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Commodities Briefing - Category | Market Moves more

Is the bear market in commodities over?

Posted on 17 April 2014 by VRS  |  Email |Print

Commodity-related equities have now troughed, according to JPM’s Neil Gregson, who says that the market has moved past the point of maximum pessimism. Having significantly underperformed and hit investors with huge capital losses over recent years, commodity and basic material stocks have bounced back and performed well relative to the wider global equity market so far in 2014.
Gregson, manager of the £1bn JPM Natural Resources fund, says this recovery in prices demonstrates that the market has now bottomed and that investors can expect a period of decent performance from the sector………………………………………..Full Article: Source

Bear market in Silver may be entering its next (and final) down phase

Posted on 17 April 2014 by VRS  |  Email |Print

Critics of price charting charge that charts only show for certain where a market has been. I completely agree. These charges are valid. Yet, understanding where market has been can provide historical context — and this historical context can be useful in anticipating the future. With the above disclaimer in mind, let’s take a look at Silver’s chart history.
Firstly, the monthly price chart shows that Silver remains in a long-term bull trend from the 1932 low. Yet, long-term trends experience sudden and violent counter-trend reactions. Such was the case in the 1980 through 1993 decline during which Silver priced declined by 93%. Silver bulls should know they can go broke being right on the metal’s long-term direction………………………………………..Full Article: Source

Time to rethink your commodity investment strategy, says Citi

Posted on 16 April 2014 by VRS  |  Email |Print

It is time to take commodities seriously as an investment, and in particular a portfolio diversifier, according the strategists at Citi. They point out metals, hydrocarbons and basic foodstuffs have outperformed equities and bonds over the past quarter.
Citi’s team expects that trend to continue into the second three months of the current year. And its analysts go as far as to suggest the historic relationship between stocks, government debt and commodities has returned to a normal pattern. The negative correlation between equities and commodities, made the latter and ideal ‘diversifier’ in a balanced portfolio………………………………………..Full Article: Source

Commodities shine as risk assets plunge

Posted on 16 April 2014 by VRS  |  Email |Print

Prices of commodities including gold, copper and Brent crude oil are enjoying an uptick as global equity indices are spooked by a sell-off in tech stocks and political unrest in Eastern Europe, according to data from Charles Stanley.
Between 7 and 11 April the price of gold, silver, copper and Brent crude rose 0.8 per cent, 0.3 per cent, 0.05 per cent and 0.31 per cent respectively. In stark comparison, all major global equity indices bar China’s Hang Seng suffered losses averaging 3 per cent, with Japan’s Nikkei 225 taking the biggest hit, shedding 7.3 per cent………………………………………..Full Article: Source

U.S. oil Independence by 2020?

Posted on 16 April 2014 by VRS  |  Email |Print

Forecasts that the USA will achieve zero net oil imports by 2020 appear to be on-track. While the U.S. Energy Information Administration (EIA) and a number of media pundits (notably on the left side of the political spectrum) take a more cautious — or even downright negative — view, the US-EIA’s own data gives good reason for hope.
Between 2006 and 2013, the United States cut its net imports in half. If this trend continues, zero net imports will occur in late 2019 or early 2020………………………………………..Full Article: Source

Global oil supplies jump

Posted on 16 April 2014 by VRS  |  Email |Print

Global supplies jumped by 600 kb/d in February to 92.89 mb/d, led by a significant rise in OPEC crude output of 500 kb/d. Compared with a year ago, February production stood 2.03 mb/d higher, with non-OPEC supply up by 2 mb/d and OPEC crude output nearly unchanged (-5 kb/d).
Non-OPEC oil production rose by 100 kb/d to 55.9 mb/d in February, led by marginally higher output in Canada and the US. Output barely rose outside of North America, with a meaningful rise occurring only in Latin American countries, most notably Colombia………………………………………..Full Article: Source

Why Angola may be the next OPEC Darling

Posted on 16 April 2014 by VRS  |  Email |Print

French energy company Total said it was sinking $16 billion into oil projects off the coast of Angola. The French major is following the bread crumbs offshore Angola and now the country aims to re-establish itself as a major oil player by courting investors to onshore fields.
Total said it made a final investment decision to develop the deepwater Kaombo project off the coast of Angola. High costs had delayed the decision, though Total now says it could produce as much as 230,000 barrels of oil per day once operations begin in 2017………………………………………..Full Article: Source

OPEC says Azerbaijan’s oil production to rise by end-2014

Posted on 16 April 2014 by VRS  |  Email |Print

OPEC predicts Azerbaijan’s oil production to amount to 0.87 million barrels per day (bpd) on average in 2014, Azernews reported on April 14. OPEC’s April oil market report said the production in the country will reach 0.89 million bpd in the fourth quarter as the highest production level of the year.
OPEC estimates the country’s oil production in the first quarter of 2014 was steady at 0.83 million bpd. In the second quarter, Azerbaijan’s oil production is predicted at 0.86 million bpd, in the third quarter at 0.88 million bpd, in the fourth quarter at 0.89 million bpd………………………………………..Full Article: Source

Gold drops on Goldman Sach’s bearish outlook

Posted on 16 April 2014 by VRS  |  Email |Print

On April 15 last year, gold prices had corrected sharply, following investment bank Goldman Sachs saying it had a bearish outlook on the commodity. At that time, prices had fallen from $1,600/oz to $1,300/oz in only a few days.
On Tuesday, exactly a year later, gold prices again fell sharply in the foreign market—from $1,330/oz to $1,290/oz—in just a few hours. Again, it was Goldman Sachs that came up with a bearish outlook—it said the metal would hit $1,050/oz by the year-end………………………………………..Full Article: Source

Dr. Doom is calling for an economic crash — How will precious metals be affected?

Posted on 16 April 2014 by VRS  |  Email |Print

Apocalyptic predictions are usually the stuff of TV shows like “The Walking Dead,” but last week Marc Faber, a noted contrarian investor and publisher of the Gloom, Boom & Doom Report, made one of his own.
Faber, often not-so-affectionately called “Doctor Doom,” said Thursday on CNBC’s Futures Now program that the stock market is headed for a crash worse than the one seen in 1987. “I think it’s very likely that we’re seeing, in the next 12 months, an ‘87-type of crash,” he commented. “And I suspect it will be even worse.”……………………………………….Full Article: Source

IEA official predicts global oil demand to hit 92.7 mln bpd

Posted on 15 April 2014 by VRS  |  Email |Print

International demand for oil in 2014 is expected to reach 92.7 million barrels per day (bpd), including 8.1 million from the Middle East, said a senior official of the International Energy Agency (IEA) here on Monday.
In a working paper presented during the first session of the 3rd Kuwait Oil and Gas Summit and Exhibition, Director for Energy Markets and Security at the International Energy Agency (IEA) Keisuke Sadamori said China would become the world’s leading oil importer by 2030………………………………………..Full Article: Source

Gold: In search of a new standard

Posted on 15 April 2014 by VRS  |  Email |Print

The London fix has been in place for almost a century but critics say the system needs reform. To supporters of the gold fixing, its longevity is a mark of its efficiency and utility. To a growing group of critics, however, the benchmark is opaque, old fashioned and vulnerable to market abuse.
Pressure to reform is coming from several directions. Since uncovering evidence of alleged abuse by bankers of the Libor and forex benchmarks, regulators have been scrutinising other big financial benchmarks for signs of weakness……………………………………….Full Article: Source

Iran challenges US sanctions with plans to double oil output by 2018

Posted on 14 April 2014 by VRS  |  Email |Print

Country’s new oil minister has set a new output target of 5.7m barrels per day of crude within four years. Iran has unveiled plans to double its oil production by the end of the decade and, ignoring sanctions, pump billions of dollars of its currency reserves into developing its share of the world’s largest natural gas reservoir in the Persian Gulf.
The country’s new oil minister, Bijan Zanganeh, has set a new output target of 5.7m barrels per day (bpd) of crude by 2018, according to the official state-run news agency Shana. The latest figures produced by the Organisation of Petroleum Exporting Countries (Opec), show that Iran is currently pumping about 3m bpd of crude………………………………………..Full Article: Source

Who needs gold really?

Posted on 14 April 2014 by VRS  |  Email |Print

People love to debate, but sadly sometimes it crosses a line and turns argumentative. That’s what is happening right now with the debate over gold. There have been several high-profile articles, most recently in the Wall Street Journal, saying you should eliminate gold as a worthwhile part of your portfolio. Primarily because of this year’s lower price.
Against that idea, many bloggers and private investors, wondering why gold prices have fallen, say that it shouldn’t have dropped. There must be some conspiracy driving down prices when money-printing and our still-weak economy should be driving gold higher………………………………………..Full Article: Source

China group buys $6bln Glencore Peru copper mine

Posted on 14 April 2014 by VRS  |  Email |Print

A Chinese consortium is buying Glencore Xstrata’s copper mine in Peru in a $6bn (£3.6bn) all-cash deal, marking one of China’s largest mining acquisitions. The consortium is led by MMG Limited and includes China’s Citic Metal.
The acquisition is subject to regulatory approvals but all parties expect the deal to be done by the end of September. Analysts expect Glencore to use the proceeds from the sale to reduce its debt………………………………………..Full Article: Source

Tight money policy: Outlook turns bearish for commodities

Posted on 11 April 2014 by VRS  |  Email |Print

From the late 1990s until the financial crisis in 2008, most commodities experienced double-digit annual real (inflation- adjusted) price growth, a period known as the commodity “supercycle.” The cycle extended despite the fallout in the economy with the rapid increase in the liquidity and monetary easing called QE in the developed world led by the US and Japan. Now as the tide of liquidity turns, commodities need to return to demand-supply dynamics and prices should readjust to that.
It is more or less an established fact that the era of monetary easing is coming to an end and the US Fed is gradually heading towards winding up its bond purchases. And if the economy sustains, the Fed might even reverse some of its purchases………………………………………..Full Article: Source

OPEC sees lower demand as U.S. crude output rises

Posted on 11 April 2014 by VRS  |  Email |Print

OPEC trimmed estimates for the amount of crude it will need to pump this year amid rising U.S. supplies, and predicted that a “supply buffer” will accumulate before demand peaks in the summer.
The Organization of Petroleum Exporting Countries, responsible for 40 percent of the world’s oil supply, will need to provide an average of 29.6 million barrels a day of crude this year, according to its monthly market report………………………………………..Full Article: Source

Looking back: Oil market’s future is different from its past

Posted on 11 April 2014 by VRS  |  Email |Print

By 1994, the oil industry had changed irrevocably due to the increased use of derivatives. Oil was once an internationally regulated utility run by the major oil companies and their home governments. The global industry consisted of a core group of vertically integrated oil majors, a large number of ‘national champion’ state-owned oil companies and some independents.
There were practically no trading companies, and their role was marginal. As for oil careers, they were much more like civil service jobs than they are today – any senior executive at a major oil company could count on getting highly paid in a much more secure environment than today’s………………………………………..Full Article: Source

Natural gas loses decades-old tie to oil in landmark deal

Posted on 11 April 2014 by VRS  |  Email |Print

A contract for France’s largest natural gas company to buy the commodity from Azerbaijan shows the decades-old structure of Europe’s energy market is starting to crumble.
For the first time, GDF Suez SA (GSZ) signed a 25-year contract to buy gas from BP Plc and partners in the former Soviet republic at prices tied to those in Western Europe’s domestic gas markets, a person with knowledge of the matter said, asking not to be named because the terms are confidential………………………………………..Full Article: Source

Energy firms to Fed: Hands off banks’ commodity trading

Posted on 10 April 2014 by VRS  |  Email |Print

Energy companies are mounting a last-ditch effort to prevent the Federal Reserve from cracking down on physical commodity trading by major Wall Street banks, saying more restriction may further damage liquidity and raise hedging costs.
In a handful of early submissions on potential new rules, industry groups and big corporations like UPS and refiner Alon USA Energy Inc urged the Fed not to push banks out of physical markets. They warned that the unregulated commodity trading houses who are now expanding in the space may pose credit and counterparty risks that financial firms do not………………………………………..Full Article: Source

Why are banks closing commodity arms?

Posted on 10 April 2014 by VRS  |  Email |Print

Higher regulatory pressure and diminishing profit potential. Are these just excuses, or are they the real reasons we’ve seen a major shift by the investment banks out of commodities and physical trading?
Over the past two years, if we look at two headliners for commodities and metals - gold and corn- we can see why. Not pretty. Actually, ugly. So as you can see, probably more of a problem with diminishing profitability rather than regulatory oversight………………………………………..Full Article: Source

OPEC plans to make room for extra oil from Iran, Iraq, Libya

Posted on 10 April 2014 by VRS  |  Email |Print

OPEC, which supplies 40 percent of the world’s oil, will accommodate additional output from members Iraq, Iran and Libya, Secretary-General Abdalla El-Badri said, without explaining how it will do so under the group’s ceiling.
The Organization of Petroleum Exporting Countries will wait until 2015 to discuss output targets with Iraq, which currently operates outside the production-quota system for each of the group’s other 11 member countries, El-Badri told reporters today in Doha, Qatar………………………………………..Full Article: Source

More oil coming from non-OPEC members

Posted on 10 April 2014 by VRS  |  Email |Print

Most of the growth in petroleum and other liquid fuel supplies comes from countries outside of OPEC, the U.S. Energy Information Administration said. EIA said it projects petroleum and other liquids supply to increase by 1.4 million barrels per day in 2014 and 1.3 million bpd in 2015, with most of the growth coming from North America.
In its short-term market report for April, EIA said it expects production from members of the Organization of Petroleum Exporting Countries to fall by 200,000 bpd in 2014 and in 2015, in part because of rising production elsewhere………………………………………..Full Article: Source

What’s going on with silver?

Posted on 10 April 2014 by VRS  |  Email |Print

According to many analysts surveyed at the beginning of 2014, this year was not supposed to be a good one for silver. In fact, in January we reported that many silver forecasts saw the silver price averaging around $21 per ounce. We are now in a mindset where any activity above $20 per ounce is greeted with positivity and chatter about a price recovery.
Is this what we have to look forward to? Pop-ups above $20? We take a look at what’s been going on this year and a couple of the issues affecting the price of silver………………………………………..Full Article: Source

The precious metals that are primed for takeoff

Posted on 10 April 2014 by VRS  |  Email |Print

Move over, gold. Palladium is ready to shine. The precious metal, used mostly to make catalytic converters that clean up emissions from combustion engines in cars, has seen a 7-percent jump in futures prices year-to-date. And analysts see further upside for the commodity, thanks to squeezed supply and growing automobile demand.
Trading around $782 per ounce, palladium is mainly produced in South Africa and Russia. Ongoing strikes by miners in South Africa and unresolved tension surrounding sanctions on Russia could drive up the prices by triggering supply constraints………………………………………..Full Article: Source

Thomson Reuters GFMS: Copper to remain under pressure; supply surplus expected

Posted on 10 April 2014 by VRS  |  Email |Print

Copper prices are likely to remain under pressure in 2014 as the market posts a moderate supply/demand surplus, said Thomson Reuters GFMS Tuesday.
The consultancy released its GFMS Copper Survey 2014, the fifth edition of the report on the copper market, during CESCO Week copper convention in Santiago, Chile. Analysts said they look for the annual average price to be below $7,000 per metric ton in 2014 for the first time since 2009, with a rest of $6,000 likely over the second half of the year………………………………………..Full Article: Source

The commodity price which gains most during El Ninos is…

Posted on 10 April 2014 by VRS  |  Email |Print

What’s the best bet for commodity bulls mulling how to exploit the El Nino which looks an increasingly likelihood this year?
It may actually be a metal rather than any of the crops which suffer the most high-profile effects from the weather pattern, which is linked to the likes of drought in eastern Australia, denting wheat production, dryness in South East Asia, hurting palm oil output, and flooding in Ecuador’s cocoa belt………………………………………..Full Article: Source

How banks are cutting risk by leaving the commodities business

Posted on 09 April 2014 by VRS  |  Email |Print

In January 2014, the Federal Reserve issued an advance notice of proposed rulemaking (ANPR) in which it raised questions regarding increased limits and restrictions on the physical commodities activities of financial holding companies (FHCs) under the Bank Holding Company Act of 1956.
In the ANPR, the Fed cites recent environmental events as a reason for its review of physical commodities activities by FHCs. The notice cites the Deepwater Horizon oil spill in the Gulf of Mexico, the incident at the Fukushima Daiichi nuclear power plant, and other environmental events to support its concerns that “the costs and liability related to physical commodity activities can be difficult to limit and higher than expected”………………………………………..Full Article: Source

EU, Germany forge deal on energy price breaks for business

Posted on 09 April 2014 by VRS  |  Email |Print

Germany’s multi-billion-euro exemption of heavy industry from green energy charges does not violate EU rules on industry rebates. Berlin and Brussels have agreed to keep the energy price breaks, but on a smaller scale.
After months of wrangling, the German government and the European Commission had reached an agreement on the country’s industry exemptions to renewable energy surcharges, German media reported Tuesday, quoting sources close to the talks………………………………………..Full Article: Source

Hedge funds and other speculators misjudged gold prices for a second time in three weeks

Posted on 09 April 2014 by VRS  |  Email |Print

Hedge funds and other speculators misjudged gold prices for a second time in three weeks. Just after the investors sold bullion holdings for a second consecutive week, a disappointing U.S. jobs report sparked the biggest rally in prices since mid-March. Their funds fared better in the five preceding weeks, correctly adjusting wagers 80 percent of the time.
Investors who were anticipating gold’s 2014 rebound would fizzle had reason to be confident at the start of last week. As U.S. equities surged to a record, bullion slid to a seven-week low on April 1 as fewer traders saw the appeal of the haven asset………………………………………..Full Article: Source

Commodities are back

Posted on 08 April 2014 by VRS  |  Email |Print

There has been no shortage of fireworks in the commodities sector in the first quarter of 2014 after a relatively dormant second half of 2014. What has changed in the last three months? Here, in no particular order, are the factors pushing the commodity complex.
At the Fed, leadership has changed with Ben Bernanke’s eight-year tenure having come to an end. Bernanke will likely be viewed as a cyclical dove. His dovish policies developed after an academic career of studying the “Great Depression” and what went wrong, destined him to learn from past monetary policy mistakes………………………………………..Full Article: Source

EU energy strategy must counter Putin’s fossil fuel-fed autocracy

Posted on 08 April 2014 by VRS  |  Email |Print

The role of climate and energy policy in the ‘long game’ that will play out between Russia and the west has been overlooked. Vladimir Putin’s land grab in Crimea has shocked the west into rethinking security strategy on the continent.
Michael McFaul, former US ambassador to Moscow, has rightly argued in the New York Times that Putin has made a strategic pivot, and has abandoned reform and partnership with the west for a campaign to consolidate autocratic power at home and erect an alternative to western liberal democracy for the nations in its “near abroad”………………………………………..Full Article: Source

World copper market will be in surplus this year

Posted on 07 April 2014 by VRS  |  Email |Print

After four consecutive years of apparent deficit, the world copper market could witness a production surplus relative to demand in 2014, according to projections made by International Copper Study Group (ICSG). Demand this year is expected to lag production. So, world production of refined copper is expected to exceed demand for refined by about 400,000 tonnes.
Interestingly, another surplus year could occur in 2015. Although growth in usage is expected to continue, owing to an increase in refined output that exceeds the expected growth in usage, a surplus is likely again………………………………………..Full Article: Source

Libyan rebels, government agree to gradually reopen occupied oil ports

Posted on 07 April 2014 by VRS  |  Email |Print

Libyan rebels occupying four eastern oil ports agreed with the government on Sunday to gradually end their eight-month petroleum blockade, which has cost the North African state billions in lost revenues.
Zueitina and Hariga ports, held by federalist rebels demanding more autonomy from Tripoli, will open immediately while the larger ports, Ras Lanuf and Es Sider, will be freed in two to four weeks after more talks, the government said………………………………………..Full Article: Source

Natural Gas production to witness continued production growth

Posted on 07 April 2014 by VRS  |  Email |Print

Natural gas production in 2014 is expected to witness continued growth and the pace of growth will accelerate compared with last year, according to Barclays. This week the Energy Information Administration (EIA) reported that January Lower-48 natural gas production growth was significantly above expectations.
January gross withdrawals in the Lower-48 increased 0.35 Bcf/d, to 75.29 Bcf/d, in January 2014, according to the latest EIA Monthly Natural Gas Gross Production Report………………………………………..Full Article: Source

Top tips on selling your old gold

Posted on 07 April 2014 by VRS  |  Email |Print

Gold bullion prices have had a spectacular run in the past few years but the party’s over, at least for the time being. The year 2013 saw the precious metal record its biggest annual loss in decades. For the record: Gold hit an all time high on September 6, 2011 when it touched $1,921.50 an ounce. Last week it was at $1,293.80.
So is that it then? Is there now no point in digging out old, unfashionable, unworn or simply broken jewellery to raise a bit of cash? Should we leave it in the box where great-grandma stored it in the last century?……………………………………….Full Article: Source

Who needs gold really?

Posted on 07 April 2014 by VRS  |  Email |Print

People love to debate, but sadly sometimes it crosses a line and turns argumentative. That’s what is happening right now with the debate over gold.
There have been several high-profile articles, most recently in the Wall Street Journal, saying you should eliminate gold as a worthwhile part of your portfolio. Primarily because of this year’s lower price………………………………………..Full Article: Source

Traders turn optimistic on commodities

Posted on 04 April 2014 by VRS  |  Email |Print

Commodity trading executives tend to speak bluntly. This week has been no exception. The oil sector is “stuck in a rut”, metal producers must get their “shops in order” and the agriculture industry is “on a knife edge”.
Those are some of the messages at the FT Commodities Global Summit in Lausanne. That may not sound especially positive, at least for trading houses, which can thrive on volatility. But, after a tough 2013, when prices of major commodities fell amid concerns about global financial health, the mood among delegates about the world economy was cautiously optimistic………………………………Full Article: Source

Energy industry told to face reality of global warming

Posted on 04 April 2014 by VRS  |  Email |Print

The UN’s top climate change official has issued an unusually blunt message to the oil and gas industry that it must radically overhaul its business model to meet the realities of global warming.
Three quarters of fossil fuel reserves need to stay in the ground if the world is to stop global temperatures rising beyond the internationally agreed limit of 2 degree Celsius, said Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change………………………………Full Article: Source

World’s biggest coal terminal to review 2015 goal on power cut

Posted on 04 April 2014 by VRS  |  Email |Print

South Africa’s Richards Bay Coal Terminal is reviewing export targets for 2015 after a power cut in February forced it to reduce this year’s goal, the head of the world’s largest standalone export facility for the fuel said.
RBCT trimmed its forecast for shipments this year to 73 million metric tons from 75 million tons after it had to halt operations for almost 10 days in February because of faults on municipal power cables that cut supply, Chief Executive Officer Nosipho Siwisa-Damasane said. While it cleared the backlog by March 31, the facility, together with exporters and Transnet SOC Ltd., the state-owned ports and rail utility, faces losses of about 2.1 billion rand ($197 million)………………………………Full Article: Source

ILZSG: Global zinc, lead markets to be in deficit again in 2014

Posted on 04 April 2014 by VRS  |  Email |Print

Demand is expected to continue to outstrip supply in the global markets for zinc and lead in 2014, the International Lead and Zinc Study Group said Thursday. The group, which met in Lisbon, Portugal this week, said the world market for refined lead metal will remain in modest deficit with the extent of the shortage estimated at 49,000 metric tons.
It added that global demand for refined zinc metal will likely exceed supply in 2014 by 117,000 tons. The ILZSG expects that global demand for refined lead metal will increase by 4.4% in 2014 to 11.73 million tons. “This will be driven mainly by growth in China where usage is forecast to increase by 7.4%,” it said. In 2013, China accounted for 45.2% of total global lead usage………………………………Full Article: Source

IMF boss Lagarde warns economy ‘too weak for comfort’

Posted on 04 April 2014 by VRS  |  Email |Print

The global economy could be heading for years of “sub-par growth”, according to the head of the International Monetary Fund (IMF). Christine Lagarde warned that without “brave action” the world could fall into a “low growth trap”.
She said the global economy would grow by more than 3% this year and next, but that market volatility and tensions in Ukraine posed risks. Ms Lagarde also urged more action to tackle low inflation in the eurozone……………………………..Full Article: Source

IMF warns of economic impact of Ukraine, other crises

Posted on 03 April 2014 by VRS  |  Email |Print

International Monetary Fund Managing Director Christine Lagarde warned today that the political crisis around Ukraine poses a danger to the broader world economy. In a speech in Washington, Lagarde said global growth five years after the Great Recession “remains too slow and weak” and faces multiple threats.
For one, low inflation, especially in Europe and Japan, are dangers for demand and output and consequently jobs, Lagarde said at the Johns Hopkins University School of Advanced International Studies. A second key threat is high corporate leverage in emerging economies, which if not adequately addressed will be worsened by the turmoil from eventual monetary tightening in advanced economies, especially the United States…………………………………Full Article: Source

Gold to hit new highs after 2014

Posted on 03 April 2014 by VRS  |  Email |Print

For the first time in three days the gold price rose this morning, on the back of hope that the low price will spur gold buying in China. Also, for the first time in the last week gold for immediate delivery in Shanghai traded at a premium to London. This suggests that the downside in gold is protected somewhat by expected demand in China.
Another reason for gold’s weakness this week is the impending March non-farm payroll data, due for release on Friday. Forecasts so far expect the U.S. Labor department to announce 200,000 new jobs were added last month…………………………………Full Article: Source

Is the bull phase of the commodity super-cycle over?

Posted on 02 April 2014 by VRS  |  Email |Print

Many investment banks, with Goldman Sachs among them, say that the bull phase of the commodity super-cycle is over. Commodity super-cycles generally last 30 to 40 years. There is an initial 15 to 20 year phase where demand outstrips supply, and a later 15 year phase where supply outstrips demand.
In the first phase of the current commodity cycle, many metal, energy, and agricultural commodities have doubled in price since 2000. Over the past several years, however, prices have been, at best, range-bound. This has led to many market pundits declaring that the bull phase of the commodity super-cycle is over. So what’s causing prices to stay range-bound, and are there any compelling reasons to own commodity producers?…………………………Full Article: Source

Japan traders seen returning $3 bln on commodities fall

Posted on 02 April 2014 by VRS  |  Email |Print

The commodities boom is over and you can have some money back. For investors in Japan’s biggest trading houses, Mitsubishi Corp. and Mitsui & Co., the payoff in dividends and stock buybacks could be as much as 300 billion yen ($3 billion) in the financial year beginning today, according to analysts who follow them.
As the China-led, decade-long rally in commodity prices fades, the traders have been left with excess cash and the need to boost their attractiveness to investors………………………….Full Article: Source

OPEC March oil output falls in survey led by Angola, Libya drops

Posted on 02 April 2014 by VRS  |  Email |Print

OPEC crude oil production dropped in March, led by declines in Angolan and Libyan output, a Bloomberg survey showed. Production by the 12-member Organization of Petroleum Exporting Countries slipped by 117,000 barrels a day to an average 30.293 million from 30.41 million in February, according to the the survey of oil companies, producers and analysts.
Last month’s total was revised 533,000 barrels a day higher because of changes to the Saudi Arabian, Iranian, Iraqi and Nigerian estimates………………………….Full Article: Source

US oil boom takes punch out of Putin on world crude prices

Posted on 02 April 2014 by VRS  |  Email |Print

The next move for world oil prices is likely lower, as growing U.S. oil supplies outweigh some of the impact of the geopolitical tensions surrounding Ukraine. The U.S. oil boom is having a bigger impact on world oil prices, and now the release of more crude via the southern leg of the newly opened Keystone pipeline running from Cushing, Okla., to Port Arthur, Texas, is creating a gusher of new supply in the Gulf Coast.
“I’m pretty bearish crude prices because I see there’s a significant amount of supply out there, and I suspect U.S. supply is going to continue to grow through the course of the year,” said Andrew Lipow, president of Lipow Oil Associates. “I suspect by the end of the year, we’ll be producing close to 9 million barrels a day.”…………………………Full Article: Source

How mining companies have underperformed commodities markets

Posted on 02 April 2014 by VRS  |  Email |Print

Mining companies, providing basic materials to fuel economies around the world, are unquestionably valuable economic contributors. But despite widespread demand for their products, mining companies may not be good investments for some investors. A common belief is that owning these companies gives shareholders exposure to growing commodities markets, a close proxy for the expanding global economy.
But in reality, mining companies’ profits don’t always track price gains in commodities markets, given the unpredictable operating costs and ongoing capital expenditures of running a mining business………………………….Full Article: Source

Latin America’s economies: Life after the commodity boom

Posted on 28 March 2014 by VRS  |  Email |Print

One morning last month Louis Dreyfus, a big commodity-trading house, formally opened a new $10m storage depot in the Peruvian port of Callao. Two of its six bunkers were piled high with 55,000 tonnes of fine brown dust covered by white tarpaulins—copper and zinc concentrate, awaiting blending and shipment.
The warehouse is “a bet that Peruvian mining will continue to be competitive,” says Gonzalo Ramírez, a Dreyfus manager. That looks like a sound wager. Blessed with high-grade ores and cheap energy, Peru’s output of copper—already the world’s third-largest—will more than double in the next three years, thanks to the opening of several low-cost mines……………………………..Full Article: Source

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April 2014
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