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Commodities Briefing - Category | Trading more

Citigroup Said to Buy Credit Suisse Energy, Metals Trading Book

Posted on 22 December 2014 by VRS  |  Email |Print

Citigroup Inc.bought the bulk of Credit Suisse Group AG (CSGN)’s commodities business, continuing an expansion into a market as its biggest rivals retreat, according to two people briefed on the transaction.
The purchase includes positions in base and precious metals, iron ore, coal, crude oil and oil products, U.S. and European natural gas, and freight, said the people, who asked for anonymity because the deal hasn’t been made public. Employees won’t change firms as a result, said the people, who didn’t provide details about the terms of the transaction………………………………………..Full Article: Source

India: Commodity trading turnover halves to Rs 65-trillion in 2014

Posted on 19 December 2014 by VRS  |  Email |Print

Grappling with its biggest ever scam running into Rs 5,600 crore, it appears to be a journey down the hill for the commodity markets with total exchange traded turnover halving to almost Rs 65 lakh crore in 2014.
Although not a formal member of the commodity futures market, the payment default at National Spot Exchange Ltd (NSEL) shook the market to its core, resulting into a series of regulatory steps to revive investor confidence and credibility during 2014 and it is now hoping for a fresh start in the new year………………………………………..Full Article: Source

Commodity crush fuels managed futures returns

Posted on 18 December 2014 by VRS  |  Email |Print

Managed futures continued their recent hot streak in November, recording their best monthly return in four years by capitalizing on plummeting commodity prices. “We’ve seen resources get crushed and different markets pull back and this strategy is taking advantage of that situation,” said Tim Pickering, chief investment officer at Auspice Capital Advisors Ltd. in Calgary.
Managed futures — or commodity trading advisor (CTA) funds as they are also known — are investment funds that provide long and short exposure to globally traded futures contracts on physical commodities such as grains, livestock, metals and energy, soft commodities like coffee, cotton, sugar and cocoa, and financial assets such as equity market indexes, government bonds and currencies…………………………………….Full Article: Source

Oil Trades Near 5-Year Low as Russia Echoes OPEC Output Policy

Posted on 18 December 2014 by VRS  |  Email |Print

Oil traded near a five-year low in New York as Russia reiterated that it will keep crude production steady next year, echoing OPEC’s strategy of refraining from curbing supply to tackle a global surplus. Futures fell as much as 3.1 percent after sliding below $54 a barrel yesterday for the first time since May 2009.
Output from Russia, the world’s largest crude producer, will be similar to this year’s 10.6 million barrels a day, according to Energy Minister Alexander Novak. Iran is offering shipments to Asia at the deepest discount in at least 14 years, according to four people with knowledge of the decision. Iraq may revisit its oil-production plans, the country’s Deputy Prime Minister said today in London…………………………………….Full Article: Source

Commodities Still Getting Trashed

Posted on 17 December 2014 by VRS  |  Email |Print

A slowdown in Chinese manufacturing and a sustained effort by OPEC to make shale oil extraction unprofitable have been just two of the factors which have been crushing commodities prices. On December 12, China’s National Bureau of Statistics reported that industrial production increased only 7.2 percent in November, on a year-over-year basis.
While that might be acceptable elsewhere in the world, the reading fell short of economists’ expectations of a 7.5 percent increase. China’s government had been anticipating that economic expansion during 2014 would remain at 7.5 percent. More recently, the People’s Bank of China has lowered its sights to 7.4 percent expansion for this year, followed by a slowdown to 7.1 percent growth in 2015……………………………………..Full Article: Source

Commodities Go From Hoard to Floored

Posted on 15 December 2014 by VRS  |  Email |Print

In understanding the latest commodities selloff centered on oil, consider a raw material lurking in your kitchen: rice. Economists think stockpiling plays a big role in commodity bubbles, but are only now getting the evidence needed to understand exactly how it works. One implication of what they are learning: Prices haven’t bottomed yet.
A standard theory of how commodity bubbles form begins with an imbalance between supply and demand. This raises prices and prompts some stockpiling, due either to worries about having enough or hopes of selling for more in the future. This curbs supply further, pushing prices higher still. Cautionary stockpiling morphs into hoarding, and the bubble inflates………………………………………..Full Article: Source

Commodities Set Up For A Continued Move Lower

Posted on 12 December 2014 by VRS  |  Email |Print

There have been few places to hide for bullish commodity traders since the end of the summer. As you can see from the chart of the iShares S&P GSCI Commodity-Indexed Trust (GSG) shown below, the bears have sent the price lower by more than 28% over the past six months. It’s only natural that many traders are left wondering when the commodities markets will rebound.
The aforementioned exchange-traded fund is a popular choice amongst commodity traders because it represents broad exposure to a wide range of futures contracts across sectors such as energy, precious metals and agriculture. We’ll take a look at the underlying commodity markets to see if we can gain a better idea of when prices may set to rebound………………………………………..Full Article: Source

India: RBI may allow FIIs to trade in commodities

Posted on 11 December 2014 by VRS  |  Email |Print

In a major boost to the sagging commodity market, the Reserve Bank of India is considering a proposal to allow foreign institutional investors (FIIs) to trade in commodities. The commodity market regulator, Forward Markets Commission, is expected to meet the RBI in this regard shortly, according to sources.
The proposal has surprised market participants, who were expecting the RBI to allow banks to trade first on the commodity exchanges before opening the doors to the FIIs. As banks actively lend to traders and farmers against warehouse receipts, it would have been logical to allow banks in first, said an analyst, who did not want to be identified………………………………………..Full Article: Source

Commodities Extend Drop to Lowest Since ’09 as Oil Loss Deepens

Posted on 10 December 2014 by VRS  |  Email |Print

Commodities extended their decline to the lowest level in more than five years as crude oil continued to fall after Iraq followed top exporter Saudi Arabia in cutting prices for Asia sales.
The Bloomberg Commodity Index (BCOM) of 22 raw materials dropped as much as 0.2 percent to 110.4571, the lowest since April 2009, and traded at 110.7105 at 2:44 p.m. in Singapore. West Texas Intermediate also fell to the lowest in more than five years………………………………………..Full Article: Source

Why Volume Is A Spurious Indicator For ETFs

Posted on 10 December 2014 by VRS  |  Email |Print

Trading volume – the number of shares of a security traded in a given day or other period – has long served as a proxy for market demand. For many traders, volume is used as a confirmation indicator to price movement. An increasing price level but a decreasing volume level may indicate that demand for that security has dried up, and that the price may soon decline.
On the other hand, a stock that breaks out of its price range on higher than average volume may indicate a higher degree of interest and probability of the demand trend continuing………………………………………..Full Article: Source

Commodity prices keep falling in November

Posted on 03 December 2014 by VRS  |  Email |Print

New Zealand commodity prices declined for the ninth consecutive month in November, to the lowest level since February last year, as milk powder prices fell to five-year lows. The ANZ Commodity Price Index dropped 1.6 per cent to 286.3 last month, 12.4 per cent lower than its reading the same month a year ago and the lowest for a November month since 2012. Skim milk powder fell 7 per cent, while whole milk powder dropped 6 per cent, with both series at their lowest since 2009.
Today’s data comes ahead of the GlobalDairyTrade auction overnight. Since the start of the year dairy prices have halved at the GDT auctions as over-supply and weaker demand in China, the biggest destination for New Zealand’s largest export, weighs on prices………………………………………..Full Article: Source

Why volatility in commodity prices is still nothing close to a ‘crash’

Posted on 02 December 2014 by VRS  |  Email |Print

When looking at commodity prices, investors tend to have short memories. Words like “crash” and “collapse” have been thrown around with frequency in recent days and weeks. The panic appeared to hit a high point on Monday morning, when commodities fell sharply in the early hours before rebounding through the afternoon.
But experts noted that the current market action does not rate as anything close to a “collapse.” To see what that looks like, one only has to look back six years………………………………………..Full Article: Source

Oil, gold crash spell end of commodity ‘supercycle’

Posted on 02 December 2014 by VRS  |  Email |Print

We are likely witnessing the painful, undignified death of the commodity investment “supercycle.” Oil prices cracked below $70 per barrel after OPEC declined to cut production. Gold sank toward $1150 an ounce after a Swiss vote to compel more central bank gold buying failed and gold holdings in the SPDR Gold ETF (GLD) shrank to a six-year low. Copper sagged beneath $3 per ounce on tepid China manufacturing activity.
As I discuss with Yahoo Finance Editor-in-Chief Aaron Task in the attached video, this collectively represents a global phenomenon of not enough dollars chasing too much “stuff” – an inversion of the classic (and flawed) monetarist definition of inflation………………………………………..Full Article: Source

Physical Gold Demand in India Looks Robust

Posted on 02 December 2014 by VRS  |  Email |Print

India imported 102 tonnes of gold between November 1 and November 15, just 48 tonnes shy of its total imports for the entire month of October. This data reveals a robust physical demand for gold in the country. Furthermore, India is looking to remove its 80/20 rule this week in order to free up gold flows into the country while eliminating distortions in the flows.
Central banks have been under pressure in Europe to account for gold held abroad. The latest news comes from France, where Governor of the Bank of France M. Christian Noyer has been asked to comprehensively audit the nation’s gold reserves. Likewise, the Netherlands repatriated some of its gold in order to restore confidence in the central bank. The increase in proprietary holding of gold by central banks is positive for global gold demand………………………………………..Full Article: Source

Oil, commodities drop helps stabilise fragile EMs: QNB

Posted on 01 December 2014 by VRS  |  Email |Print

Recent developments in global financial markets have helped stabilise some of the fragile emerging markets (EMs) that were previously thought to be at risk, QNB has said in a report. “The recent drop in oil prices is changing the risk profile of emerging markets,” QNB said.
Significant adjustments to global financial markets in the second half of 2014 include a large drop in commodity prices, the end of Quantitative Easing (QE) in the US, and a stronger dollar. These developments, particularly the drop in oil prices, have led to a divergence in EM performance and risks going forward………………………………………..Full Article: Source

India: Commodity Market Regulator Plans to Introduce Call Auction

Posted on 01 December 2014 by VRS  |  Email |Print

The Forward Markets Commission (FMC) is planning to introduce the concept of call auction for half an hour in order to curtail market manipulation in commodity futures. The call auction is prevalent in stock markets.
“We are soon planning to introduce call auction for an half hour with 100 per cent delivery. This will help in getting the final settlement price for commodities futures,” FMC Chairman Ramesh Abhishek told PTI. There were some complaints that prices are being manipulated while determining the final settlement price in a commodity futures contract, he said………………………………………..Full Article: Source

China’s slowdown is putting pressure on commodities market: Hemindra Hazari

Posted on 28 November 2014 by VRS  |  Email |Print

By and large everything has gone up in this market, everything looks over heated. Banking has gone up and people are still talking about that it is the beginning of a multi-year bull cycle run. Commodities are under lot of pressure because China is in a slowdown mode.
Surprisingly, while imports over all were down in month of October, iron ore imports were actually up which shows that a lot of dumping is taking place. Indian people are importing the iron and the steel because that is what is happening globally……………………………………Full Article: Source

How JPMorgan struck gold with copper: Andy Home

Posted on 28 November 2014 by VRS  |  Email |Print

December 2010 and the copper market was booming. On the London Metal Exchange (LME), three-month metal was charging to the then all-time high of $9,550 per tonne, and front-month spreads were tightening.
LME reports at the time showed a single entity controlling over half of all eligible LME stocks, leading to a frenzy of speculation as to just who was squeezing the copper market. JPMorgan was “outed” in the media as the controlling hand, which only fuelled further the whirl of speculation, given the same bank was proposing to launch an exchange-traded fund backed by physical copper……………………………………Full Article: Source

Deutsche Bank Shutters Precious Metal Trading Amid Cuts

Posted on 28 November 2014 by VRS  |  Email |Print

Deutsche Bank AG (DBK), Europe’s biggest investment bank, is exiting physical trading of precious metals as it scales back its securities unit to improve returns. Some parts of the business may be shifted to other units of Deutsche Bank and the firm will continue to trade derivatives linked to precious metals, a London-based spokesman for the bank.
Global banks are exiting or paring back their commodities arms as regulators order them to increase buffers for potential trading losses and avoid a repeat of taxpayer-funded rescues. Deutsche Bank’s move is part of an overhaul of its securities unit to help boost profitability and increase the proportion of capital on its balance sheet by shrinking assets……………………………………Full Article: Source

Commodities accumulators panic – from Vienna to Zurich

Posted on 26 November 2014 by VRS  |  Email |Print

The fact that the accumulators of the world’s key commodities are gathering this week in Austria (OPEC on oil) and Switzerland (Swiss vote on gold reserves) to rein in a sharp decline in their valued resources is a manifestation of rising deflation risks emerging from a strengthening US dollar and a slowing Chinese economy.
Year-to-date, the Reuters/Jefferies CRB Commodity Index is down 5%, and as much as 15% from its June highs. Admittedly, the index is more weighed towards energy commodities than to metals and agricultural commodities. But the technical break of the CRB’s 30-month trendline (green support line in chart), portends further declines below the 260 level……………………………Full Article: Source

Global metal trading becomes more difficult to regulate

Posted on 25 November 2014 by VRS  |  Email |Print

Global metals markets are becoming more difficult to regulate as manipulation takes more subtle forms and new trading platforms spring up, according to a new study. The movement of commodities trading to new hubs in Singapore, Dubai and China adds additional complications for national regulators, London-based think-tank Chatham House will say in a report set to come out next month.
“Opaque pricing mechanisms and weakly governed market platforms are vulnerable to manipulation by powerful market participants, including trading houses, major producers and financial institutions,” the report says………………………………….Full Article: Source

US Senators question banks over commodities trading

Posted on 21 November 2014 by VRS  |  Email |Print

Executives of three US banks are being grilled by senators over accusations the banks engaged in unfair trading practices relating to several commodities. A two-year report found that Goldman Sachs, Morgan Stanley and JP Morgan Chase bought up large stockpiles of commodities like aluminium and copper.
In doing so, they were able to influence prices and gain advantages. The banks deny they exploited any trading advantages from these holdings…………………………………Full Article: Source

China ‘triple bubble’ points to long slide for commodities

Posted on 21 November 2014 by VRS  |  Email |Print

The “commodity super cycle” is dead. Now, it’s time to get used to the “commodity super down cycle, and China is the biggest reason why, warn strategists at Credit Suisse in a Thursday note.
Commodity demand tends to be very cyclical. Commodities, however, have been underperforming cyclical indicators of growth, including industrial production and new manufacturing orders (as measured by Institute for Supply Management survey data), they say. Much of the blame is on China, the strategists argue, noting that the country remains the “most significant source” of demand for most industrial commodities…………………………………Full Article: Source

U.S. Fed began rejecting commodity trade requests in 2010: report

Posted on 20 November 2014 by VRS  |  Email |Print

The U.S. Federal Reserve has been quietly quashing some Wall Street requests to delve more deeply into physical commodity markets since 2010, according to a new Senate report that includes previously unreported details of the Fed’s oversight of the area.
While critical of the “uncoordinated, incoherent patchwork” of rules limiting banks’ activities in physical raw materials trading, the report by the Permanent Subcommittee on Investigations also showed for the first time that the Fed had actually begun denying some requests to engage in the market………………………………Full Article: Source

Currency trading: Fixed penalty

Posted on 17 November 2014 by VRS  |  Email |Print

Once again, a handful of the world’s largest banks have agreed to pay vast amounts of money to settle an investigation, this time concerning the manipulation of benchmarks used in the trading of currencies. American, British and Swiss regulators clubbed together to squeeze six banks for $4.3 billion between them. Yet more fines may be in the pipeline.
The deal announced on November 12th follows a now familiar pattern: regulators release e-mails or instant messages they have harvested that indicate sleazy activity in an important market; banks issue statements that are contrite, emphatic about a commitment to moral values yet vague about what exactly occurred; no one charges any individuals with any crimes and lots of questions are left unanswered, including how the regulators calculated the penalties (Britain’s FCA being an honourable exception)……………………………………Full Article: Source

Rise of protectionism in China a threat to commodities imports

Posted on 14 November 2014 by VRS  |  Email |Print

As China lobbies world leaders to back its free trade plan at an Asia-Pacific summit this week, businesses are complaining about Beijing’s use of non-tariff barriers from customs clearance to quality restrictions to curb raw material imports.
Amid a slowdown in economic growth, the world’s top commodities buyer is facing a supply glut that has sent local prices tumbling and miners deep into the red. Inventories of iron ore, coal and cotton are bulging at ports across the country and state granaries are overflowing…………………………………Full Article: Source

Standard Chartered CEO Commits to Commodities Financing

Posted on 14 November 2014 by VRS  |  Email |Print

Standard Chartered Plc (STAN) Chief Executive Officer Peter Sands said financing commodity trade will remain an essential part of its business even after falling prices worldwide helped curb a decade of profit growth.
The company is tightening lending criteria to reduce risk from its $61 billion of credit exposure to commodities, exacerbated by slowing economies in India, China and Korea, the bank’s management said today after a three-day meeting with some of its shareholders in Hong Kong…………………………………Full Article: Source

Swiss regulator flags attempt to manipulate bullion benchmarks

Posted on 13 November 2014 by VRS  |  Email |Print

Switzerland’s financial watchdog said on Wednesday it had found a “clear attempt” to manipulate precious metals price benchmarks during a cross-market investigation into trading at UBS bank.
The FINMA regulator revealed its findings just days after the precious metals industry decided to automate the setting of reference prices for gold, ending the twice-daily “fix” by a panel of banks which has been used for almost a century………………………………………..Full Article: Source

Volatility hurting commodities, says PwC

Posted on 12 November 2014 by VRS  |  Email |Print

Global economic challenges, the strengthening U.S. economy, and an imbalance of supply and demand have had a devastating impact on the commodities market, according to PwC’s Gold, Silver and Copper Price Report. The report notes low prices have led to widespread cuts across the sector from exploration to production and both operating and capital expenses.
However, the current slump in prices is reflective of the cyclical nature of the industry. For gold companies, while the long-term view is above current spot prices, volatility remains the key issue. For base metal producers, a growing global population that will have greater overall need for products such as cars, computers and household goods has helped support current prices.’……………………………………….Full Article: Source

China commodity imports don’t fit soft economic narrative: Russell

Posted on 11 November 2014 by VRS  |  Email |Print

It’s becoming increasingly hard to make Chinese commodity import data fit with the prevailing narrative of a softening in the world’s second-biggest economy. Trade figures released Nov. 8 showed ongoing strength across a broad spectrum of commodity imports, with the only consistent weak spot this year being coal.
October iron ore imports may have slipped 6.3 percent from the previous month’s high to 79.39 million tonnes, but they are still up 16.5 percent in the first 10 months of the year over the same period in 2013, on track for the strongest annual growth since 2009………………………………………..Full Article: Source

India: Commodities in regulated warehouses exempted from stock limit

Posted on 11 November 2014 by VRS  |  Email |Print

The government has exempted commodities kept in regulated warehouses from the purview of stock limits effected by state governments to curb hoarding under the Essential Commodities Act.
This was one of the key reforms that commodity markets regulator Forward Markets Commission (FMC) was pushing with the Consumer Affairs Ministry for last few years. In a latest circular, the commission said: “Department of Consumer Affairs has informed that the commodities kept in regulated warehouse (registered by the Warehousing Development and Regulatory Authority) have been exempted from stock holding limits under the Essential Commodity Act, 1955.” ……………………………………….Full Article: Source

China Oct commodities imports fall despite price slump; copper rebounds

Posted on 10 November 2014 by VRS  |  Email |Print

China’s imports of most major commodities fell in October from month ago due to seasonal factors and a weaker economy, with copper the lone bright spark as trade gradually returned to normal after a financing scandal.
The demand outlook for iron ore and coal for the rest of the year remains bleak, analysts said, as steel mills have started to cut output on continuing weakness in demand and the usual winter slowdown in use. Import tariffs on coal since October are also making overseas supplies uneconomic………………………………………..Full Article: Source

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Egypt commodities mega-project plan fails to convince traders

Posted on 10 November 2014 by VRS  |  Email |Print

Egypt’s aim to transform itself into a global commodities hub has so far failed to convince the multinational commodities companies that are key to the project’s success, as they worry about the plan’s ambition but lack of detail.
President Abdelfattah al-Sisi’s government last month unveiled a multi-billion project to build a commodities re-export and trading complex, giving a timeline of two years and price tag of 15 billion Egyptian pounds ($2.1 billion) but few specifics………………………………………..Full Article: Source

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Commodity slump brings gains, losses

Posted on 07 November 2014 by VRS  |  Email |Print

Everything is cheaper. Almost. The commodity supercycle that started in the 2000s, fuelled by China’s enormous appetite, and which peaked around the time of the Beijing Olympics in 2008, is tapering off. And how! Oil is currently trading in the low $80s, the lowest level in more than four years, and major metal and food prices have fallen steeply.
Iron ore is at the lowest in more than five years after losing 43% this year. Lower commodity prices promise to translate into lower inflation and already, India’s bonds have rallied in anticipation of an earlier-than-foreseen cut in interest rates late this year or early next year………………………………………..Full Article: Source

Are Commodities at a Major Turning Point?

Posted on 07 November 2014 by VRS  |  Email |Print

As most of you probably know, I have been expecting the CRB to form a major three year cycle low sometime next summer. However, I’m now starting to see some things that might indicate a major cycle bottom is going to occur earlier than I expected.
Since oil is the main driver of the CRB, and most commodities will follow its lead, I’m going to focus on the action in oil. Notice in the next chart that oil has now reached oversold levels similar to, if not more extreme than, the previous two 3 year cycle lows………………………………………..Full Article: Source

3 Ways to Trade Gold Now

Posted on 07 November 2014 by VRS  |  Email |Print

Goldbugs, like ideologues and passionate lovers, possess extraordinary convictions. They need them now more than they have in decades. The yellow metal is undergoing a powerful decline that will challenge their beliefs in ways many goldbugs have never experienced.
Gold is dancing around a four-year low as the U.S. dollar rises to a four-year high against the euro and a seven-year high against the yen. Trading patterns in the stock, options, and futures markets suggest prices will fall further. Gold recently traded at around $1,148 per ounce, far from the halcyon high of about $1,900 in late 2011. It is down 11% in the past three months………………………………………..Full Article: Source

New push to ease Japan commodity trading rules

Posted on 06 November 2014 by VRS  |  Email |Print

A top Japanese politician is pushing for an overhaul of regulation governing exchanges, potentially opening the door to a long-awaited consolidation of the country’s fragmented trading landscape.
Masahiko Shibayama, the firebrand head of the ruling Liberal Democratic Party’s finance division, wants to change laws so that Japan Exchange Group (JPX) – formed from the January 2013 merger of the Tokyo and Osaka securities exchanges – can offer commodity futures without seeking permission from the powerful Ministry of Economy, Industry and Trade (Meti)………………………………………..Full Article: Source

Don’t rule out OPEC cut, say top oil traders

Posted on 05 November 2014 by VRS  |  Email |Print

Forget conspiracy theories and be prepared for OPEC to cut output in November because this is what they need to do and have done in the past, veteran oil traders who run and co-own some of the world’s biggest trading firms told the Reuters Commodities Summit.
The views from the top executives of Vitol, Gunvor and Mercuria go against expectations that the 12-member Organization of the Petroleum Exporting Countries is unlikely to step in and support prices………………………………………..Full Article: Source

Few commodities buck falling trend

Posted on 29 October 2014 by VRS  |  Email |Print

Most everything we consume begins as a commodity, so when commodity prices go up, it transfers wealth and power from consumers to producers, but when commodity prices fall, it’s as close as it gets in economics to getting two meals for the price of one, or double coupons at your favorite grocery store. Such a moment appears to be happening now.
With few exceptions, most commodities have been falling over the past two months, with some falling rather quickly. Commodity prices are being pushed lower by an increased supply of most commodities, a slowing global economy, as well as a slowing China, the world’s largest consumer of most raw materials. Of the 69 commodities we follow weekly, only biofuels, cattle and sugar are in the positive over the past eight weeks………………………………………..Full Article: Source

BSE plans foray into commodity trading; board gives nod for new platform

Posted on 28 October 2014 by VRS  |  Email |Print

Asia’s oldest stock exchange BSE will soon make a foray into commodity trading. A proposal to start a new platform for commodities trading was approved by the BSE board on October 20, said two sources familiar with the development.
BSE’s rival in equity trading, the National Stock Exchange (NSE), already has a presence in the commodity segment through a stake in National Commodity & Derivatives Exchange. Bourses such as BSE entering commodity trading are eyeing the passage of Forwards Contract Regulations Act (FCRA) that could boost trading volumes as it allows launch of further derivative products in the segment. ……………………………………….Full Article: Source

Citi buys Deutsche commodities trading book in expansion push

Posted on 21 October 2014 by VRS  |  Email |Print

Citigroup Inc has bought Deutsche Bank AG’s energy and metals book, a source familiar with the matter said, in the latest sign of expansion from the U.S. firm in commodities trading as rivals retrench.
Citi won Deutsche’s oil, metals and power books this summer and autumn, the source said, after a bidding round that saw several Wall Street firms and trading houses chasing the opportunity to take on the positions of a once top-five commodities bank………………………………………..Full Article: Source

Volatility is spice of life in commodities market

Posted on 20 October 2014 by VRS  |  Email |Print

On the eastern side of Australia this week, the opening of a new mine in an oversupplied commodity sector was warmly welcomed as a humanitarian act that was providing jobs and hope. Over on the nation’s western coast, plans to increase supply into another oversupplied commodity were sharply criticised as a “flawed strategy” that was harming the local jurisdiction.
The two commentators were, famously, elected statesmen from the same political church, yet political discourse was not the only place where wild volatility was the order of the day. Amid gyrations in global markets, prices for some of the commodities with the biggest influence on the Australian economy, particularly oil and iron ore, were tracking unpredictable paths………………………………………..Full Article: Source

Low oil price means high anxiety for Opec as US flexes its muscles

Posted on 20 October 2014 by VRS  |  Email |Print

Motorists, airlines and industry are enjoying low energy costs, the US is relishing its reduced reliance on the Middle East – and Opec is wondering how to reassert its authority. During a week of turmoil on the global stock markets, the energy sector played out a drama that could have even bigger consequences: a standoff between the US and the Opec oil-producing nations.
While pension holders and investors watched aghast as billions of pounds were lost to market gyrations, a fossil-fuel glut and a slowing global economy have driven the oil price down to a level that could save the world $1.8bn a day on fuel costs. If this is some consolation for households everywhere after last week’s hit on stock market wealth, it means pain for the Opec cartel, composed mainly of Middle East producers………………………………………..Full Article: Source

The Strong Dollar Weighs Heavily on the Commodities Market

Posted on 17 October 2014 by VRS  |  Email |Print

Early in 2014, the commodities markets were doing surprisingly well. China’s appetite for raw material was holding up, and the International Monetary Fund was predicting a decent year of global growth, which meant rising demand for everything from oil to cotton. Then the spell broke. In July, China reported lower imports of oil and copper.
Since the country is the largest consumer of pretty much everything that’s pumped or mined out of the ground, the news sent prices of commodities sliding. On Oct. 2, oil fell below $90 a barrel for the first time in 17 months. Global growth was stalling, and the commodity companies were faced with much lower demand than they’d anticipated in January………………………………………..Full Article: Source

The next paradigm in commodities: Trade houses vs banks

Posted on 16 October 2014 by VRS  |  Email |Print

Agri-business services are dominated by two industries: First, trade houses provide services that vertically integrate from farmers to consumers. Second, financial institutions horizontally integrate the value chain by facilitating an efficient transfer of capital. There is a sweet spot where these two industries intersect in their service offerings: Risk management and Trade financing.
The last two years have witnessed a lot of activity in this point of intersection where there has been a flight of human and financial capital from banks to trade houses. In this article, I will focus on the key reason on such a paradigm shift, and also predict a futuristic scenario how these two service industries will evolve given the technological advance………………………………………..Full Article: Source

How will EMs be affected by commodity price declines?

Posted on 15 October 2014 by VRS  |  Email |Print

Credit Suisse has a new report out on the winners and losers of the recent rout in global natural resource prices. While everyone has been paying attention to the remarkable decline in the value of oil, agricultural commodities and industrial metals have also become a lot cheaper recently:
Unsurprisingly, Credit Suisse thinks Korea, which imports most of its raw materials, should be the biggest beneficiary, while the petro-dependent economies of Venezuela and Russia will feel the most pain. But there are a few surprises worth noting as well………………………………………..Full Article: Source

Expect big silver price surge if gold stays positive

Posted on 15 October 2014 by VRS  |  Email |Print

What a difference 10 days makes. A little over a week ago the gold market was all doom and gloom with the yellow metal crashing back below $1200 an ounce. But with a few extraneous geopolitical and global health factors positively impacting the market, and the possibility of a general stock market crash in the minds of investors, gold has seen positive action on the price front in something of a safe haven turnaround.
But silver, on the other hand, has hardly moved at all. Compare the 30-day kitco gold and silver charts below – courtesy kitco.com and kitcosilver.com. Historically, silver prices have sharply outperformed gold when precious metals prices are rising, and sharply underperformed when they are falling yet this pattern on the upside has just not yet started to appear. But if the recent gold price rise isn’t just a blip then we would expect silver to start to move upwards – and move upwards fast………………………………………..Full Article: Source

Oil Prices Dip Below $90 for First Time in Two Years

Posted on 10 October 2014 by VRS  |  Email |Print

Global oil prices dipped below $90 a barrel for the first time in more than two years Thursday as investors saw new signs that global supplies will continue to surpass demand. Both Brent, the global benchmark, and the U.S. standard are trading more than 20% below a recent high, meeting the definition of a bear market. Prices have slumped for nearly four months as global supplies remain ample.
At the start of PIRA Energy Group’s widely attended seminar in New York on Thursday, the research firm predicted oil prices have further to fall, Reuters reported. PIRA is typically considered optimistic on energy prices, market participants say. The seminar is closed to the press………………………………………..Full Article: Source

Commodity Trading to Consolidate as Earnings Fall: Report

Posted on 07 October 2014 by VRS  |  Email |Print

Commodity trading consolidation will cut the number of major independent players to two or three in each asset class as the industry becomes less profitable, according to Oliver Wyman Group. “We predict that soon only two to three will remain due to an increasingly cutthroat environment,” consultant Oliver Wyman said.
Independent traders are facing increasing competition from oil majors, national energy companies and miners seeking to monetize production as well consumer companies trying to gain greater control over their supply chains, Oliver Wyman said. Traders are competing to secure flows of materials from coal to zinc by offering output deals with producers as margins shrink due to lower price volatility and more transparent markets………………………………………..Full Article: Source

Look Who’s ‘Trading’ Commodities

Posted on 06 October 2014 by VRS  |  Email |Print

In the government’s bid to crack down on risky trading, charities and other nonprofit organizations may become collateral damage. That is causing alarm in the nonprofit world and should be a concern for donors. Under new rules, your local charity could be obligated to register with federal regulators as a commodity-pool operator—even if it doesn’t invest directly in corn or pork bellies.
CPOs, as they are sometimes called on Wall Street, invest in a range of derivatives contracts, including futures, swaps and options on foreign currencies, commodities and interest rates. That is light years away from the mission of most nonprofits. Having to register as a CPO with the Commodity Futures Trading Commission would entail higher costs and more red tape. As a result, if you are a donor or board member, you need to ask a whole new set of questions about how the institution’s money is managed………………………………………..Full Article: Source

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