to a consumer-oriented one………………………………………..Full Article: Source

Falling Commodities – A Warning Sign of a Global Crash

Posted on 11 December 2014 by VRS  |  Email |Print

Three trends have come together that are igniting a deflationary environment. Central banks are fighting them with a fire hose of quantitative easing (inflation). The first trend, and it’s slow at this point, is deleveraging the greatest debt bubble in history. The second is aging populations in the developed world, and the third is falling commodity prices. If governments and central banks are intent on fighting deflation, as they clearly are, they can’t be happy about commodity prices, especially oil, continuing to fall.
I’ve been arguing for years now that falling commodity prices is one of the least recognized indicators of the next global crash and financial crisis. The falling prices trigger a vicious cycle of slowing exports for emerging countries………………………………………..Full Article: Source

The silent crash in commodities—a warning sign

Posted on 10 December 2014 by VRS  |  Email |Print

If the commodity markets were followed as widely as the stock market, the financial world would be buzzing with the news of a crash that has taken place in the value of “stuff.” While the plunging prices of oil, natural gas and gasoline are making headlines every day, thanks to the benefits accruing to consumers of energy products, the message of the commodity markets, in many ways, is hardly a reassuring one when it comes to the outlook for global economic growth.
Basic materials prices for the likes of copper, nickel, iron ore, and other industrial commodities, have collapsed, both in advance of, and now coincident with, weakening economies from Madrid to Moscow and from Berlin to Beijing. This is not good news for the global economy………………………………………..Full Article: Source

Global gluts hurting commodity prices

Posted on 05 December 2014 by VRS  |  Email |Print

It’s been an annus horribilis for the oil and iron ore industries, and 2015 is unlikely to be much better as producers engage in epic games of chicken. Quite simply, a recent ramp up in output across both sectors means there’s more oil and iron ore being produced than needed but no one wants to be the one to cut back.
Iron ore prices have slumped 46 per cent in the past year while oil prices have dropped 30 per cent since July as both industries grapple with an oversupplied market. In the case of iron ore, global giants Rio Tinto and BHP Billiton have embarked on a controversial strategy to increase production even as prices continue to dive………………………………………..Full Article: Source

Can The Commodities Carnage Get Worse?

Posted on 02 December 2014 by VRS  |  Email |Print

Everyone’s focused on the collapsing oil price. But commodities generally have taken a pasting: precious metals, industrial metals, agriculturals, you name it, it’s probably down.
Sure, few have been hit quite as hard as oil, crude prices are down 39% on the year’s highs. Nonetheless pain is being felt across the asset class. The Dow Jones-UBS soft commodities–coffee, cocoa, wheat and fruit–sub-index is down 25%, other agriculturals have lost 24%, the precious metals sub-index is down 18% and the industrial metals index is down 15%………………………………………..Full Article: Source

Commodities Drop to 5-Year Low in Capitulation to China

Posted on 23 September 2014 by VRS  |  Email |Print

Commodities extended declines to a five-year low on speculation that a stronger dollar and signs of slowdown in China will curb demand for raw materials. The Bloomberg Dollar Spot Index has climbed for the past five weeks and Chinese data from industrial production to manufacturing was below economists forecasts.
“We’re seeing a kind of mental capitulation by investors,” Jon Bergtheil, an analyst at Citigroup Inc. in London, said by telephone today. “The fundamentals are getting worse. The strong dollar because commodities are measured in dollars is normally bad news for commodities.”……………………………………….Full Article: Source

Panic as commodity index plunges

Posted on 23 September 2014 by VRS  |  Email |Print

“An unbiased, major barometer of commodity prices,” is how Thomson Reuters describes its CRB Continuous Commodity Index. And that’s why it’s so important. But the equally-weighted index is falling fast and last week plunged through major support levels.
Just weeks before, the 57 year-old index confirmed what is referred to by technical analysts as a “death cross” - it’s when the 50-day moving average crosses under the 200-day moving average, and is often taken to indicate a bear market………………………………………..Full Article: Source

What’s Caused The Commodity Bull Market To Derail?

Posted on 19 September 2014 by VRS  |  Email |Print

The commodities market started the year like a rocket. Since July it has lost almost all its gains. Like the market I started the year bullish on precious metals stocks. I turned defensive in June. I have since turned more bearish and am net short gold and silver stocks.
The commodity complex is in free fall. Agriculture products are falling out of bed. Metals are moving to yearly lows. Even copper has broken down which is the best gauge of world growth……………………………………..Full Article: Source

When Will The Peak Oil Crisis Begin?

Posted on 01 September 2014 by VRS  |  Email |Print

For those following the world oil production situation, it has been clear for some time that the only factor keeping global crude output from moving lower is the continuing increase in U.S. shale oil production, mostly from Texas and North Dakota. Needless to say, once the fabled “peak” comes oil and gasoline prices are certain to move higher, triggering a series of economic events – most of which will not be good for the global economy.
Thus the key question is just how many more months or years production of U.S. shale oil (more accurately call light tight oil) will continue to grow. Many have answers to this question ranging from the “next year or so” on out the middle or end of the next decade………………………………………..Full Article: Source

Commodity markets rattled by Ukraine airplane disaster

Posted on 21 July 2014 by VRS  |  Email |Print

Global commodity markets were gripped this week by the Malaysian air crash, which has dramatically raised tensions between Russia — a key producer of many raw materials — and the West. The doomed Malaysia Airlines MH17 flight, which crashed killing 298 people on Thursday, was “likely downed” by a surface-to-air missile fired from separatist-held eastern Ukraine, a US envoy said on Friday.
Investor sentiment was already hit by broadened US sanctions on Russian energy, defence and financial firms to punish what Washington charges are violations of Ukraine´s sovereignty.”If Russia turns out to have played any part in (Thursday´s) shooting down of a passenger plane over east Ukraine, there is a risk of sanctions being further tightened,” Commerzbank analysts said in a research note………………………………………..Full Article: Source

The Peak Oil Crisis: Iraq on the Precipice

Posted on 03 July 2014 by VRS  |  Email |Print

The daily newspapers are now full of stories predicting that Iraq, as we know it, will soon disintegrate into three or more warring states. In the last two weeks Sunni insurgents led by the extremist ISIS have routed a good part of the Iraqi army, taken over much of northern Iraq not controlled by the Kurds, and now are moving close to Baghdad.
Despite the dispatch of American and Iranian military advisors to at least assess the situation, most observers say government forces are too weak to drive back the insurgents and retake the lost territory. Washington is refusing to get involved unless the Shiite-dominated Iraqi government makes radical changes in its relations with the Sunnis and Kurds………………………………………..Full Article: Source

Will Iraq crisis keep bulls away from commodity markets

Posted on 24 June 2014 by VRS  |  Email |Print

Commodity markets have been fickle during past few years, as an event seemingly trivial transforms into a significant phenomenon. Things are going to be no different in the near future, whereby investor’s sentiment and allocation of funds undergo persistent flux. Geopolitical dynamics, shift in sovereign monetary policies, transition in global economic trajectory and several other variables constantly linger in the minds of the market participants.
Gazing at the crystal ball to predict the factors which can determine the future course is simply an attempt in futility. The dust has never settled down as far as economic issues and policies in various geographies are concerned. Markets continue to be influenced by events and monetary policy stance adopted by various central banks across the globe………………………………………..Full Article: Source

The best way to profit from the commodity bust

Posted on 27 August 2013 by VRS  |  Email |Print

What happens to a forest after a forest fire? More often than not, it grows back even healthier than before. Trees damaged in a fire typically die within two years, and dead vegetation falls to the ground. The remaining snags provide a habitat for wildlife and eventually fall to the forest floor, becoming a long-term source of nutrients. It’s a process of creative destruction.
Financial markets can behave the same way. They can crash and burn, clearing out irrational excess in order to build a foundation of sustainable growth. Two prime examples: the tech bubble of the late 1990s and the so-called commodities supercycle………………………………………..Full Article: Source

Next global crash could come next year

Posted on 14 August 2013 by VRS  |  Email |Print

Despite the continued economic stimulus policies across the world since the 2008 financial crisis, the global economy is likely to face another crash next year, according to U.S.-based economic forecaster Harry Dent.
He says the world faces three major short-term risks: falling commodity prices, a depression in southern Europe and the bursting of China’s real estate bubble. Regarding the outlook for the U.S. economy, Dent, who has for decades followed the booms and busts of the global economy, remained skeptical………………………………………..Full Article: Source

Pitfalls of investing in commodities

Posted on 12 August 2013 by VRS  |  Email |Print

In the last 10 years, commodities have been one of the best performing assets, giving high double-digit returns to investors. This is best exemplified by gold, that has nearly quadrupled in value (in dollar terms) since 2003 and was up five times in rupee terms in the last decade. In comparison, the benchmark S&P BSE Sensex is up around 4.7 times since the middle of 2003.
Gold’s performance in the last five years has been even more spectacular. In the domestic bullion market, gold prices have appreciated at a compounded annual growth rate (CAGR) of 18.6 per cent since 2008, much higher than the 4.2 per cent CAGR return delivered by the National Stock Exchange’s 50-stock Nifty index during the period………………………………………..Full Article: Source

The case against commodities grows

Posted on 25 July 2013 by VRS  |  Email |Print

Buying commodities in order to diversify your portfolio might not be that bright an idea after all. A new study from the Bank for International Settlements disputes the idea that adding commodities to a portfolio can lower the volatility of returns. Considering that this has been the bedrock idea underlying the buying and selling of commodities as an asset class over the past 15 years or so, this is big news.
Taken in combination with trends negative for commodities markets like the migration of manufacturing back to developed markets and 3-D printing, there may be fewer reasons for investors to consider the asset class………………………………………..Full Article: Source

China bubble to end commodities supercycle: Chanos

Posted on 18 July 2013 by VRS  |  Email |Print

The credit bubble in China is “world-class” and is getting “worse and worse and worse,” hedge fund manager Jim Chanos said. The deteriorating credit situation “has worked its way through things like steel, cement, [and] commodities globally,” the founder of Kynikos Associates said.
Chanos, who first raised concern about China in 2009, added that he’s “seeing arguably the end of the commodities supercycle,” the boost for raw materials fueled by the rise of the economies of China and other emerging markets………………………………………..Full Article: Source

Fitch: Commodity price fall impact to vary across APAC

Posted on 18 July 2013 by VRS  |  Email |Print

Fitch Ratings says in a new report that a significant price fall in commodities will have varying impact across Asia Pacific economies, depending on their economic structures and policy response.
The report assumes a shock price fall in the range of 30%-40% within a period of six to 12 months, as balancing forces, such as policy response, are likely to counteract the shock in the medium- to long-term. The analysis covers seven APAC countries, including six that have a higher than median dependence on commodities………………………………………..Full Article: Source

OPEC says commodity supercycle waning, little upside

Posted on 11 July 2013 by VRS  |  Email |Print

The commodity market’s “supercycle” of strong growth is waning, OPEC said on Wednesday, with commodity prices currently in transition mode to slower growth rates. OPEC (the Organization of the Petroleum Exporting Countries) joined a chorus of analysts who have been warning for several months that the era of high prices for commodities is ending.
The group cited a slowdown in emerging economies, in particular China, coupled with decelerating foreign investment in those markets, as an explanation………………………………………..Full Article: Source

Commodities: Too early to become positive, says Credit Suisse’s Merath

Posted on 05 July 2013 by VRS  |  Email |Print

Tobias Merath, head of Commodity and Alternative Investments Research at Credit Suisse, says market conditions for commodities remain challenging.In late June, prices sold-off following a period of stabilization.
The broad-based commodity indices are all down year-to-date. We think a rebound is possible in some markets but would not expect a broad move higher. Instead, leading economic indicators suggest that investors should remain cautious for now. In order to assess the outlook for commodity markets, we mainly look at three factors: cycle, valuation and technical analysis. On the cyclical side, there is currently not much impetus………………………………………..Full Article: Source

Three reasons commodities look horrible: Roubini strategist

Posted on 04 July 2013 by VRS  |  Email |Print

It’s been one of the worst investments of 2013—and this Roubini strategist thinks it will get even worse. Gold, copper and grain prices have dropped precipitously this year. In fact, JPMorgan’s commodity team recently used that as a reason to get bullish on the space.
“In a number of commodities, prices have fallen far enough for long enough to force involuntary cuts in production and to spur fresh demand,” JPMorgan’s note read. In fact, JPMorgan said that “Sentiment is universally bearish,” creating some real opportunities………………………………………..Full Article: Source

UBS rates commodities ‘underweight’ as equities seen advancing

Posted on 03 July 2013 by VRS  |  Email |Print

The commodity supercycle has ended and investors should reduce their holdings in raw materials, especially gold, and buy equities, UBS AG said.
Slow economic growth in the U.S. will boost equities more than commodities and reduced quantitative easing by the U.S. Federal Reserve will be negative for gold, Stephane Deo, a strategist at UBS in London, said in a report dated today. Industrial metals are rated “underweight” on increased supply and slower growth in top consumer China……………………………….Full Article: Source

Will bust follow commodities boom in Australia? (Video)

Posted on 03 July 2013 by VRS  |  Email |Print

Australia has proved resilient during the global economic downturn, with the commodities boom a key factor driving its economy in the right direction. But there are fears that a slowdown in Chinese manufacturing could depress demand for iron ore and other Australian raw materials.
The BBC’s Linda Yueh reports from Port Hedland, an Australian town shaped by the commodities boom……………………………….Full Article: Source

Amid commodities declines, don’t forget nat gas ETFs

Posted on 03 July 2013 by VRS  |  Email |Print

As a group, commodities performed miserably in the second quarter. The 8% decline for the PowerShares DB Commodity Index Tracking ETF tells the story, but it was gold and silver that garnered the bulk of the press.
Investors should not forget that natural gas futures also suffered through a dismal second quarter. The U.S. Natural Gas Fund, which tracks natural gas futures, plunged almost 14% last quarter due to soaring inventories and mild weather after getting a lift in the first quarter due to low temperatures in some parts of the U.S. On June 27, UNG tumbled to its lowest levels since February due to rising inventories and mild weather forecasts……………………………….Full Article: Source

7 reasons to avoid commodities and why they’re wrong

Posted on 02 July 2013 by VRS  |  Email |Print

One of the most contentious debates in finance is whether investors should consider including an allocation to commodities in their portfolio. The reason for considering including commodities is that they act as a form of portfolio insurance.
Commodities have been shown to hedge the risks of unexpected inflation, tending to perform best during periods of rising inflation, when nominal return bonds do poorly. Commodities also have been shown to hedge supply shocks that hurt stock returns (such as the oil embargo of 1973-74), though not demand shocks to the economy (such as the financial crisis of 2008). ……………………………….Full Article: Source

Benchmark rules risk commodities chaos

Posted on 02 July 2013 by VRS  |  Email |Print

Commodities traders and price reporting agencies could see their greatest fears realised after the European Commission outlined new proposals for the regulation of commodities benchmarks. Market participants say these threaten to make the market more opaque.
The proposals, which include holding commodities price contributors liable for their submissions, are part of the wider EC draft regulation on benchmarks, seen by Financial News, due to be published in the coming months………………………………..Full Article: Source

How to profit from a continued commodities slump

Posted on 01 July 2013 by VRS  |  Email |Print

Commodities appear to be in freefall with lots of catalysts being thrown around: a stronger dollar index, changes in the global macro-economic outlook, core PCE inflation in the U.S still slowing, and the Fed openly contemplating tapering its asset-purchase program. All of these factors are likely to put commodities under further selling pressure.
Naturally, investors can still profit from declining commodities by shorting companies that have high exposure to them or by purchasing ETFs with an inverse exposure to commodities………………………………….Full Article: Source

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