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Commodities Briefing - Category | Trading more

Platts Survey: OPEC Pumps 31.11 Million Barrels of Crude Oil Per Day in May

Posted on 16 June 2015 by VRS  |  Email |Print

Oil production from the Organization of the Petroleum Exporting Countries (OPEC) totaled 31.11 million barrels per day (b/d) in May, up 180,000 b/d from April and the group’s highest monthly volume since October 2012, according to the latest Platts survey of OPEC and oil industry officials and analysts. “OPEC’s communique after the June 5 meeting mentioned that members had been urged to adhere to its production ceiling,” said Margaret McQuaile, senior correspondent for Platts, a leading global provider of energy and commodities information.
“That’s something of a tall order, given that there are no quotas and that the 30 million b/d ceiling is supposed to cover production from Iraq, which hasn’t been part of OPEC’s production management system for years. With market share now pretty much the main theme – for the bigger players, at least – it seems likely that, for the time being, the only cuts in output will be involuntary ones.” (Press Release)

Gold Trades Little Changed as Platinum Sags to 6-Year Low

Posted on 16 June 2015 by VRS  |  Email |Print

The platinum market is the latest victim in the Greece debt turmoil. Prices tumbled to a six-year low on Monday. The white metal is mainly used in pollution-control devices for cars, and Europe accounts for about a quarter of global demand. With talks on securing a bailout deal for Greece in deadlock, it’s increasing concern that auto demand in the region will drop.
Platinum has slumped 10 percent this year, the biggest loss among the major precious metals. Investors cut holdings in exchange-traded funds backed by the metal in three of the past four weeks. Vehicle sales in Europe declined 24 percent in April, the third decline in 2015, the latest figures show………………………………………..Full Article: Source

Citi faces headwinds in commodity trade finance, presses on with expansion

Posted on 16 June 2015 by VRS  |  Email |Print

Citigroup Inc and rivals in the commodity trade finance sector are facing headwinds of weak oil prices, sanctions on Russia and stiff competition, which have pressured fees. The U.S. bank, which launched its business in the sector three years ago, has shifted attention from China, where fees are weak, to Africa and Latin America, said Kris van Broekhoven, global head of commodity trade finance.
“It’s still a tough environment,” he told Reuters. “China is not an easy market. It’s very competitive and pricing is low. We want growth, but not at any cost.”……………………………………….Full Article: Source

Iran third leading OPEC producer in May: report

Posted on 15 June 2015 by VRS  |  Email |Print

Iran was the third leading producer within the Organization of Petroleum Exporting Countries in May, outpacing the United Arab Emirates, OPEC said in its Monthly Oil Market Report. Iran produced 2.845 million barrels of oil per day in May, the report said, ranking Iran behind Saudi Arabia and Iraq at third place.

The UAE produced 2.83 million barrels of oil per day in May. Saudi Arabia and Iraq were the two leading producers, with 10.107 million barrels per day and 3.8 million barrels per day output, respectively. According to the report, total OPEC crude oil production averaged 30.98 million barrels per day in May, an increase of 24 thousand barrels per day over the previous month………………………………………..Full Article: Source

India: Forward contracts in commodities find few takers

Posted on 10 June 2015 by VRS  |  Email |Print

Forward contracts in commodities launched in September 2014 to reduce speculative activity in the commodity market and draw genuine investors to the exchange platform have found few takers. Market participants blame it on structural issues in the product as it does not offer full trade guarantee and zero counter-party default risk, two essentials for any product traded on the exchange platform.
The fraud at the National Spot Exchange Ltd (NSEL) too has made entities wary of trading in any product where the bourse does not guarantee the trade, market participants say. According to the Forward Contracts (Regulation) Act, 1952, which regulates commodity trading in India, a “forward contract” is a contract for the actual delivery of goods unlike futures contract, wherein the buyer can opt for the contract to be settled in cash………………………………………..Full Article: Source

China Now World’s Largest Oil Importer; Effect on Global Market

Posted on 09 June 2015 by VRS  |  Email |Print

Although data opacity makes objective analysis difficult, market observers reported in April that China has surpassed the United States as the world’s largest oil importer. This statistical inflection point needs context to understand global consumption trends.
While oil bulls are anxious about China’s reduced crude growth appetite, fundamental shifts in Chinese currency and domestic consumption strategies point to long-term growth in Chinese hydrocarbon consumption generally………………………………………..Full Article: Source

Commodity futures traders making cautious bets through ’spread contract’

Posted on 09 June 2015 by VRS  |  Email |Print

Amid fears of poor monsoon and depletion of old stocks, a few wealthy investors have begun taking cautious bets in commodity futures like castorseed, jeera and coriander through a relatively new product to benefit from price volatility on farm bourse NCDEX.
Called a spread contract, the product lets a trader lock in a spread or price difference between a near and mid-month futures contract.If she believes the spread would widen, she simply buys the spread and if it’s expected to narrow, she sells the spread.Once the spread widens she offsets the position -sells and captures the difference………………………………………..Full Article: Source

China Steels Itself Against Trade Complaints

Posted on 05 June 2015 by VRS  |  Email |Print

China’s government urged its steel industry, the largest in the world, to launch lawsuits to defend businesses against a rising tide of international trade complaints, including those from the U.S., its commerce ministry said.
“We encourage Chinese steelmakers and related businesses to actively participate in countersuits, and protect their legitimate interests according to World Trade Organization rules,” the ministry said this week. The ministry’s stance comes as rising Chinese steel exports run into resistance from competitors at the destinations of its shipments………………………………………..Full Article: Source

Turkey Gold Imports Slide to 10-Month Low as Local Prices Surge

Posted on 03 June 2015 by VRS  |  Email |Print

Turkey’s highest gold price in more than three years is cutting appetite for the metal in the fourth-biggest buyer. The country imported 1.65 metric tons of bullion in May, 21 percent less than a month earlier and the least since July, the Istanbul Gold Exchange’s website showed on Tuesday. Turkish first-quarter consumer demand for bullion slid 42 percent from a year earlier, according to World Gold Council data.
Local prices rallied 21 percent in the past year as the lira weakened against the dollar. The currency’s slump is the second-biggest in emerging markets this year on concern government gridlock will prevent legislation needed to bolster the economy. Turkey will hold national elections on June 7 and polls suggest a coalition government will be elected………………………………………..Full Article: Source

Iron Ore Trading in China Climbs to Record as Price Advances

Posted on 03 June 2015 by VRS  |  Email |Print

Trading of iron ore derivatives on China’s Dalian Commodity Exchange climbed to a record last month as prices increased. Volume jumped 33 percent in May from a month earlier to 24.86 million contracts, or 2.49 billion metric tons, according to bourse data. The previous all-time high was set in April. Compared with a year earlier the volume more than tripled.
Iron ore prices advanced in May as port stockpiles in China contracted. The world’s biggest consumer of metals and energy is seeking to expand its role in setting benchmark raw-material prices. A priority for the Dalian bourse this year is boosting the influence of its prices on global trade, according to Chen Wei, head of industrial commodities………………………………………..Full Article: Source

U.S. shale and OPEC, the altered balance of power

Posted on 02 June 2015 by VRS  |  Email |Print

Two landmark events this month will underscore the extent to which the oil market’s balance of power has been transformed by the shale revolution. In Washington, Congress will begin considering legislation to permit the export of crude oil from the United States, reversing a four decade ban put in place after the first oil crisis in 1973/74.
In Vienna, the Organization of the Petroleum Exporting Countries (OPEC) is expected to roll over its crude production target of 30 million barrels per day (bpd) even though prices have fallen more than 40 percent over the last 12 months. Rather than reduce production to boost prices, Saudi Arabia and the other OPEC members are prepared to continue pumping to defend market share and maximise revenue………………………………..Full Article: Source

‘Cautious optimism’ abounds in Asia commodities: Russell

Posted on 01 June 2015 by VRS  |  Email |Print

There appears to be an outbreak of “cautious optimism” in the Asian commodities sector. It was easy to lose track of the number of times the phrase popped up in presentations and conversations at four major commodities conferences in the region in the past two weeks.
However, defining what people meant by being cautiously optimistic was somewhat more challenging, although the common thread was a view that the worst is over for commodity prices, and the sector is once again worth looking at from an investment perspective. Of course, it’s easy to dismiss participants at the SGX Iron Ore Forum and the Asia Mining Congress in Singapore, the Asia Oil & Gas Conference in Kuala Lumpur and the LME Week Asia in Hong Kong as talking their books, or at least to their hopes………………………………….Full Article: Source

3 ETFs for Investing in Agriculture

Posted on 01 June 2015 by VRS  |  Email |Print

Changing diets across the globe are pushing up demand for soft commodities such as corn, wheat and soybeans. There are logistical problems with trading directly in the underlying commodity. The fund itself can’t very well store a thousand tons of grain and trade this on a day-to-day basis. So in order to gain the underlying exposure, the fund trades in the highly liquid futures market and they roll these to maintain exposure through time.
Currently the most popular is the ETF Securities Agriculture ETC (AIGA) product, with a total holding cost of 99 basis points, which still comes well under many of the item managed alternatives………………………………….Full Article: Source

State Commodity Traders Grow to Take on Glencore, Cargill

Posted on 01 June 2015 by VRS  |  Email |Print

When Azerbaijan’s Socar Trading SA took over the storied commodity trader Phibro LLC this year, it put a stamp on a new trend: the emergence of giant state enterprises to buy and sell natural resources. Azerbaijan is not alone: Saudi Arabia, China, Oman, Thailand and Russia are also building or expanding government-owned firms to procure and market commodities directly, bypassing the traditional oil and grain traders such as Glencore Plc, Cargill Inc., Vitol Group BV and Trafigura Beheer BV.
“Countries want to secure the offtake of their production or they want to secure supplies,” Socar Trading Chief Executive Officer Arzu Azimov said in an interview. “There is a trend of national companies building trading arms.”…………………………………Full Article: Source

Turn out the lights as commodity spending boom ends

Posted on 28 May 2015 by VRS  |  Email |Print

Australia, one of the engine rooms of the decade-long global commodity boom, is forecasting a staggering 90 per cent plunge in spending on projects, calling time on its biggest resources bonanza since the 1850s gold rush. After a collapse in prices from oil to iron ore, the value of the nation’s approved and financed mining and energy projects is forecast fall to about $15 billion in 2017, from $226 billion at the end of April.
Planned iron ore projects worth at least $10 billion have been canceled since October, according to the Department of Industry and Science. Billionaire Gina Rinehart’s Roy Hill — due to ship later this year — is Australia’s last remaining mining project being developed worth $5 billion or more…………………………………….Full Article: Source

Aluminum market eyes SHFE, LME arbitrage as support for premiums

Posted on 27 May 2015 by VRS  |  Email |Print

Some traders in Asia are closely monitoring the spread between Shanghai Futures Exchange and London Metal Exchange aluminum contract prices, as a wider spread may see more of the metal head to China. Front-month SHFE June aluminum traded at Yuan 13,150-Yuan 13,160 ($2,152-$2,153)/mt Tuesday, while the most recent LME settlement on May 22 was $1,726/mt.
Platts assessed spot Chinese import premium for Western grade aluminum at $150-$200/mt Monday. On the basis of LME at $1,726/mt, the $175/mt import premium, port handling charges of Yuan 100/mt and China’s value added tax of 17%, the Chinese import price is equivalent to Yuan 13,689/mt — higher than the traded level for SHFE June aluminum contract, Platts calculation shows…………………………………..Full Article: Source

Westpac eyes China, India for commodities trade growth

Posted on 25 May 2015 by VRS  |  Email |Print

A recent entrant in Asia’s commodities markets, Australia’s Westpac Banking Corp is ramping up to take advantage of a commodities “supercycle” that it says has at least another 30 years to run. While some global banks have exited commodities due to more stringent regulations, Westpac is setting itself to support a deeper push into the region by its corporate customers, a senior executive told Reuters.
“The commodity cycle is still in the supercycle phase. The urbanization of Asia has not stopped - all we’re getting at the minute is a correction,” said Paul Gardner, the bank’s Singapore-based Global Head of Structured Commodity Finance………………………………………..Full Article: Source

Hong Kong’s bold, but uncertain pitch for China commodity trade

Posted on 25 May 2015 by VRS  |  Email |Print

Imagine a world where global investors can access Chinese commodities markets through established global exchanges and Chinese investors can trade through their local bourses. It’s more than just an attractive proposition, it’s the great hope for finally integrating the world’s largest commodity producer, consumer and importer with the rest of the world.
It’s also the prize being sought by Charles Li, the chief executive of Hong Kong Exchanges and Clearing (HKEx), which bought the venerable London Metal Exchange (LME). But there is a long way to travel before the dream becomes a reality, and there is always the danger that the market will have moved on by the time HKEx manages to pull something together………………………………………..Full Article: Source

Turkish ferrous scrap import prices slide on lower indications

Posted on 22 May 2015 by VRS  |  Email |Print

Platts’ daily assessment of Turkish ferrous premium heavy melting scrap I/II (80:20) imports slipped $2/mt to $286.50/mt CFR Thursday on lower indications and a cheaper deal. A US East Coast-origin cargo was heard sold Wednesday comprising 25,000 mt of HMS I/II (80:20) at $285/mt CFR and 15,000 mt of shred at $290/mt CFR.
The seller had the option to load some of the material in Puerto Rico, which sell-side sources said lowered the value of the cargo somewhat. Platts partially factored the cargo into its assessment, and normalized it to $287-$288/mt CFR, taking into account the Puerto Rican-origin scrap — the methodology specifies 80:20 of premium USEC origin or equivalent………………………………………..Full Article: Source

Where Are Oil Prices and the Ruble Going Next?

Posted on 21 May 2015 by VRS  |  Email |Print

The strong rally in the oil price over the past four months has confounded most forecasters. Instead of continuing the late 2014 slide to test the 2009 low of $42 per barrel, the price of Brent came close to $45 on Jan. 13 before starting a steady climb, which brought it close to $68 late last week.
That price rally, which has been replicated in Russia’s Urals contract, is a big part of the reason why the ruble has rallied strongly since early February and why there is so much optimism that Russia’s economy has weathered the economic crisis relatively unscathed. It is also the main reason why the RDXUSD, the index of Russian equities traded on international bourses, is one of the best in the world so far in 2015 with a gain of 34 percent………………………………………..Full Article: Source

Saudi Arabia, OPEC partners turn down Chinese requests for extra oil

Posted on 21 May 2015 by VRS  |  Email |Print

Saudi Arabia and its main Middle East OPEC partners are turning down Chinese requests for extra oil as they hold back fuel for their own refineries just as demand from the world’s biggest crude importer hits new records.
While the Saudi and other refusals for additional crude supplies may not be part of a new pricing strategy, the rejections to their biggest client help explain a 40 percent rise in oil prices this year as Chinese importers have had to seek more oil from other suppliers in what analysts say is still an oversupplied market………………………………………..Full Article: Source

Chinese Gold Standard Would Need a Rate 50 Times Bullion’s Price

Posted on 21 May 2015 by VRS  |  Email |Print

A move to a gold standard in China would require an exchange rate of as much as $64,000 an ounce, 50 times bullion’s price now, according to Bloomberg Intelligence. A traditional gold standard, in which the precious metal backs the currency, is basically impossible at current prices due to the amount of metal needed and there’s no evidence the sixth-biggest bullion holder will adopt one, Bloomberg Intelligence said in reports published Wednesday.
Any attempt probably would involve new technologies and depend on the ratio of what is backed, it said. Chinese policy makers are trying to establish the yuan as a reserve currency, and backing it with gold would help attract foreign capital inflows, the Bloomberg research unit wrote………………………………………..Full Article: Source

Palladium Gains From Environmental Rules

Posted on 20 May 2015 by VRS  |  Email |Print

Among precious metals, palladium has rarely shone brightest for investors. Yet in recent weeks, the metal, used mostly in catalytic converters for cars, has been commanding more attention than gold, silver and platinum, its more glamorous counterparts.
Analysts expect solid auto sales in China and the U.S., together with tighter environmental standards, to keep growth in demand for palladium strong enough to potentially outpace increases in supplies. The market was in deficit last year, and there could be shortfalls this year, in 2016 and in 2017, analysts at Australia & New Zealand Banking Group Ltd. predict………………………………………..Full Article: Source

Islamic commodity trading getting a boost

Posted on 20 May 2015 by VRS  |  Email |Print

Islamic commodity trading has become more popular in the financial world as of late because an accord seems to have been reached among scholars whether such commodity trading, which is conventionally done through futures contracts and not through the exchange of physical commodities, is permissible as per Islamic law.
So far, Islamic commodity trading has been done mostly by commodity murabaha whereby an institution agrees to purchase goods from a counterparty which promises to buy it back with an agreed mark-up at a later date………………………………………..Full Article: Source

Saudi oil exports hit highest in a decade

Posted on 19 May 2015 by VRS  |  Email |Print

Saudi Arabia wasn’t bluffing. The Kingdom increased its oil exports to the highest level since 2005 in March, official data from the Joint Organisations Data Initiative (JODI) showed, as Opec’s most powerful member made good on its promise to try to take back market share from other producers, reports David Sheppard, deputy commodities editor.
Its oil exports were 7.89 million barrels a day in March, a 10 per cent increase on the same month last year, despite rising domestic demand. This was the highest since November 2005 when it reached 7.96m b/d………………………………………..Full Article: Source

Gold Trapped in Summer Doldrums Usually Means Volatile Wake Up

Posted on 19 May 2015 by VRS  |  Email |Print

For gold traders, summer has come early. Just don’t book your trip to the beach yet. Prices have seesawed for the past two months, leaving the metal trapped in the tightest trading range in two years, according to data compiled by Bloomberg through the end of last week. That’s historically a sign of more volatility to come.
When similar periods of calm blanketed the market, the metal swung 3.3 percent on average in the five days after breaking out of the band, almost twice the usual weekly change. Gold moved around $1,200 an ounce as bullish catalysts, such as signs of faster inflation, were offset by speculation the Federal Reserve will soon raise interest rates. While the weaker dollar usually draws buyers to gold, there’s also less demand for haven assets with equities near all-time highs………………………………………..Full Article: Source

Traders warn on gold liquidity

Posted on 19 May 2015 by VRS  |  Email |Print

A few years ago London’s precious metals traders would arrive at their desks to find the phones flashing. On the other end of the line were rival banks looking to buy and sell gold. Today, the trading floors are a lot quieter.
Not only is most trading screen-based but there has been a decline in bank-to-bank activity — the anchor of the over-the-counter (OTC) bullion market — as many institutions have scaled back or exited commodities. This has made the gold market more frenetic and pushed up the costs of hedging and doing larger trades, according to market participants………………………………………..Full Article: Source

Rethinking Commodity Trade Finance

Posted on 18 May 2015 by VRS  |  Email |Print

Is traditional commodity finance dying? Has the slack been taken up or is the commodity finance market underfunded? Are producers and traders getting the right products at the right prices? These are just some of the question we would like you to help us answer in our 2015 Commodity Finance Survey.
Trade finance – and commodity trade finance in particular, which involves lending to and servicing commodity producers, processors and traders – remains pivotal to the workings of a globalised and growing world economy, and to international development. The WTO says world trade will double in the next 15 years and the global population will be in excess of 9 billion by 2050, even though the growth rate of international trade has dropped drastically compared to the years before the global financial crisis………………………………………..Full Article: Source

India’s gold demand could rise in second quarter, says WGC

Posted on 15 May 2015 by VRS  |  Email |Print

Gold demand in India, the world’s second-largest consumer of the metal after China, is likely to increase in the April-June quarter, from the first quarter. Demand will get a boost from strong buying during a major festival, lower prices and robust economic growth, according to the World Gold Council (WGC).
Second-quarter gold demand numbers for India, expected to be released by mid-August, will likely show an improvement over the first-quarter, when China was the top consumer, overtaking India by nearly 100 tonnes, the WGC said…………………………………..Full Article: Source

Chinese gov’t allows commodity trading

Posted on 15 May 2015 by VRS  |  Email |Print

China has more than tripled the number of central government-owned firms allowed to trade commodities derivatives overseas without regulator approval. The move will give China more clout in global markets for metals, energy and agricultural products.
One hundred more large government-backed Chinese companies will be permitted to trade in international futures, swaps and options markets, according to three sources with direct knowledge of the changes. It marks the biggest expansion of the list in nearly 10 years…………………………………..Full Article: Source

Global Debt Now $200 Trillion!

Posted on 15 May 2015 by VRS  |  Email |Print

Global debt is now in the region of $200 trillion. The McKinsey Global Institute recently published a report highlighting the bloated, unsustainable levels of debt that have been accumulated globally and the huge risks when interest rates begin to rise again.
McKinsey concluded that total global debt was $199 trillion and the little covered report was released in February – 3 months ago – meaning that the figure is likely over $200 trillion. With a global population of 7.3 billion this works out out at over $27,200 of debt for every man, woman and child alive in the world today. Almost 29% of that debt – $57 trillion – has been accumulated in the relative short period since the financial crisis erupted in 2007 – just 8 years…………………………………..Full Article: Source

Opec revises up oil demand and cuts US supply forecast

Posted on 13 May 2015 by VRS  |  Email |Print

Oil cartel has upgraded its demand forecast on stronger European growth as US drillers struggle. The Organisation of the Petroleum Exporting Countries (Opec) has revised up its forecast for world oil demand this year on higher consumption in Europe’s biggest economies and cut its estimate for the growth in US supply.
The group of 12 major oil producers now expects demand for crude to increase by 1.18m barrels per day (bpd) of crude to 92.5m bpd in 2015. Opec’s latest closely watched market report said: “The upward movement of European oil demand during the second half of 2014 has continued and been enhanced during the first three months of 2015………………………………………..Full Article: Source

Oil settles under $60 as traders fret about Iran

Posted on 08 May 2015 by VRS  |  Email |Print

Oil futures settled back under $60 a barrel on Thursday, with traders increasingly worried about how much oil Iran can add to the global market should sanctions be lifted as part of a deal with world powers over its nuclear program.
June crude fell $1.99, or 3.3%, to settle at $58.94 a barrel on the New York Mercantile Exchange. Prices had settled near $61 Wednesday at their highest level of the year. Brent crude for June delivery on London’s ICE Futures exchange settled lower by $2.23, or 3.3%, lower at $65.54 a barrel………………………………………..Full Article: Source

China magnesium: Spot export trades remain lackluster, offers steady

Posted on 08 May 2015 by VRS  |  Email |Print

Spot export trades for Chinese magnesium ingot on a FOB basis remained lackluster on the dearth of overseas buying interest, while offers continued to hold steady, industry sources said Thursday. Platts kept its weekly magnesium ingot (minimum 99.8%) price assessment steady at $2,180-$2,230/mt FOB China Thursday, unchanged from the previous weeks as bids and offers were heard within the range.
The Chinese magnesium die-cast alloy price assessment was also maintained at $2,460-2,530/mt FOB China, unchanged from last week. “I am not hearing any movement in both the domestic and export offers after the implementation of the minimum domestic offer of Yuan 13,000/mt ($2,095/mt) in Shaanxi,” said a North China-based analyst, who heard steady offers at Yuan 13,000-Yuan 13,300/mt ex-works and $2,200-$2,250/mt FOB China………………………………………..Full Article: Source

What Commodity Momentum Tells Us About Equities

Posted on 08 May 2015 by VRS  |  Email |Print

It is fact that equity prices prosper when commodity prices are relatively stable. Normally, it is the instability of commodities on the upside that disturbs equities, such as that experienced between 1973 and 1974. However, downside volatility in the commodity pits can be even more devastating. Just consider the sharp drop in both markets in the second half of 2008, 1921 or even the 1930/32 experience.
That said, we can use long-term trends in commodity momentum to signal favorable long-term environments for equities. This chart, for instance, features our secular commodity momentum indicator. It is calculated by dividing a 60-month by a 360-month MA of commodity prices………………………………………..Full Article: Source

China allows more state firms to trade global commodities derivatives

Posted on 07 May 2015 by VRS  |  Email |Print

China has more than tripled the number of central government owned firms permitted to trade overseas commodities derivatives without approval from the state assets regulator, said three sources with direct knowledge of the matter.
The move will see roughly 100 additional large government-backed Chinese companies boost trading in global commodities derivatives markets such as futures, swaps and options, marking a significant step after years of strict controls in this area………………………………………..Full Article: Source

Pain is not over for commodities yet warns Kames Capital

Posted on 07 May 2015 by VRS  |  Email |Print

Investors should not be lulled into increasing their commodity exposure because of discounted valuations across commodities markets, with major headwinds poised to further disrupt returns this year, Kames Capital has warned. Kames’ chief investment officer Stephen Jones says while prices in some major commodity markets appeared to be showing signs of stabilisation, the fundamentals remained unfavourable for the sector.
“Now though, it would appear that both oil and copper have found something of a floor, and investors appear only too keen to buy into this, judging by inflows into ETFs. However, we remain sceptical. When you look through short-term factors for commodities, for example unrest in the Middle East and its impact on oil, analysis inevitably reverts back to supply and demand dynamics to dictate the price………………………………………..Full Article: Source

Shackles off commodity derivatives trade

Posted on 07 May 2015 by VRS  |  Email |Print

China has more than tripled the number of central government-owned firms that are allowed to trade commodities derivatives overseas without needing the approval of regulators. The move will give the nation more clout in global markets for metals, energy and agricultural products.
About 100 more large government- backed firms are set to be permitted to trade in international futures, swaps and options markets the biggest expansion of the list in nearly 10 years. “This is one more step toward capital account opening,” said Grace Tam, a markets strategist at JPMorgan Asset Management in Hong Kong………………………………………..Full Article: Source

Fate of commodities is linked to dollar

Posted on 06 May 2015 by VRS  |  Email |Print

Amonth or so ago we highlighted a research note from Barclays that showed how investors were continuing to retreat from commodities. Long-term readers will not be surprised to learn that looks to have marked a turn of fortune for the sector. The Continuous Commodity Index is an equally weighted measure of 17 commodity futures, including energy, base metal and agricultural benchmarks, along with precious metals, too.
As such, it is a useful gauge of sentiment towards the broad asset class. The CCI hit a five-year low in March but has trundled higher of late, forming what chartists might consider a solid looking base………………………………………..Full Article: Source

More oil on tap for OPEC member Angola

Posted on 06 May 2015 by VRS  |  Email |Print

Italian energy company Eni announced Tuesday it was ahead of the curve with what its partners described as a breakthrough operation offshore Angola. Eni holds a 20 percent stake in a section of the Kizomba project off the coast of Angola. The Italian company said production there has started ahead of schedule.
Kizomba is part of the country’s Kakocha, Bavuca and Mondo South fields. “The project develops approximately 190 million barrels of oil with peak production currently estimated at 70,000 barrels of oil per day,” the Italian company said in a statement………………………………………..Full Article: Source

EU commodity trading firms face capital punishment

Posted on 06 May 2015 by VRS  |  Email |Print

Imposing CRD IV capital rules on trading houses, utilities and oil majors carries huge costs and makes no sense. The notion of imposing capital requirements on firms that trade commodities has been advocated by some financial regulators in recent years. It has also been loudly cheered by banks, which argue non-bank commodity traders enjoy an unfair competitive advantage from not having to set aside regulatory capital against their assets.
Since the entry into force of Europe’s Mifid II legislation in July last year, this abstract debate has become very real indeed. Mifid II both removes and narrows exemptions to financial market rules that many commodity trading firms previously benefited from. That means such firms may be forced to comply with CRD IV – the European Union version of Basel III bank capital rules………………………………………..Full Article: Source

Biggest commodity price fall since 2008 in April, led by dairy

Posted on 04 May 2015 by VRS  |  Email |Print

New Zealand commodity prices had their biggest decline since the height of the global financial crisis in 2008, led by falling dairy product prices. The ANZ Commodity Price Index fell 7.4 percent in April, the biggest decline since October 2008, when it fell by the same amount. The latest decline has reversed most of the gains seen since the start of the year, with prices 15 percent lower than a year ago.
Dairy product prices led declines, down 15 percent to be a third lower than a year ago, on weaker milk powder and butter prices. Fonterra Cooperative Group, the world’s biggest dairy exporter, last week cut its forecast payout to farmers for the current season to $4.50 per kilogram of milk solids from $4.70/kgMS, blaming volatile global commodity prices and an over-supply in international markets………………………………………..Full Article: Source

These risks threaten the recent commodity surge

Posted on 04 May 2015 by VRS  |  Email |Print

The recent resurgence in certain commodities such as oil, copper and zinc must feel pretty good to investors — especially those in Canada — who have been hit hard by the slump in natural resources in recent years. But it may be better if investors hold off getting excited for now. The rebound could very well have legs, but it could just as easily fizzle in the days and months ahead, say analysts.
“After a dismal finish to 2014, dominated by the collapse in oil prices, sentiment towards commodities is turning more positive again,” said Julien Jessop, analyst at Capital Economics, in a note to clients………………………………………..Full Article: Source

Gold Speculators Net Bullish Positions Virtually Unchanged Last Week

Posted on 04 May 2015 by VRS  |  Email |Print

Gold speculator and large futures trader positions were virtually unchanged last week as gold bullish bets hovered above +100,000 net contracts for a second week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The non-commercial futures contracts of Comex gold futures, traded by large speculators and hedge funds, totaled a net position of +101,257 contracts in the data reported through April 28th. This was a weekly change of just +12 contracts from the previous week’s total of +101,245 net contracts that was registered on April 21st………………………………………..Full Article: Source

Gujarat imports 80% of gold from Switzerland

Posted on 04 May 2015 by VRS  |  Email |Print

The largest gold reserves, easier procedures and least chances of duplication or adulteration have made Switzerland the favourite source of gold imports by bullion traders in Gujarat. In 2014-15, over 80% of the 152 metric tonnes (MT) of gold imported through Gujarat was from Switzerland followed by UAE, South Africa and Australia.
Industry insiders say the share of Switzerland in overall gold imports in Gujarat has risen from 45% in 2012 to more than 80% in 2015. According to industry sources, of 22 MT of gold worth Rs 5,190 crore imported in March 2015 in Gujarat, around 19 MT, worth Rs 4,450 crore, was from Switzerland alone. Imports from UAE, South Africa, Australia and Turkey stood at 1,450 kg, 740 kg, 600 kg and 350 kg respectively………………………………………..Full Article: Source

Can hedge funds turn the tide in 2015?

Posted on 29 April 2015 by VRS  |  Email |Print

According to Preqin, hedge funds have started this year with a bullet. The Preqin All-Strategies Hedge Fund benchmark posted a 2.49% return in February, the highest monthly return since January 2013. The performance is timely given that hedge fund performance was a concern in 2014. The challenge, and opportunity, still remains for hedge funds to continue the uptick in Q1 as equity markets look to be buoyant and commodity markets remain turbulent.
According to the latest HFR Market Microstructure Industry Report, new hedge fund launches were down last year (in numerical terms, down 20 on the 1,060 funds launched in 2013). While launches have trended in a narrow range in recent years, they remain well below the peak of 2,073 funds launched in 2005, though nearly double the local trough of 659 launches in 2008. This is now the third consecutive year of decline, while fund liquidations saw their first drop since 2010………………………………………..Full Article: Source

Bullish Traders Are Turning To Rare Earth Metals

Posted on 24 April 2015 by VRS  |  Email |Print

This past week many momentum traders have turned their attention to a niche corner of the commodity markets – rare earth metals. Companies that explore and or process rare metals are of specific interest to traders because of strong moves in a couple of the sector’s key players. Based on their respective chart patterns, active traders will likely add these stocks to their watch lists because they could be setting up for a continued move higher.
Molycorp, Inc. (MCP) is one of the most popular rare earth players available in the public markets and it is a favorite amongst many who are interested in the sector. Recently, the company announced that it will supply rare earth metals for use in Siemens AG’s (SIEGY) wind turbine generators over the next 10 years. This news could be enough of a catalyst to continue to send prices higher over the coming weeks and months…………………………………..Full Article: Source

World’s commodity trading houses have their sights set on Iran thaw

Posted on 23 April 2015 by VRS  |  Email |Print

The world’s largest commodity trading houses are first in line to profit from the much expected return of Iran to global markets as Tehran and Washington enter into the final three months of nuclear talks. While the global oil industry has been seen as the biggest beneficiary of a thaw, commodities’ traders including Cargill, Glencore, Vitol, Trafigura and Louis Dreyfus Commodities have a long history in Iran, helping to export its oil and import daily basics like gasoline, wheat and rice.
The US and European sanctions, designed to stop oil and gas trading, are also limiting the traders’ ability to sell food commodities, because of banking and shipping restrictions. With a population of almost 80 million and the prospect of strong economic growth once sanctions are lifted, Iran offers one of the world’s biggest trading opportunities……………………………………Full Article: Source

Strong demand to rebalance oil market by early 2016

Posted on 23 April 2015 by VRS  |  Email |Print

Global oil demand is set to rise by 1 million or even 1.5 million barrels per day (bpd) in 2015, according to a range of forecasters. Coupled with a fall in shale output in the second half of the year, as the decline in the US rig count takes effect, that should be enough to bring the oil market near to balance by early 2016.
Worldwide consumption will increase by a little over 1 million bpd in 2015, according to forecasts published this month by both the International Energy Agency and the US Energy Information Administration (EIA). Ian Taylor,CEO of Vitol, the world’s largest oil trader, has also predicted demand will grow by around 1 million bpd, at a conference hosted by the Financial Times……………………………………Full Article: Source

World’s Biggest Oil Trader Sees $50 Floor for Crude Prices

Posted on 22 April 2015 by VRS  |  Email |Print

Vitol Group, the world’s biggest independent oil trader, said crude prices won’t drop below $50 a barrel for sustained periods because that’s a level some producers need in order to invest in new supply. Gunvor Group said a rout is over.
“We still subscribe to the likelihood that over time prices still have to go back up again because you still need to invest,” Vitol’s Chief Executive Officer Ian Taylor said in an interview at the FT Commodities Global Summit in Lausanne, Switzerland on Tuesday. “People won’t invest unless they can make the upstream business work and it’s not just U.S. shale, at $50 a barrel it doesn’t work.”………………………………….Full Article: Source

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