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Commodities Briefing - Category | Futures and Options more

Sebi allows options trading in commodities

Posted on 29 September 2016 by VRS  |  Email |Print

Sebi’s move aims to enhance liquidity and broad base participation in the commodity market. Capital markets regulator Securities and Exchange Board of India (Sebi) on Wednesday allowed commodity derivative exchanges to launch options contracts for trading with the aim of increasing liquidity and attracting more investors to the commodities market.
Sebi said commodity options will facilitate hedging by market participants and help deepen the commodity derivatives market. The exchanges have been allowed to trade in options following a recommendation by the Commodity Derivatives Advisory Committee (CDAC), Sebi said in a circular……………………………………Full Article: Source

Derivative trading rules for commodity bourses tightened

Posted on 21 September 2016 by VRS  |  Email |Print

Before launching any futures contract, its specifications and launch calendar have to be notified well in advance to the market, Sebi said. The Securities and Exchange Board of India (Sebi) tightened on Tuesday the norms for derivatives traded on commodity bourses and said the terms of a futures contract cannot be changed without taking the regulator’s approval and informing market participants in advance.
Before launching any futures contract, its specifications and launch calendar have to be notified well in advance to the market, Sebi said………………………………………Full Article: Source

Hedge Funds Are Uprooting Agriculture Futures Contracts

Posted on 07 September 2016 by VRS  |  Email |Print

Eight times in the nine weeks leading up to August 15, 2016, hedge fund managers reduced their positions in agricultural futures, with cotton, wheat and corn particular sell-off targets.
For guidance, hedge funds may be looking to Managed Money, a benchmark for commodity speculators, which recently slashed its net long position in the “top 13 U.S.-traded agricultural commodities, from cotton to cattle, by 8,255 contracts in the week to last Tuesday,” according to Agrimoney.com, siting data from the Commodity Futures Trading Commission………………………………………..Full Article: Source

Why Hedge Funds are Mass-Selling Agricultural Futures

Posted on 07 September 2016 by VRS  |  Email |Print

Agrimoney.com has reported that net long positions on key agricultural futures across the hedge fund industry have declined significantly in the past two to three months, down from roughly 600,000 contracts to 367,000 contracts in play.
Hedge funds across the country have repeatedly sold off stakes in corn, wheat, and cotton in particular during this time period. A number of factors may be contributing to this sudden shift in approach, including an important move from a leading commodity speculator, questions about the Federal Reserve’s possible interest rate change in the months to come, and environmental and seasonal factors in the agricultural industry that have affected supply and demand………………………………………..Full Article: Source

Sebi tightens risk management for commodity derivatives

Posted on 02 September 2016 by VRS  |  Email |Print

The Securities and Exchange Board of India (Sebi) announced a series of measures for strengthening and upgrading of risk management in commodity derivatives markets. Some new concepts were also introduced to deal with liquidity problems in stressed situations.
For instance, up to two days of risk coverage by initial margin, concentration margin, tools to regain matched book and ‘default waterfall’. An exchange’s accountability in a default has also been increased, to match those at equity exchanges. So far, exchanges were not a counter-party to trades but ensured and responsibilities were met out of margins………………………………………..Full Article: Source

Gold futures may climb toward $1,400 by end of year: analyst

Posted on 31 August 2016 by VRS  |  Email |Print

Gold futures still have room to climb this year even as the Federal Reserve seesaws between a dovish and hawkish stance on monetary policy. Prices for the yellow metal may make “another try” at the $1,400-an-ounce level later this year, George Milling-Stanley, head of gold investment strategy at State Street Global Advisors, said.
He said he can’t guarantee a rate increase at all, with the Fed appearing to be “dovish one day and hawish another” day. He expects gold to see muted trading for the rest of the year but despite that, prices may still see another $50, $60 or $70 rise. Also on CNBC, Tom McClellan, editor of The McClellan Market Report, said next year and 2018 should be “hugely bullish” for gold……………………………………….Full Article: Source

Oil futures end higher after a choppy session

Posted on 18 August 2016 by VRS  |  Email |Print

Oil futures finished higher Wednesday, getting a lift from bigger-than-expected declines in U.S. supplies of crude and gasoline as well as a retreat in the dollar following minutes from the Federal Reserve’s July meeting.
Shortly before oil prices finished a choppy session on Nymex, minutes from the July Fed meeting showed officials at the central bank were split over whether an interest rate hike would be needed soon. That damped expectations for an interest rate hike before the end of the year, and put pressure on the dollar offering support for dollar-denominated commodities such as oil………………………………………..Full Article: Source

Palladium futures settle at highest level in over a year

Posted on 11 August 2016 by VRS  |  Email |Print

Palladium futures rallied Wednesday to settle at their highest level in more than a year, with strong vehicle sales in China implying strong demand for the metal used in car-making.
A weaker U.S. dollar provided support to the broad dollar-peg precious-metals complex. Gold and silver futures notched a second straight session of gains as some traders bet on a potential rise in Asian demand for the yellow metal………………………………………..Full Article: Source

Oil Options Traders Don’t See Dip to $40 Leading to Market Rout

Posted on 03 August 2016 by VRS  |  Email |Print

Oil analysts from Citigroup Inc. to Bank of America Merrill Lynch are confident that the new bear market in crude will be short-lived. The options market increasingly agrees with them. Investors are paying the smallest premium in two months to protect against a drop in prices from now through the end of the year, even after oil entered a bear market.
The so-called put skew on December Brent and West Texas Intermediate options — the premium traders will pay for insurance that prices will fall rather than rise — has narrowed more than 30 percent since early July. The skew on second-month WTI contracts has fallen by almost half………………………………………..Full Article: Source

Commodity derivatives: Sebi finalising stricter warehousing rules

Posted on 03 August 2016 by VRS  |  Email |Print

The Securities and Exchange Board of India (Sebi) is to finalise stricter regulations for warehouse service providers (WSPs) that are recognised by commodity exchanges (comexes), especially for storing goods meant for selling on the exchange platforms. This will be very significant for trading in agricultural commodities.
Sebi has asked its Commodity Derivatves Advisory Committee to give its views and a meeting this month will discuss the new regulations. Sebi will be assigning the responsibility of settlement of futures contracts to commodity derivatives exchanges………………………………………..Full Article: Source

The Best Way to Trade Commodities Without Playing the Futures Market

Posted on 29 July 2016 by VRS  |  Email |Print

Investors love having as many options as possible available to them to make a profit. Stock trading software and platforms are a dime a dozen, and option trading has become equally ubiquitous in the everyday investor’s world. However, commodities always seemed just out of reach for all but the wealthy or professional investor.
Futures exchanges carry commodities, which can be traded. Futures are typically used by companies to hedge their product against adverse price movements. For example, a gold mining company may use futures to lock in a specific price for the gold it mined………………………………………..Full Article: Source

Commodity futures may see some new reforms

Posted on 25 July 2016 by VRS  |  Email |Print

Hopes have grown of reforms in the 13-year-old commodity futures market with Sebi likely to consider an advisory committee’s recommendation for new products and participants. Until now, trading of commodity futures has willy-nilly been the preserve of retail traders and a few corporates.
1. What can one hope to see? There may be introduction of options on gold, silver, possibly crude, refined soya oil and guar seed. Also, a few more new commodity futures contracts — tea, pig iron, brass, diamond, skimmed milk powder, egg, white butter — could be notified for trading on bourses like MCX, NCDEX and NMCE………………………………………..Full Article: Source

Copper Futures Slide as Chinese Production Climbs in First Half

Posted on 21 July 2016 by VRS  |  Email |Print

Copper retreated on concern that supply will keep outpacing demand as data showed rising output in China, the biggest producer and user of refined metal. A stronger dollar also hit commodities priced in the currency.
China’s production grew 7.6 percent in the first half, according to the National Bureau of Statistics Wednesday, as smelter margins improved. There will be a global surplus every year until 2020, Barclays Plc said in a July 19 note………………………………………..Full Article: Source

China steel-linked commodities futures tumble, on expectation gains outpacing physical demand

Posted on 19 July 2016 by VRS  |  Email |Print

Chinese steel-related commodities futures dived on Monday, erasing last week’s rally as investors felt the previous gains outpaced physical demand for steel in China, the world’s top producer.
The October benchmark rebar contract on the Shanghai Futures Exchange and September iron ore contract on the Dalian Commodity Exchange deepened losses in the afternoon trading, hitting downside limit of 6 percent by close. Rebar was at a one-week low of 2,362 yuan ($352.61) a tonne and iron ore ended the day by 431 yuan a tonne………………………………………..Full Article: Source

Anyone Can Trade Commodities on the Futures Market

Posted on 14 July 2016 by VRS  |  Email |Print

Before money, people traded grain and precious metals directly with one another. Today, corn, wheat, gold and other commodities are traded through futures contracts that guarantee the purchase or sale of a given amount of the underlying commodity for a stated price on a set date.
The first futures contracts allowed farmers to lock in prices for their crops well before they were ready for market, taking the edge off the price plunge that could come with the harvest glut. These contracts could also assure that a user like a bread maker would have ready access to the commodity it would need in the off-season………………………………………..Full Article: Source

BSE plans trading in commodity derivative segment

Posted on 12 July 2016 by VRS  |  Email |Print

Leading bourse Bombay Stock Exchange (BSE) plans to launch commodity derivative segment which will allow trading in metals and has approached market regulator Sebi for approval. “BSE plans to set up a commodity derivative segment as soon as approvals are in place. It would consist of non-agricultural commodities like metal, oil and gas,” BSE Managing Director and CEO Ashishkumar Chauhan said.
Post the merger of the capital market regulator Sebi and commodity market watchdog Forward Market Commission (FMC), the exchange members need not create a separate subsidiary to start commodity trading………………………………………..Full Article: Source

Top China commodity exchange pledges ‘zero tolerance’ for abuse

Posted on 12 July 2016 by VRS  |  Email |Print

The Shanghai Futures Exchange has vowed it won’t tolerate any abuse of trading rules after the unprecedented boom-bust episode earlier this year, adding that its products aren’t for mom and pop investors.
“Futures isn’t a mass market but a professional one,” the exchange said in comments to Bloomberg News. There’ll be “zero tolerance” of any activity that violates regulations, according to the statement, which said more than 900 cases of what it called abnormal activity were settled in the first five months………………………………………..Full Article: Source

Will oil price surge if Remain wins the EU referendum?

Posted on 24 June 2016 by VRS  |  Email |Print

Oil futures, like most risk assets, has been doing better in recent days as traders take heart from a late polls shift to Remain ahead of the EU referendum. Having fallen for six consecutive sessions from a 2016 high of $53 two weeks ago, international benchmark Brent crude returned to $50 earlier this week. It has been held back from further gains by supply concerns – so would a Remain victory send it soaring?
No, says investment bank BNP Paribas. It outlines a lose-lose scenario for oil: either a Leave vote sends the price spiralling lower in response to a demand-dampening surge for the dollar against the pound, or a Remain victory focuses attention back on supply and demand fundamentals that do not support higher prices………………………………………..Full Article: Source

U.S. derivatives regulator rethinks algorithmic trading proposal

Posted on 17 June 2016 by VRS  |  Email |Print

The U.S. derivatives regulator is rethinking parts of its proposal to regulate automated trading and looking into whether the rule could affect too many people, it said on Thursday. The Commodity Futures Trading Commission, announcing it had reopened the public comment period on the rule through June 26, also said it is considering who should mitigate the risks of algorithmic trades and how the rule would apply when traders purchase their algorithms and systems.
It said it asked how to define “source code” and what software and hardware should be included within the term “Algorithmic Trading system.”……………………………………….Full Article: Source

China’s iron and steel futures lead falls in commodities

Posted on 01 June 2016 by VRS  |  Email |Print

Copper and gold face biggest monthly drop in six months as dollar strength takes toll in market pricing. China’s steel and iron ore futures are set for their worst monthly performance on record as a stronger US dollar weighed on commodities from copper to gold during May.
After a burst of speculative trading in the first four months of the year, China’s steel rebar contract has fallen 28 per cent this month, its worst performance since it started trading in 2009………………………………………..Full Article: Source

HKEX Gets Approval to Launch Four New Renminbi Currency Futures

Posted on 24 May 2016 by VRS  |  Email |Print

Euro, Japanese yen, United States dollar, and Australian dollar futures will be launched against the Chinese renminbi (CNH or offshore RMB) by Hong Kong Exchanges and Clearing (HKEX) which today announced that it received regulatory approval to offer the four new RMB currency futures set to go live on May 30th, 2016.
The cash-settled EUR/RMB, JPY/RMB and AUD/RMB will trade in renminbi, and the RMB/USD futures will be priced in US dollars, and all of them are aimed at appealing to hedgers and the risk-management needs of traders seeking exposure in China’s emerging currency as well as serving the capital efficiency of exchange-traded futures, as per the HKEX update………………………………………..Full Article: Source

India: Coming, new commodity derivative products

Posted on 16 May 2016 by VRS  |  Email |Print

New derivative products in the commodity markets are likely to be launched by the Securities and Exchange Board of India in the coming months. Three sub-working groups of the market regulator are looking at various issues relating to commodity derivatives – polling of prices, option limit and eligibility criteria for commodities to qualify for future trading. The groups are expected to submit their reports shortly.
“Once they submit their report, we will hold a meeting and look at possible options,” said NITI Aayog member Ramesh Chand, who also heads SEBI’s Commodity Market Advisory Committee and is currrently working on the issue………………………………………..Full Article: Source

Africa’s Economic Future without Commodity Dependence

Posted on 11 May 2016 by VRS  |  Email |Print

The current slump in world commodity prices is forcing Africa to rethink its traditional dependence on raw material exports. This is why the time for African nations to lay the foundations for transitioning from extractive to learning economies is now.
The jolts are real. The International Monetary Fund has projected that the continent will grow by 3% in 2016. This is well below the 6% average growth over the past decade and the lowest rate in the past 15 years………………………………………..Full Article: Source

China steel, iron ore futures dive as demand worries batter commodities

Posted on 10 May 2016 by VRS  |  Email |Print

Chinese commodities dived on Monday, led by 6 percent falls in steel and iron ore futures, as deepening worries about China’s demand extended a fortnight of sharp drops and false rebounds in the country’s market for industrial metals.
Speculative funds rushed into China’s commodities futures last month, betting the country’s economy was bottoming. The buying frenzy alarmed domestic exchanges and regulators fearing a bubble could be forming as volumes and prices soared………………………………………..Full Article: Source

China curbs commodity futures speculation

Posted on 05 May 2016 by VRS  |  Email |Print

Chinese regulators appear to have successfully popped a mini-bubble for now in steel and other commodity futures, scaring off speculators who piled in last month to drive steep gains in the prices of raw materials from coal to cotton.
China has vowed that it won’t allow its commodity futures markets to become a “hot-bed” for speculators, fearing that price movements not based on fundamentals could skew investment decisions and hamper efforts to rein in overcapacity………………………………………..Full Article: Source

Indian regulator Sebi may allow options in select commodities

Posted on 04 May 2016 by VRS  |  Email |Print

The Securities and Exchange Board of India (Sebi) is in talks with leading commodity exchanges about allowing options trading in select commodities. According to sources, the Multi Commodity Exchange might be allowed to introduce options in two metals, while the National Commodity & Derivatives Exchange (NCDEX) could be permitted options in two commodities from the oil complex.
“There is a vital need in the interest of the Indian economy to deepen the commodity derivatives market to attain the basis objectives of price discovery and provision of a platform for risk mitigation. The structural characteristics of options make them significantly attractive as a tool for price risk management.”……………………………………….Full Article: Source

Agricultural Commodities Egged On by China’s Futures Frenzy

Posted on 03 May 2016 by VRS  |  Email |Print

The recent fevered commodities trading in China hasn’t been limited to iron ore. Investors have piled into futures for everything from wheat and cotton to eggs and asphalt. As with industrial metals, analysts reckon much of the interest is coming from speculative investors who have been turned off to China’s stock markets by tighter rules over trading.
“Chinese speculators didn’t want to buy into the equity market with all the curbs, so they jumped into the commodity markets and it seems they’ve done so in massive style,” said Michael Coleman, managing director at RCMA Asset Management Pte………………………………………..Full Article: Source

China securities regulator orders major commodities exchanges to control futures speculation

Posted on 29 April 2016 by VRS  |  Email |Print

China’s securities regulator ordered the country’s major commodity futures exchanges this week to control speculative trading activity, sources told Reuters, after a surge in prices sparked fears of a boom-and-bust cycle.
In response, commodity futures exchanges in Dalian, Shanghai and Zhengzhou ordered major institutional investors that lack a commodities background to rein in their trading, three people with direct knowledge of the situation said. The sources didn’t define what was meant by a lack of background in commodities………………………………………..Full Article: Source

Speculative Bubble in China Commodity Futures Rattles Industry Players

Posted on 28 April 2016 by VRS  |  Email |Print

A surge of volatility in China’s once placid commodities futures markets has rattled industrial players who use them for hedging, with some taking losses or cutting exposure, driven out by a flood of speculative money from hedge funds and retail investors.
A herd of financial investors charged into commodities futures markets this year, throwing money into iron ore, rebar, cotton, and even egg futures, causing rapid spikes and leading many to warn of similarities with last year’s boom and bust in Chinese stocks………………………………………..Full Article: Source

Chinese commodity curbs hit iron and steel futures

Posted on 27 April 2016 by VRS  |  Email |Print

China’s heavily traded iron ore and steel futures slid Tuesday after curbs aimed to cut speculation came into effect. The most active iron ore contract on the Dalian Commodity Exchange closed down 6 per cent at 450.5 yuan a tonne, while steel rebar futures dropped 3.8 per cent to close at 2,554 yuan a tonne.
A wave of money has entered China’s commodities markets this month, on improved demand in the steel industry and expectations that China’s government would boost property and infrastructure construction………………………………………..Full Article: Source

Commodity futures lead charge in exchange-traded derivatives

Posted on 19 April 2016 by VRS  |  Email |Print

Exchanges hope to capture a larger share of derivatives trading, on demand from emerging markets. Trading in commodity and currency derivatives surged on the world’s exchanges last year as traders in emerging economies used futures to hedge themselves against rising market volatility.
Overall volumes for exchange-traded derivatives rose 12 per cent to 23.4bn contracts in 2015, the first increase in four years, according to annual data collated by the World Federation of Exchanges, a trade association for 200 market infrastructure operators………………………………………..Full Article: Source

Gold scores biggest quarterly gain in nearly 30 years

Posted on 01 April 2016 by VRS  |  Email |Print

Gold futures settled higher Thursday, scoring their best quarterly performance since 1986—a year when “Top Gun” was the most popular movie. Bullion has benefited as the Federal Reserve’s dovish stance on policy has softened the highflying U.S. dollar.
Prices for the most-active contracts saw a monthly gain of less than 0.1%—the smallest of the year, but gold jumped 16.4% in the first three months of 2016, its strongest quarterly showing since the third quarter of 1986, according to FactSet………………………………………..Full Article: Source

Sebi allows commodity derivatives trading in bourses at IFSC

Posted on 18 March 2016 by VRS  |  Email |Print

India’s markets regulator Sebi has allowed trading in commodity derivatives at stock exchanges operating in International Financial Services Centre (IFSC). The move comes after amendment was made under Securities Contracts Regulation Act to include commodity derivatives as securities.
The Securities and Exchange Board of India (Sebi) last year began regulating the commodity derivatives market as well. In a circular today, Sebi said “commodity derivatives shall be eligible as securities for trading and the stock exchanges operating in IFSC may permit dealing in commodity derivatives”. ……………………………………….Full Article: Source

India: Budget signals introduction of new commodity derivatives products

Posted on 01 March 2016 by VRS  |  Email |Print

While the FM did not specify products likely to be introduced, market participants expect the introduction of option contracts in commodity derivatives, similar to those available in equities. Finance minister Arun Jaitley on Monday indicated that the government plans to allow the launch of new commodity derivative products to help deepen the markets.
While the finance minister did not specify the products likely to be introduced, market participants expect the introduction of option contracts in the commodity derivatives market, similar to those available in the equities market. They also expect a wider range of indices to be introduced………………………………………..Full Article: Source

Lawmakers Urge Commodities Agency to Keep Plan to Limit Futures Contracts

Posted on 26 February 2016 by VRS  |  Email |Print

Lawmakers heaped criticism on an advisory committee report to the Commodity Futures Trading Commission recommending that the agency scrap its proposed rule on position limits in derivatives trading. The report and a dissenting opinion were presented at a meeting of the commission on Thursday.
The report, which was approved 8 to 1 by the Energy and Environmental Markets Advisory Committee, says that federally mandated position limits are not necessary and that the C.F.T.C. should not enact the rule it has been working on. It adds that if the agency goes ahead with the rule, it needs substantial changes………………………………………..Full Article: Source

Indian Regulator puts rider for commodity derivative reforms

Posted on 12 February 2016 by VRS  |  Email |Print

At an event here, P K Bindish, chief general manger at the regulatory body, the Securities and Exchange Board of India (Sebi), said: “We want the commodity futures market to bring risk management at par with the equity market before allowing new instruments and a new set of participants for hedging on commexes.”
This implies Sebi might not allow instruments like options and indices to trade on a commodity exchange till these mitigation facilities are in place. While the commexes claim to already have a strong risk management system already in place, the recent suspension of castor seed futures by the National Commodity & Derivatives Exchange (NCDEX) has restirred the issue………………………………………..Full Article: Source

Euronext Expands Commodity Derivatives

Posted on 29 January 2016 by VRS  |  Email |Print

Euronext is launching sugar futures this autumn, before quotas are abolished in the European market, as the exchange continues to grow its commodity derivatives franchise. The pan-European exchange operator is launching sugar futures, subject to regulatory approvals, ahead of the European Union abolishing sugar production quotas on 30 September 2017.
The European Union is the third largest sugar producer and the second largest consumer in the world according to Euronext. Sugar futures can already be traded on rival exchange ICE, the former owner of Euronext………………………………………..Full Article: Source

2016 to be a year of turnaround for commodity futures market

Posted on 28 December 2015 by VRS  |  Email |Print

After a stressful 2015, the coming year is likely to be one of turnaround for commodity exchanges, through introduction of new instruments and new classes of traders. The biggest event the comexes witnessed in 2015 was merger of its relatively less powerful regulator, the Forward Markets Commission, into the much stronger equity markets regulator, the Securities and Exchange Board of India (Sebi), effective September 28.
Right after, Sebi chairman U K Sinha said introduction of instruments like options and indices would be prioritised, to enhance depth in commodity derivatives market. Perhaps possible in the near future, he said………………………………………..Full Article: Source

Gold Futures Hold Near Three-Month Low on December Fed-Rate Bets

Posted on 12 November 2015 by VRS  |  Email |Print

Gold held near a three-month low on growing expectations that the Federal Reserve will increase interest rates in December. Odds that the central bank will raise rates next month have climbed to 66 percent, from 39 percent a month ago, according to Fed-fund futures data. A gauge of the dollar rose on Tuesday to the highest since at least 2005, curbing the appeal of bullion as an alternative asset.
Gold posted the biggest weekly drop in a year on Friday after a report showing U.S. payrolls surged in October, boosting the case for the Fed to raise rates. Chicago Fed President Charles Evans said on Tuesday he’d like the central bank to get back to a point where the federal funds rate is “trading comfortably at its neutral rate well above zero.”……………………………………….Full Article: Source

Gold logs lowest settlement in about 5 years

Posted on 12 November 2015 by VRS  |  Email |Print

Gold finished lower on Wednesday, closing at its worst level in about half a decade, as intensifying concerns about a rate increase weighed on the precious metal. December gold lost $3.60, or 0.3%, to $1,084.90 an ounce, after settling marginally higher on Tuesday at $1,088.50 an ounce. The yellow metal’s settlement Wednesday represents its lowest for a most-active contract since early 2010, according to FactSet data.
Expectations that next month the Federal Reserve will raise rates for the first time in nearly a decade have proved a drag on the price of commodities, particularly dollar-denominated assets like gold. Jim Wyckoff, senior market analyst at Kitco, said that the market has become “obsessed” with the prospect of the Fed raising rates in December………………………………………..Full Article: Source

Oil futures edge up to settle above $46 a barrel

Posted on 30 October 2015 by VRS  |  Email |Print

Oil prices edged higher to settle above $46 a barrel on Thursday, extending the more-than-6% rally they saw a day earlier, as bets on a slowdown in production grow. Natural-gas prices, meanwhile, ended lower as supplies moved closer to a record level.
December West Texas Intermediate crude tacked on 12 cents by the close, or 0.3%, to settle at a more-than-one-week high of $46.06 a barrel on the New York Mercantile Exchange. Prices jumped 6.3% on Wednesday, as a rise in crude stockpiles wasn’t quite as large as some expected and supplies of gasoline fell………………………………………..Full Article: Source

The Cost of Physical Gold vs. Futures

Posted on 23 October 2015 by VRS  |  Email |Print

Suppose you plan to buy gold, hold it 10 years, and sell it at the end. Is it more cost-effective to buy physical metal, store it, and sell it at the end? Or are you better off buying futures? It’s easy to calculate the cost of physical metal. If you buy at $4 over spot, that’s about 35 basis points (bps). You will also pay for storage an insurance, say 30 bps per year. In 10 years, you sell it at the spot price. Your total cost is about 3.3%.
If you started with enough to dollars to buy 400oz of gold, then at the end you would have dollars equal to about 386.8oz at the then-current price of gold. Futures contracts are more complicated. When you buy, there is almost no premium (10 or 20 cents). However, there is a commission of around $0.25 an ounce. So initially, you get more gold. See the graph above, zoomed in to show the small difference in cost between the two approaches to holding gold for 10 years and then selling it………………………………………..Full Article: Source

Oil suffers a loss of 24% for the quarter

Posted on 01 October 2015 by VRS  |  Email |Print

Oil futures tallied a loss of 24% for the third quarter, after ending Wednesday lower on the back of a report revealing the first U.S. crude-supply increase in three weeks. The report also showed a modest decline in domestic production, helping prices limit losses for the session.
November West Texas Intermediate crude settled at $45.09 a barrel, down 14 cents, or 0.3%, on the New York Mercantile Exchange, trading between a high of $45.85 and a low of $44.68, according to FactSet data. WTI prices, based the front-month contracts, lost 8.4% for the month and were 24% lower for the quarter. Year to date, they’re down by more than 15%………………………………………..Full Article: Source

CME sees first trades on European aluminum premium futures contract

Posted on 25 September 2015 by VRS  |  Email |Print

CME Group’s new Aluminium European Premium Duty-Unpaid (Metal Bulletin) futures contract saw its first trades on Tuesday, the day after the contract launched, the US exchange group said Thursday. A total of 10 futures contracts were traded at a price of $72.50/mt by Crunch Risk, CME said.
“We’re pleased to see early support for our new Aluminium European Premium futures, which are an outgrowth of our existing suite of aluminium risk management tools,” said Young-Jin Chang, CME Group senior director of metals products, in a statement………………………………………..Full Article: Source

U.S. regulators revise proposal on commodity position limits

Posted on 23 September 2015 by VRS  |  Email |Print

U.S. derivatives regulators are revising their proposal to limit the positions that traders can hold in commodity markets to make it easier for some hedge funds and banks to keep large trades. The Commodity Futures Trading Commission wants to allow financial firms to count their market positions separately from subsidiaries if the parent company says it does not control trading at the affiliate, according to a proposal issued on Tuesday.
Under revised rules, a company would simply be able to file a notice with the CFTC saying that it has no control over trading at a subsidiary and that firewalls are in place to prevent access to information, CFTC Chairman Timothy Massad said………………………………………..Full Article: Source

Sebi considers proposal on cross-currency futures pairs

Posted on 14 September 2015 by VRS  |  Email |Print

Punters could soon get to trade in cross-currency futures pairs at a much cheaper cost on local bourses. Capital market regulator the Securities and Exchange Board of India ( Sebi), which regulates currency derivatives jointly with the Reserve Bank of India (RBI), is mulling a proposal by stock exchanges to offer these pairs in addition to dollar- and eurorupee futures they currently offer.
“We are considering the proposal as we want to introduce new products and are in discussions with the RBI,” said a regulatory official aware of the development. “Once the central bank approves it, exchanges could launch cross-currency pairs like dollar-euro, dollar-pound and dollar-yen.” ……………………………………….Full Article: Source

Martin Currie long/short manager eyes commodities after sell-off

Posted on 11 September 2015 by VRS  |  Email |Print

Martin Currie’s European long/short manager Michael Browne is eyeing opportunities in commodities following the strong sell-off across global markets in August. The manager in charge of the Legg Mason affiliate’s European long/short strategy said the volatility during the summer months has presented buying opportunities and he has the flexibility to boost exposure.
Prior to the sell-off, the team adopted a cautious stance on expectations of a global slowdown, having cut net exposure in the fund to 26% in mid-August, in time to weather the market storm………………………………………..Full Article: Source

Get used to cheap oil, derivatives markets say

Posted on 20 August 2015 by VRS  |  Email |Print

Oil prices will stay low for years to come, derivatives markets say, keeping a lid on inflation and helping boost global growth. Oil has more than halved in value over the last year, thanks to huge oversupply, and many oil companies, particularly in the United States, say they may soon have to rein in production, tightening supply, unless the market recovers.
That has led many analysts to predict that oil - on average around 5 percent of companies’ costs - will see price rises later this year or in 2016, pushing up inflation. But oil derivatives tell another story………………………………………..Full Article: Source

Does gold have a future?

Posted on 11 August 2015 by VRS  |  Email |Print

Had gold peaked at $1,200-1,400 per ounce in 2012, its fall since then might not have been so hard to swallow for gold bulls. As I write this, gold spot price is being quoted at around $1,095 per ounce. The peak about three years ago was around $1,800 per ounce.
Gold bulls, such as yours truly, have been wrong for three years. Many bulls are frustrated and are ready to give up. Of course, capitulation on the part of remaining bulls will always mark a true bottom in any asset price. It is very evident that gold is the anti-dollar. Things are always clearer after the fact………………………………………..Full Article: Source

Oil Futures Signal Weak Prices Could Last Years

Posted on 10 August 2015 by VRS  |  Email |Print

The oil market is signaling that prices could stay lower for longer, delivering a fresh blow to hard-hit energy exploration-and-production companies. Benchmark U.S. oil futures for September delivery are nearing the six-year low hit in March. But contracts for delivery in later years have taken an even bigger hit, with prices for 2016 and 2017 already trading below their March lows. That indicates that investors, traders and oil companies see the global glut of crude oil persisting beyond this year.
Companies making long-term investment decisions rely on the prices of futures contracts one or more years in advance. Producers trade futures and options contracts for coming years to lock in prices for the oil they plan to sell in those years………………………………………..Full Article: Source

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