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Goldman Sees Nickel Rising With Palladium to Beat Soy

Posted on 30 July 2014 by VRS  |  Email |Print

Nickel and palladium are set to outperform iron ore and soybeans as supply outlooks for commodities diverge amid a tentative acceleration in global economic growth, according to Goldman Sachs Group Inc.
The bank kept its 12-month recommendation for commodities at neutral, analysts including Jeffrey Currie wrote in a report dated yesterday. They expect the total return for the Standard & Poor’s GSCI Enhanced Commodity Index to be 0.1 percent in 12 months helped by positive roll yields………………………………………..Full Article: Source

Is The Most Important Commodity About To Break Down?

Posted on 30 July 2014 by VRS  |  Email |Print

Is Crude Oil about to follow in the footsteps of the yield on the bell weather bond and break support? The left chart above highlights that the yield on the 30-year bond is breaking down, below a two-year support line. The right chart highlights that Crude Oil and the yield on the 30-year bond have correlated a little bit over the past couple of years, with the 30-year breaking support.
Could crude oil follow yields and break lower? If they both break support and head lower, what would the macro message be coming from them? If Crude would break 5-year support, traders would expressing some concern about the prospects of global growth………………………………………..Full Article: Source

Saudi Arabia oil and gas market to 2023

Posted on 30 July 2014 by VRS  |  Email |Print

Business Monitor International has released a new report, ‘Saudi Arabia Oil & Gas Report Q3 2014’, in which it indicates the view that crude production in the country will remain elevated by historical standards in 2014 and 2014.
This view is based on continued OPEC outages, a mediocre global supply picture, a continued increase of domestic consumption from the power generation and transport sectors, strong demand from the refining sector and a recovering global demand picture………………………………………..Full Article: Source

Who will run the gold fix next?

Posted on 30 July 2014 by VRS  |  Email |Print

The banks that conduct the century- old gold fixing and the London Bullion Market Association will seek proposals next month for a new administrator to run a revamped process for the benchmark by year-end.
The London Gold Market Fixing Ltd., which manages the procedure, and the LBMA will open a market consultation in late August and plan to announce a third-party administrator by the end of September, the association said in a statement today. The process will be open and not restricted to firms who pitched to run a mechanism that will replace the silver fixing on Aug. 15………………………………………..Full Article: Source

Must-know facts about the silver rally

Posted on 29 July 2014 by VRS  |  Email |Print

First, it’s worth putting silver’s recent rise in context. Here are three important facts about the recent rally. 1. While the metal has had a respectable run over the past month, silver is still playing catch-up after losses earlier this year. Between late February and early June, silver prices fell roughly 15%.
In addition, even with the recent rally, for the first half of the year silver has trailed gold, which has gained nearly 10% versus roughly 7.5% for silver. Prices are based on spot prices for both gold and silver from Bloomberg. 2. The recent jump in silver prices is partly a function of the metal’s volatility. Silver tends to be a relatively thinly traded market………………………………………..Full Article: Source

Fundamentals are driving commodity markets

Posted on 28 July 2014 by VRS  |  Email |Print

Commodities performance in Q2 and in the beginning of Q3 has been a mixed bag. We have the grains and oilseeds plunging into a bear market, rallies in the softs and better returns in energy and precious metals. These commodity asset classes are re-aligning and being driven by their own fundamentals rather than broad macro-economic drivers. A whole range of factors, especially from the supply side including weather, export bans, unplanned outages and geopolitical risk, are starting to have more influence on commodity prices than announcements from the Fed.
The first half of 2014 has also seen a decline in the correlation between commodities and other asset classes. With the current environment of high bond issuance, tight credit spreads and record low volatility in these other asset classes, the higher volatility in different commodity markets is inducing investors to re-look commodities again………………………………………..Full Article: Source

Global markets untroubled by world’s chaos

Posted on 28 July 2014 by VRS  |  Email |Print

The world feels especially scary lately. There has been mayhem in the Middle East, Russia seems on the verge of becoming a rogue state, violence in Central America is driving children to make the harrowing trek to the U.S. border, and much of Asia is bickering over Pacific islands and political dominance. Global politics are rarely this unstable.
Global financial markets, by contrast, are sanguine. The U.S. stock market is at record highs, and markets in most of the rest of the world aren’t far behind. Investors are willing to buy the bonds of financially challenged companies and countries at record low interest rates. Global commodity prices and most currencies, including the U.S. dollar, are steady………………………………………..Full Article: Source

Zinc extends rally

Posted on 28 July 2014 by VRS  |  Email |Print

Zinc prices extended a rally to a 35-month high as speculation mounted that global demand will exceed supplies. Lead rose to the costliest this year.
Zinc inventories monitored by the London Metal Exchange have tumbled 30 percent this year to 653,900 metric tons, the lowest since December 2010. Goldman Sachs Group Inc. forecasts a global production deficit will widen to 154,000 metric tons next year………………………………………..Full Article: Source

SocGen: Precious-Metals Traders Continue To Monitor Ukraine-Russia Tensions

Posted on 25 July 2014 by VRS  |  Email |Print

Participants in precious metals markets are watching to see if geopolitical tensions put more of a risk premium into gold and boost palladium again, says Robin Bhar, metals analyst with Societe Generale. Prices spiked last week when a Malaysian jetliner was reportedly shot down by pro-Russian separatists, but have since pulled back.
“However, with all eyes on (Russian President Vladimir) Putin, aside from some price volatility here and there, the majority of investors seem to cautiously sit on the sidelines watching the action in the political spectrum unfold,” Bhar says………………………………………..Full Article: Source

How the second half will be for commodities this year

Posted on 24 July 2014 by VRS  |  Email |Print

Commodity markets are generally perceived to be fraught with risk given the volatility commodity prices demonstrate. And 2014 has been a year of contrasts. The year began with an extremely bullish situation in the grain and oilseed markets, pushing prices to new highs. In addition, the weather premium was built into prices of fears of El Niño striking later this year. Low inventories of some commodities such as soyabeans exacerbated conditions.
Mid-year, everything has turned around. The weather has been extraordinarily good in the North American continent. The dry and hot conditions expected in South America that could have pushed the sugar prices higher has not turned out as bad as feared. Rainfall from the Indian monsoon isn’t great, but it isn’t that bad either. Overall, the weather premium has now been taken out of the market. ……………………………………….Full Article: Source

The End of Quantitative Easing and What It Means for Commodities

Posted on 23 July 2014 by VRS  |  Email |Print

It’s rather bizarre that we’ve heard so much from pundits and Republican policymakers about the horrors of quantitative easing, how we’ve needed to end the problem for too long, and now — when we’re less than three months from closing the program, nobody in Washington or on Wall Street is talking about it.
It’s odd but true — in the wake of such noise making, the debate has abruptly turned to interest rates. Certainly, interest rates are important. Still, how are we looking right past the end of quantitative easing without acknowledging that we’re finally going to be done with printing money?……………………………………….Full Article: Source

Geopolitics Keeps Safe-Haven Bid in Gold Market

Posted on 22 July 2014 by VRS  |  Email |Print

Gold prices are moderately higher in early U.S. trading Monday as heightened geopolitical tensions keep a safe-haven bid in the market. August Comex gold was last up $8.70 at $1,318.00 an ounce. Spot gold was last quoted up $5.60 at $1,317.00. December Comex silver last traded up $0.261 at $21.205 an ounce.
Geopolitics remains on the front burner of the market place early this week. Last week’s downing of a Malaysian airliner on the Russia-Ukraine border and Israel’s ground offensive against Hamas on the Gaza strip are the dominant fundamentals in the markets Monday morning………………………………………..Full Article: Source

Iran rejects selling oil to Greece, Sri Lanka, South Africa

Posted on 21 July 2014 by VRS  |  Email |Print

Mohsen Qamsari, an official with the National Iranian Oil Company, said on July 20 rejected the claims that Iran is selling crude oil to Greece, Sri Lanka, and South Africa. “China with 400,000 barrels per day is the biggest costumer of Iranian crude oil,” he said, adding that Beijing’s imports account for 40 percent of Iran’s total oil export, Iran’s IRNA News Agency reported.
“India with 25 percent is the second biggest costumer of Iranian oil,” Qamsari explained. He went on to note that South Korea, Japan, and Turkey are the other main costumers of Iranian oil………………………………………..Full Article: Source

Gold to head north on geo-political tensions

Posted on 21 July 2014 by VRS  |  Email |Print

In the international market, spot gold prices dropped two per cent to $1310.8 per troy ounce. The metal touched a high of $1324.7 on Friday but came off the peaks soon on profit booking. News of the shooting down of a Malaysian Airlines plane in Ukraine increased geopolitical tensions and helped gold — a classic haven — to edge up.
However, the sharper drop in price in the initial part of the week on fears of an early increase in interest rates in the US made gold close in the negative zone for the week………………………………………..Full Article: Source

Commodities Face Back End Pressure

Posted on 18 July 2014 by VRS  |  Email |Print

The Oil market backwardation has narrowed significantly over the past month and the forward discount on oil is now at the lowest level since 2012. Libya’s imminent return to the market as well as the insurgence in Iraq have been key forces stirring up the market. The move has been passed on to oil product curves as well as base metal curves.
For some time now the oil market forward curve has mainly been driven by movements in the front end of the curve. Most recently the Iraqi insurgence pushed the oil price to the highest level in nine months. However, concerns over the unrest quickly eased and the price fell back again. The drop was further exacerbated by the news that Libya after a year of shutdown looks ready to restart exports………………………………………..Full Article: Source

Commodity prices will dip as super-cycle ends: Goldman Sachs

Posted on 18 July 2014 by VRS  |  Email |Print

Commodities from iron ore to copper and Brent crude will drop over the next five years as global supplies climb, according to Goldman Sachs Group, which highlighted oil’s recent losses as a sign of increased output. There will be substantial declines in some metals, energy and bulk commodities, analysts including Chief Currency Strategist Robin Brooks wrote in a report.
The period of continued year-on-year price rises for most commodities is over, they said in the report, which was dated July 15. Banks from Citigroup to Deutsche Bank AG have called an end to the commodities super-cycle, when China’s surging demand combined with supply constraints to more than double prices in the 12 years through 2010………………………………………..Full Article: Source

Gold spikes on Malaysia Airlines crash

Posted on 18 July 2014 by VRS  |  Email |Print

The price of the safe haven metal surged amid market nervousness over the crash in Ukraine. Safe-haven gold spiked and stocks fell as investors took fright at the loss of a passenger jet in Ukraine near the border with Russia.
Gold, a shelter for investors in times of uncertainty, surged as much as 1.9pc on reports the Malaysia Airlines aircraft, which was carrying 295 people, had been shot down………………………………………..Full Article: Source

Wall St. and commodity risk: Morgan Stanley’s VaR dips

Posted on 18 July 2014 by VRS  |  Email |Print

The quarterly earnings of Wall Street’s biggest banks offer a glimpse into the scale of their commodity trading activity through a measure of trading risk called VaR.
On Thursday, Morgan Stanley reported its commodity Value-at-Risk (VaR) fell to $19 million in the second quarter from $20 million in the first quarter and $24 million in the second quarter of 2013. VaR is the largest amount of money that the bank could lose on 95 percent of the trading days during the period………………………………………..Full Article: Source

Commodities to fall in price over next five years, says Goldman Sachs

Posted on 17 July 2014 by VRS  |  Email |Print

Commodities from iron ore to copper and Brent crude are expected to see price falls over the next five years as global supplies increase, according to Goldman Sachs. There will be substantial declines in some metals, energy and bulk commodities, analysts including chief currency strategist Robin Brooks wrote in a report. The period of continued year-on-year price rises for most commodities is over, they said.
Banks from Citigroup to Deutsche Bank have called an end to the commodities super-cycle, when China’s surging demand for raw materials combined with supply constraints at mines and wells to more than double prices in the 12 years to the end of 2010. Commodities rallied this year from three consecutive annual losses as a lack of rainfall in Brazil lifted coffee 46 per cent and a ban of ore exports from Indonesia spurred a 39 per cent increase in nickel………………………………………..Full Article: Source

Iraq: What Is The Real Impact On Oil?

Posted on 17 July 2014 by VRS  |  Email |Print

Over the last several decades, political and military turmoil in Iraq has been almost immediately associated with rising oil prices and increased uncertainty in energy markets. From a supply and demand perspective, there are some real and appropriate reasons for why this might occur. Iraq is one of the largest contributors in the Organization of the Petroleum Exporting Countries (OPEC), which accounted for more than 80% of world crude oil reserves, as of 2012.
So, it is relatively easy to understand why there is a strong association between political turmoil in the Middle East and the potential for rising prices in oil and many other energy markets. This is also why stocks likeExxon Mobil have rallied to yearly highs above $100 per share………………………………………..Full Article: Source

Winning by Waiting in Commodities

Posted on 16 July 2014 by VRS  |  Email |Print

In a bumpy year for commodities markets, some investors think they have hit on a winning strategy: Wait it out. Extreme weather and an uncertain economic outlook have sent prices for commodities ranging from coffee to natural gas to soybeans on a wild ride this year. In many of these markets, the cost for commodities delivered today is higher than months from now. That is opening up a number of ways for investors to profit.
How it works: A fund manager buys a futures contract for delivery next month. Right before it expires, the investor sells the contract, buys a cheaper one for delivery at a later date and pockets the difference………………………………………..Full Article: Source

OPEC’s Clout Falls as US Increases Oil Supply

Posted on 16 July 2014 by VRS  |  Email |Print

Crude oil supply from hydraulic fracturing isn’t just a controversial topic for U.S. politicians and industry regulators; it’s also affecting the business of the world’s biggest oil cartel. The Organization of the Petroleum Exporting Countries (OPEC) cut demand forecast for its own oil by around 300,000 barrels per day (bpd) in 2015, mainly due to increased supply from American and Canadian shale formations.
Last week, OPEC’s secretariat in Vienna, Austria, issued a report projecting that demand for oil from its 12 member nations would drop from 29.7 million bpd this year to 29.4 million bpd in 2015………………………………………..Full Article: Source

Commodity Price Volatility: What Should Producers Do About It?

Posted on 15 July 2014 by VRS  |  Email |Print

What can you do in your business about commodity price volatility? I’ve written recently about Commodity Prices: Basics for Businesses That Buy, Sell or Use Basic Materials and Commodities Prices: Why Do They Shoot Up And Then Collapse? If commodities are important to your business, can you hedge away your challenges? And if you can, should you?
Investors may find the underlying analysis useful as they think about how they trade. Businesses can have basically three relationships with commodities: producers, users or traders This article is about producers; the others relationships will be covered in subsequent articles………………………………………..Full Article: Source

Is the U.S. Fracking Boom a Bubble?

Posted on 15 July 2014 by VRS  |  Email |Print

America’s oil boom continues at breakneck speed. Last week the Bank of America released figures showing that the U.S. is now the world’s leading oil producer, overtaking both Saudi Arabia and Russia.
Ways of extracting “tight” oil and gas from shale rock and other unconventional sources have revolutionized energy production. In the first half of this year the U.S. produced 11 million barrels of oil a day………………………………………..Full Article: Source

Why gold just posted its biggest drop this year

Posted on 15 July 2014 by VRS  |  Email |Print

Gold’s $30-plus drop today — the biggest daily decline of the year — serves as a powerful reminder that the market for the yellow metal remains vulnerable to shifts in investor mood. And that does not bode well for gold’s near-term prospects. That’s because there’s more bullishness than bearishness today among the gold traders I monitor, which, in turn, means it’s more likely that shifts in mood will cause gold to fall than to rise.
Consider the average recommended gold-market exposure among a subset of short-term gold-timing newsletters tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI). The average currently stands at 23.3%………………………………………..Full Article: Source

Commodity managers argue tide of outflows is turning

Posted on 14 July 2014 by VRS  |  Email |Print

Commodity markets have suffered massive financial outflows over the past 18 months as investors, disappointed with poor returns in recent years, headed for the exit.
Last year, investors withdrew a net $47.1bn from commodity markets, Barclays says. The bulk of the redemptions, some $40.7bn, were gold related but the base metal, agricultural and energy-related commodity sectors also saw withdrawals. Outflows have continued this year, albeit at a slower pace, with a further $8.6bn being withdrawn as of the end of May, $8bn of which was from gold………………………………………..Full Article: Source

OPEC’s oil market share to shrink in 2015, despite growing demand

Posted on 11 July 2014 by VRS  |  Email |Print

OPEC expects its share of the world oil market to shrink in 2015 for a third year running, due in part to the U.S. shale oil boom, giving the exporter group little comfort from an acceleration in global demand.
Making its first 2015 forecast in a monthly report, the Organization of the Petroleum Exporting Countries said demand for its oil next year would average 29.37 million barrels per day (bpd), down 310,000 bpd from 2014………………………………………..Full Article: Source

IEEJ sees 2015 non-OPEC oil supply rising 1.6 mil b/d, led by US exports

Posted on 11 July 2014 by VRS  |  Email |Print

Non-OPEC oil supply is expected to rise by 1.6 million b/d in 2015 from a year earlier, led by increasing US liquids exports, a senior oil analyst at the Institute of Energy Economics, Japan said Thursday. Yoshikazu Kobayashi, oil group manager at IEEJ’s fossil fuels and electric power industry unit, said the outlook considered rising LPG supplies from the US and a recent US Commerce Department decision allowing exports of lightly processed condensates.
“We expect to see US condensates flowing into the Asian market from now on,” he said, adding that US condensate export volumes would be limited but would nevertheless help reduce procurement prices of naphtha and light crudes in Asia………………………………………..Full Article: Source

Gold and silver hit three-month highs

Posted on 11 July 2014 by VRS  |  Email |Print

Gold and silver prices rose to three-and-a-half month highs on Thursday as European stock markets fell and the dollar weakened following the release of the Federal Reserve minutes.
The yellow metal jumped 1.3 per cent to a peak of $1,345 a troy ounce, while silver surged as much as 2.3 per cent to $21.55 an ounce. Both precious metals have rebounded strongly since early June, with gold up 8 per cent and silver 16 per cent………………………………………..Full Article: Source

A notable miss to commodity markets

Posted on 11 July 2014 by VRS  |  Email |Print

A year after introducing a transaction tax on non-farm futures and witnessing the worst settlement crisis in the spot market, the government on Thursday almost gave the commodity markets a notable miss with no worthwhile announcement.
While the Budget’s focus on farming and warehousing would strengthen the primary agriculture market and aid the functioning of the spot and futures markets, analysts said finance minister Arun Jaitley has refrained from addressing any of the vexed issues………………………………………..Full Article: Source

Ag Commodity Panic Selling Creating Strong Buy Opportunities

Posted on 11 July 2014 by VRS  |  Email |Print

Agricultural commodities from Wheat to Soybeans, and from Sugar to Cotton, are going through extremely strong selling pressure as I write this. Everything is being thrown out, the baby together with the bathwater, in what appears to be a forced liquidation.
Keep in mind that Commitment of Traders positioning by hedge funds, shown in the chart above, has lagged by a whole week. It will be very interesting to see how many funds will stay net long after this recent panic selling episode………………………………………..Full Article: Source

Commodity Market Increased Slightly in June as Supply Risks Rebounded

Posted on 10 July 2014 by VRS  |  Email |Print

Commodities were slightly higher in June, supported by idiosyncratic supply risks. Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management business, said, “Commodities continued the broader trend of the year in June, and were generally supported by one-off event driven risks which negatively affected supplies. Agriculture was the one exception as supply expectations generally increased during the month.”
“We expect idiosyncratic risks to continue to drive commodity returns going forward. For example, crude oil may continue to stay well-supported as geopolitical risks seem skewed to the upside, with the uncertainty in Iraq the most likely to dominate in the near term. Elsewhere, geopolitical risks remain heightened in various parts of the Middle East along with Ukraine and Russia. This has helped increase crude oil prices across the curve, while the forward curve remains steeply backwardated.” (Press Release)

Libya’s oil industry remains vulnerable to protests

Posted on 10 July 2014 by VRS  |  Email |Print

Libya’s oil industry hopes life will return to normal now that a wave of protests has ebbed, but it will take months to ramp up production and more unrest is in prospect as political chaos spreads in the North African country. A group of eastern rebels agreed last week to clear two major ports they had seized almost a year ago in a drive for regional autonomy.
Together with the freeing of the southern El Sharara oilfield, where a separate group has ended a blockade of its own, the ports’ reopening could boost oil exports by 650,000 barrels a day in the next few weeks - helping to restore much of the 1.4 million bpd Libya used to pump before protests paralysed the sector………………………………………..Full Article: Source

US EIA: Cuts 2014 World Oil Demnd Outlk,Raises Non-OPEC Supply

Posted on 09 July 2014 by VRS  |  Email |Print

The U.S. Energy Information Administration Tuesday slashed its forecasts for how much it sees world oil demand growing in 2014, while increasing its expectation for how supply will come from non-OPEC producers this year. The agency reported in its July Short Term Energy Outlook that U.S. oil output in 2015 will likely average its highest level in 42 years, while also raising its forecast for U.S. and international oil prices.
U.S. crude oil production is expected to increase from an estimated 7.4 million barrels per day in 2013 to 8.5 million bpd in 2014 and 9.3 million bpd in 2015. “The 2015 forecast represents the highest annual average level of oil production since 1972,” the EIA said……………………………………Full Article: Source

Gold Shines Again as Hedge Funds Boost Wagers on Advance

Posted on 09 July 2014 by VRS  |  Email |Print

Gold is precious again. After investors sent bullion tumbling in 2013 by the most in three decades and kept dumping the metal earlier this year, demand is now up and prices are defying bearish forecasts. Money managers increased net-long positions for a fourth straight week through July 1 and holdings in exchange-traded products are climbing at the fastest pace since 2012.
“Gold’s performance has proven the bears wrong so far this year,” John Kinsey, who helps manage about C$1 billion ($935 million) at Caldwell Securities Ltd. in Toronto, said in a telephone interview yesterday. “We look for further strength through the balance of the year.”…………………………………..Full Article: Source

Gold industry resistant to price benchmark replacement - WGC

Posted on 08 July 2014 by VRS  |  Email |Print

Gold producers and consumers are resistant to a wholesale redesign of the existing price setting benchmark known as the “fix” despite increasing regulatory glare, a discussion held by the World Gold Council found on Monday.
The debate hosted by the gold mining industry group was attended by 34 delegates from investment funds, refiners, exchanges, and other industry bodies. The four banks that currently set the globally used gold benchmark twice a day via a conference call - Barclays Plc , HSBC, Bank of Nova Scotia and Societe Generale - were not present, but the WGC said it had had meetings with them separately……………………………………..Full Article: Source

Iraq fighting doesn’t raise oil prices, yet

Posted on 08 July 2014 by VRS  |  Email |Print

Iraq is one of the world’s top oil exporters, so you would think that a recent attack by militants on its largest oil refinery amid a deteriorating security situation in the country would prompt global fears of oil shortages and spark a spike in prices.
Instead, ​prices are about where they were a year ago, although they have been creeping up in recent months. Why no panic? Iraq’s vast crude supplies are safe for the time being because the bulk of its oil production — about 2.5 million barrels a day — takes place in the south, far from the current insurgency, analysts say……………………………………..Full Article: Source

Emerging markets output growth strongest since March 2013 - survey

Posted on 07 July 2014 by VRS  |  Email |Print

Business activity in emerging markets expanded last month at its fastest rate since March 2013, boosted by strong growth in China and India, a survey showed on Monday.
HSBC’s composite emerging markets index of manufacturing and services purchasing managers’ surveys jumped to 52.3 in June - well above the 50 threshold that indicates expansion - from 50.6 in May. Services activity growth hit a 15-month high and manufacturing output also rose, HSBC said………………………………………..Full Article: Source

Why It’s Time to Explore the Stocks-Commodities Dynamic

Posted on 07 July 2014 by VRS  |  Email |Print

Commodities are outperforming stocks. The Greenhaven Continuous Commodity ETF (GCC) has gained 8.77% through the first six-months of the year, while the SPDR S&P 500 (SPY) is ahead by 7.71%.
GCC is an outstanding barometer of the broader commodities market. Unlike several larger competing commodity ETFs, GCC equally weights a basket of 17 commodity futures contracts – including gold, oil, and sugar, among others. That means no single commodity dominates GCC’s performance, giving it a broader view of what’s really happening in the commodities marketplace………………………………………..Full Article: Source

Gold market to return to net hedging in 2014 - GFMS

Posted on 07 July 2014 by VRS  |  Email |Print

Gold producers will return to net hedging for the first time since 2011 this year, GFMS analysts at Thomson Reuters said on Friday, after Polyus Gold this week announced a two-year programme to sell gold forward.
Hedging, or selling future gold production, allows miners of the metal to lock in prices for their output. While it can protect producers when prices are falling, it can also stop them capitalising on a rising market………………………………………..Full Article: Source

Morgan Stanley buys Deutsche’s bulk commodities trading book

Posted on 04 July 2014 by VRS  |  Email |Print

Morgan Stanley has bought Deutsche Bank’s bulk commodities trading book dealing in coal, iron ore and freight forward contracts to expand in commodities derivatives, a source familiar with the matter said on Thursday.
The deal marks an apparent return to iron ore for the Wall Street bank, which exited the market by last year, and an expansion in coal and freight. The acquisition will broaden Morgan Stanley’s customer base, making it the counterparty for structuredtransactions with a wide range of end-users………………………………………..Full Article: Source

Will Gold Rise in the Second Half This Year?

Posted on 04 July 2014 by VRS  |  Email |Print

The first half of the year was great for gold, which rose by about 10 percent from January through June. While analysts were nearly unanimously bearish in January, there have been a couple of individuals outside of the gold community who have turned bullish, but the vast majority of mainstream analysts are bearish or neutral. They see a lack of interest in gold as the economy improves and stock prices continue to rise. When stocks rise people feel good, and there is no reason for them to hold gold.
And these people may be right in the near term even if they are mistaken in the long term. The gold price is near a critical resistance point at around $1,350 per ounce, and the price is trending downward if you take the August 2013 peak and connect it to the March peak………………………………………..Full Article: Source

China’s impact beyond commodities

Posted on 03 July 2014 by VRS  |  Email |Print

Since 2003, Europe has made the greatest inroads into China’s chemicals, machinery and transport equipment import markets, dominating them all in 2013. Some of the gains seem to have come at Japan’s expense, especially in recent years. This increased exposure to China also implies increased vulnerabilities to a China slowdown. Also, the US and Japan seem to have made a comeback of late.
China’s importance for global growth has risen incredibly over the past decade not only for emerging but also developed markets. In the 2014 edition of our annual China export exposure chart book, we look at how China’s importance as an export market has evolved over the past decade. We note that the importance of China as an ultimate “consumer” of imports has gone beyond commodities………………………………………..Full Article: Source

Petrochemicals latest China commodity to be hit by potential fraud

Posted on 03 July 2014 by VRS  |  Email |Print

Chinese petrochemical imports have become the latest commodity financing tool to come under investigation for possible fraud, highlighting the risks from the widespread use of raw materials as collateral to raise loans and skirt credit restrictions.
Commodity financing deals in China, which Goldman Sachs has estimated to be worth as much as $160 billion, have come under close scrutiny after an alleged metal financing fraud at Qingdao Port, a huge trading hub in eastern China………………………………………..Full Article: Source

Underweight Commodities

Posted on 02 July 2014 by VRS  |  Email |Print

Commodities generally marched to different drummers in the first half of 2014. The idiosyncratic responses of individual commodity markets to supply disruptions generated surprisingly strong returns.
Even accounting for these supply interruptions, however, commodity supply is still trending generally stronger amid subdued demand, and so we continue to recommend maintaining commodity positions below long-term target allocations. Nevertheless, we see long-term reasons why investors should continue to include commodities in a diversified portfolio………………………………………..Full Article: Source

TDS Raises Commodity Forecasts, Sees Average 2014 Gold Price At $1,273/Oz

Posted on 02 July 2014 by VRS  |  Email |Print

TD Securities raised second-half 2014 forecasts for a host of commodities, including gold, silver, base metals and some energy markets. In a research report released late Monday, TDS now forecast average 2014 gold prices at $1,273 an ounce, up $25 from their previous view, and silver at $19.87, up 55 cents. For the third quarter, their average gold price forecast is $1,260, up $60, and the fourth-quarter forecast is up $25 to $1,250. For silver, the third-quarter forecast is up $1.20 to $19.80 and the fourth-quarter forecast is up 64 cents to $19.64.
For 2015, however, the firm lowered its gold forecast for the first half of the year, leaving its second-half 2015 forecast unchanged. It lowered its 2015 average price forecast by $10 to $1,271. For silver, TDS upped its second-quarter 2015 forecast and lifted its 2015 average forecast by 6 cents to $19.88………………………………………..Full Article: Source

Sun finally shines on commodities

Posted on 01 July 2014 by VRS  |  Email |Print

After years of losses and investor pessimism the sun finally shone on commodities in the first half of 2014. The Dow Jones-UBS index, which tracks the prices of 21 commodities, delivered total returns of 7.1 per cent, outpacing US equities, 10-year Treasuries and high yield corporate bonds.
But the clouds could quickly gather again if this year’s big improvement in performance fails to entice long-term investors back into commodities, say analysts. “There’s a lot resting on what happens in the second half of this year, in terms of the long term viability of commodities [as an asset class],” says Kevin Norrish, commodities strategist at Barclays………………………………………..Full Article: Source

Commodities traders await BNP Paribas fall-out

Posted on 01 July 2014 by VRS  |  Email |Print

The nearly $9 billion (CHF8 billion) fine imposed on French bank BNP Paribas could have a major impact on the Geneva commodities sector, according to one expert. The violations arose mainly from the bank’s Geneva-based trade finance unit that has greased the wheels of the explosive growth of commodities trading in the region.
Trade finance is a specialist banking service that provides credit to traders. The funding is vital for plugging the financial gap between traders buying a commodity in one part of the world and receiving payment once the goods have been successfully shipped to another country………………………………………..Full Article: Source

Iraq and the oil market: How much will prices rise?

Posted on 01 July 2014 by VRS  |  Email |Print

It stands to reason that one of the effects of the turmoil in Iraq will be a change in oil prices. Indeed, the violence in OPEC’s second-largest producer has already sent oil prices to 10-month highs.
A recent report from the International Energy Agency (IEA) put it well: “While Iraq’s production is huge, so are the political hurdles it is facing — and nothing provides a clearer example of that risk than the military campaign.” Yet this is no time to panic. For one, Iraq is not the only dark cloud hovering over the world oil market………………………………………..Full Article: Source

More investors plan to overweight commodities -Credit Suisse

Posted on 27 June 2014 by VRS  |  Email |Print

More investors plan to ramp up on commodities over the next 12 months after years of pessimism toward the sector, betting that the Iraq conflict will push oil prices higher while other commodities prices advance in volatile trade, a Credit Suisse poll showed on Thursday.
The Swiss bank said it found a favorable view developing toward commodities at a conference in New York this week, when it surveyed 350 investors, including institutions, hedge funds, family offices, mutual funds and corporate firms. A year ago, the bank said most investors at a similar Credit Suisse conference expressed reservations on commodities………………………………………..Full Article: Source

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