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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

Africa’s economy to strengthen in 2015 despite Ebola, oil price

Posted on 26 May 2015 by VRS  |  Email |Print

Africa’s overall economy should advance in 2015, expanding by 4.5 percent, showing resilience despite weak commodity prices and the devastating Ebola epidemic, an annual report published Monday said. And future growth could be spurred by the continent’s population doubling to two billion over the next 35 years, repeating in Africa the economic boom seen in Asia’s biggest countries.
“Africa’s gross domestic product (GDP) growth is expected to strengthen to 4.5 percent in 2015 and 5.0 percent in 2016 after subdued expansion in 2013 (of 3.5 percent) and 2014 (3.9 percent),” said the report, co-authored by the Organisation for Economic Co-operation and Development (OECD), the African Development Bank and the UN Development Programme (UNDP)………………………………………..Full Article: Source

Commodities, precious metals funds outflows biggest since 2013 -Lipper

Posted on 22 May 2015 by VRS  |  Email |Print

Investors in U.S.-based funds pulled $597 million out of funds that specialize in commodities and precious metals in the week ended May 20, data from Thomson Reuters’ Lipper service showed on Thursday. The outflows were the biggest since December 2013. Stock funds posted $1.7 billion in outflows over the latest week after attracting $3.7 billion in inflows the prior week.
U.S.-based non-domestic-focused stock funds attracted $3.3 billion of inflows, their 15th straight week of net new cash. “I’m speculating here but possibly stronger economic news caused investors to pull money out of commodities and into stocks,” said Patrick Keon, research analyst at Lipper………………………………………..Full Article: Source

Moody’s Predicts Big Jump in Oil and Gas Defaults

Posted on 20 May 2015 by VRS  |  Email |Print

So far oil and gas companies have largely weathered the sharp drop in oil prices with minimal carnage. But that carnage is coming, according to a new report from Moody’s Investors Service. Analysts at Moody’s predicts that the default rate for oil and gas companies with lower credit ratings — B2 or lower — could increase to 7.4% by March 2016 from 2.7%.
Moody’s Senior Vice President David Keisman said in the report that even if energy prices recover gradually to roughly $70 to $75 per barrel in 2016, the “weaker oil & gas issuers” will still be positioned for a “much greater risk of default.”……………………………………….Full Article: Source

Oil prices to recover, says BHP

Posted on 19 May 2015 by VRS  |  Email |Print

Cheap oil prices will not last for long, with significant rises to come in two to three years because of a lack of new discoveries, BHP Billiton’s petroleum boss says. Equally weak natural gas prices will take longer to bounce back though, according to industry leaders attending Australia’s largest oil and gas conference.
The predictions on gas are good news for consumers, particularly manufacturers, but not the energy companies that have invested an estimated $75 billion on three new liquefied natural gas projects in Queensland that about to come online………………………………………..Full Article: Source

Global outlook increasingly uncertain

Posted on 18 May 2015 by VRS  |  Email |Print

An increasing number of clouds are rolling in from Greece to Britain to the US, which may give investors a reason to pause their bullish bets on equities. Increasingly erratic and extreme shifts in asset pricing are unnerving investors everywhere.
On one level the backup in global bond yields makes sense. The deep-seated deflation that was built into bonds after last year’s oil price collapse now has to be rethought and repriced. But the speed and shock of the bond backlash has exposed illiquidity and overcooked, over-correlated investment positions………………………………………..Full Article: Source

Palladium to outperform platinum, move towards convergence – ANZ

Posted on 15 May 2015 by VRS  |  Email |Print

Palladium will continue to outperform platinum, with the prices of the two metals moving further to convergence amid differing fundamentals, ANZ Research said. Platinum was recently quoted at $1,149/1,155 per ounce, up $4 on Wednesday’s close and recovering from March’s sub-$1,100 lows – its softest since July 2009. Palladium, meanwhile, was last at $784/789, up $1.
“The price of the two metals should move closer to parity over the next few years, based on how we expect the market supply/demand balances to evolve,” the broker said in a note on Thursday. “But it is likely to be a long grind rather than a quick shift. In reality, this would just be a continuation of the downtrend in the platinum/palladium ratio in place since 2009,” it added…………………………………..Full Article: Source

EIA ups 2015 crude-price forecasts, cuts 2016 view

Posted on 13 May 2015 by VRS  |  Email |Print

The U.S. Energy Information Administration raised its 2015 forecasts for West Texas Intermediate and Brent crude prices in a monthly report issued Tuesday. The government agency said it expects WTI prices to average $54.32 a barrel this year, up from a previous forecast of $52.52.
The EIA, however, said it expects WTI crude to average $65.57 a barrel in 2016, down from the prior view of $70.07. Brent crude is forecast at $60.79 this year, up from a previous forecast of $59.39. The EIA said it expects natural-gas prices to average $2.93 per million British thermal units this year, down from the earlier estimate of $3.07………………………………………..Full Article: Source

ETFs poised to outstrip hedge funds

Posted on 08 May 2015 by VRS  |  Email |Print

The high-profile hedge fund world is about to be surpassed in terms of total assets by the unstoppable juggernaut that is the exchange-traded fund (ETF) industry, new research shows. Assets held globally in ETFs reached $2.93trn (£1.9trn) at the end of the first quarter of this year, according to research and consultancy firm ETFGI.
Meanwhile, a report from Hedge Fund Research has revealed there was $2.94trn in hedge funds at the same time. The difference in assets is the closest it has ever been (see top chart) and ETFGI predicts that given the much faster rate of inflows into ETFs seen in recent years, the tracker funds should overtake hedge funds within the second quarter of this year………………………………………..Full Article: Source

World Seen Saving $153 Billion on Food Bill After Costs Tumble

Posted on 08 May 2015 by VRS  |  Email |Print

Hefty supplies and cheaper shipping costs mean countries will pay less to import food than anytime in the past five years, the United Nations predicted. Food prices globally have fallen for most of the past year given an oversupply in everything from wheat to sugar and dairy, according to a report released Thursday by the UN’s Food & Agriculture Organization.
The group said the world food import bill may drop $153 billion, or 12 percent, to $1.13 trillion this year. While poorer countries, such as those in sub-Saharan Africa, will be able to get cheaper food in the international market, in some cases the benefit is diminished because their currencies have weakened relative to the dollar, the FAO said………………………………………..Full Article: Source

Gold an ‘unreliable’ hedge against geopolitical risk – SocGen

Posted on 08 May 2015 by VRS  |  Email |Print

Gold is not reliable as a hedge against geopolitical risks, Société Générale said on Thursday. The performance of the yellow metal in periods of regional military conflicts is mixed and it has not performed well consistently, the bank said in a note on Thursday.
One of the most recent examples is the annexation of Crimea by the Russian military during which gold initially rallied towards $1,400. “[But] the gold rally didn’t last very long and it wasn’t long before gold was trading at levels below when armed men seized Crimea’s parliament,” SocGen said………………………………………..Full Article: Source

Global surge in silver output passes SA by

Posted on 08 May 2015 by VRS  |  Email |Print

South Africa is Africa’s second-largest silver producer, but it is minuscule when compared with global supply, which last year notched up a 12th consecutive year of growth to reach 877-million ounces. Silver in SA is largely a by-product of other mining processes, and production has remained constant at about 2.8-million ounces a year over the past decade.
Silver is used mainly in industrial, jewellery and investment applications. The silver market ended last year with a 4.9-million ounce deficit, but the price fell 20% to $19.08/oz, the lowest average annual price since 2009, according to the 2015 World Silver Survey compiled by Thomson Reuters GFMS………………………………………..Full Article: Source

15 Precious Metals Terms All Gold Buyers Should Know

Posted on 07 May 2015 by VRS  |  Email |Print

For the sake of simplicity, “gold” in any of the definitions below can be replaced with silver, platinum, or palladium. 1. Ingot: A mass of metal formed into a convenient shape for shipping, storing, or further processing. Ingot and bar may be used interchangeably in regards to precious metals.
2. Bullion: Precious metals in the form of bars, coins, or other ingots. Not to be confused with bouillon, the French word for broth. 3. Circulated/Uncirculated: Circulated coins have been used as currency by the public, and uncirculatedcoins have not. Uncirculated coins are usually in much better condition than circulated ones………………………………………..Full Article: Source

How QE impacts commodities

Posted on 06 May 2015 by VRS  |  Email |Print

The economic cycle of depression/recession has created the need for Quantitative Easing (QE), the occasionally used and effective tool used by central banks across the globe. The world knows all about it and will be remembered for ages. Before we delve deep in to this topic, it is essential to understand the basic definition of this much hyped “Quantitative Easing” and how it is supposed to work.
Quantitative Easing can be defined as monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective. The new money swells the size of the bank reserves and lower interest rates will stimulate the economy by encouraging banks to make more loans which in turn boosts investment………………………………………..Full Article: Source

Africa and commodity prices: No longer the kiss of death

Posted on 24 April 2015 by VRS  |  Email |Print

In 2014 commodity prices tumbled. Many economists feared the worst for Africa. For decades the continent has been hopelessly dependent on commodities to power economic growth. When prices crashed, economies would go into tailspin. This time around, though, things seem different. The continent is holding up well.
The map above looks at how forecasts from the International Monetary Fund for African growth in 2015-16 have changed in the past year. Compared to what they were predicting in April 2014, the IMF now expects economic growth to fall in most African economies. For instance, the IMF now expects Nigeria to grow by 10% over the next two years, whereas in April 2014 it had predicted growth of 14%. Thus growth expectations have fallen by 4 percentage points, as the map’s colouring shows…………………………………..Full Article: Source

Continued Weakness in Commodity Markets May Signal Long Term Easing of Prices

Posted on 23 April 2015 by VRS  |  Email |Print

Well-supplied markets are continuing to drive down prices of commodities, across the board, says the latest issue of the World Bank’s Commodity Markets Outlook (CMO). Most indices edged further down during the first quarter of 2015, with food down 7.3 percent, crude oil down 13 percent and metals down 9 percent compared to the fourth quarter of 2014. Prices are expected to stay weak for the rest of this year, with only a marginal recovery expected in 2016.
“Surplus production and subdued demand due to weak global growth are continuing to depress commodity prices. The slowdown in emerging economies, coupled with a strong U.S. dollar, will likely keep the lid on prices. Although weaker prices will mean lower revenues for commodity exporting countries, they will help reduce current account and fiscal deficits in many commodity-importing countries,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group……………………………………Full Article: Source

Greece is ‘main threat to global economy’s recovery’

Posted on 21 April 2015 by VRS  |  Email |Print

World finance officials worry about unevenness of growth as the Greece’s debt crisis poses the biggest problem that now needs solving. World finance officials said they see a number of threats on the horizon for a global economy still clawing back from the deepest recession in seven decades, and a potential Greek debt default presents the most immediate risk to the recovery.
After finance officials wrapped up three days of talks on Saturday, the International Monetary Fund’s policy committee set a goal of working toward a “more robust, balanced and job-rich global economy” while acknowledging growing risks to achieving that objective…………………………………..Full Article: Source

Global financial risks have risen, says IMF

Posted on 16 April 2015 by VRS  |  Email |Print

The risks to global financial stability have risen, the International Monetary Fund (IMF) has said. In a new report, the IMF says that countries that export oil and other commodities have been severely affected. Some emerging economies have been hit by sharp moves in the global currency markets.
And the report says financial stability is still not “fully grounded” in the rich countries. “Risks to the global financial system have risen since October and have rotated to parts of the financial system where they are harder to assess and harder to address,” said Jose Vinals, financial counsellor at the IMF………………………………………..Full Article: Source

Commodities squeeze growth

Posted on 15 April 2015 by VRS  |  Email |Print

Economic growth in sub-Saharan Africa is expected to slow to 4% this year, from 4.5% in 2014 on the back of falling commodity prices before picking up moderately next year, according to World Bank projections. This is while problems in the electricity sector continued to curtailed South Africa growth. The World Bank insisted that oil exporters such as Angola and Nigeria, were especially hard hit by sharply lower oil prices.
While in South Africa the energy power supply and policy uncertainty were having a negative impact. The World Bank’s Africa’s Pulse report focused on the continent’s economic prospects and pointed out that the downturn on growth largely reflected the fall in the prices of oil and other commodities………………………………………..Full Article: Source

US Shale oil production may have maxed out - EIA

Posted on 15 April 2015 by VRS  |  Email |Print

The shale oil boom may be over, judging from the latest report from the US Energy Information Administration, which said oil output from America’s seven most productive shale formations will decrease for the first time in four years.
The report has had an effect on the oil market with Brent, the benchmark for more than half of the world’s oil, trading above $58.25 per barrel, a 0.55 percent increase, and WTI, the North American blend, advancing one percent to $52.44 at the time of publication………………………………………..Full Article: Source

World Bank says sharp slowdown in China would hurt NZ, Australia

Posted on 14 April 2015 by VRS  |  Email |Print

A sharp slowdown in China would hurt commodity exporting countries like New Zealand and Australia and spill over into Pacific Island countries, the World Bank says in its latest East Asia Pacific Update. The global institution yesterday lowered its 2015 growth forecast for China, Asia’s largest economy, to 7.1 percent from a previous estimate of 7.2 percent, and its 2016 estimate to 7 percent from 7.1 percent.
China will release its first quarter gross domestic product data tomorrow, which is expected to show the economy expanded 7 percent from a year earlier, according to a Bloomberg survey of economists. That would be the slowest pace since the first quarter of 2009………………………………………..Full Article: Source

Gold price to end 2015 between $1,151-$1,250/oz: conference

Posted on 14 April 2015 by VRS  |  Email |Print

The gold price will end 2015 somewhere between $1,151 and $1,250/oz, delegates at the Dubai Precious Metals Conference voted Monday. In the closing remarks the audience was electronically polled on where the price will close the year, the results were down from $1,251-$1,350/oz at the start of the conference Sunday.
Still, 51% of delegates said they would prefer to be long the metal, up from 43% at the start. On the sidelines talking to Platts one banker said that overall mood at the conference was neither “bullish nor bearish, it’s neutral.”……………………………………….Full Article: Source

Thomson Reuters publishes GFMS Gold Survey 2015

Posted on 13 April 2015 by VRS  |  Email |Print

Thomson Reuters released “Gold 2015”, the 49th in the series of annual Surveys, looking at the shifts and developments in the global gold markets, their fundamentals and their drivers, over the year and setting the scene for future.
“Like most markets, gold takes time to recover from periods of turbulence and in early 2015 it is continuing the stabilisation of 2014 following the hurricane that swept through it in the previous year. Demand contracted sharply in 2014 as some key regions, notably China, suffered from over-purchasing in 2013, while lack of confidence in any near-term price recovery deterred investment purchases elsewhere. There are signs that confidence is starting to return, however, as the physical market adjusts and takes comfort from the price stabilisation since November 2014………………………………………..Full Article: Source

With the end of commodities prices ’super-cycle’, UN panel lowers Latin American growth forecast to 1%

Posted on 10 April 2015 by VRS  |  Email |Print

The Economic Commission for Latin America and the Caribbean (ECLAC) has revised downward its economic growth projection for the region in 2015, forecasting a 1.0% increase in the regional Gross Domestic Product (GDP), the United Nations organization said today in a press release.
This revision reflects a global environment characterized by less economic dynamism than what was expected at the end of 2014. With the exception of the United States, industrialized countries have revised their growth estimates downward, and emerging economies continue to decelerate. The region is expected to keep economic growth at around the same level as in 2014 (1.1% according to the ECLAC’s annual report Preliminary Overview of the Economies of Latin America and the Caribbean 2014)……………………………………….Full Article: Source

Tough first quarter for commodities markets

Posted on 02 April 2015 by VRS  |  Email |Print

It’s been a tough first quarter in the commodities markets. Oversupply, a stronger dollar and crude weakness weighed on the price of many raw materials. Iron ore led the decliners, closing the quarter at $51 a tonne, a post financial crisis low.
Nevertheless, money flowed into energy exchange traded funds supporting overall investment inflows. Here is a look at some other issues which came under the spotlight. Is the world running out of crude storage? Concerns have mounted that the current supply glut would overwhelm storage tanks from Oklahoma to Xinjiang and depress prices further………………………………………..Full Article: Source

How Much U.S. Oil and Gas Comes From Fracking?

Posted on 02 April 2015 by VRS  |  Email |Print

Hydraulic fracturing has unleashed vast new quantities of crude oil and natural gas. The percentage of fuel flowing from shale-rock compared with traditional oil and gas fields has been steadily rising. But lackluster energy demand and low prices are expected to curb growth later this year. Here’s a graphic that helps explain fracking:……………………………………….Full Article: Source

JP Morgan lowers gold, silver price forecast for 2015

Posted on 02 April 2015 by VRS  |  Email |Print

The sharp decline in gold prices during February and Early March has forced JP Morgan to lower its gold price forecast for the entire year 2015. According to them, prices of the yellow metal are likely to drop further during the second and third quarters of the year. However, strong physical buying may offer some support during Q4 2015. JP Morgan has also lowered the average silver price forecast for the year.
The gold price forecast for the full year has been lowered by 3.6% to $1,188 per ounce. The U.S. interest rate hikes may drag gold prices, despite temporary boosts from geopolitical events. The escalating tensions in Yemen and deadlock over Iran nuclear deal may provide temporary support to gold prices………………………………………..Full Article: Source

Goldman Sachs warns that peak gold may happen in 2015

Posted on 02 April 2015 by VRS  |  Email |Print

Goldman warns that peak gold may happen in 2015. New report says there are only “20 years of known mineable reserves of gold”. Discoveries of new sources of gold production peaked in 1995 despite major bull market .
Production lags new finds in 20 year cycle – Indicates 2015 may be year of peak gold production. Production in major gold mining countries has dropped in recent years. This will provide support and should lead to higher prices in long term. For many years, we have written about ‘peak gold’ and the ramifications of the underappreciated peak gold phenomenon for the gold market………………………………………..Full Article: Source

Gold price to average $1,183/oz this year, silver $16.20/oz – BarCap

Posted on 02 April 2015 by VRS  |  Email |Print

Gold should hammer out a base this year and next, providing good buying opportunities for the long-term investor, Barclays Capital said on Wednesday. The broker sees gold averaging $1,183 per ounce this year. Spot metal was last at $1,185.40/1,186.20, up a $2.50 increase on Tuesday’s close.
With the relationship between gold and US interest rates crucial to prices, the timing and extent of the Federal Reserve’s raising of US interest rates from near-zero levels will be closely watched. BarCap expects the increases to be gradual, with the first increase to come later in the year. “A June rate hike would have exposed a weak gold price floor, whereas in September, physical demand tends to strengthen in light of seasonal buying in India. Thus, although a rate hike is likely to lead to disinvestment, physical demand should buffer prices, limiting the downward pressure,” it said………………………………………..Full Article: Source

The global oil price drop may last for the next couple decades, Stanford economist says

Posted on 31 March 2015 by VRS  |  Email |Print

Global oil prices may stay low for the next 10 or 20 years, according to Stanford economist Frank Wolak. The most likely medium-term outcome is $50 to $70 per barrel, according to Wolak. He is the Holbrook Working Professor of Commodity Price Studies in the Department of Economics at Stanford University.

And while geopolitical and environmental issues may unexpectedly arise that turn oil prices upward, Wolak said many factors point to lower oil prices for the foreseeable future. Crude oil prices fell from a high of $115 a barrel in June 2014 to a low of $45 in January of this year. The lower prices have generated ripple effects throughout the global economy………………………………………..Full Article: Source

Morgan Stanley Cuts Commodities Outlook on China Demand

Posted on 25 March 2015 by VRS  |  Email |Print

Morgan Stanley cut its price forecasts for almost all base metals and bulk commodities as China’s “dormant” industry fails to bolster demand in the world’s biggest consumer of copper and iron ore.
The bank reduced its 2015 estimate for nickel by 23 percent from its previous estimate to an average $14,815 a metric ton and lowered copper by 16 percent to $5,945 a ton. It cut its iron ore outlook by 28 percent and coking coal by 16 percent. Industrial metals will perform better than bulk commodities as growth in developed countries supports demand, analysts Tom Price and Joel Crane said in a report on Tuesday………………………………………..Full Article: Source

Fed hike, Indian demand will be key for Gold: Barclays

Posted on 24 March 2015 by VRS  |  Email |Print

A likely Fed hike and seasonal physical demand will determine the intensity for risks in store for Gold, a report by Barclays said. In Q315 gold will likely be caught between scope for disinvestment as markets look for a rate hike and seasonal physical demand materializing from India.
“Our economists now see a much lower likelihood that the committee raises rates in June given the downward revision to NAIRU which means that the Fed’s estimate of labour market slack has risen. In turn, the Fed now looks for the first rate hike to occur in September and for the target range for the federal funds rate to reach 50-75bp in December, the report said………………………………………..Full Article: Source

Commodity Traders Aren’t Too Big Too Fail, Trafigura Report Says

Posted on 23 March 2015 by VRS  |  Email |Print

Commodity traders don’t pose systematic risks to the global financial system and shouldn’t be subjected to bank-style regulation, according to a paper published Monday by the second-largest metals trader Trafigura Beheer BV.
The report ‘Not Too Big To Fail,’ funded by Trafigura and written by University of Houston finance professor Craig Pirrong, argues against imposing capital requirements on commodity trading firms. It says commodity traders aren’t highly leveraged compared with banks, have strong capital structures and use syndicated lending to mitigate risk………………………………………..Full Article: Source

Gold price to double by 2030 thanks to Asia

Posted on 19 March 2015 by VRS  |  Email |Print

Asia’s financial system liberalization and its population’s growing wealth are two key factors expected to boost demand for gold and push the price of the key commodity over US$2,400 an ounce by 2030, a report published Wednesday claims. According to the Australia and New Zealand Banking Group (ANZ) predictions, as incomes rise across Asia, particularly in China and India, so will the appetite for gold rings and necklaces.
In its report “East to El Dorado: Asia and the Future of Gold,” ANZ estimates that annual retail and investor demand for the precious metal in the 10 largest economies in Asia could double to 5,000 tonnes within 15 years. The bank dubbed these nations “the A10″ – China, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam………………………………………..Full Article: Source

Citi Sees Slower Commodities Demand Growth as China Recedes

Posted on 18 March 2015 by VRS  |  Email |Print

Global commodity markets will see slower and less synchronized demand growth from across the world as China’s dominance fades, according to Citigroup Inc. Global demand expansion, which centered on the rise of China in the 2000s, will slow in the next decade and be driven increasingly by India, Southeast Asia, the Middle East, Latin America and Africa, the New York-based bank said in a report e-mailed Tuesday.
While demand will increase from these regions, dubbed the “Emerging 5”, it won’t be enough to offset the impact of slower growth from China, Citigroup said. Commodities tumbled to a 12-year low on Monday, with crude oil in New York slumping 18 percent in 2015. Inventories are rising after a decade-long bull market spurred farmers, miners and drillers to increase production just as economic growth slowed in China………………………………………..Full Article: Source

China is irreplaceable for the commodities market

Posted on 18 March 2015 by VRS  |  Email |Print

The commodities supercycle may be over but there’s no replacement for China as the world’s factory, according to Citi. From now on commodities demand will come from a diversified group of regions including India, the Middle East, Latin America, Africa and countries belonging to ASEAN in Southeast Asia, writes Henry Sanderson, commodities correspondent.
But this won’t be enough to offset China, leading to slower worldwide demand growth for commodities as well as weaker global trade flows, the bank said. Hardest hit will be thermal coal, steel iron ore and coking coal, due to their exposure to China’s manufacturing, infrastructure, and real estate sectors, they said. Base metals such as aluminium and copper are likely to do better, with emerging market demand growth in the 3 per cent to 5 per cent range into the 2020s, they said………………………………………..Full Article: Source

Preqin: Hedge funds turn the tide on poor 2014 performance

Posted on 18 March 2015 by VRS  |  Email |Print

Hedge fund managers have got off to a strong start in 2015. Following a year which saw the average hedge fund deliver returns of 3.78%, managers have already returned 2.52% on average two months into the year. Given that performance was named as the key concern in the industry in 2015 by investors in a Preqin survey at the end of 2014, managers will have been keen to deliver strong performance early in the year. The challenge, and opportunity, still remains for hedge funds to continue this performance, particularly amidst strong equity markets and turbulent commodity markets.
Other Key Hedge Fund Performance Stats: Equity Strategies Leading the Pack: All main hedge fund strategies generated positive returns in February 2015, with equity strategies posting the highest monthly return of 3.28%. . Oil Prices Causing Problems: The reversal in falling oil prices led to CTAs generating their lowest monthly return since October 2014, and only just hung on to positive performance with average returns of 0.20%. (Press Release)

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