Fri, Jul 1, 2016
A A A
Welcome vaishu
RSS

Commodities Briefing - Category | Trading more

A Chinese conundrum for commodity markets

Posted on 19 November 2015 by VRS  |  Email |Print

There’s an interesting conundrum developing in commodity markets. Oversupply of almost all commodities has been factored into commodity prices throughout this year, as has some weakening of China’s economy and therefore demand for the raw materials that have fuelled its growth. Yet despite China’s official GDP growth numbers tracking in line with expectations — China’s president Xi Jinping reaffirmed his expectation of growth of around 7 per cent this year at the weekend’s G20 summit — commodity prices have cracked once again.
Over the past month or so there has been another sharp fall in prices across the suite of hard commodities, with iron ore prices now down about 13.5 per cent, copper prices by a similar amount, aluminium trading at its lowest levels for six years and zinc prices, which spiked after Glencore announced it would cut a third from its production, falling back to levels about 4 per cent lower than their levels before that announcement………………………………………Full Article: Source

The Collapse of Commodities in One Simple Chart

Posted on 19 November 2015 by VRS  |  Email |Print

This chart from Macquarie puts the year in perspective for commodity investors. It covers various asset classes including equities, FX markets, bonds, and commodity prices, and charts them YTD in terms of US dollars and expressed as a percentage. For a simple chart, there is a lot of information here to consider.
For starters, on the far right is the prime culprit in stymying commodity markets: the Dollar Index. The US dollar, which commodities are priced in, has had a big year with close to a 10% return YTD. While the US economy is still suspect at best, it has served as a safe haven for investors this year over markets such as Europe, China, and Japan. As a result, the USD has had the best performance of all of these asset classes listed on the chart………………………………………Full Article: Source

Currencies, Commodities and Slow Global Growth (Video)

Posted on 18 November 2015 by VRS  |  Email |Print

Geoffrey Yu, senior FX strategist at UBS, and Charles Lichfield, research associate at Eurasia Group, examine global economic growth and the impact of geopolitical risks on currencies and commodities. They speak on “Bloomberg Surveillance.”.………………………………………Full Article: Source

Forget China, the US offers commodities upside

Posted on 11 November 2015 by VRS  |  Email |Print

Commodity price swings aren’t all about China’s weaker demand; the U.S. could move the market upwards as its taste for commodities returns, one expert predicts. Upbeat data from the US suggest the possibility of an Federal Reserve interest rate hike soon, which would be a boon for commodities, Invast Australia’s director of research, Peter Fay, said.
“There are other countries that can come out and add to demand, it’s not just China,” Fay told CNBC’s Squawk Box on Tuesday. The U.S. Bureau of Labor Statistics reported Friday that nonfarm payrolls grew 271,000 for October, a sharp jump from weak August and September numbers…………………………………………Full Article: Source

IEA: Cheap oil era could boost reliance on Middle Eastern crude

Posted on 11 November 2015 by VRS  |  Email |Print

If crude prices don’t bounce back by the end of the decade, an era of cheap oil could consolidate more oil-market power into the hands of a few low-cost producers in the Middle East – raising concerns about energy security for oil-importing nations, the International Energy Agency says.
The IEA’s closely watched World Energy Outlook, an annual report being released Tuesday, said the world’s reliance on Middle Eastern oil exports could “eventually escalate to a level last seen in the 1970s,” most profoundly in developing Asian countries like India and China, if oil prices stay low well beyond 2020 and force higher-cost producers out of the market over the next 25 years. The Paris-based group, which consults 29 oil-importing nations, is a well-respected oil-market forecaster………………………………………..Full Article: Source

Dhanteras fail to boost gold sales

Posted on 11 November 2015 by VRS  |  Email |Print

Gold sales have remained sluggish despite the Tihar festival and Dhanteras which is considered to be an auspicious day for buying precious metals as people are more concerned about daily essentials. Jewellers said that low vehicular movement due to the fuel shortage caused by the Indian blockade had also dampened the festive buying sentiment.
Although huge crowds were seen at some gold shops, bullion traders said that footfall was 20-30 percent less compared to previous years. Many gold shops have launched discount offers on jewellery making charges to entice consumers. The offers will run till Laxmi Puja which occurs on November 11. Dhanteras, which was celebrated on Monday, marks the beginning of Tihar when buying gold is a popular custom………………………………………..Full Article: Source

Gold stabilises but more pain ahead

Posted on 11 November 2015 by VRS  |  Email |Print

Gold has stabilised after the weekend’s plunge, and Australian gold equities have stabilised with it, but there’s more pain to come, say analysts. Bullion was trading at $US1092 on Tuesday afternoon, up from the weekend’s low around $US1087.
Just to put that in perspective, on October 28 – less than two weeks ago – bullion was trading at $US1180. That’s a decline of nearly 8 per cent. Deutsche Bank analyst Brett McKay said it was “pretty obvious” the likelihood of a US Federal Reserve interest rate rise had prompted the fall. As US interest rates rise, and offer a better return to investors, alternative investments like gold lose their appeal………………………………………..Full Article: Source

Commodity demand: Past, present, future

Posted on 09 November 2015 by VRS  |  Email |Print

Over the past 15 years, China’s impact on global raw material demand has been nothing short of phenomenal. The spectacular growth in commodity demand between 2005 and 2010 led to the term “commodity supercycle”. But this was no ordinary commodity cycle, as the nation with a population of more than 1 billion people rapidly urbanised.
Today, despite the slowdown in commodity demand since 2011, there are still many analysts who have the firm conviction that the world remains in a commodity supercycle and that the globe is currently experiencing a pause before the acceleration in the demand for commodities resumes………………………………………..Full Article: Source

OPEC October oil output falls led by Saudi, Iraq

Posted on 09 November 2015 by VRS  |  Email |Print

Bunker buyers watching the key oil market drivers Friday received mixed signals as October all but drew to a close, with analysts undecided on whether Saudi Arabia, and the Organization of the Petroleum Exporting Countries (OPEC) as a whole, had increased or decreased their oil output. Even so, prices of Oman crude on the Dubai Mercantile Exchange closed the month marginally higher.
That’s an increase of 1.3 percent from a year earlier and 0.3 percent more than the previous month. “Stockpiles of distillate and gasoline are expected to have fallen last week, suggesting demand was sufficient to soak up the extra supplies assuming refinery activity picked up”, said the agency, predicting a decline of 1.88 million barrels in distillate stocks and a drawdown of 660,000 barrels in gasoline stocks in the same week………………………………………..Full Article: Source

Tokyo Commodity Exchange Trading Volumes down in October

Posted on 09 November 2015 by VRS  |  Email |Print

The Tokyo Commodity Exchange (TOCOM) reported a 12.8 percent monthly decline in average daily trading volumes, from 109,962 to 95,896 contracts. The total amount of trades carried out on the exchange over the month of October stood at 2.013 million, versus 2.089 million contracts for September.
In a statement, the exchange attributed the decline to the market uncertainty shrouding the economies of China and the European Union, which, it said, kept volatility subdued………………………………………..Full Article: Source

Medium-term outlook brightens for China’s commodities demand

Posted on 05 November 2015 by VRS  |  Email |Print

Lost amid the headlines about China’s decision to end its one-child policy was news that points to a brighter medium-term outlook for commodity demand in the world’s biggest consumer of natural resources. While the details of the ruling Communist Party’s fifth plenary have yet to be published, the world of commodities should note the commitment to double gross domestic product and per capita income by 2020 from 2010 levels.
This should go some way towards alleviating fears that China’s economy is in structural decline, as achieving those goals will require urbanisation to boost earnings to a level where China could be considered a middle income country. While it is no secret that Chinese leaders want to see an economy led by more sustainable consumer spending, to get there the country needs consumers with higher disposable incomes, and this means city-based jobs, whether these be in services such as finance or in manufacturing………………………………………..Full Article: Source

UBS: iron ore hanging tough, other commodities headed south

Posted on 05 November 2015 by VRS  |  Email |Print

There’s more grim news ahead for Australia’s commodities, with all minerals bar iron ore expected to head south. UBS has updated its commodity forecasts offering a mixed outlook, with iron ore expected to do a little better, coal to do worse, and base metals, including copper, expected to plunge.
For iron ore prices at the end of this year, UBS has upgraded forecasts slightly from $US56 to $US57. For the end of 2016 UBS has updated their iron ore price forecast to $US52 per tonne from $US50. The commodity dropped below $US50 last week for the first time since July as the fourth quarter tends to be a weak quarter for Chinese steel production. Steel production in China peaked last year at about 830 million tonnes, according to UBS……………………………………….Full Article: Source

Aluminium traders closing out bearish bets

Posted on 03 November 2015 by VRS  |  Email |Print

Orders to remove aluminium from warehouses tracked by the biggest metals exchange rose for a third day, the longest stretch in more than a year, prompting traders to close out bearish bets on prices that are near a six-year low.
Cancelled warrants, as the bookings are known, surged 21 per cent in the past three days to 1.1 million metric tons, the highest in five weeks, London Metal Exchange data show. While the market is in surplus, the bookings are probably a sign that supplies are tightening and have spurred traders to cover positions on further price declines, according to ICBC Standard Bank………………………………………..Full Article: Source

Focus on Africa for next commodities ‘supercycle’

Posted on 02 November 2015 by VRS  |  Email |Print

There was a frenetic air to trading in London’s listed miners this week — things were faster, wilder and even more uncontrolled to the downside than battered sector players have come to expect. No one mentions the concept of a commodities “supercycle” these days, not after four years of a downturn with no end in sight.
The themes of oversupply and faltering Chinese demand are well-worn, but the focus recently has moved to corporate debt levels and dividends. Or rather debt and the non-deliverable nature of those dividends. There is also the slightly unintuitive issue of rapidly falling production costs in the mining industry, noted by Investec’s sector specialist Marc Elliott this week as he and his research team again chopped their commodity price forecasts across the board………………………………………..Full Article: Source

Emerging markets and commodities: These are 2015’s seven worst-performing funds

Posted on 30 October 2015 by VRS  |  Email |Print

To say investors have been having a rocky 2015 is putting it mildly, with concerns over China’s worsening slowdown, a continuing commodities rout, and emerging markets getting pummeled. And all that before Black Monday came along and pulled the rug from under our feet as Chinese stocks fell to the floor on 24 August.
But some funds have been performing worse than others. FE Research has put together the seven active funds giving investors the worst headaches. It’s not hard to see the common ground here: Emerging markets and commodities funds are struggling the most, as Patrick Enright, analyst at FE Research said:……………………………………….Full Article: Source

Why Is Aluminum Trading at Its Lowest Levels Since 2009?

Posted on 28 October 2015 by VRS  |  Email |Print

Base metals and major base metal mining companies fell in the week ending on October 23, 2015. Within the base metals complex, Aluminum was the worst performer, falling ~5% last week. Anglo American (AAUKY), one of the major producers of base metals, led the descent by falling 11% last week. Also, LME (London Metal Exchange) 3M Copper fell by 2% last week and closed at 5176$ per MT, or metric ton.
Copper has been consolidating for the past two weeks. The surprise rate cut from China initially had a positive effect on metals prices, but as the dollar found major strength, these metals, including copper, fell to the lows established on October 21. The Chinese government’s meeting to draft its 5-year development plan, as well as the FOMC meeting, will help define the direction of copper prices in the short term………………………………………..Full Article: Source

The Commodities Boom Is Dead. Long Live the Commodities Boom.

Posted on 26 October 2015 by VRS  |  Email |Print

What’s going on with BHP Billiton? The world’s biggest miner bid for a share in a Chilean copper mine this year and is exploring for offshore petroleum in Australia and the Gulf of Mexico. Isn’t the commodities super-cycle meant to be over?
One way of thinking about it is to take a trip to your local supermarket. Its owners probably purchased a lot of steel, concrete and bricks while it was being built. Now the doors are open, they’re buying stuff that shoppers use every day: Food to fill their bellies, gasoline to fuel their cars, aluminum foil to wrap their lunch, electronic goods wired with copper, and stainless steel cutlery alloyed with nickel………………………………………..Full Article: Source

Oil traders threaten London market exit over EU ‘position limits’

Posted on 26 October 2015 by VRS  |  Email |Print

Some of the world’s largest oil traders are threatening to pull their business from London’s derivative exchanges because of tough new European rules that would place limits on their ability to manage price swings. Oil majors including BP and Royal Dutch Shell, and large independent traders such as Trafigura, may be unable to hedge their financial exposures to the contents of more than a handful of oil tankers under current proposals from the European Commission.
The rules, which are making their way through Brussels, seek to clamp down on speculation by imposing “position limits” that cap the number of futures contracts each company can hold………………………………………..Full Article: Source

India: Investors could soon get to trade in commodity, weather-based indices

Posted on 26 October 2015 by VRS  |  Email |Print

Traders, rich investors and hedgers could get to trade in commodity and weather-based indices, akin to Nifty and Bank Nifty in the equity segment, in a matter of months. In a move to deepen the decade-old commodity futures market, its new regulator Sebi is studying how this could change the trading landscape.
“We are studying the commodity market. Our initial sense is that it is a shallow market. We would like it to be deepened like the equity market, where introduction of demat accounts and online trading were the game changers. We are identifying what these (game changers) could be for the commodity markets,” a senior Sebi official said……………………………………….Full Article: Source

‘Urgency’ for oil exporters to adjust spending: IMF

Posted on 23 October 2015 by VRS  |  Email |Print

Political turmoil in the Middle East and a sharp decline in oil prices highlights the “urgency” oil exporting countries should have in adjusting their government spending plans, according to the latest regional outlook from the International Monetary Fund (IMF).
The IMF forecast growth in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region would be 2.5 percent in 2015, down from growth of 2.7 percent last year and down 0.5 percentage points from the fund’s last predictions in May………………………………………..Full Article: Source

Goldman Said to Hire Commodity Traders From Glencore, Moore

Posted on 23 October 2015 by VRS  |  Email |Print

Goldman Sachs Group Inc. hired traders from Glencore Plc and hedge fund Moore Capital Management LLC as the bank seeks to rebuild its bulk commodities team following a string of departures, according to people familiar with the situation.
The investment bank has recruited Espen Aaboe from Moore Capital and Brian Koizim from Glencore to trade coal and iron ore, according to the people, who asked to not be identified because the information hasn’t been made public. Both will start in London at a later date………………………………………..Full Article: Source

US and European stocks ease as commodities slip

Posted on 21 October 2015 by VRS  |  Email |Print

Stocks were slightly softer as the euro and Bund yields rose after improving bank lending in the eurozone reduced expectations for more stimulus from the European Central Bank. The FTSE Eurofirst 300, a pan-European equity gauge, fell 0.5 per cent, also dragged lower by resources groups as the prices of base metals and oil relapse. The FTSE Asia Pacific index shed just 0.1 per cent.
Both regions have received little impetus from the US, where the S&P 500 was flat overnight and briefly flirted with two-month highs before slipping 2.89 points to 2,030.77 by the close. That leaves the Wall Street benchmark, which tends to determine the global mood, only about 5 per cent below its record hit in May, having bounced 8.7 per cent from its August lows………………………………………..Full Article: Source

Diamond industry dragged into commodities slump

Posted on 21 October 2015 by VRS  |  Email |Print

The China-fueled commodity slump that has torn through the world’s biggest raw-materials markets from iron ore to copper is now hitting the diamond industry. That’s bad news for Anglo American. Cooling demand for diamond jewellery in China, the biggest market after the US, is the latest sign that the country’s slowdown isn’t only a problem for industrial commodities.
At the same time, customers of Anglo American’s De Beers unit, who trade, cut and polish the stones, say the producer is demanding more for the gems than many in the industry say they can afford to pay. “It is a catastrophe,” said Guy Harari, co-founder of rough-diamond trading platform Bluedax. “De Beers is saying it’s business as usual; it’s not business as usual. The market is much weaker than what De Beers tries to show the world.”……………………………………….Full Article: Source

Moody’s downgrade 2016 oil prices estimates

Posted on 20 October 2015 by VRS  |  Email |Print

Ratings agency Moody’s has cut its price outlook for the both Brent crude and WTI, believing the rise in prices will take place at a much slower pace than originally forecast as oversupply and demand issues show no signs of waning. The agency downgrade it price assumption in 2016 for Brent crude to $53 per barrel, down from $57. WTI was cut to $48 from $52 per barrel.
Moody’s expects both prices to rise by $7 per barrel in 2017, which is down $5 per barrel from its prior forecast. “We believe that oil prices will remain lower for a longer period, as large built-up inventories and oversupply cause oil prices to increase at a slower rate,” said managing director of corporate finance at the group, Steve Wood………………………………………..Full Article: Source

LBMA Looks to Modernise Gold Trading

Posted on 20 October 2015 by VRS  |  Email |Print

Change is brewing in London as the the LBMA – the association that oversees the world’s largest gold market – is looking at how best to modernise and improve over-the-counter gold trading. As members of the world’s gold industry meet this week at the LBMA’s annual conference in Vienna, their proposals are being sought on how to bring the gold trading in London up to date.
According to Eddie Van Der Valt reporting today for Bloomberg, London’s bullion market is more than three centuries old and has cleared about $21 billion of gold on average each day through the city this year. Key considerations for reform include “boosting transparency and… considering a new electronic platform that may lower trading costs and improve efficiency”………………………………………..Full Article: Source

Commodities slump casts a pall over UK dividend growth

Posted on 19 October 2015 by VRS  |  Email |Print

Dividend growth from London-listed companies is set to slow sharply in 2016 as the commodities sell-off hits payouts. Total dividends paid by companies listed on the main market are set to grow by 3 per cent in 2016, down from a 6.8 per cent projected increase in 2015, says a report by Capita Asset Services.
The gloomier prospects follow a peak in the second quarter, when total dividends reached their highest levels since before the 2008 financial crisis. But that picture has since been marred by dividend cuts at Glencore, the heavily indebted FTSE 100 metals and mining group, and Standard Chartered, the emerging markets focused bank………………………………………..Full Article: Source

China could be what determines whether the bottom is in for commodities

Posted on 19 October 2015 by VRS  |  Email |Print

The painful sell-off in some commodities may be over for now, but a blast of major Chinese economic reports early next week could put any recent rallies to the test. While many Wall Street strategists see signs of a broader bottoming process, there is no consensus that the commodities crash is actually over, particularly for copper.
Nonetheless, a bundle of Chinese data Monday, including GDP, retail sales and industrial output, could set the course for these markets next week. Analysts believe China’s economy must show improvement, or at least stop declining, before some base metals and other commodities see a real rebound. The concern is that any unexpected weakness in the data could mean a hard landing is ahead………………………………………..Full Article: Source

China, LatAm need to expand cooperation far beyond trading commodities

Posted on 15 October 2015 by VRS  |  Email |Print

Cooperation between China and Latin America, which traditionally relied on trading commodities, has to explore new areas amid the fall in the price of commodities. In its latest World Economic Outlook report, the International Monetary Fund (IMF) identified the end of the commodities supercycle as one of the major economic threats currently facing the world.
Many emerging economies, which rely heavily on exports of raw materials, are clearly suffering. For example, raw and intermediate products make up 62 percent of Brazil’s total exports; countries such as Chile and Peru have similar trade breakdowns. It is no wonder that the fall in the price of oil, iron, copper and other minerals has left them uncertain about how to rebalance their foreign trade………………………………………..Full Article: Source

Wait for commodities opportunities

Posted on 14 October 2015 by VRS  |  Email |Print

China’s continued deceleration has significantly impacted countries such as Canada, Australia and Brazil, which all have resource-dependent economies. That slowdown has also weighed on global demand for many commodities, including iron ore, coal, coke and copper, says Scott Vali, vice-president, Equity, for CIBC Asset Management. He manages the Renaissance Global Resources Fund.
In particular, China’s transition from an industrialized to consumer economy has hurt steel demand, he adds. “We’re seeing auto sales [and] steel sales peaking. That has a direct correlation on the demand for coke and coal, and [for] iron ore.”……………………………………….Full Article: Source

China imports plummet on weak commodities prices

Posted on 14 October 2015 by VRS  |  Email |Print

Chinese imports plunged by more than a fifth last month, official figures showed Tuesday, as slowing growth in the world’s second-largest economy wreaks havoc on global commodities prices and the country’s own customers.
The Asian giant is the world’s leading trader in goods but flagging expansion has seen the resources it uses — such as iron ore and crude oil — fall sharply in value, hitting producer countries, for example Australia. September imports sank 20.4 percent to $145.2 billion in dollar terms, the customs department said — worse than forecast in a survey of economists by Bloomberg News………………………………………..Full Article: Source

How Much Gold Is China Importing

Posted on 14 October 2015 by VRS  |  Email |Print

We have some catching up to do in terms of discussing Chinese gold import in H1 2015 and how this relates to withdrawals from Shanghai Gold Exchange (SGE) vaults. For this post, it’s advised you’ve read The Mechanics Of The Chinese Domestic Gold Market to have a basic understanding of the physical gold supply and demand flows through the SGE within the Chinese domestic gold market.
SGE withdrawals in 2015 are stronger than ever. Although, SGE withdrawals are (seemingly) less correlated to Chinese gold imports this year, nonetheless Chinese gold imports in the first six months of 2015 were higher relative to the same periods in the years before………………………………………..Full Article: Source

Goldman Sachs: What to expect from commodities as China slows

Posted on 13 October 2015 by VRS  |  Email |Print

After a bounce in both oil and metal prices last week, some analysts predicted that the worst was over for the commodity rout sparked by fears of an economic slowdown in China. Nonetheless, Goldman Sachs is maintaining its bearish take on the sector generally, as it argues fundamentals have not changed following the recent rally, but analysts at the bank are also suggesting that China’s rebalancing also throws up some opportunities.
The biggest shift the group sees is a rising demand for “opex” commodities, or energy and consumption-based metals such as aluminium in China, while expecting a decline in demand for “capex” commodities such as steel, cement and iron ore………………………………………..Full Article: Source

The Falling Commodities Markets Are Not About To Cause A Second Crash

Posted on 13 October 2015 by VRS  |  Email |Print

Seriously, there is no chance of a systematic crash from the troubles that certain commodities companies are going through. Whatever does happen to Glencore (and it has to be said that what does happen might not be good for that firm) we’re simply not at a Bear Sterns or Lehman Brothers moment.
The firms that are having those interesting times simply aren’t large enough with respect to the global economy to have that effect. Nor are they harbingers of a more general financial markets crash. They’re, if anything at all, simply commodity traders who got a little over leveraged in the boom and now the commodities bust is upon them………………………………………..Full Article: Source

Copper gains following production cuts

Posted on 13 October 2015 by VRS  |  Email |Print

Copper prices are higher as production cuts by Glencore continued to boost base metals, but analysts warned the output shift may not be enough to offset weak demand growth in China.
Benchmark copper on the London Metal Exchange closed 0.5 per cent up at $US5,315 a tonne, after nearing Friday’s three-week high of $US5,356 in early trade. The metal rose more than three per cent in the previous session, swept higher in a broad metals rally triggered by news that Glencore will cut zinc output by 500,000 tonnes, or 4 per cent of global supply………………………………………..Full Article: Source

PIMCO calls an end to worst of commodity crunch

Posted on 12 October 2015 by VRS  |  Email |Print

The worst of the collapse in commodities prices is probably over, with oil poised to gain over the next 12 months, according to Pacific Investment Management Co. Just don’t expect a major rebound. Producers are shelving projects and scaling back output from Arctic oilfields to Indian aluminum mills amid the weakest returns from raw materials since 1999. While the response may help draw a line under the rout, prices are set to remain “lower for longer” because of excess inventories, according to the firm that manages $US15 billion in commodity assets.
“The declines in commodity prices are largely behind us,” executive vice presidents Greg Sharenow and Nic Johnson said in an e-mail. Newport Beach, California-based Pimco has about $US1.52 trillion under management. “Most prices are well into the marginal cost curve across metals and oil, and that will help to put a floor under prices here.”……………………………………….Full Article: Source

Commodity slump intensifies risks to emerging markets: Kemp

Posted on 09 October 2015 by VRS  |  Email |Print

Oil, gas and mining accounted for nearly nine percent of all new greenfield foreign direct investment (FDI) projects announced over the last decade. Oil, gas and mining FDI has played a large role fuelling growth over the last decade, especially in developing countries.
The current and prospective slowdown in investment is likely contributing to sluggish performance in 2015 and 2016. Between 2005 and 2014, the petroleum and mining industries announced new FDI projects totalling almost $745 billion, according to the United Nations Conference on Trade and Development (UNCTAD)………………………………………..Full Article: Source

Rethinking Commodities

Posted on 08 October 2015 by VRS  |  Email |Print

The holy grail of portfolio diversification: an asset class that provides long-term risk-adjusted returns similar to equities but is negatively correlated with the returns of stocks and bonds. That is what professors Gary Gorton and Geert Rouwenhorst (hereafter G&R) appeared to have identified in their seminal study, “Facts and Fantasies about Commodity Futures”.
The paper looked at the period from July 1959 through December 2004 and concluded that the risk premium earned from investing in a broadly diversified basket of fully collateralized commodity futures is very similar to the historical equity risk premium. Moreover, the authors found that the volatility of commodity futures (as measured by standard deviation) was less than that of stocks………………………………………..Full Article: Source

Gold still not drawing a crowd

Posted on 07 October 2015 by VRS  |  Email |Print

The shiny yellow stuff has all the usual things going for it: a US Federal Reserve that’s reluctant to hike interest rates and a run of drab economic data would often be enough to jack up the price. But many buyers are still staying away. UBS says in a new note that the reluctance to break higher suggests that, well, many investors just don’t care.
It highlights the overall subdued interest in the precious metals space. In a sense, it also confirms our recent observations that investors’ thresholds for warming up to gold is relatively high at the moment – stronger evidence seems to be needed in order to shift gold sentiment materially………………………………………..Full Article: Source

Commodity Traders Win Billions in Loans Amid Glencore Storm

Posted on 07 October 2015 by VRS  |  Email |Print

For all the fears that Glencore Plc could buckle under its weighty debt load, a wave of new bank loans this month shows the concerns aren’t spreading across the commodity-trading sector.
Banks are granting new credit lines to Glencore’s biggest trading rivals, including a record $8 billion of loan facilities on Tuesday to Vitol SA, the Swiss unit of the world’s biggest independent oil trader. Trafigura Pte Ltd. won improved terms on a $2.2 billion loan refinancing deal on Oct. 1 via a group of 28 banks. Swiss commodity traders Gunvor Group Ltd. and Mercuria Energy Group Ltd. are also marketing credit facilities totaling $2 billion………………………………………..Full Article: Source

Commodities crisis spurs calls for African reform

Posted on 06 October 2015 by VRS  |  Email |Print

African nations need to respond to the commodity price crash by overhauling the continent’s regulatory burden and bolstering its energy infrastructure, prominent executives and officials have told a Financial Times summit.
Participants at the London conference were virtually unanimous that reforms delayed when oil and metal prices were rising can be put off no further now that demand from China has slowed and the commodities supercycle is on a downturn………………………………………..Full Article: Source

Bottom Hunting In Commodities

Posted on 01 October 2015 by VRS  |  Email |Print

Not all commodities are created equal, oil is by far the most important. It’s a major input cost, often the largest, in the production of every commodity. When oil prices are cut in half over 12 months the cost to produce everything from corn to platinum declines, boosting supply and weighing on prices. Commodities have been in a bear market since 2011.
The oil collapse wasn’t the cause of this bear market, it was the nail in the coffin. Commodities have been in a rut because of the immense overcapacity built up following China’s infrastructure spending in 2009-2010. In retrospect, oil held up extremely well relative to other bulk commodities until it finally succumbed to USD strength in late 2014………………………………………..Full Article: Source

World stocks hit two-year lows as commodities stay pressured

Posted on 30 September 2015 by VRS  |  Email |Print

Global stocks slid to their lowest in more than two years on Tuesday as raw materials prices and emerging markets stayed under pressure. Commodity prices edged up but held near multi-year lows on concern over an economic slowdown in major consumer China.
Mining and trading giant Glencore, whose shares fell by almost a third on Monday on investor concern over its debt levels, eked out gains of 4 percent in London but only after its Hong Kong-listed shares fell 29 percent. Asian commodity merchant Noble lost 11 percent, having at one point in the session fallen by 15 percent to levels last seen in October 2008………………………………………..Full Article: Source

Oil prices set to move ’sideways’, but still vulnerable

Posted on 29 September 2015 by VRS  |  Email |Print

Oil traders have started the week in a pessimistic mood on the back of a report pointing again to a slowdown in manufacturing output in China. International benchmark Brent crude is down by around 0.8 per cent to little more than $48 a barrel after an Asian trading session dominated by a nine per cent fall in Chinese industrial profits.
The news, which has hit wider markets, adds to evidence of a fall in consumption in the world’s second largest economy. Oil is vulnerable to any signs of waning demand from such a key market, as the supply glut that has weighed on prices in the past year continues……………………………………….Full Article: Source

Commodity Traders Face Higher Costs Under New European Rules

Posted on 29 September 2015 by VRS  |  Email |Print

Commodity traders and consumers are set for higher costs as the industry will for the first time be subject to similar regulations as stock and bond markets under European Union proposals to prevent market abuse.
Companies where speculative activity makes up more than 10 percent of their total commodity derivatives trading will need to get a financial license, comply with new disclosure rules and set aside additional capital to back trades, the European Securities and Markets Authority proposed Monday. ESMA also relaxed some previously proposed limits on the total open positions a trading firm can hold in a market………………………………………..Full Article: Source

Oil Traders May Look to the Sea for Profit Amid Price Collapse

Posted on 28 September 2015 by VRS  |  Email |Print

The global oil glut may soon expand to the ocean. While traders are already cashing in on the surplus by housing oil in onshore tanks across the globe — including on the tiny Caribbean island of St. Lucia– expanding the storage to tankers at sea may near a point where it becomes profitable, according to Citigroup Inc., Goldman Sachs Group Inc. and IHS Maritime & Trade.
A structure called contango, when the price of a commodity to be delivered in the future is higher than if it was sold today, has been moving in the right direction. Vessels laden with oil, parked offshore from Singapore to the Gulf of Mexico, became a feature after the global financial crisis as the widening contango allowed traders with access to storage to lock in a profit………………………………………..Full Article: Source

Commodities Traders Brace for New European Rules

Posted on 25 September 2015 by VRS  |  Email |Print

Europe’s commodities traders are warning that new regulations set to be released within days could roil markets and push up costs for a range of essentials from crude oil to chocolate.
A final draft of expanded rules governing the European Union’s oversight of financial markets is expected to extend its authority over firms that focus on trading in oil, farm products, industrial metals like copper and a host of other commodities. It would add a new layer of scrutiny for an industry that has historically operated with limited oversight………………………………………..Full Article: Source

Gold price jumps as Fed rally returns

Posted on 25 September 2015 by VRS  |  Email |Print

On Thursday, gold capitalized on its safe haven status amid another down day on equity markets and after weak US economic news supported a decision by the US Federal Reserve last week not to raise interest rates.
In late afternoon dealings on the Comex market in New York, gold futures with December delivery dates jumped more than $25 or 2% to $1,156.70 in heavy trade with double the daily average number of contracts changing hands. The last time gold was above the $1,150 resistance level was August 24. Gold is up 5% from where it was trading before the Fed’s hold on rates which have been unchanged since June 2009………………………………………..Full Article: Source

Commodity traders given breathing room

Posted on 23 September 2015 by VRS  |  Email |Print

Hedge funds and Wall Street banks face an easier time keeping large oil, grain and metal trades after persuading the US derivatives regulator to amend a controversial clampdown on commodity speculation.
The Commodity Futures Trading Commission proposed on Tuesday to change one aspect of long-debated rules on commodity position limits, or caps on speculative holdings that were mandated by the Dodd-Frank financial reform. The regulation has been contentious, even after the collapse in commodity prices………………………………………..Full Article: Source

Despite Mideast worries over cheap global oil prices, more regional crude may enter the market

Posted on 21 September 2015 by VRS  |  Email |Print

Across a Mideast fueled by oil production, low global prices have some countries running on empty and scrambling to cover shortfalls, even as more regional crude is on tap to enter the market. While some Gulf nations rest on ample reserve funds, embattled Iraq is desperate to scrounge up more money for its fight against the extremist Islamic State group as protesters demand repairs to its failing power grid.
Contrast that to neighboring Iran, whose nuclear deal with world powers positions it to re-enter the global oil market and make long-needed repairs to its fields to increase its daily production. The possibility of more supply entering the market has analysts already lowering their forecast price for oil into the next year………………………………………..Full Article: Source

China takes aim at automated trading in commodities futures

Posted on 17 September 2015 by VRS  |  Email |Print

China is extending its control of onshore markets to commodities exchanges, spooked by signs that speculators have shifted from China’s volatile stock markets to commodities futures.
The country’s top commodities exchanges - the Dalian Commodity Exchange (DCE), Shanghai Futures Exchange (SHFE) and Zhengzhou Commodity Exchange (ZCE) - were asked recently by China’s exchange regulator to draft rules designed to “regulate the behaviour of program trading” in futures markets, according to people familiar with the matter………………………………………..Full Article: Source

banner
July 2016
S M T W T F S
« Jun    
 12
3456789
10111213141516
17181920212223
24252627282930
31