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Commodities Briefing - Category | Trading more

Is Palladium starting to play catch-up?

Posted on 15 March 2016 by VRS  |  Email |Print

Palladium, the worst performing precious metal this year, has started to play catch-up to its peers. This after acting more as an industrial metal and following overall market trends instead of trends in precious metals.
The metal fell more than 17% to a five-year low of around $470/oz in early January, when data showed that Chinese car sales increased at the slowest pace in three years. The main use of palladium in China, the biggest consumer of the metal, is in the fabrication of autocatalytic converters which reduce harmful emissions………………………………………..Full Article: Source

Commodities Speculation Doesn’t Increase Food Prices

Posted on 11 March 2016 by VRS  |  Email |Print

A few years back it was all the rage to go around shouting that commodities speculation drove food prices higher. This betrayed a startling lack of understanding of how commodities markets actually work but it really was popular to say so. This led to proposals to limit the amount of speculation that could be done in things like wheat futures and so on.
Not a good idea and not likely to be a productive public policy simply because it wasn’t the speculation driving prices higher. We’ve now also got an interesting little data point with which to refute that original contention………………………………………..Full Article: Source

Iran plays hardball with European oil buyers, slowing exports

Posted on 11 March 2016 by VRS  |  Email |Print

Iran has managed to sell only modest volumes of oil to Europe since the lifting of sanctions seven weeks ago and several former buyers are staying away, citing legal complications and Tehran’s reluctance to sweeten terms to win back customers.
Tehran had been unable to sell crude to European firms since 2012 when the EU imposed sanctions over its nuclear programme, depriving it of a market that accounted for over a third of its exports and leaving it relying completely on Asian buyers………………………………………..Full Article: Source

Sell gold if it hits this level

Posted on 11 March 2016 by VRS  |  Email |Print

Gold has been a standout performer against all other asset classes this year. But despite economic and financial market uncertainties, we do not believe it is a one-way bet. The high gold price is unsustainable, in our view, unless the U.S. enters a recession or the U.S.Federal Reserve completely reverses course on monetary policy.
Investors should consider reducing their gold holdings if the price approaches $1,310 an ounce over the coming weeks and increasing them if prices fall back to $ 1,100 an ounce………………………………………..Full Article: Source

US doesn’t believe in new oil cartel, and here is why

Posted on 10 March 2016 by VRS  |  Email |Print

The US Department of Energy has made the most pessimistic world oil price forecasts for the next two years this week, although I would call them pragmatic. While the leading world oil producers are trying to agree on freezing of production to stabilize oil prices, and taking into account oil has recently reached almost $40 per barrel, the US Department of Energy’s Energy Information Administration (EIA) has published a report forecasting the Brent oil average price will hit $34 per barrel in 2016 and $40 only in 2017.
Moreover, these estimates are even lower than EIA’s previous forecasts by $3 and $10 per barrel, respectively………………………………………..Full Article: Source

Opec targets $50 oil as Brent rally stalls at $40

Posted on 09 March 2016 by VRS  |  Email |Print

Brent oil halted gains above $40 a barrel as forecasts that US stockpiles would remain at the most since 1930 competed with speculation producers may agree to an output freeze. Futures in London lost as much as 1.4 per cent after closing above $40 for the first time since December on Monday, capping the longest run of gains in three months.
US supplies probably rose 3.5 million barrels last week, according to a Bloomberg News survey before government data Wednesday. Ecuador’s foreign ministry said Latin American producers will meet on Friday to discuss oil prices, while Russia said last week major suppliers may meet by April 1………………………………………..Full Article: Source

Time to Cash in Your Gold Trade? Sprott’s Rick Rule Comments

Posted on 08 March 2016 by VRS  |  Email |Print

Gold prices are still on the rise, up over 19% year to date, with some investors now questioning whether or not they have missed their chance to get in on the action. However, according to one veteran gold investor, the ‘real move’ in gold is yet to come.
‘If this rally falters a little bit, some people will say it’s over and miss the real move, which I believe is to come,’ Rick Rule, president & CEO of Sprott U.S. Holdings, told Kitco News at the Prospectors & Developers Association of Canada in Toronto on Sunday………………………………………..Full Article: Source

Iranian Oil Lands in Europe for First Time Since Sanctions Ended

Posted on 07 March 2016 by VRS  |  Email |Print

The Monte Toledo oil tanker covered the uneventful voyage from Iran to Europe with a haul of one million barrels of crude in just 17 days, but its journey has been four years in the making.
On Sunday, the tanker became the first to deliver Iranian crude into Europe since mid-2012, when Brussels imposed an oil embargo in an attempt to force the Middle Eastern nation to negotiate the end of its nuclear program. The ban was lifted in January as part of a broader deal that ended a decade of sanctions………………………………………..Full Article: Source

Canadian Premiers Agree on `Urgency’ of Commodity Transportation

Posted on 04 March 2016 by VRS  |  Email |Print

Canadian provinces and the federal government agreed to pave the way for accelerating transportation infrastructure to move commodities such as oil and natural gas to new markets.
The leaders said Canadian commodities need to reach markets in “responsible” and “sustainable” ways after “science-based environmental assessments,” while emphasizing the urgent need for infrastructure development, according to a statement released by Prime Minister Justin Trudeau and provincial leaders Thursday in Vancouver………………………………………..Full Article: Source

If oil doesn’t do this, then watch for a steep fall

Posted on 04 March 2016 by VRS  |  Email |Print

There’s a distinct whiff of optimism in the air where crude prices are concerned — something that has trickled down to stocks. There was good and bad news in Wednesday’s U.S. crude production data.
First the good: Oil production fell for a sixth straight week, and is now at the lowest since Nov. 2014, notes Commerzbank. But the bad: Inventories rose 10.4 million barrels, to a new record high. “The fact that the market is taking such longer-term aspects into account rather than looking solely at near-term inventory trends suggests that sentiment is shifting on the oil market,” says Commerzbank………………………………………..Full Article: Source

Buoyant zinc rallies 25% after falling in January

Posted on 04 March 2016 by VRS  |  Email |Print

Zinc has risen more than 14 per cent since the start of the year, making it the third best-performing major commodity behind iron ore and gold. Since falling to a seven-year low of $1,460 a tonne in mid-January, the metal has rallied by 25 per cent.
Glencore, the world’s biggest metal trader, said this week that its order book was strong and it had not seen any signs of “weakness”. “What we’ve also seen is the shortage of zinc concentrates in the world,” said chief executive Ivan Glasenberg after Glencore reported annual results on Tuesday………………………………………..Full Article: Source

China’s Commodities Trade Thrives as Uncertainty Spurs Wagers

Posted on 03 March 2016 by VRS  |  Email |Print

Economic uncertainty is a boon for China’s commodities trade, lifting volumes and expanding the nation’s sway over global markets for raw materials even as its own demand slows, according to two veteran metals brokers who share more than 50 years experience in the industry.
“Volatility is going to remain in the market this year and that is going to increase turnover,” said John Browning, managing partner at BANDS Financial Ltd., the brokerage he founded with Chinese business partner Tiger Shi last year………………………………………..Full Article: Source

US recovery involves short-term pain and long-term gain for commodities

Posted on 01 March 2016 by VRS  |  Email |Print

The US economic recovery placed pressure on metals prices as investors continued to unwind commodities-based positions taken during the resource supercycle, according to Export Development Canada VP and chief economist Peter Hall.
It had not been an orderly event, particularly for commodities-focussed nations that experienced pain on the lower prices caused, he told an audience at a recent meeting of the Canadian Institute of Mining’s Management and Economic Society in Toronto………………………………………..Full Article: Source

Here’s how to play gold: Technician

Posted on 29 February 2016 by VRS  |  Email |Print

Maybe the goldbugs will finally strike gold. After enduring years and years of losses, bullion is tracking for its best month since January 2012, up 9 percent. And according to a highly regarded technician, the hot commodity is about to get even hotter.
“I think we can squeeze a little bit more out of this trade” said Ari Wald of Oppenheimer on CNBC’s Fast Money last week. According to Wald’s chart work, the recent price action in gold is strikingly similar to the activity in 1999 when the commodity reversed a multi-year downtrend and started to form a base………………………………………..Full Article: Source

Lawmakers Urge Commodities Agency to Keep Plan to Limit Futures Contracts

Posted on 26 February 2016 by VRS  |  Email |Print

Lawmakers heaped criticism on an advisory committee report to the Commodity Futures Trading Commission recommending that the agency scrap its proposed rule on position limits in derivatives trading. The report and a dissenting opinion were presented at a meeting of the commission on Thursday.
The report, which was approved 8 to 1 by the Energy and Environmental Markets Advisory Committee, says that federally mandated position limits are not necessary and that the C.F.T.C. should not enact the rule it has been working on. It adds that if the agency goes ahead with the rule, it needs substantial changes………………………………………..Full Article: Source

Amid Commodities Gloom, a Few Bright Spots Emerge

Posted on 24 February 2016 by VRS  |  Email |Print

Commodities have been an unloved asset class for a while, but some have had a pretty good year so far. Not that you’d know it from listening to those who produce or trade the world’s metals. On Tuesday, mining giant BHP Billiton announced a $5.67 billion first-half loss and said it would slash its dividend, arguing that the current period “of weaker prices and higher volatility will be prolonged.”
Singapore-listed trader Noble Group Ltd. meanwhile cut its long-term forecast for coal prices, blaming weaker growth in China and the broad trend away from using coal as an energy source. The company also issued a profit warning, saying it expects to report a net loss for the fourth quarter………………………………………..Full Article: Source

Why the Recent Rally in Commodities Will Come to an End

Posted on 24 February 2016 by VRS  |  Email |Print

Despite the upbeat view of some analysts and industry insiders who have predicted a strong rebound in commodities over the course of 2016, the outlook remains gloomy. This is because industry fundamentals and recent economic data indicates that demand will remain soft and that sharply weak commodity prices are here for some time to come.
Now what? Over the last two decades the primary driver of growing commodity prices was China’s insatiable demand for raw materials as it rapidly modernized and developed. This triggered a massive construction boom as the promise of a better life and higher wages sparked one of the greatest waves of rural-to-urban migrations ever witnessed………………………………………..Full Article: Source

Gold’s 2016 Rally: Don’t Fall for the “Fear Trade”

Posted on 23 February 2016 by VRS  |  Email |Print

Gold has performed well in 2016 as fears of systemic failure increased. That’s no reason to put on this “fear trade.” Is the fear that sent global markets lower this year beginning to subside for good? Today, it’s “risk on” mode as the Dow Jones Industrial Average joins the S&P 500 in climbing out of correction territory (a correction is usually defined as a 10% pull-back from the high).
With very few industrial applications, gold doesn’t trade like a genuine commodity. You might be better served to think of it as psychological commodity, one that provides comfort to the anxious, the unhinged, and those more or less rational individuals who have fallen for gold marketers’ pitch………………………………………..Full Article: Source

Commodity Slump Puts Dry-Bulk Shipping on Hold

Posted on 22 February 2016 by VRS  |  Email |Print

Idled ships are dotting coastlines world-wide as increasingly desperate companies that ship iron ore, coal and other bulk commodities try to weather the industry’s worst downturn in decades.
The parked vessels are a stark sign of how crumbling Chinese demand for commodities is pummeling the global shipping industry. The freight rates shipping lines can charge to transport raw materials are at record lows, and several operators have filed for bankruptcy protection or folded outright, brokers say………………………………………..Full Article: Source

Commodities update: Gold ready to roar, crude looks up

Posted on 19 February 2016 by VRS  |  Email |Print

Gold is in the news again, with prices rising as much as 14 per cent this year, which is ahead of the performance of most other asset classes. The latest bounce in the prices is raising hope that the precious metal may be getting ready to roar again. Or is it?
While the Singapore-based DBS has turned overweight on the yellow metal, Goldman analysts had recommended investors to short it. Meanwhile, there is hope on the crude counter, after Tehran agreed to support an effort by four major oil producing nations to check the global oil glut. All those and what else is buzzing on the commodity counter in this quick digest. ……………………………………….Full Article: Source

Oil prices get boost as Iran praises Saudi plan to freeze output

Posted on 18 February 2016 by VRS  |  Email |Print

Iran has given a significant boost to oil prices by unexpectedly praising a plan put forward by Saudi Arabia and Russia to freeze production. The cost of Brent crude soared by 6.7% to $34.35 as Iran gave its verbal support for a production ceiling, even though it avoided making any immediate commitment to rein in its own growing output.
“Iran backs any measures which help stabilise the market and improve the price of crude oil,” said Bijan Zanganeh, the Iranian oil minister, after meeting his counterparts from Iraq, Qatar and Venezuela………………………………………..Full Article: Source

Russian trade hit by sanctions and commodity crisis

Posted on 15 February 2016 by VRS  |  Email |Print

Russia’s trade with the EU’s eastern states fell by almost a third in 2015, as sanctions over Crimea and the economic impact of plummeting commodity prices further unravel the fraying links between Moscow and its former Soviet bloc allies.
Exports to Russia from the six countries for which full data are available were worth €5.9bn less in 2015 than 2014. Sales of goods from Lithuania, Latvia, Estonia, Poland, the Czech Republic and Bulgaria declined an average of 30 per cent last year, with similar falls in the first 11 months of the year in Slovakia and Hungary………………………………………..Full Article: Source

Negotiating the Commodity Tightrope

Posted on 10 February 2016 by VRS  |  Email |Print

A cocktail of the ‘4Cs’ – Currency headwinds, China headwinds, Contango headwinds, and Cost deflation headwinds – that has driven commodity investor returns into negative territory is not about to change.
Commodities have been caught in a “negative feedback loop” between excess production capacity, US dollar appreciation and weaker emerging market economic growth – what Goldman Sachs term the 3D’s of macro – Deflation (excess production capacity and rising productivity), Divergence (stronger US dollar and weaker EM currencies) and Deleveraging (significant EM credit and macro imbalances)………………………………………..Full Article: Source

China’s ‘zombie commodities’ haunt the market

Posted on 09 February 2016 by VRS  |  Email |Print

China has a record-breaking stockpile of farm commodities that has been languishing in warehouses for years, declining in value. Officials are afraid to let the crops out, fearing the havoc they could cause if released. The towering stockpiles result from a numbers-based approach to food security and a declining trend in crop prices that officials were slow to understand.
To make this concrete, let’s review how China created an unwanted stockpile of rice. Five years ago, Chinese officials were worried that farmers were producing only one crop of rice a year instead of two………………………………………..Full Article: Source

Oil trader Vitol says market may never see $100 a barrel again

Posted on 09 February 2016 by VRS  |  Email |Print

Global commodities trader Vitol has said the oil market will struggle to break above the $50 per barrel mark and may never reach the $100 price last seen in 2014. Vitol boss Ian Taylor poured doubt on hopes that the market may rebalance later this year, telling Bloomberg that prices would take far longer to recover.
Growing supply and more efficient use of fuel could change the market to the extent that it may never seen $100/b oil again, he added. “UK consumption of oil is going down; not much, but it’s going down. Efficiency in cars is going up tremendously, as it is in aeroplanes. You have to believe that there is a possibility that you will not necessarily go back above $100, you know, ever,” Taylor said………………………………………..Full Article: Source

Commodities rout rolls through Australia Inc

Posted on 05 February 2016 by VRS  |  Email |Print

Two of Australia’s biggest companies are slashing costs further and writing down the value of their resources businesses amid a deepening rout in commodities prices. South32, the diversified mining group spun out of BHP Billiton last year, on Thursday outlined plans to book a US$1.7bn writedown on the value of its manganese, coal and alumina assets stretching from Australia to South Africa and Brazil.
The group said it would cut 620 jobs at its manganese joint venture in South Africa and would detail further job cuts in its results statement later in February………………………………………..Full Article: Source

A contrarian view on soft commodities

Posted on 05 February 2016 by VRS  |  Email |Print

The agricultural sector has been in negative territory for five years, putting specific food and food input companies at attractive valuations, according to Baring. Oil aside, other commodities such as food inputs have also fallen out of favour. The cumulative one-, three- and five year returns for the agriculture sector have all been double-digit negative.
But James Govan, manager of the Baring Asset Management’s Global Agriculture Fund believes opportunities this year are emerging in the agricultural value chain, particularly in the health and wellness niche, driven by the demand for healthier food………………………………………..Full Article: Source

Commodity Bull Cycle Seen Rising From Ashes as Oil Bottoming

Posted on 04 February 2016 by VRS  |  Email |Print

Europe’s largest publicly traded asset manager is calling the bottom for oil and sees a rebound in prices as one of the spurs that may start a new bull cycle in commodities. Schroders Plc says the oil price could rally almost two-thirds to as high as $50 a barrel in a few months as a slump to a 12-year low means producers will have to cut output.
That should encourage a wave of retail investors to return to raw materials, according to Geoff Blanning, head of commodities at Schroders, where he helps oversee about $2 billion. “In the past three-to-six months, supply growth has been sagging as a direct result of the lower price, but now it looks like a strong bet that supply is actually going to fall, and fall sharply,” he wrote in an internal note to staff on Jan. 21 seen by Bloomberg News………………………………………..Full Article: Source

Time For a Good Gold-to-Silver Ratio Play For Traders? - Peter Hug

Posted on 02 February 2016 by VRS  |  Email |Print

Is a major upside number for gold in the cards? Or is the choppy action making investors wary? In the first trading day of February, gold has once again topped the $1,122 chart point. The metal is currently trading near a 3-month high. It has been a good start to the year for gold, with the market up nearly 6% in the past month.
‘You want to express a major upside number for gold but the choppy action makes investors wary,’ said Kitco Metals’ Global Trading Director, Peter Hug. Speaking with Kitco News, Hug added, ‘A scenario similar to 2008-2011 may yet develop but I cannot in good faith just throw out an absurd upside target. The cross-currents in the market continue to suggest upside momentum for gold, but the move is likely to be jerky.’……………………………………….Full Article: Source

Japan Trading Houses Facing $13 Billion Hit on Commodity Misfire

Posted on 02 February 2016 by VRS  |  Email |Print

A handful of companies that have dominated almost every kind of raw-material business in Japan for decades may take as much as $13 billion in charges during the current fiscal year. The global commodity slump is squeezing the “sogo shosha,” or general trading houses like Mitsubishi Corp. that supply everything from gasoline and steel to seafood and noodles in resource-poor Japan.
They invested in metals and energy only to see prices fall. Already, Sumitomo Corp. has taken a $650 million writedown at a nickel project in Madagascar. Its rivals will probably report impairments as soon as this week, says Goldman Sachs Group Inc………………………………………..Full Article: Source

How Is China Driving Down Commodities?

Posted on 01 February 2016 by VRS  |  Email |Print

Commodities right now are certainly the place not to be. Commodity markets today are characterized by a triple whammy of overcapacity, overleverage and low profitability. Prices have reflected as much, tanking across the board in the last year, with much of the blame attributed to China’s slowdown as well as the supply glut.
China has proven to be one of (if not the) most important driver of commodities today. As China soared in the early 2000s on the back of rapid industrialization, so did commodities. Construction projects began rolling out to modernize infrastructure and urbanize, which drove demand for metals such as copper and steel. So began the new phase of the commodity supercycle………………………………………..Full Article: Source

World Bank slashes outlook for 80% of commodity prices

Posted on 27 January 2016 by VRS  |  Email |Print

The World Bank has cut its price forecast for 80 percent of the world’s major commodities as oversupply and weaker emerging market growth prospects weigh on demand. In its latest report, out Tuesday, the bank has cut its 2016 forecast for crude oil prices to $37 per barrel, down from $51 per barrel in its October report, citing the sooner-than-anticipated resumption of exports by the Islamic Republic of Iran and greater resilience in U.S. production.
Oil prices fell by 47 percent in 2015 and are expected to decline, on an annual average, by another 27 percent in 2016, according to the World Bank………………………………………..Full Article: Source

An argument for commodities

Posted on 22 January 2016 by VRS  |  Email |Print

With oil trading below $30 a barrel and Chinese growth continuing to slow, it is understandable that investor sentiment toward commodities is close to hitting its all-time lows.
But, argues James Butterfill, this bodes well for the commodities complex over the longer term. Indeed, speaking at the firm’s investment conference in London, ETF Securities’ head of research and investment strategy argued that the level of bearishness is one of a number of contrarian indicators pointing to eventual better times ahead………………………………………..Full Article: Source

Citigroup Cuts Commodity Forecasts as Resources Rout Resumes

Posted on 21 January 2016 by VRS  |  Email |Print

Citigroup Inc. cut its commodities forecasts on concern slowing global growth will prolong the time it takes for markets to swing back into balance. Shares of resources companies resumed their drop as raw material prices slid.
Brent crude may average $40 a barrel this year, compared with an estimate of $51 in a November report, while the outlook for nickel was cut 22 percent to $8,450 a metric ton, analysts including Ed Morse wrote in a report received on Wednesday. Gold was a rare bright spot, with Citigroup raising its forecast 7.5 percent to $1,070 an ounce………………………………………..Full Article: Source

Another Chance to Join Commodity Rally You Probably Missed

Posted on 19 January 2016 by VRS  |  Email |Print

Traders and investors have another chance to join a rare commodity rally that probably passed them by last year. European Union pollution permits, beaten only by London cocoa in 2015, may have further to roll.
Spurred by European Union lawmakers in Brussels, the contracts are poised to gain about 39 percent in 2016, after a poor start to the year, according to a survey of 13 traders and analysts by Bloomberg. That would be a record third year of gains after prices climbed 11 percent in 2015………………………………………..Full Article: Source

To Divine Chinese Commodity Demand, Keep Eye on Credit

Posted on 19 January 2016 by VRS  |  Email |Print

When China slows, commodities crash. If only it were that simple. Understanding the real cause and effect relationship between the two takes a bit more homework. Much of the weakness in global commodities isn’t China’s fault—at least not directly.
Oil at $30 and the attendant tumble in prices of iron ore, coal, copper and soybeans is as much a function of too much supply as slack Chinese demand. But China exerts powerful direct effects, and they are especially worth watching with the nation’s industrial economy in such a precarious position………………………………………..Full Article: Source

Commodity ‘Crash’ Could Be ‘Catastrophic’ to Global Economy

Posted on 15 January 2016 by VRS  |  Email |Print

The world’s economy is in “quite a mess right now,” and while the American economy is doing well, its growth remains “mediocre by historical standards,” argued Carl Weinberg, chief economist of High Frequency Economics. It’s hard to overstate the deleterious effect of falling commodity prices, Weinberg said.
“There’s a crash in commodity prices right now that’s potentially catastrophic to the global economy,” he said. The steep price declines in everything from iron ore to gold to agricultural products — not to mention oil—“10 or 20 years ago” would have had only a modest effect on global GDP, but that’s not now the case, he said………………………………………..Full Article: Source

China’s Buying Binge Replaced by a Global Commodities Glut

Posted on 11 January 2016 by VRS  |  Email |Print

Chile is expanding its largest open-pit copper mine below the northern desert to dig up 1.7 billion additional tons of minerals, even as metal prices plummet around the globe. India is building railroad lines that crisscross the country to connect underused coal mines with growing urban populations, threatening to dump more resources into an already glutted market.
Australia is increasing natural gas production by roughly 150 percent over the next four years, as energy companies build half a dozen export terminals to serve dwindling demand. Across the commodities landscape, this worrisome mismatch mainly traces back to the same source: China………………………………………..Full Article: Source

Oil market ‘more fragile’ than prices show: Citi

Posted on 08 January 2016 by VRS  |  Email |Print

U.S. oil prices of around $20 per barrel could still happen, Citigroup’s Ed Morse, said Thursday as crude briefly hit 12-year lows of just over $32 per barrel.
“You never know where the bottom is,” Morse told CNBC’s “Squawk Box.” He said the recent tumble has been more severe than he’d anticipated. “We think the pressure is still going to be on for lower prices,” he added. West Texas Intermediate crude was falling around 3 percent early Thursday, after a decline of 5.5 percent on Wednesday………………………………………..Full Article: Source

Saudi Arabia Cuts European Oil Prices

Posted on 06 January 2016 by VRS  |  Email |Print

Saudi Arabia on Tuesday sharply cut the prices it charges for crude oil in Europe, a move that could undercut Iran as sectarian tensions escalate between the rival Middle Eastern nations.
The Saudi move appears to pave the way for a competition over European oil markets later this year when Iran is expected to increase its exports after the expected end of western sanctions over its nuclear program………………………………………..Full Article: Source

Commodities: Hopes pinned on demand recovery

Posted on 04 January 2016 by VRS  |  Email |Print

2015 was another tough year for commodities with a sharp slowdown seen in demand from China. Combined with ongoing supply growth—the result of a 30-year high in capital investment over 2009-13—this has led to all non-precious commodity prices falling materially, and the global mining sector equities underperforming for an unprecedented fifth consecutive year, making it the worst period since at least 1966.
Looking forward into 2016, it is hard to see what might pull the sector out of its tailspin. A demand shock seems unlikely given the state of China’s economy. Aside from the structural transition away from fixed asset investment (FAI) intensive growth in China, we worry about deteriorating demographics in China and a multi-year slowdown in property investment………………………………………..Full Article: Source

Gold Volumes Shrink on Steady Prices as Traders Look to 2016

Posted on 30 December 2015 by VRS  |  Email |Print

Gold trading volumes shrunk in New York and prices were little changed as traders shifted their focus to the outlook for 2016. Aggregate volume for gold futures has been below the 30-day average since mid-December, when the Federal Reserve raised U.S. interest rates for the first time in almost a decade.
Prices had already been heading for a third straight annual loss on the outlook for higher rates, which cut the appeal of the metal as a store of value. While the metal briefly rallied amid the Paris attacks, investors have mostly ignored bullion this year as the dollar climbed. Now, traders are focusing on how quickly Fed policy makers will continue to raise rates in 2016………………………………………..Full Article: Source

Survival of fittest for commodities shipping firms in 2016

Posted on 29 December 2015 by VRS  |  Email |Print

Shipping companies that transport commodities such as coal, iron ore and grain face a painful year ahead, with only the strongest expected to weather a deepening crisis caused by tepid demand and a surplus of vessels for hire.
The predicament facing firms that ship commodities in large unpackaged amounts - known as dry bulk - is partly the result of slower coal and iron ore demand from leading global importer China in the second half of 2015. The Baltic Exchange’s main sea freight index - which tracks rates for ships carrying dry bulk commodities - plunged to an all-time low this month………………………………………..Full Article: Source

Crude Oil Market to Balance Some Time in 2016, Says Saudi Aramco Chairman

Posted on 29 December 2015 by VRS  |  Email |Print

Crude oil markets are likely to balance some time next year as supplies from North America, including U.S. shale, continue to decline significantly, the chairman of Saudi Arabia’s giant oil company said Monday.
“Supply has plateaued in North America and [is] declining by significant amounts. We expect that to continue and perhaps accelerate in 2016,” Khalid al-Falih, chairman of Saudi Arabian Oil Co., known as Saudi Aramco, said in a news conference in Riyadh. “We see the market balancing some time in 2016. We see demand ultimately exceeding supply…Prices in due course will respond,” he said………………………………………..Full Article: Source

The commodity roller-coaster ride is not over yet

Posted on 28 December 2015 by VRS  |  Email |Print

The global commodity supercycle is hardly a new phenomenon. Though the details vary, primary commodity exporters tend to act out the same story, and economic outcomes tend to follow recognisable patterns. But the element of predictability in the path of the commodity-price cycle, like that in the course of a roller coaster, does not make its twists and turns any easier to stomach.
Since the late 18th century, there have been seven or eight booms in non-oil commodity prices, relative to the price of manufactured goods. (The exact number depends on how peaks and troughs are defined.)……………………………………….Full Article: Source

Agri commodities go through the wringer

Posted on 28 December 2015 by VRS  |  Email |Print

The year 2015 was hard to forget for commodities. While major metals suffered their worst falls since 2008, agri commodities witnessed mixed fortunes. It was a good year for some agri-commodities, not so for others. But one thing in common for both the gainers and losers was they witnessed similar volatility.
Most agri commodities futures contracts on the National Commodity and Derivatives Exchange (NCDEX) witnessed wild swings. Either they moved up sharply initially in the first half of the year and then fell back strongly thereafter or vice-versa. Here, we take stock of the performance of the most actively traded agri commodities in the domestic exchange………………………………………..Full Article: Source

Swiss authorities ban six for precious metal manipulation

Posted on 18 December 2015 by VRS  |  Email |Print

The Swiss Financial Market Supervisory Authority (FINMA) has banned six managers and traders formally employed by UBS for misconduct in foreign exchange and precious metals trading. FINMA banned the former heads of global foreign exchange trading and global foreign exchange spot trading from holding senior management positions at firms supervised by FINMA for four and five years respectively.
It also banned four traders in foreign exchange and precious metals from the bank’s spot trading desk for at least one year each. FINMA examined thousands of suspicious chat group conversations between traders at multiple banks and found evidence of abusive practices there………………………………………..Full Article: Source

Currency trading algorithms

Posted on 18 December 2015 by VRS  |  Email |Print

Algorithm has been a dirty word this year. In September, Volkswagen admitted to installing a “sophisticated software algorithm” on certain vehicles to cheat emissions tests, and in November Barclays was fined $150m for alleged misuse of its foreign exchange algorithm. New regulation will soon be in place to manage the potential for “market distortion” as a result of the increased use of algorithms in financial markets.
But algorithms in themselves are not malicious, and their use is widespread and multi-faceted in trading across asset classes. At its core, an algorithm is simply a set of instructions given to a computer to carry out a specific task: “buy when the price drops below x”, “offer price y if the market moves in our favour”……………………………………….Full Article: Source

OPEC more threatened by Iran than U.S. oil exports

Posted on 17 December 2015 by VRS  |  Email |Print

An end to the U.S.’s 40-year ban on oil exports is probably not what OPEC needs right now. Yet a resurgent Iran may present a greater threat as it prepares to dump a million bbl on the market next year.
While OPEC “could have done without” the return of U.S. crude, “probably much more impactful will be whatever comes out of Iran, starting sometime in the second quarter,” said David Fyfe, head of market research and analysis at trading house Gunvor Group Ltd. Researcher IHS Inc. also said the immediate effect of the ban’s repeal would be “relatively minor.”……………………………………….Full Article: Source

Commodities on track for recovery: Van Eck

Posted on 16 December 2015 by VRS  |  Email |Print

Van Eck Global’s commodity strategist, Roland Morris, said financial markets remain focused on weak demand for commodities, not taking into account relevant supply adjustments that could lead to a sector-wide recovery. Morris gave the example of US oil production, which peaked at 9.6 million barrels in 2011. He said production today is down to nine million barrels and is likely to fall below this in 2016.
“Not only has production on existing rigs been scaled back, but new deep water and oil sands projects that could have delivered between six and seven million barrels have been cancelled or pushed out beyond 2020,” he said………………………………………..Full Article: Source

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