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Commodities Briefing - Category | Commodity Crisis more

Don’t mourn the death of the commodities “super-cycle”

Posted on 11 December 2015 by VRS  |  Email |Print

It is hard to recall a time of such conflicting signals from the world economy. Oil and commodity prices are plummeting, promising £1 a litre at the pumps, but forcing crippling retrenchment on resource producing companies and nations.
This might suggest deeply impaired demand, and a world economy that is heading back into recession. In the United States, on the other hand, the Federal Reserve is preparing for its first rise in interest rates since the onset of the financial crisis. Over in America at least, policymakers fear an economy that needs reining in………………………………………..Full Article: Source

Winners and losers as commodities ‘super-cycle’ turns into mirage

Posted on 11 December 2015 by VRS  |  Email |Print

These are tough times for commodity investors and resources companies. The price of Brent crude has dipped below $US40 a barrel for the first time since 2009 and is down by 60 per cent since the middle of last year. The share prices of mining companies fell sharply after news broke that Anglo American had cut its ­dividend.
Commodities are the biggest story of 2015, not only in markets and economics but also in politics and, of course, the environment. Cheaper fossil fuels pose a risk to strategies for mitigating climate change. The collapse in prices is devastating for countries whose export earnings are dominated by commodities and that have squandered the proceeds of a commodities boom or siphoned them to private interests………………………………………..Full Article: Source

Commodities rout more severe than anticipated, not all due to China: BHP

Posted on 11 December 2015 by VRS  |  Email |Print

The extent of the commodities rout that’s pushed raw material prices to 16-year-lows is more severe than anticipated and isn’t chiefly the fault of weaker growth in China, according to the head of the world’s largest mining company.
Some price declines “have been a lot more dramatic than probably we thought they would be at the start of the year,” BHP Billiton chief executive officer Andrew Mackenzie said. “I would say it’s wrong to see a prolonged period of lower prices as entirely a product of China moving more into a services-based economy.”……………………………………….Full Article: Source

Gloomy mood prevails despite calmer commodities

Posted on 10 December 2015 by VRS  |  Email |Print

Commodity prices caught a break from a bruising sell-off on Wednesday, helping to put global equities on a slightly steadier footing after a rough week driven by fears over global demand. The mood was far from euphoric, though, with European markets underperforming and U.S. equity futures edging down.
Traders warned that markets were likely to give up their gains throughout the day and investors were preparing portfolios for year-end rather than making major new reallocations. Economic data offered little to cheer about. China’s consumer inflation picked up but remained under the government’s 2015 price target of 3 percent. The ripple effects of China’s slowdown was evident in Europe, where German imports fell in October and exports also weakened………………………………………..Full Article: Source

Copper, aluminum and steel collapse to crisis levels

Posted on 10 December 2015 by VRS  |  Email |Print

The last time raw materials like copper and oil were this cheap, an economic depression loomed just around the corner. It’s no secret that commodities in general have had a horrendous 2015. A nasty combination of overflowing supply and soft demand has wreaked havoc on the industry.
But prices for everything from crude oil to industrial metals like aluminum, steel, copper, platinum, and palladium have collapsed even further in recent days. Crude oil crumbled below $37 a barrel on Tuesday for the first time since February 2009………………………………………..Full Article: Source

Commodities rout deepens as Chinese trade data signal weaker demand

Posted on 09 December 2015 by VRS  |  Email |Print

The accelerating rout in commodity prices has piled pressure on energy and resources shares in Asia Pacific amid more signs of slowing demand from China. Although oil prices pushed back on Tuesday from seven-year lows, stock markets around the region felt the pain from uncertainty about global growth and the likely rise in US interest rates later this month.
The Nikkei index in Japan was down almost 1% on Tuesday and the Shanghai Composite and Hang Seng indices were down more 0.9% and 1.6% respectively. In resource-rich Australia, the ASX/S&P200 benchmark had a volaltile day but bears had the upper hand by the afternoon with the index off 0.91% at the close with the big oil and gas and mining companies bearing the brunt………………………………………..Full Article: Source

Global stocks drop on commodities rout

Posted on 09 December 2015 by VRS  |  Email |Print

The global commodities rout throttled world stock markets Tuesday, with mining companies retreating on news of massive layoffs at mining giant Anglo American and oil prices hitting fresh multi-year lows.
A global sell-off began in Asia following weak Chinese trade data and deepened after Anglo American unveiled what it billed as a “radical” restructuring in response to weak commodity prices. Equity markets in Paris, London and Frankfurt lost between 1.4 and 2.0 percent, while the broad-based S&P 500 in the US shed 0.7 percent. In foreign exchange activity, the euro edged higher against the dollar………………………………………..Full Article: Source

Investors brace for more losses as commodities crunched

Posted on 09 December 2015 by VRS  |  Email |Print

BHP shares have dropped below $17 each and South32 under $1 for the first time after commodities were crunched again overnight and mining giant Anglo American cancelled its dividend.
Brent oil dipped below $US40 a barrel for the first time since early 2009, before recovering, while iron ore continued its descent, with the Qingdao benchmark shedding another US41¢, or 1.1 per cent, to $US38.65 a tonne. On the London Stock Exchange, investors dumped Rio Tinto, driving the price of its shares down 8.4 per cent, while BHP Billiton dropped a further 5.5 per cent………………………………………..Full Article: Source

Fear grips market as oil leads commodity crash

Posted on 09 December 2015 by VRS  |  Email |Print

Oil prices have buckled following the breakdown of Opec talks last week, but Chinese commodity demand is actually picking up. Brent crude prices have crashed below $40 a barrel for the first time since the depths of the global financial crisis as Opec floods the market to drive out rivals, with a parallel drama unfolding across the gamut of industrial metals.
The Bloomberg commodity index has fallen to within a whisker of lows last seen in 1998 and has now dropped by two-thirds from its peak, wiping out the entire gains of the resource supercycle. What China giveth, China taketh away………………………………………..Full Article: Source

The Commodity Prices Nightmare of 2015

Posted on 04 December 2015 by VRS  |  Email |Print

We’ve mostly heard about the decline in energy during 2015. After all, oil and natural gas are two of the most actively traded commodities on the market and are down 33.4% and 38.5% this year as of Dec. 3. But the decline in oil and natural gas is just the tip of the iceberg. In fact, the entire commodity complex is in much worse shape than the individual energy sector.
According to Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices, “worst year rank” represents how each commodity’s 2015 performance compares to other years. For example, aluminum’s worst year rank of 2 means 2015 has been the second-worst year ever for aluminum prices. Cotton prices, on the other hand, are having their 23rd-worst year………………………………………..Full Article: Source

Crash in Commodities Just Started

Posted on 03 December 2015 by VRS  |  Email |Print

It certainly hasn’t been a good year for commodity investors. Unfortunately if you’re a resource punter, it won’t get any easier any time soon. Resource Speculator readers are well prepared for what lays ahead. After I turned bearish on commodities in November 2014, I’ve been preparing them for the ongoing destruction all year.
They know we’re not at the bottom. Yet, they understand when commodities should see a turnaround. They also know why. It comes down to a mix of base metal supply cuts, maximum pessimism and rising geopolitical conflict………………………………………..Full Article: Source

Commodities Hit 1970 Lows

Posted on 02 December 2015 by VRS  |  Email |Print

As commodities continue to get pounded, U.S. manufacturing, led by the struggling energy sector, has been pushed into a recession, reflected in the Institute of Supply Management’s new manufacturing index results. At 48.6, it’s a sizable miss versus Wall Street expectations, and is the lowest reading since June 2009.
Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices, notes that the S&P GSCI (formerly known as the S&P Goldman Sachs commodity Index) has rarely seen a November with such a bad commodity performance, with as many as 21 out of 24 commodities in a severe downtrend. Just three commodities, sugar, cotton and cocoa, are on track to be positive in November. Commodities have had their fifth worst November on record since 1970, only behind 1997, 1998, 2008 and 2014, Gunzberg says………………………………………..Full Article: Source

More commodity price uncertainty ahead in 2016, Citi forecast says

Posted on 01 December 2015 by VRS  |  Email |Print

Next year promises to be transitional for the routed commodities market, with “W-shaped” price adjustments lying in wait in 2016, Citi’s annual commodities outlook says. Subtitled Down but not out – On the road to modest recovery, the study said it was difficult to say whether key commodity prices had reached their bottom or whether there was more downside to come.
“As many commodities trade close to production cost levels, it’s tempting to look for a bottom,” the outlook said. “That looks fine for a number of sectors, but should not work across the complex,” Citi’s global commodities team wrote in the paper………………………………………..Full Article: Source

Commodities’ November nightmare

Posted on 01 December 2015 by VRS  |  Email |Print

Goldman Sachs created the GSCI commodity index back in 1991, with the intention of getting asset managers to use it as a benchmark for commodity investment, but also as an improved way of measuring inflation. Specifically, the index was pitched as a better measure than that being provided by Commodity Research Bureau’s (CRB) futures index, because it included a mix of products that Goldman said better reflected real inflation.
In support of the countercyclical diversification case, back-tested returns from 1970-1990 showed the GSCI was negatively correlated with the S&P 500 and government bonds, meaning a basket of GSCI commodities could improve annual returns for investors………………………………………..Full Article: Source

Get set for a commodity crunch

Posted on 30 November 2015 by VRS  |  Email |Print

Markets are betting that China’s currency is headed for another fall with commodity markets likely to suffer collateral damage. The International Monetary Fund board meets today to consider whether to include the yuan in the basket of currencies that makes up the fund’s benchmark currency called Special Drawing Rights.
It is expected to award it the status that the People’s Bank of China has been seeking, symbolising China’s emer­gence as a global financial power. The PBOC vice-governor Yi Gang commented last week that the currency would remain stable after its inclusion in the IMF basket, implying that the central bank is prepared to intervene to make sure that is the case………………………………………..Full Article: Source

Rio Tinto And Vale Killed The Commodities Supercycle, Not China Or The Fed

Posted on 30 November 2015 by VRS  |  Email |Print

That the commodities supercycle is over is obvious: we can see that just by looking at the falling values of pretty much all of the commodities. However, there’s a number of implications of this being bandied about which are wrong. It’s not, for example, slowing growth in China which has killed it, nor will it be the Federal Reserve raising interest rates which gives it the final death blow.
It’s much more accurate to say that the producing companies, like say Rio Tinto or Vale in iron ore, which have killed off the cycle. And as a result of that we can’t quite say that falling commodity prices are symptoms of the global economy about to fall over into depression………………………………………..Full Article: Source

Maximum pain for commodities. Are we there yet?

Posted on 27 November 2015 by VRS  |  Email |Print

The dominant theme of commodity markets in recent months, in virtually every article or conversation at events, has been how much lower can prices possibly go. The answer is simple, they will stop falling when the point of maximum pain is reached.
With the prices of many commodities at multi-year lows and the broad Bloomberg Commodity Index close to its weakest in more than 16 years, many commodity producers, investors and traders are becoming desperate for any positive signs. But any bottoming of prices, or indeed the start of a rally, requires more than desperation, it needs fundamental re-alignment of the existing supply-demand balances………………………………………..Full Article: Source

China’s march from commodities to cosmetics and karaoke

Posted on 27 November 2015 by VRS  |  Email |Print

There has been great concern regarding the slowdown of growth in China and its impact on commodity demand and, therefore, commodity prices. Crude oil’s price gyrations tend to get the most attention, but China’s share of global oil consumption is about 12%, which is significant but less than that of the United States.
One could argue that Chinese demand patterns likely have played an even greater part in influencing prices of many other commodities where China holds an even larger share of global consumption. China’s share of global grain consumption was around 22% in 20142 and its share of global metal consumption tripled from 13% in 2000 to 47% in 2014………………………………………..Full Article: Source

Commodities Slump Defies Miners’ Cuts

Posted on 27 November 2015 by VRS  |  Email |Print

For commodities, the first cuts weren’t the deepest. If anything, they have proved feeble. Prices for copper and zinc continued to fall after announced production cuts by miners. Glencore in September said it would close two African copper mines, removing about 400,000 metric tons of copper annually from the market.
That came after cuts from others like Freeport-McMoRan. Glencore followed that with October’s plans to cut a third of its annual zinc production, or 500,000 tons. The moves prompted short-term rallies, only for them to dissipate within days………………………………………..Full Article: Source

If China killed the commodities boom, the Fed is about to bury it

Posted on 26 November 2015 by VRS  |  Email |Print

For commodities, it’s like the 21st century never happened. The last time commodity investor returns were this low, Apple’s best-selling product was a desktop computer, and you could pay for it with francs and deutsche marks.
Bloomberg’s Commodity Index tracking the performance of 22 natural resources has plunged two-thirds from its peak, to the lowest level since 1999. That shows it’s back to square one for the so-called commodity super cycle — a hunger for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade until 2011………………………………………..Full Article: Source

Fed to blame for commodities rout, not China

Posted on 26 November 2015 by VRS  |  Email |Print

Blame China. A global glut of commodities has emerged because China suddenly decided it no longer wants mineral ores. Prices are now collapsing, which threatens the worldwide supply chain. It’s all China’s fault. I have one problem with this story. Look at the first chart on the quantity of China’s iron ore imports and you see scant sign that iron ore is no longer in demand. That demand curve has flattened out but this is after a 16-fold growth over the past 15 years. A breather was due at some point.
And what you see in iron ore you can also see in other major minerals and in petroleum. In some cases there has been no slowdown at all. Imports of copper ore and concentrates, for instance, are still growing at double digit rates………………………………………..Full Article: Source

As commodities swoon, neighbors find a need for each other

Posted on 26 November 2015 by VRS  |  Email |Print

After two years of playing diplomatic tit for tat, the South Pacific’s two major powers are now pushing to restore close relations, especially on the economic front. Their newfound bond can be traced to the commodities markets, which have served both nations well but are now tanking.
Australian Prime Minister Malcolm Turnbull earlier this month demonstrated the importance his government places on Indonesia by visiting the country — before making trips to major trading partners like Japan and China. Turnbull took office in September………………………………………..Full Article: Source

Back to square one for commodity super cycle

Posted on 26 November 2015 by VRS  |  Email |Print

The last time the Bloomberg Commodity Index of investor returns was this low, Apple’s best-selling product was a desktop computer, and you could pay for it with francs and Deutschemarks.
The gauge tracking the performance of 22 natural resources has plunged two-thirds from its peak, to the lowest level since 1999. That shows it is back to square one for the so-called commodity super cycle - a hunger for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade until 2011………………………………………..Full Article: Source

Commodities strike 2002 bottom

Posted on 25 November 2015 by VRS  |  Email |Print

Commodities hit 13-year lows on Monday as metals markets crashed but a steady close in oil and higher grains markets helped a key sector benchmark settle off the day’s trough. Copper and nickel prices fell to multi-year lows, forcing the Thomson Reuters/Core Commodity CRB Index to its lowest levels since November 2002.
The 19-commodity index, however, managed to settle just slightly lower after tracking oil’s steady finish, which came on the back of a pledge by Saudi Arabia to work toward crude price stability. Grains from soybeans to wheat and corn also rose on better physical demand and technical buying, limiting the downside in commodities………………………………………..Full Article: Source

Harmless commodity crash accelerates as dollar soars

Posted on 24 November 2015 by VRS  |  Email |Print

‘Dr Copper should be struck off the list. He is telling us a lot about over-supply in China, but little about the world economy,’ says Capital Economics. Copper prices have crashed to their lowest level since the Lehman Brothers crisis and industrial metals have slumped across the board as a flood of supply overwhelms the market.
The violent sell-off came as the US dollar surged to a 12-year high on expectations of an interest rate rise by the US Federal Reserve next month. The closely-watched dollar index rose to within a whisker of 100, and has itself become a key force pushing down commodities on the derivatives markets………………………………………..Full Article: Source

Aussie dollar resists commodities rout - for now

Posted on 18 November 2015 by VRS  |  Email |Print

The Australian dollar has confounded traders by rising overnight despite a global commodities rout, but analysts say the gains are likely to be limited and predict the currency will face renewed pressure even when the prices of iron ore and other key commodities stabilise. The Aussie shrugged off a further 4.5 per cent drop in the price of iron ore, climbing overnight against the greenback to around US71.40¢ before easing to US71.15¢ in early local trade.
National Australia Bank global co-head of strategy Ray Attrill ascribed the unexpected resilience to a range of factors, including renewed faith the Reserve Bank of Australia will leave the cash rate at 2 per cent despite its concerns about the pace of China’s slowdown and sluggish household wage and spending growth at home………………………………………..Full Article: Source

Commodity rout deepens, like catching ‘falling knife’

Posted on 16 November 2015 by VRS  |  Email |Print

Commodity prices and energy stocks around the globe remained under heavy selling pressure entering the weekend, and analysts are warning the rout has not ended. “It’s going to take a while for this supply-demand imbalance to work out,” Wells Fargo senior global equity strategist Scott Wren said.
“To buy commodities here, it’s a catch the falling knife situation.” Commodity producers are facing a perfect storm: softening demand from a slowing China, a huge expansion in supply of commodities such as iron ore and oil, and a US dollar that is surging on expectations that the US Federal Reserve will begin lifting interest rates next month………………………………………..Full Article: Source

Commodities slump again - here’s why you should care

Posted on 16 November 2015 by VRS  |  Email |Print

It’s becoming a familiar story. Fed officials say - but not particularly clearly - something that spooks the markets, no one really knows when US interest rates will rise, but everyone thinks they will very soon, and then commodities tumble, which in turn drags down Asian stock markets.
It feels like we go through this every couple of weeks. But even if you’re not invested in the markets, here are three reasons why you should care about falling commodity prices and what it means for global growth. Demand is falling. Copper prices are down by more than a fifth this year. The metal is used in everything from homes to factories - so it’s a really good gauge of overall global demand………………………………………..Full Article: Source

Has ‘Commodities’ Slump Undercut Emerging Nations?

Posted on 06 November 2015 by VRS  |  Email |Print

While the 60% oil price crash from September 2014 to current levels has largely impacted the major producers (Russia, U.S., Saudi Arabia), a much wider range of commodity price depression is raising havoc with previously fast-growing emerging economies (Brazil, South Africa, Australia, Indonesia, etc.).
The latter, whose economic dynamics were heavily predicated on a large proportion of commodity reserves are now undergoing a serious deflation in economic growth, voiding any chance of expansion, while this deep commodity price depression persists. With the major segment of these nations’ gross domestic product based on commodity exports, forward growth has become impossible until commodities, in general, return to previous price levels………………………………………..Full Article: Source

The global commodities slump is hitting Africa hard

Posted on 30 October 2015 by VRS  |  Email |Print

If you live by commodities, you will die by commodities. In Africa, this aphorism is becoming true in a devastating fashion. The continent’s economies rode the global demand for commodities in the early part of this century to create some of the fastest economic growth in the world.
In fact, in the first 10 years of this century, six of the 10 fastest growing economies came from Africa. But those good times have come to an end. Demand for commodities has slowed down considerably, representing a “formidable shock for many of the sub-Saharan African countries that are still substantial commodity exporters,” a recent report by the IMF says………………………………………..Full Article: Source

Weary commodity investors see end of slump

Posted on 30 October 2015 by VRS  |  Email |Print

After commodity prices tipped over in 1997, it took 21 months to arrest the fall. In 2000-01 it was 13 months. After collapsing along with the global economy in 2008, commodities hit the floor in just eight months. This time, the Bloomberg Commodity Index has been in decline for four years and counting. From its most recent peak in May 2011, the benchmark is off by half and scraping the lowest levels of the 21st century.
Worn-out investors are asking: have commodity prices finally bottomed? “It’s top of mind for anyone looking at the market,” says Norbert Ruecker, head of commodities research at Julius Baer in Zurich………………………………………..Full Article: Source

Commodity prices wil continue to pressure Malaysia

Posted on 29 October 2015 by VRS  |  Email |Print

Weak commodity prices will continue to put pressure on Malaysia’s fiscal and broader economic outlook next year, said Fitch Ratings. According to the international rating agency, some of the detailed assumptions for the country’s Budget 2016 looked optimistic, hence, could potentially pose some downside risk to the Government’s projections.
It added that Malaysia’s fiscal and broader economic outlook would remain under pressure from weaker commodity prices into 2016. Fitch noted that there could be a risk of Malaysia missing its 2016 fiscal deficit target of 3.1% of gross domestic product (GDP), even though the Government’s debt level would likely remain stable………………………………………..Full Article: Source

A Global Chill in Commodity Demand Hits America’s Heartland

Posted on 26 October 2015 by VRS  |  Email |Print

A thousand miles south of this gritty steel town on the Mississippi River, West Texas oil rigs have shuddered to a halt. Seven hundred miles north, mines in the Iron Range of Minnesota have been stilled. The drilling rigs, with their deep underground pipes, once consumed much of the steel that Granite City’s blast furnaces could produce, while the mines supplied the raw material.
So now, more than 2,000 workers at the mammoth United States Steel plant not far from St. Louis are waiting to see if they will be next. This month, the company warned them it might be forced to idle the plant. Layoffs could begin around Christmas………………………………………..Full Article: Source

Commodities roiled by China rate cut

Posted on 26 October 2015 by VRS  |  Email |Print

Commodity markets were roiled on Friday after China cut interest rates for the sixth time in a year, with the focus on the strength of the Middle Kingdom’s resource-hungry economy. Oil and metals initially rallied on the news as traders scrambled to close out bets on lower prices, with lower interest rates potentially boosting China’s economy, where growth has slowed.
Both oil and copper later slipped, however, with traders split on whether the rate cut signalled good or bad news for China, the world’s largest consumer of commodities. “We shouldn’t take today’s announcement as evidence that policymakers have grown more concerned about the economy,” said Mark Williams, chief Asia economist at Capital Economics………………………………………..Full Article: Source

Commodities roiled by China rate cut

Posted on 26 October 2015 by VRS  |  Email |Print

Commodity markets were roiled on Friday after China cut interest rates for the sixth time in a year, with the focus on the strength of the Middle Kingdom’s resource-hungry economy. Oil and metals initially rallied on the news as traders scrambled to close out bets on lower prices, with lower interest rates potentially boosting China’s economy, where growth has slowed.
Both oil and copper later slipped, however, with traders split on whether the rate cut signalled good or bad news for China, the world’s largest consumer of commodities. “We shouldn’t take today’s announcement as evidence that policymakers have grown more concerned about the economy,” said Mark Williams, chief Asia economist at Capital Economics………………………………………..Full Article: Source

The Commodities Boom Is Dead. Long Live the Commodities Boom.

Posted on 26 October 2015 by VRS  |  Email |Print

What’s going on with BHP Billiton? The world’s biggest miner bid for a share in a Chilean copper mine this year and is exploring for offshore petroleum in Australia and the Gulf of Mexico. Isn’t the commodities super-cycle meant to be over?
One way of thinking about it is to take a trip to your local supermarket. Its owners probably purchased a lot of steel, concrete and bricks while it was being built. Now the doors are open, they’re buying stuff that shoppers use every day: Food to fill their bellies, gasoline to fuel their cars, aluminum foil to wrap their lunch, electronic goods wired with copper, and stainless steel cutlery alloyed with nickel………………………………………..Full Article: Source

Tough times may linger for commodities

Posted on 23 October 2015 by VRS  |  Email |Print

Bureau for Economic Research (BER) senior economist Hugo Pienaar said on Thursday that he expected commodities to face the pinch for some time to come. “We don’t think it is going to be a robust story for commodity prices any time soon. The global situation is not positive for South Africa,” he told a BER conference in Stellenbosch.
This was despite the fall in the rand to record low levels. Major producers were showing pessimistic numbers and price outlooks, although there was a window of hope come 2017. “Our five-year outlook is that we will start to see moderate increases in commodity prices from 2017 onwards as the global economy starts to recover,” advised Pienaar………………………………………..Full Article: Source

Two reasons commodities may have found a bottom

Posted on 20 October 2015 by VRS  |  Email |Print

While it’s unlikely that commodity prices will stage a material rebound, there is a good chance that a trough has been found. There are two reasons for this. Firstly, much of the shrinkage that regulators sought in the commodities market appears to have occurred. Secondly, it looks increasingly likely that the US dollar is at a peak.
Now this clearly carries significant ramifications for the Australian market. It’ll remove a key source of angst for investors and it should counter much of the pressure the Reserve Bank of Australia is under to cut rates again. That may sound counterintuitive as far as the US dollar goes, with most economists arguing that any renewed US dollar weakness strengthens the case for the RBA to cut. This isn’t necessarily the case though, as a weaker US dollar is normally associated with higher commodity prices………………………………………..Full Article: Source

Commodity contagion sparks second credit crisis as investors panic

Posted on 12 October 2015 by VRS  |  Email |Print

The collapse in commodity prices has sparked a second credit crisis as investors dump high-yield bonds, shattering the fragile confidence necessary to support global markets. Those calling it a Lehman moment forget their history. Current events have chilling similarities to the Bear Stearns collapse and mark the start of a new crisis, not the end.
The world of commodity trading has been thrown into chaos as the cost of borrowing to fund operations soars. Glencore has become the poster child for the sector’s woes as its shares have more than halved in value during the past six months. More worrying has been the impact on the group’s credit profile………………………………………..Full Article: Source

PIMCO calls an end to worst of commodity crunch

Posted on 12 October 2015 by VRS  |  Email |Print

The worst of the collapse in commodities prices is probably over, with oil poised to gain over the next 12 months, according to Pacific Investment Management Co. Just don’t expect a major rebound. Producers are shelving projects and scaling back output from Arctic oilfields to Indian aluminum mills amid the weakest returns from raw materials since 1999. While the response may help draw a line under the rout, prices are set to remain “lower for longer” because of excess inventories, according to the firm that manages $US15 billion in commodity assets.
“The declines in commodity prices are largely behind us,” executive vice presidents Greg Sharenow and Nic Johnson said in an e-mail. Newport Beach, California-based Pimco has about $US1.52 trillion under management. “Most prices are well into the marginal cost curve across metals and oil, and that will help to put a floor under prices here.”……………………………………….Full Article: Source

Commodity Collapse Has More to Go as Goldman to Citi See Losses

Posted on 06 October 2015 by VRS  |  Email |Print

Even with commodities mired in the worst slump in a generation, Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc. are warning bulls that prices may stay lower for years.
Crude oil and copper are unlikely to rebound because of excess supplies, Goldman predicts, and Morgan Stanley forecasts that weaker currencies in producing countries will encourage robust output of raw materials sold for dollars, even during bear markets. Citigroup says the sluggish world economy makes it “hard to argue” that most prices have already bottomed………………………………………..Full Article: Source

Commodities crisis spurs calls for African reform

Posted on 06 October 2015 by VRS  |  Email |Print

African nations need to respond to the commodity price crash by overhauling the continent’s regulatory burden and bolstering its energy infrastructure, prominent executives and officials have told a Financial Times summit.
Participants at the London conference were virtually unanimous that reforms delayed when oil and metal prices were rising can be put off no further now that demand from China has slowed and the commodities supercycle is on a downturn………………………………………..Full Article: Source

Global commodity price slump sends ripples around the world

Posted on 05 October 2015 by VRS  |  Email |Print

Ghana as a whole, once Africa’s star economy, is suffering. Not only is gold it biggest source of foreign exchange but the price of oil, which it also produces, has sunk, it has double-digit inflation and the value of the cedi currency has declined.
There are similar tales of misfortune across the continent, with the impact felt on both the poor and the middle class.The United Nations Conference on Trade and Development (UNCTAD) says falling commodity prices threaten economic and political stability in developing economies across Latin America, Africa, the Middle East and Asia………………………………………..Full Article: Source

Global commodity price slump sends ripples around the world

Posted on 05 October 2015 by VRS  |  Email |Print

Ghana as a whole, once Africa’s star economy, is suffering. Not only is gold it biggest source of foreign exchange but the price of oil, which it also produces, has sunk, it has double-digit inflation and the value of the cedi currency has declined.
There are similar tales of misfortune across the continent, with the impact felt on both the poor and the middle class.The United Nations Conference on Trade and Development (UNCTAD) says falling commodity prices threaten economic and political stability in developing economies across Latin America, Africa, the Middle East and Asia………………………………………..Full Article: Source

Bear super-cycle? Gloomy outlook for commodities

Posted on 02 October 2015 by VRS  |  Email |Print

The outlook for commodity prices is generally pretty grim, according to the plethora of crystal-ball-gazing papers that have been published to mark the new quarter, although there are a few voices suggesting the only way from here is up.
As the sector recovers from its worst quarter since 2008, there are some deeply pessimistic views going around. Take the United States-based Ned Davis Research Group, which believes that commodities are in the fourth year of a 20-year “bear super-cycle”, going by a historical study of commodity busts going back to the 18th century………………………………………..Full Article: Source

Commodities Rout Takes Its Toll on ASEAN

Posted on 02 October 2015 by VRS  |  Email |Print

Following the Global Financial Crisis, sky-rocketing commodity prices, and a corresponding investment boom boosted ASEAN’s attractiveness – a narrative similar to other commodity-producing regions. After all, the region is endowed with a wide range of commodities – from natural gas reserves in Malaysia and Indonesia to abundant metal deposits, not to mention relatively high-value agricultural commodities in Thailand and Vietnam.
That said, the contours of ASEAN’s commodity exports are more diverse and convoluted than other commodity-producing regions (take the Middle East or Australia, for example), and the welfare benefits/consequences of price changes aren’t always clear. In this month’s ASEAN Perspectives, we attempt to break this down………………………………………..Full Article: Source

More Shocks Seen Roiling Commodities After Worst Drop Since 2008

Posted on 01 October 2015 by VRS  |  Email |Print

Commodities posted their worst quarter since the 2008 global financial crisis, and Morgan Stanley warns that more losses may be ahead. Returns from 22 raw materials tracked by Bloomberg shrunk about 14 percent, the most since the last quarter of 2008, amid forecasts for the slowest economic growth since 1990 in China, the biggest user of energy, metals and grains.
Oil led the collapse as OPEC producers pump near record levels while everything from copper to wheat were also down more than 10 percent on speculation that supplies are outpacing demand………………………………………..Full Article: Source

Trouble looms for developing countries as commodity revenues collapse: Kemp

Posted on 30 September 2015 by VRS  |  Email |Print

Slumping commodity prices pose a serious challenge to economic and political stability in developing economies across Latin America, Africa, the Middle East and Asia. According to the United Nations Conference on Trade and Development, 94 developing countries depended on commodities for more than 60 percent of their merchandise export revenues in 2012/13.
Sixty-three developing economies were considered “extremely commodity dependent” with commodities accounting for more than 80 percent of export earnings. Most commodity-dependent developing countries rely on raw material exports for more than 20 percent of their entire economic output, in some cases rising to more than 50 percent, according to UNCTAD……………………………………….Full Article: Source

Commodities Are Collapsing

Posted on 29 September 2015 by VRS  |  Email |Print

There are two commodity stories today worthy of an investor’s interest: the collapse of shares at Glencore and the abandonment of Arctic drilling by Shell. Both are interesting as they point to a continuing collapse in the commodity space, and an even more serious worry about what that collapse means for global economies going forward.
Shell has invested almost $7 billion to date to gain permission and develop the first leases for deepwater drilling in the Arctic. This story of Shell’s second big foray north (after its first ignominious defeat with the Kulluk in 2012) gained wide media attention last month as President Obama visited Alaska — making his case for a global initiative on climate change while approving Shell’s leases………………………………………..Full Article: Source

Commodities’ dive raises doubts over Africa’s ‘middle class’

Posted on 24 September 2015 by VRS  |  Email |Print

Whether it’s selling pensions, pasta or toothpicks, investors in Africa have been targeting the booming middle class. But a year of diving commodity prices has exposed how much the continent, and its consumers, still rely on exporting resources. A decade of growth above five percent in sub-Saharan African economies has drawn a wave of interest in selling consumer goods and providing services to a rapidly urbanizing population of 1 billion.
Millions of Africans have moved out of subsistence farming, but national economies have yet to make the transition from relying on commodity exports to mass manufacturing, the model which transformed living standards in much of Asia………………………………………..Full Article: Source

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