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Commodities Briefing - Category | Research more

BofA-ML cuts oil price forecast to $55-70 per barrel

Posted on 01 September 2015 by VRS  |  Email |Print

With concerns on China’s growth, expectation of rising Iranian oil production, and persistent dollar strength, Bank of America-Merrill Lynch has announced a cut in its Brent oil price forecast from $60-80 per barrel to $55-70 per barrel.
“But, we expect prices to rebound into the year-end, driven by an accelerating decline in non-Organization of the Petroleum Exporting Countries (OPEC) production led by the US, a temporary pickup in Chinese demand on monetary stimulus and seasonally strong global demand,” the body said. It added the OPEC could keep prices above $50 per barrel to fund their budgets………………………………………..Full Article: Source

Lessons from the oil market’s ‘lost decade’: Kemp

Posted on 28 August 2015 by VRS  |  Email |Print

Saudi Arabia and its OPEC allies are counting on strong growth in demand coupled with slower growth in non-OPEC supply to rebalance the oil market in 2016. But the experience of the “lost decade” after prices slumped in 1986 suggests rebalancing could take longer than some OPEC members and market analysts expect.
Following the price slump in 1985/86, the oil market struggled with persistent surpluses for much of the next 17 years. In real terms, oil prices did not rise above the 1986 crisis level on a sustained basis until 2003……………………………………….Full Article: Source

Behind the commodities bust

Posted on 27 August 2015 by VRS  |  Email |Print

First was the dot-com bubble, then the housing bubble. Now comes the commodities bubble. We don’t fully understand the stock market’s current turmoil, but we know it’s driven at least in part by a bubble of raw material prices. Their collapse weighs on world stock markets through fears of slower economic growth and large financial losses.
All bubbles share similar characteristics. There’s a strong, enthusiastic demand for some object (whether stocks, homes, oil or tulips). High demand pushes up prices, which inspires more demand. Prices ultimately reach unsustainable levels so that when spending slows, the bubble implodes. Commodities have now traced this familiar path………………………………………..Full Article: Source

Commodities: The Chinese curse

Posted on 26 August 2015 by VRS  |  Email |Print

An ancient Chinese curse translates as “May you live in interesting times”. We are doing that, thanks to the bursting of the Chinese stock market bubble. The collapse of Chinese equity markets has triggered big selloffs in other markets and underlined the weakness in demand for a range of basic commodities.
Metals, fuels, cotton and plastics have all gone South. There has also been turmoil in the forex market, with Emerging Market currencies down in the wake of heavy FII selling. The Indian stock market indices have been badly hit. There is an additional complication in that this is settlement week………………………………………..Full Article: Source

Outlook for base metal prices continues to grow cloudier: BMO

Posted on 26 August 2015 by VRS  |  Email |Print

Despite the second biggest price decline in the past 35 years, the outlook for base metals doesn’t look good, says a new report from BMO Capital Markets. “Although prices have tanked, we expect that markets will remain lacklustre or even test lower levels by the end of 2016, given strong headwinds blowing from multiple directions,” BMO said.
China and a strengthening U.S. dollar are the two biggest culprits weighing on base metals, leading to a 40-per-cent plunge in the CRB metal sub-index since the most recent peak. Only the price collapse of 2008 has been worse. BMO said there are plenty of signs that despite the pullback, the worst might not even be behind us………………………………………..Full Article: Source

Commodity markets tumble as China weakness spreads

Posted on 24 August 2015 by VRS  |  Email |Print

Commodities markets hit fresh lows in early Asian trading on Monday as fears spread that a more severe slowdown in China would pull down other economies in the region, denting energy and raw material consumption. In Japan, the Nikkei share average tumbled more than 2 percent to its lowest level in nearly five months on Monday as worries over slower growth in the Chinese economy intensified.
The weak sentiment in Asia also hit oil, the dominant fuel for transportation and most traded commodity. The two most important crude futures, U.S. West Texas Intermediate (WTI) and the global benchmark Brent , hit fresh 6-year lows on Mondays to levels last seen during the peak of the credit crunch of 2008/2009………………………………………..Full Article: Source

10 Gold Market Facts You Should Know

Posted on 19 August 2015 by VRS  |  Email |Print

Here are ten basic gold-market realities that are either unknown or ignored by many gold ‘experts’: 1. Supply always equals demand, with the price changing to maintain the equivalence. In this respect the gold market is no different from any other market that clears, but it’s incredible how often comments like “demand is increasing relative to supply” appear in gold-related articles.
2. The supply of gold is the total above-ground gold inventory, which is currently somewhere in the 150K-200K tonne range. Mining’s contribution is to increase the above-ground inventory by about 1.5% each year. An implication is that there should never be a shortage of gold………………………………………..Full Article: Source

Citi lowers gold price forecasts for 2015, 2016

Posted on 19 August 2015 by VRS  |  Email |Print

Citi lowered its average gold price forecasts for this year and 2016 as weak macro themes and short-term fundamentals dominate the market, it said on Tuesday. The bank now forecasts gold prices to average $1,090 per ounce in the third quarter of this year, slipping further into the fourth quarter to $1,050. The bank forecasts an annual average price this year of $1,140 and $1,050 in 2016.
The spot gold price was last at $1,111.2/1,111.5, down $5.80 on the previous close. After testing $1,080 in the first week of August, gold prices rallied 1.7 percent last week after a surprise devaluation of the Chines yuan sparked renewed safe-haven buying and prompted short-covering in gold, which had recently reached all-time lows in COMEX money manager net length………………………………………..Full Article: Source

Goldman Sachs ends era in commodities with coal mine sale

Posted on 17 August 2015 by VRS  |  Email |Print

Goldman Sachs Group closed a near 35-year era of investments in commodity assets such as power plants and refineries with the sale of a Colombian coal mine. The disposal is the latest sign of how Wall Street banks are responding to pressure from US regulators and disappointing returns as raw materials prices plunged.
Goldman Sachs has invested in physical commodity assets since 1981, when it bought what was then a small trading house called J Aron. Over the years, the company has owned oil refineries in Rotterdam, power plants in Virginia and Colorado, and warehouses to store aluminium and copper around the world………………………………………..Full Article: Source

Commodity markets overreacting to falling yuan, says UBS

Posted on 14 August 2015 by VRS  |  Email |Print

China’s shock move to devalue the yuan is sparking fears over the country’s growth outlook, but it will only have a minor affect on demand for commodities, and equity markets are “overreacting” to the move, UBS says. China’s play will have a small impact on global commodity markets, UBS commodities analyst Daniel Morgan told The Australian Financial Review.
“Some people are worried that this may be a new and ongoing bearish driver for commodity markets,” Mr Morgan said. “This is another bearish catalyst, but how much of commodity trade is going to contract because of this? Not much.”……………………………………….Full Article: Source

Lower gold prices may bolster Indian demand in H2 - WGC

Posted on 14 August 2015 by VRS  |  Email |Print

India’s gold demand in the second half of 2015 could rise by more than a quarter from a year before as lower prices encourage buying during the peak festival season towards the year-end, the World Gold Council (WGC) said on Thursday.
Stronger demand from the world’s second-biggest gold consumer could support the global bullion price, which hit its lowest in 5-1/2 years below $1,100 an ounce last month. But growth in demand could be lower if monsoon rains turned out to be weak, Somasundaram PR, managing director of the WGC’s Indian operations, told Reuters………………………………………..Full Article: Source

BofA Merrill cuts 2015 gold, silver price forecasts

Posted on 13 August 2015 by VRS  |  Email |Print

Bank of America Merrill Lynch lowered its 2015 gold and silver price forecasts, citing the current macroeconomic backdrop and “persistent headwinds” to gold and silver prices of late. The bank said it was reducing its average 2015 gold and silver forecasts by 6.8 percent and 4.6 percent, to $1,122 per ounce and $15.70 per ounce, respectively.
The bank reiterated its view that gold prices should fall below $1,000 per ounce in 2016. Continued hawkish comments from the U.S. Federal Reserve against a backdrop of falling inflation are a most notable concern, BofA said in a note dated Tuesday. The bank said it believes gold should stabilize when inflation picks up………………………………………..Full Article: Source

The New Oil Order: in charts

Posted on 12 August 2015 by VRS  |  Email |Print

The Financial Times has been investigating what the plunge in the oil price since the summer of 2014 has meant for the industry, consumers and producers. Brent crude has more than halved since June last year, with the slide accelerating after Opec’s decision last November not to cut output, despite a US supply glut and weaker than expected demand in Asia.
The drop has inflicted massive pain on oil-exporting countries, widening budget deficits and weakening currencies. Energy companies have laid off an estimated 70,000 workers and scrapped projects worth billions of dollars, especially in high-cost areas such as Canada’s oil sands and the deepwater fields of the Gulf of Mexico………………………………………..Full Article: Source

Barron’s Likes Commodities; Cramer Doesn’t

Posted on 10 August 2015 by VRS  |  Email |Print

Over the weekend, it was reported that Warren Buffett’s Berkshire Hathaway is nearing a deal to buy industrial company Precision Castparts (PCP) for a price tag that could exceed $30 billion, according to the Wall Street Journal. And demand for U.S. Treasuries seems to be as strong as ever despite data that show that China has reduced its holdings recently in U.S. debt by about $180 billion, Bloomberg reported.
Benchmark 10-year yields fell only about 0.6 percentage point even though the largest foreign holder of U.S. debt pared its stake between March 2014 and May of this year, based on the most recent data available from the Treasury Department………………………………………..Full Article: Source

Oil’s $4.4 Trillion Hole: Deflation spreads through the global oil industry

Posted on 07 August 2015 by VRS  |  Email |Print

It rankles when you lose $20. But hey, at least it isn’t $4.4 trillion. That is roughly how much revenue the world’s oil producers will forego over the next three years, based on the current outlook for prices and demand, relative to what was expected just a year ago.
With Brent crude having tumbled back below $50 a barrel, the industry has entered a vicious, and spreading, bout of deflation. A year ago, futures indicated an average Brent crude-oil price in 2016 through 2018 of about $101 a barrel. Today, that is just under $60. Estimates of future demand have also been marked down slightly. The implied hit to oil producers’ revenue is about $4.4 trillion spread across those three years………………………………………..Full Article: Source

Commodities rout brings global winners and losers

Posted on 03 August 2015 by VRS  |  Email |Print

The sell-off in commodities is terrible news for emerging market countries which depend on high resource prices. What happened to the summer lull? No sooner did it look like things were calming down in Greece and China than something new came along to rattle markets. The wild ride for commodities will ruin a few holidays this year but others won’t be surprised by the latest gyrations.
Cheaper natural resources are a two-edged sword and many investors will welcome the past month’s commodity crunch because it creates winners as well as losers. The commodity slump is important because, unlike the Greek debt negotiations and Shanghai’s bursting equity bubble, its impact is felt throughout the global economy………………………………………..Full Article: Source

Prepare for gold prices to plunge…as low as $350

Posted on 31 July 2015 by VRS  |  Email |Print

A prominent gold forecaster predicts the yellow metal will drop to a mere $350 an ounce, a level unseen since 2003. It’s dramatically lower than what most experts are currently calling for. But Claude Erb’s prediction might have merit. Back in 2012, Erb, a former commodities trader at TCW Group, co-authored a landmark research paper with Duke University professor Campbell Harvey that was early to predict gold’s downfall.
At the time, gold was fetching north of $1,600 an ounce. Now it’s trading below $1,100. The paper used historical analysis to show that if gold is an inflation hedge — as many people believe — then it’s extremely expensive at current levels………………………………………..Full Article: Source

Study predicts gold could plunge to $350 an ounce

Posted on 31 July 2015 by VRS  |  Email |Print

Gold bugs, who have just begun to digest bullion’s more than $100 drop over the past month, need to prepare for the possibility of an even bigger decline. That, at least, is the forecast of Claude Erb, a former commodities manager at fund manager TCW Group, and co-author (with Campbell Harvey, a Duke University finance professor) of a mid-2012 study that forecast a plunging gold price.
They deserve to be listened to, therefore, since — unlike many latter-day converts to the bearish thesis — they forecast a long-term gold bear market when it was only just beginning. You might think that, with gold now trading more than $500 lower than when the study was released, Erb would declare victory and leave well enough alone. But Erb is doing nothing of the sort. Earlier this week, he told me that the gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce………………………………………..Full Article: Source

Deutsche: Gold price has another 30% to fall – and soon

Posted on 30 July 2015 by VRS  |  Email |Print

On Tuesday gold stabilized but hovered near five-and-half year lows struck last week after a closely watched report showed global gold demand at the lowest in six years , followed by a prediction of a 30% fall from today’s levels.
Futures contracts in New York with August delivery dates were exchanging hands for $1,095.10 an ounce in after hours trade on Tuesday and flat compared to yesterday’s close in another day of light trading as anxious investors look for fresh direction for the metal………………………………………..Full Article: Source

HSBC downgrades 2015 gold price forecast

Posted on 30 July 2015 by VRS  |  Email |Print

HSBC has significantly downgraded its 2015 average gold price forecast, following the brutal sell-off seen in the market one week ago. HSBC now predicts that gold will average $1,160 per ounce in 2015 from $1,234 previously. The bank has also lowered its 2016 forecast by five percent from $1,275 per ounce to $1,205.
Nonetheless, the bank still believes that in the end, gold will recover from current levels, it said. Gold recently slumped to levels not seen since March 2009 at $1,077 per ounce, following a bear-raid on the market during early trading hours in Asia and what was the most illiquid period of business in the week………………………………………..Full Article: Source

End of Commodities Supercycle? (Energy Subset)

Posted on 28 July 2015 by VRS  |  Email |Print

About a decade ago, Goldman Sachs’ Arjun Murti suggested an oil “superspike” might send prices to $105 a barrel. There were two primary reactions to this analysis, first, that Goldman was just marketing its commodity indices, and second, that he/they were crazy. The former view probably continues to be held by some, the latter, not so much.
Murti’s later prediction that oil might hit $200 didn’t prove out, but the $105/barrel prognostication certainly held up. What many overlooked at the time of the initial $105/barrel prediction was that it reflected an estimate of how prices might respond to an oil supply disruption. As such, it was much more reasonable than the predictions of peak oilers like Matthew Simmons or T. Boone Pickens, who thought prices were on a permanent upwards trend because of geological scarcity………………………………………..Full Article: Source

Deutsche Bank: Just because all commodities are falling doesn’t mean there’s one driver

Posted on 27 July 2015 by VRS  |  Email |Print

Gold, copper, corn, wheat, iron ore. The list of commodities that have been falling and under pressure over recent weeks and months grows. It would be easy to think there is something they all have in common. A stronger US dollar, rising US interest rates, slowing Chinese growth?
Unlike Tolstoyan families, all unhappy commodities are alike whereas each happy one is happy in its own way. This time last year, with prices still strong, the average correlation among eight diverse commodities had fallen to a decade low of 10 per cent. Since then, amid a slump afflicting everything from gold and oil to copper and sugar, the correlation has increased to 20 per cent. Yet even though the overall CRB commodities index is approaching 2009 lows, the correlation is only half the level back then………………………………………..Full Article: Source

Moody’s Says Low Oil Price Here to Stay as Russia Bleeds Capital

Posted on 24 July 2015 by VRS  |  Email |Print

Low oil prices are just the tip of what ails Russia, according to Moody’s Investors Service. With its dependence on commodities and a slump in investment, Russia will have a hard time recovering from its record economic slump as global oil prices are bound to remain lower for a long time, Yves Lemay, managing director in the sovereign risk group at Moody’s in London, said in an interview on Wednesday.
As much as a quarter of Russia’s gross domestic product and two-thirds of its exports are linked to the energy industry, according to the rating company. “Our assessment is that low oil prices are here to stay,” Lemay said. “Without major investment in the infrastructure, modernizing the equipment, oil production in Russia is unlikely to rise and may slowly decline in the coming years.”……………………………………….Full Article: Source

Another grim year for commodities as global supplies rise: World Bank

Posted on 23 July 2015 by VRS  |  Email |Print

The outlook for commodities remains grim for this year, except that oil will fall a bit less than previously forecast, the World Bank said. Average prices for fuels such as crude, natural gas and coal will tumble 39 per cent from 2014, while those for materials like metals and fertilisers will fall about 12 per cent, the Washington-based lender said in its quarterly “Commodity Markets Outlook” released Wednesday.
“All main commodity price indices are expected to decline in 2015, mainly due to abundant supplies, and in the case of industrial commodities, weak demand,” the bank said in the report. Commodities are trading at their lowest in 12 years following a decade-long bull market fuelled by growth in developing nations such as China and India. The bank said that metals and coal consumption in particular may slow in China as the nation shifts to a more services-oriented economy and enacts policies to curb pollution………………………………………..Full Article: Source

World Bank projects crude oil to average $57/b in 2015, $61/b in 2016

Posted on 23 July 2015 by VRS  |  Email |Print

The World Bank on Wednesday revised upward its 2015 crude oil price forecast to $57/barrel from $53/b in April, with demand higher than expected in the second quarter, particularly in the US. However, large inventories and rising output from OPEC “suggest prices will likely remain weak in the medium-term,” John Baffes, the World Bank’s senior economist, said in a statement.
The bank said it expects the price to rise to $61/b in 2016 as supply growth slows. The price projections are included in the organization’s latest quarterly Commodity Markets Outlook………………………………………..Full Article: Source

Four signs of pain in commodities

Posted on 21 July 2015 by VRS  |  Email |Print

Oil has been reeling for about a year; now gold is getting slammed - not pretty for commodities investors. The Bloomberg Commodities Index dropped to a 13-year low Monday - weaker than after the banking meltdown of 2008 and the euro-zone crisis of 2012. From wheat, to copper, to natural gas, little has escaped the rout.
“Commodities are a mess,” Walter “Bucky” Hellwig, who helps manage $US17 billion at BB&T Wealth Management, said. “We are not looking to add to positions.” It’s the year’s worst-performing asset class, with the Bloomberg gauge down more than 7 per cent. In Monday’s drop, the value of holdings in exchange-traded products for gold plunged to its lowest since 2009. During a stretch of about 15 minutes in Asian trading hours, prices of the metal fell the most in two years………………………………………..Full Article: Source

China’s Commodities Crash Will Not Make Australia The Next Greece

Posted on 21 July 2015 by VRS  |  Email |Print

It’s entirely possible that the Chinese economy is in the middle of a massive crash: there’s well informed people asserting just that. It’s also entirely possible that Australia won’t have a happy time of it if that is indeed so: the country has waxed very fat off the commodities boom as China has developed at breakneck speed.
However, there’s then those saying that this will mean that the Australian economy will then suffer the catastrophe that has befallen Greece: and this just ain’t so. That is to misdiagnose what has happened to Greece: it’s not that its terms of trade changed, but that it wasn’t allowed to use the simplest and best method of altering an economy to deal with changes in the terms of trade………………………………………..Full Article: Source

How China affects commodity prices

Posted on 20 July 2015 by VRS  |  Email |Print

Over the last 20 years, China has emerged as a major player in the commodities market. Whether it’s a global commodity super-cycle or a worldwide rout, it is often explained in terms of the ‘China factor’. Most commodity commentators devote a lot of attention to China because it is not just a large importer of many materials, it is also a prodigious producer of some.
So can we quantify the China effect on different commodity markets? Consider Chinese demand first. The consumption boom across many metals in the past two decades was driven largely by China. A World Bank report shows that China consumed about half the 91 million tonnes of metals produced globally in 2012. This was up from a mere 4 per cent in 1990. In the same period, metal consumption at the OECD countries, for instance, remained unchanged………………………………………..Full Article: Source

Commodities: Off the Boil

Posted on 16 July 2015 by VRS  |  Email |Print

The recent commodity price ‘rally’ as some have described it has come to a halt. Further significant price gains in the near-term are unlikely. However, H2 2015 may provide some support for fundamentals. Nevertheless, returns will remain meagre and warning signs emanating from the macro environment (Grexit etc.) allude to the short-term nature of commodity investment flows.
Net inflows to commodities of almost $7bn in Q1 2015, followed by a month (April) when commodities outperformed most other asset classes (registering double-digit returns as oil prices rose 20%) gave promise to markets. But no sooner had the commodity bulls returned than the spectre of continued sluggish growth and amply supply came back to dent sentiment. Lets face it, the majority of commodities remain in good supply and so the run-up in prices Q1 proved short-lived………………………………………..Full Article: Source

Iron ore, commodities to fall: Citi third quarter outlook takes bearish view

Posted on 15 July 2015 by VRS  |  Email |Print

Citi expects iron ore prices to fall into the $US30s in the second half of 2015, with the prices of other commodities – coal, oil and grain – also expected to weaken. Citi’s third quarter outlook, titled Sorting through the asset market bargain bin, stated that “rebounding Australian exports, lower Chinese steel production, mine re-starts and ramp up of new supply are expected to push iron ore prices below $US40 per tonne.”
Iron ore was most recently trading at $US50.30 per tonne after falling to $US44.59 earlier in the month. “The iron ore market continues to suffer from the three Ds: weak Chinese steel demand, cost deflation, and deleveraging among traders and steel mills.”……………………………………….Full Article: Source

Global Implications of Lower Oil Prices

Posted on 15 July 2015 by VRS  |  Email |Print

While the dramatic drop in oil prices in the past year will mean significant losses in revenue for some exporting countries, consumers should be paying less for fuel—and have more money to spend. A new paper published by IMF staff suggests that higher spending will ultimately be good for global growth.
The decline in oil prices is certainly benefiting consumers, but not as much as we might have thought. Even though crude oil prices fell by about half between June of last year and by the end of the year, retail fuel prices on average globally have fallen by half as much, so by about a quarter, says Aasim Husain, co-author and deputy director in the IMF’s Middle East and Central Asia Department……………………………………….Full Article: Source

Barclays Is Negative About Commodities in Q3.

Posted on 14 July 2015 by VRS  |  Email |Print

Barclays see the greatest upside potential in the commodity area for Copper. In a research report revealed today, 12 July 2015, Barclays has shared its negative outlook for commodities in Q3. On April 20, Barclays announced plans to to exit most of its commodities activities which is in line with the negative expectations revealed.
Commodities revenue at the 10 largest banks fell 18 percent last year amid reduced volatility, Coalition, a London-based analytics company, said in February. At the same time, regulators are concerned that lenders might control prices if they both own and trade raw materials, or suffer losses that would endanger the financial system. Deutsche Bank AG and Bank of America Corp. are exiting some commodities activities, while JPMorgan and Morgan Stanley are selling units………………………………………..Full Article: Source

Will China’s crash trigger a new global recession?

Posted on 13 July 2015 by VRS  |  Email |Print

The weak post-2008 recovery in the global economy is drawing to a close. Greece, China, falling bond and equity prices, all point to trouble ahead. With one of the world’s most open economies, we in Ireland will be among the first to feel the draft.
Following the stunning success of the “no” camp in last Sunday’s referendum all eyes have been focused on Greece. Will the Mediterranean country be able to agree a package with its creditors that allows it to stay in the euro or is ‘Grexit’ finally upon us? If Greece does become the first country to exit the single currency what, if any, will be the consequences for the rest of the eurozone?……………………………………….Full Article: Source

Global agri-commodities’ price plunges to six-year low in June

Posted on 10 July 2015 by VRS  |  Email |Print

Global agri commodities’ prices declined to nearly six-year low in June 2015 due to bumper output of all products in value chain. Forecast for yet another year of better-than-expected production this year despite continuing apprehension over El Niño pulled commodities’ prices down.
Data compiled by the Food and Agricultural Organisation (FAO) of the United Nations, showed prices of global agri commodities fell by 0.9% in June. Weighed in terms of index known as FAO’s Food Price Index (FPI), prices of agri commodities stood at 165.1 points, a decline of 21% from a year ago and at its lowest level since September 2009………………………………………..Full Article: Source

Goldman Sees Negative Loop in Commodities From Excess Money

Posted on 09 July 2015 by VRS  |  Email |Print

It’s going to take a prolonged slump in commodities to break a cycle of too much money and excess production, according to Goldman Sachs Group Inc. The market is caught in a “negative feedback loop,” where lower raw-material prices are strengthening the dollar and lowering production costs for countries with weaker currencies, Goldman analysts wrote in a report.
That boosts the prospects of higher U.S. interest rates and a reduction in emerging-economy debt, according to the bank. Demand for commodities will subsequently decline, capping prices and further reinforcing the greenback, it said. “Commodity markets still have access to far too much capital relative to future demand and a declining cost structure,” analysts including Jeffrey Currie in New York wrote in the note………………………………………..Full Article: Source

China’s reduced appetite for commodities won’t be offset by India

Posted on 06 July 2015 by VRS  |  Email |Print

The decade-long commodity demand “super-cycle” induced by China’s unique, resource-intensive economic growth model is nearing an end, analysts say, and that will not change even if India changes course to follow suit. That means global demand for commodities will grow more slowly in the years ahead as India, despite a similar population to China, will not make up for China’s slowdown.
“Even if India were to emulate China’s growth path, it will take a long time before the country can compensate for the slowdown in Chinese demand for commodities due to India’s small base,” Vanessa Lau, a senior analyst at American brokerage Sanford Bernstein, said in a research report………………………………………..Full Article: Source

Global slump in agri commodities to persist: report

Posted on 02 July 2015 by VRS  |  Email |Print

A major factor driving lower food prices globally is lower oil prices that is pushing down energy and fertilizer costs, the report said, adding, this will remove incentives for production of bio-fuels. Better crop yields and a slower growth in global demand will lead to a gradual decline in real prices of major crops over the next decade, said the Agricultural Outlook 2015-2024 released on Wednesday.
However, crop prices are likely to remain at levels above those in the early 2000s, observed the report released by the Organisation for Economic Cooperation and Development (OECD) and UN’s Food and Agriculture Organization (FAO)………………………………………..Full Article: Source

Commodities Green Shoots Suggest Better H2 - Analysts

Posted on 01 July 2015 by VRS  |  Email |Print

Commodity prices have been largely flatlined in the past few months, and even on the year, would appear to be on life-support. Nevertheless, analysts see scope for commodity recovery in the second half of 2015 and point to several factors that could revive global investor interest.
The Thomson Reuters Jefferies CRB index stands at 227.2176 Tuesday afternoon, on the high side of a 223.1627 to 226.4730 range. The TRJCRB closed at 229.9579 December 31, and fell to 211.2690 January 29, covered to 229.5511 in mid February and then put in a 2015 trough of 206.8126 on March 18, the day the Fed took the word “patient” from the accompanying statement………………………………………..Full Article: Source

Bank for International Settlements warns of emerging market risks

Posted on 29 June 2015 by VRS  |  Email |Print

Economists and foreign investors may have overestimated the potential economic output of a quintet of Latin American countries by 2 percentage points, leading to the possibility of sharp financial outflows when reality sinks in. Separately, “massive borrowing” by emerging market companies has also left them vulnerable to funding reversals if and when investor sentiment towards EMs reverses.
These are among the warnings from the Bank for International Settlements, commonly known as the central bankers’ central bank, in its annual report, released on Sunday. Amid slowing economic growth across much of the emerging world, the BIS says that a “moderation” of growth from the very high rates seen in recent years is “probably unavoidable”………………………………………..Full Article: Source

25 Lessons on Commodity Investing

Posted on 26 June 2015 by VRS  |  Email |Print

Commodities can be very powerful investments but they also come with their fair share of risk. In recent years, investors and advisors have begun to adopt commodities into portfolios, as many have seen the benefits of adding these low-correlated assets to a group of holdings.
The launch of a robust lineup of exchange-traded products that utilize both physical commodities and commodity futures contracts has brought commodities to the masses; they’re no longer reserved for the largest and most sophisticated investors………………………………………..Full Article: Source

Testing Your Basic Commodities Knowledge

Posted on 26 June 2015 by VRS  |  Email |Print

The world of commodities has played an important role in the investing landscape over the years. Some of these hard assets are known for their low correlation to other asset classes, while others are known for their volatility and hefty price movements. Either way, commodity investing has only grown more popular over the years and has even made its way into the average retail portfolio.
The quiz below will test some of your basic commodities knowledge and how well you know the industry. Simply click on the answer that you believe is correct. Good luck!……………………………………….Full Article: Source

How El Niño affects commodity prices (Video)

Posted on 22 June 2015 by VRS  |  Email |Print

Cocoa, coffee and minerals are especially vulnerable to the weather pattern first named by Peruvian fishermen. The Economist explains how El Niño affects.…………………………………………Full Article: Source

Australia cuts farm commodity forecasts due to El Niño

Posted on 18 June 2015 by VRS  |  Email |Print

Australia on Tuesday slashed forecast production levels for wheat, cotton and other agricultural commodities in fiscal 2015/16 as an El Niño weather phenomenon grips the country and dries out farmland. Meteorologists warn the current El Niño, the second in five years in Australia, will persist until the end of the year.
“We should see an end to this El Niño by December, January at the latest,” Andrew Watkins, manager of climate prediction services for the Australian Bureau of Meteorology. In the year ending July 1, 2016, cotton production in Australia is forecast to reach only 520,000 tonnes down from a March forecast of 559,500 tonnes, according to the latest quarterly update from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)………………………………………..Full Article: Source

5 little-known facts about commodities

Posted on 17 June 2015 by VRS  |  Email |Print

Regardless of what you think about commodities futures, you’re probably wrong. That’s because commodities are one of the most misunderstood asset classes in the entire investment arena. And that’s really saying something, since there is considerable misunderstanding about other asset classes as well.
One reason there’s been so much misunderstanding about commodities futures is that, until now, long-term historical data were unavailable. So analysts were largely shooting in the dark when trying to draw statistically robust conclusions about those contracts’ behavior………………………………………..Full Article: Source

Hank Paulson says China risks ‘real damage’ to economy

Posted on 15 June 2015 by VRS  |  Email |Print

The Chinese government risks “real damage” to the economy if it does not hasten reform of China’s state-owned enterprises and overhaul a debt-fuelled growth model, Hank Paulson has warned. For more than two decades the former US Treasury secretary and Goldman Sachs chief has worked closely with pivotal Chinese political figures such as Wang Qishan, currently head of the Chinese Communist party’s anti-graft bureau, and visits Beijing frequently.
“Until the state-owned enterprises are put on a level and competitive playing field, it’s going to be difficult to have the marketplace work efficiently in some key sectors of the economy,” Mr Paulson told the Financial Times during a visit to the Chinese capital. “Reform of the SOEs has been moving too slowly.”……………………………………….Full Article: Source

Commodities: Where is the value?

Posted on 05 June 2015 by VRS  |  Email |Print

The prices of core commodities, including oil and iron ore, have plunged in recent years. Michael Hulme, commodity equities fund manager at Carmignac Gestion, analyses the areas still able to offer value as industries consolidate and respond to price changes
Though last year’s plunge in oil prices was partly offset by a near-50% rebound from March 2015 onwards, volatility continues to unsettle investors within the asset class. There is reason to be cautiously optimistic on the outlook for some commodities, particularly oil, which continues to gain ground as US shale production begins to fall. Our long run forecast remains $80 to $90/barrel………………………………………..Full Article: Source

Energy & Commodities Market Study

Posted on 03 June 2015 by VRS  |  Email |Print

The perfect storm in energy and commodities is the result of a confluence of events; any of which, in a “normal” market, would require time for the markets to absorb and return to equilibrium, according to a new report from SunGard.
These events are: weakening energy and commodities demand due to slow global economic growth, overinvestment in, and a return of previously constrained, production capacity leading to an extended period of excess supply, a strong dollar policy reducing the value of dollar denominated commodities and increasing regulatory intervention in commodities markets that impacts broad segments of the commodities value chain………………………………………..Full Article: Source

SocGen Deal Reflects Commodity Troubles

Posted on 28 May 2015 by VRS  |  Email |Print

Société Générale SA told Jefferies LLC that it’s interested in buying its Bache commodities-trading unit — but only parts of it, Christian Berthelsen and Tatyana Shumsky report. It’s an indication of how unattractive raw-materials trading is amid fewer profits and more regulation. SocGen expects to take more than 300 of Bache’s top clients by revenue, including producers and end users of materials ranging from crude oil to aluminum.
But many brokers on Jefferies Bache’s energy team are moving to U.K. brokerage ED&F Man Capital Markets after SocGen decided to absorb just a third of client assets. “This year has been a reality check for the industry,” said Matt Simon, head of futures research at consulting firm TABB Group LLC. “It’s a simple case of what the profitability is going to be. There’s lower commissions, fewer instruments you can profit on, stronger capital commitments and growing pressure on the business.”……………………………………Full Article: Source

Iron ore forecast cut 32% by Citigroup as demand to drop

Posted on 28 May 2015 by VRS  |  Email |Print

Global iron ore demand will contract over the 2020s as steel consumption growth in China peaks, according to Citigroup, which reduced its long-run price forecast for the raw material by 32 percent. The long-run estimate was cut to $55 a metric ton from $81 as the world’s major mining companies added more cheap supply, analysts including Ivan Szpakowski wrote in a report on Wednesday. From 2016 to 2018, prices may average $40, it said.
“The next decade is shaping up to be a complete reversal of the past decade,” Citigroup said. After a period of rapid demand growth, the entry of new miners and rising costs, the years ahead will see lower demand, marginal producers forced out and major miners dominating supply growth, it said…………………………………….Full Article: Source

Goldman Sticks to Commodity Bear Call as Copper Vulnerable

Posted on 26 May 2015 by VRS  |  Email |Print

Commodities will reverse a rally that started in March as a stronger U.S. dollar, cheaper oil and cooling China again pressure raw materials, especially copper, according to Goldman Sachs Group Inc. Copper will lose at least 16 percent over the coming 12 months on China’s weakening demand growth and slowdown in construction completions, analysts including Jeffrey Currie said in a report e-mailed Monday.
Oil in New York will fall to $45 a barrel by October while the dollar continues its rise, pushing commodities prices lower as production costs slide. “We see downside pressures on commodity prices re-emerging,” the analysts wrote in the report. “The recent rise in commodity prices is clearly at odds with our lower-for-longer bearish view across the complex.”……………………………………….Full Article: Source

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