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Commodities Briefing - Category | Trading more

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

OPEC cuts oil production forecast for US

Posted on 15 September 2015 by VRS  |  Email |Print

OPEC has cut its oil production forecasts for states like the US that are not members of the cartel. The group said Monday it had lowered its forecast for daily oil supply growth this year from non-member states by 72,000 barrels a day to 880,000 due to lower than expected output in the US For next year, it trimmed its forecast by 110,000 barrels to 160,000.
The cartel also increased its forecast for global demand growth this year by around 84,000 barrels a day to 1.46 million, and by 50,000 barrels to 1.29 million for next year. The price of oil has fallen this year amid strong supply and weaker demand from energy-hungry economies like China………………………………………..Full Article: Source

Day Traders Struggle Amid Commodities Rout

Posted on 15 September 2015 by VRS  |  Email |Print

There is no source that lists the losses and gains of day-traders, but anecdotal evidence from brokers and the traders themselves suggest losses for many day-traders were steeper. Their trade is adding to market volatility, analysts say.
These losses could combine with the increasingly complex, computer-generated way many markets now trade to push day-traders out of many markets, says analysts, and some of the traders themselves. While day trading is largely associated with equity markets, these investors also began moving into commodities after 2006 when some Chicago-based brokerages began offering commodities options to retail traders………………………………………..Full Article: Source

Commodities Producers’ Currency Prop

Posted on 14 September 2015 by VRS  |  Email |Print

Some emerging-markets exposure can be a valuable currency – for commodities producers. Currencies of commodity-producing countries have mostly fallen against the U.S. dollar this year, helping cushion earnings of miners who dig there. Platinum has fallen 20% this year in dollar terms, but only about 6% in South African rand. Copper is down 15% in dollars, just 4% in Chilean peso.
This can keep beleaguered producers in business. It also means big falls in investment spending don’t necessarily mean equally large cuts in activity. Tudor Pickering Holt notes emerging-market oil producers like Lukoil, Rosneft, CNOOC and Petrobras all expect capital spending to be down 30% this year, helped by currency moves, versus 15% for U.S. and European companies………………………………………..Full Article: Source

Oil remains on a slippery slope

Posted on 14 September 2015 by VRS  |  Email |Print

In June last year, it was difficult to guess that crude oil would fall off the precipice within months. The Islamic State (IS) was rampaging across Iraq and fears of supply disruption in the country had sent Brent oil up to $115 a barrel. But then, the pincer of global oversupply and slack demand put oil on the slippery slope. Declining steadily, Brent was down more than 50 per cent to about $45 a barrel by January this year.
A recovery to about $65 until mid-May was short-lived and the fuel again slipped to $40 last month. It currently trades at about $47 a barrel. While it’s a mug’s game trying to predict crude oil prices, it is likely to remain under pressure at least in the near term — the factors that caused the rout remain in place and seem to be getting worse………………………………………..Full Article: Source

CME challenges LME in its metals trading heartland: Andy Home

Posted on 09 September 2015 by VRS  |  Email |Print

When Hong Kong Exchanges and Clearing (HKEx) bought the venerable old London Metal Exchange (LME) back in 2012, it did so with eyes firmly fixed on China. The vision was to leverage the LME’s near monopoly on base metals pricing in the rest of the world to open up the world’s fastest-growing metals market.
That remains the vision, although HKEx’ ambitions in the commodities space have taken back seat to its Stock-Connect bridge between Hong Kong and mainland Chinese stock markets. What HKEx almost certainly wasn’t expecting back in 2012 was a challenge to the LME’s existing franchise outside of China………………………………………..Full Article: Source

Commodity Finance Slump Threatens Global Trading, Report Says

Posted on 08 September 2015 by VRS  |  Email |Print

Small and mid-sized commodity traders are being squeezed as banks retreat from global trade finance or offer the “wrong type” of loans, according to law firm Clyde & Co. Trade finance is harder to access today than it was a decade ago, according to 77 per cent of companies and executives surveyed in the report to be published Monday by the London- based legal firm.
Bank-led trade finance has slumped by half from a peak of US$14 trillion before the global financial crisis in 2008 to about US$7 trillion, Clyde & Co said. That’s forcing traders and commodity producers to rely on a “complex patchwork” of financing to meet their needs………………………………………..Full Article: Source

Spain Is Winner From Oil, Commodities Plunge, De Guindos Says

Posted on 04 September 2015 by VRS  |  Email |Print

Spain’s economy minister says his country is a winner from the plunge in oil prices and is well insulated from the Chinese slowdown that’s partly driving the decline. In a Bloomberg Television interview in Madrid, Luis de Guindos said lower energy costs for consumers and companies are helping to drive an acceleration in Spain’s expansion this year.
The economy grew 1 percent in the second quarter, more than three times the euro-area average. “We import the majority of the commodities, especially in the case of energy,” de Guindos said in the interview in Madrid on Wednesday. “So for Spain it’s a gain-gain situation.”……………………………………….Full Article: Source

Why is nickel trading like it’s 2008? Andy Home

Posted on 04 September 2015 by VRS  |  Email |Print

On the London Metal Exchange (LME) benchmark nickel for three-month delivery is currently trading around $10,000 per tonne. Which, as with all the other industrial metals traded on the LME, is the lowest it has been since the Global Financial Crisis in 2008-2009.
But whereas the likes of copper and aluminium are still comfortably above the troughs recorded during the worst of the manufacturing meltdown that followed the financial meltdown, nickel is actually there. Nickel hit a low of $9,100 during its “flash crash” of Aug. 12, within spitting distance of the low of $8,850 recorded in October 2009, the month after the fateful “Lehman Moment”………………………………………..Full Article: Source

OPEC oil output in Aug falls from record on Iraq disruption - survey

Posted on 03 September 2015 by VRS  |  Email |Print

OPEC oil output fell in August from the highest monthly level in recent history, a Reuters survey found on Wednesday, as disruptions to flows on Iraq’s northern pipeline halted supply growth from the group’s second-largest producer.
Largely stable output from Saudi Arabia and other Gulf members of the Organization of the Petroleum Exporting Countries indicated they are not wavering in their focus on defending market share instead of prices. OPEC supply fell in August to 31.71 million barrels per day (bpd) from a revised 31.88 million bpd in July, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants………………………………………..Full Article: Source

The End of the Commodity Super Cycle

Posted on 02 September 2015 by VRS  |  Email |Print

The recent decline in commodity prices resembles a downhill mountain biking expedition. The price drop has been so severe that we’ve seen a nearly one-sided market, with buyers largely absent in futures, commodity indices, and exchange-traded funds (ETFs). As a result, many commodity hedge funds have closed and are returning capital, despite their ability to trade short.
Indeed, we knew it was getting serious when the phrase “market correction” was slowly replaced by the word “carnage.” Yet, if you believe in the commodity super cycle – defined as the decades-long price movements in a wide range of commodities – then this shouldn’t have been entirely surprising………………………………………..Full Article: Source

Pain in global commodities to continue for the long term

Posted on 01 September 2015 by VRS  |  Email |Print

Stocks of leading companies producing iron ore, crude oil, steel, aluminium,and zinc have fallen 40-60% over the past 12 months to fresh lows. This fall has mirrored the 40-60% rout in underlying global commodity prices such as crude, iron ore, and steel. So, is this the time to do value buying or distressed asset buying? Not really.
Investors should avoid them as global demand-supply dynamics can potentially keep commodity prices under pressure for years to come. The top four global iron ore companies have been on a capacity expansion spree since 2012. By 2017, their production is likely to touch 1.2 billion tonnes, a massive 50% increase in supply. This supply will be at the lowest end of the cost curve ($25-40 per tonne, including freight)………………………………………..Full Article: Source

Why the commodities super cycle was a myth

Posted on 01 September 2015 by VRS  |  Email |Print

In 1980, the economist Julian Simon challenged doom-mongering biologist Paul Ehrlich to a bet that the prices of any five metals would be lower in 10 years’ time. He won, and made his point: over the long run, technological progress means commodity prices are likely to fall in real terms.
From the early 2000s, many investors forgot that lesson. The idea that there are decades-long “super-cycles” in commodity prices has some respectability: a 2012 paper by Bilge Erten of the UN and José Antonio Ocampo of Columbia University found evidence for four such cycles during the period 1865-2009. But in the bastardised form that became popular in the 2000s , the concept gained less honourable currency, as a story that commodities were a one-way bet upwards………………………………………..Full Article: Source

Commodities strike six-year lows, set to enter new cycle

Posted on 28 August 2015 by VRS  |  Email |Print

Falling demand, rising production and faltering growth in the world’s second-largest economy China have sent many major commodities plummeting to their lowest level since 2009, with some experts predicting the start of a new cycle.
Oil prices this week dived to 6.5-year lows as commodities tumbled over concerns that China’s slowing economy will curb demand for metals and other vital raw materials which have helped feed its astonishing growth over the past three decades………………………………………..Full Article: Source

Could commodities make a real comeback soon?

Posted on 28 August 2015 by VRS  |  Email |Print

With oil prices surging after the global market turmoil of “Black Monday,” could investors regain their faith in commodities? If China fired enough stimulus into its economy, a longer-term bounce back in commodities could be on the horizon.
“We certainly think that the authorities in China have the firepower in terms of monetary and fiscal policy to enact enough stimulus for the economy to at least meet the growth rate they’re targeting,” Caroline Bain, senior commodities economist at Capital Economics, said………………………………………..Full Article: Source

Difference in London Gold Price AM and spot gold rate costs ‘unhedged’ bullion dealers

Posted on 27 August 2015 by VRS  |  Email |Print

For over a century, gold rates have been set twice daily — at 10:30 am and 3 pm — in London on the basis of which the metal is valued and traded throughout the world. On Tuesday, after the customary morning rate was set eyebrows were raised among a few bullion dealers at home and reportedly by some abroad.
The so-called London Gold Price AM which traders in India get to know at 3 PM, was $4.48 higher than the spot gold rate. This, according to the bullion dealers, resulted in losses for those who without hedging themselves made a delivery commitment to clients based on the lower spot rate, but had to pick up the gold by paying almost $5 more, based on the London Bullion Market Association (LBMA) morning rate………………………………………..Full Article: Source

China Remains a Key Commodities Player, Despite Waning Appetites

Posted on 26 August 2015 by VRS  |  Email |Print

The fear that China’s appetite for commodities, from copper to coal, is falling after a decade of breakneck growth has sent prices tumbling, but the country’s sheer scale in these markets means that China will continue to shape them in the long term, even if at a slower speed.
China now buys about an eighth of the world’s oil, a quarter of its gold, almost a third of its cotton and up to half of all the major base metals. Its buying power has made the country integral to global commodities trading, influencing everything from prices to the hours traders work. While analysts predict a slowdown in the growth of Chinese commodity demand, they believe the country’s clout in the market isn’t likely to wane………………………………………..Full Article: Source

Buy low, sell high…but stay away from commodities

Posted on 26 August 2015 by VRS  |  Email |Print

The global stock rout may have claimed some victims this week, with heavy selling sending the S&P 500 into correction territory, but equity markets can still offer returns for investors. The definition of “correction territory” is when you see a downward move from a recent high of 10 percent or more.
The definition of “bear market territory” is when you have a 20 percent move down over the course of at least 2 months. Down 17 percent since its recent high in April, the broad-based European Stoxx 600 index is now officially in “correction territory”……………………………………….Full Article: Source

Commodity Traders Feel Unusual Pain of a Market Rout

Posted on 26 August 2015 by VRS  |  Email |Print

For years, the secretive club of the world’s largest commodities traders thrived on volatility and sometimes tiny price differences in the raw materials they trade—styling themselves as nimble middlemen able to profit whether markets were rising or falling.
These days, many outfits are very different animals and that’s causing unusual pain amid today’s commodities-market rout. During a decade of booming commodities prices, many of these trading firms put billions of dollars into mines, pipelines and storage terminals. Those bets were supposed to help their traders understand supply and demand, while providing their trading floors with a ready source of supply………………………………………..Full Article: Source

Copper, Aluminum Close at Lowest Levels Since 2009

Posted on 25 August 2015 by VRS  |  Email |Print

Copper and aluminum futures closed at more-than-six-year lows in London on Monday, as a sharp decline in Chinese equities triggered a broad-based commodities rout over fears that the world’s biggest consumer of base metals is heading into a steeper-than-expected economic slowdown.
The London Metal Exchange’s three-month copper contract was down 2% at $4,953 a metric ton at the PM kerb close, having tumbled to its lowest level since 2009 earlier in trading at $4,855 a ton. It fell below the key $5,000 level for the fifth-straight session. Aluminum, meanwhile, closed down 1.7% at $1,521.50 a ton, after hitting a six-year low during trading at $1,506 a ton………………………………………..Full Article: Source

Commodity trading norms cleared by Sebi

Posted on 25 August 2015 by VRS  |  Email |Print

Setting September 28 as the date for merger of Forward Markets Commission (FMC) with itself, Sebi on Monday announced new norms for commodities derivatives market under which exchanges and brokers in this segment will need to comply with rules applicable to their stock market peers.
The new regulations will also come into force on September 28, the date from which Sebi would begin regulating the commodity derivatives market as a unified regulator. These norms, approved by Sebi’s board here on Monday, will enable functioning of the commodities derivatives market and its brokers under Sebi norms and integration of commodities derivatives and securities trading in an orderly manner………………………………………..Full Article: Source

Commodities Are Cheapest Since 2002, But Maybe Not Cheap Enough

Posted on 24 August 2015 by VRS  |  Email |Print

Here’s one more way to measure just how bad the commodity meltdown has gotten: compare the asset class to stocks. The Standard & Poor’s GSCI Index of 24 raw materials is now trading near its cheapest since 2002 compared with the S&P 500 Index of U.S. shares. But if you trust history for providing guidance, that’s still not low enough.
During the last big shift from commodity bull markets to bear markets, the ratio dropped even lower. After peaking in October 1980 amid supply shortages, producers responded to higher prices by boosting output. As gluts emerged, the ratio tumbled 96 percent to a record low of 0.1 in February 1999………………………………………..Full Article: Source

Wobbly global equities, commodities market may slow growth

Posted on 24 August 2015 by VRS  |  Email |Print

Global markets, which witnessed a sell off last week, may go to the extent of slowing global growth, analysts said, even as they sniff for investment opportunities. Global markets fell between 1-4 per cent last week, with the Dow Jones Industrial Average falling 500 points. Gold, however, recovered more than 10 per cent from its recent low on safe haven buying.
“The greatest near-term worry is that the fallout seen in the financial markets has a negative and reinforcing impact on global growth. The legacy of the turmoil in emerging markets is of course most likely to be lower growth in those economies,” said Gary Dugan, chief investment officer, at National Bank of Abu Dhabi………………………………………..Full Article: Source

Commodities Slide to Lowest in 16 Years as Oil Extends Collapse

Posted on 24 August 2015 by VRS  |  Email |Print

Commodities sank to the lowest level in 16 years as China’s economic slowdown exacerbates gluts of everything from oil to metals. The Bloomberg Commodity Index, which tracks 22 raw materials, lost as much 1.1 percent to 86.8556 points, the lowest intraday level since August 1999. The gauge, which was at 86.8620 points at 10:30 a.m. in Singapore, has dropped for the past four years.
Brent crude slid below $45 a barrel Monday for the first time since 2009 after Iran vowed to raise supply at any cost to defend market share. Raw materials are in retreat as supplies outstrip demand amid forecasts for the slowest Chinese growth since 1990. The largest user of energy, grains and metals was much weaker than anyone expected in the first half of the year, according to Ivan Glasenberg, head of commodity trader Glencore Plc………………………………………..Full Article: Source

The sell-off in commodities: Goodbye to all that

Posted on 21 August 2015 by VRS  |  Email |Print

A resurgent dollar has hammered commodity prices: many have recently fallen below their levels of a decade ago. That is a fate not shared by other tradeable assets: not since the late 1990s have commodity prices been so weak compared with shares.
The American economy is strengthening, but by no means enough to encourage thieves to filch bronze bells from Chinese temples to send as scrap to the United States. The impact of its recovery is dwarfed by slowing demand in China, which still consumes about half the world’s metals such as iron, aluminium, and zinc………………………………………..Full Article: Source

Gold Trading and the China Effect

Posted on 20 August 2015 by VRS  |  Email |Print

A higher interest rate scenario in the US also means that Gold may not be so attractive, as Bonds will start carrying higher coupons. Last week’s devaluation of the Yuan created a surge in Gold price over the following two days as investors turned to the shiny metal in search of a safe haven.
Since then the past 4 trading sessions has seen price remain within a fairly tight range between with most action between $1126.00 and $1110. China is the world’s number three market for Gold demand but the devaluation of its currency may have a negative effect in the longer run as Gold quoted in US Dollars becomes more expensive. Last Friday China’s biggest Gold Bullion ETF (exchange traded fund), Huaan Yifu Gold, reported a third consecutive outflow of funds………………………………………..Full Article: Source

What China’s currency devaluation means for the world’s trade deals

Posted on 20 August 2015 by VRS  |  Email |Print

With no international (or domestic) agreements on what constitutes currency manipulation, it’s time world leaders take action. With the sudden depreciation of China’s renminbi, it’s worth looking at the link between currency values and trade agreements. China’s currency last week dropped by a cumulative 4.4% against the U.S. dollar, making Chinese exports cheaper and imports into China more expensive by that amount.
The effect on trade can be substantial. With the U.S. average tariff on industrial goods well under 2%, this change in China’s currency value easily swamps most U.S. tariffs. And given the fact that the U.S. dollar was already strong, this move is an added disadvantage to U.S. exports headed for China compared to exports from other countries………………………………………..Full Article: Source

Oil and commodities crash hits AIM companies

Posted on 17 August 2015 by VRS  |  Email |Print

More than a tenth of the companies on the Alternative Investment Market are in the “90 per cent club”, having lost that proportion of their stock market worth since their peak, with much of the damage coming in the oil and gas and mining sectors.
These are disproportionately represented on AIM, as companies with promising assets but no production have used it to raise fresh capital. The collapse in the oil price and the fall in global commodities have undermined the value of those assets………………………………………..Full Article: Source

Agricultural commodities feel the bite of weaker demand

Posted on 13 August 2015 by VRS  |  Email |Print

A traders sound the death knell of the commodities supercycle, grains prices, which rallied on increased demand from emerging markets and periods of bad weather, also look to be heading for a period of weakness. Along with oil and metals, agricultural commodities rode the great bull run in raw materials from the early 2000s. On top of new demand from developing countries, biofuel mandates also contributed to supply shortages.
However, as growth slows in China and other emerging economies, agricultural and rural economies are facing a “reset downward” says Professor David Kohl, a US agricultural economist formerly of Virginia Tech………………………………………..Full Article: Source

Rumors of commodities’ demise are not being exaggerated

Posted on 11 August 2015 by VRS  |  Email |Print

Commodities are the gift that keep on not giving. The sector is in the throes of an ‘annus horribilis’, having gotten wrecked over the past few years despite massive liquidity that should have boosted their value. Bullish investor after bullish investor has tried to call a bottom, in a set of calls that now appear ill-conceived and money losing.
In the past week, the S&P GSCI Commodity Index has dropped 3.4 in the past week, as crude oil plunged 7 percent to hit multi-month lows, and a host of metals fell alongside it. That, of course, hardly marks the first big drop for the alternative investment group. That widely watched commodity index has fallen 17 percent the last three months, and a whopping 42 percent in the past two years. ……………………………………….Full Article: Source

China’s Exports Plunge - More Bad News For Commodities?

Posted on 10 August 2015 by VRS  |  Email |Print

China’s exports plunged 8.3% in July, far worse than expected, as China gets a taste of the other side of globalization – whereby a slow down in one area of the world spreads to another, in a vicious cycle of decline.
For years, China has been the largest beneficiary of globalization, riding a virtuous cycle of global growth in China’s three largest export markets – European Union, the US, and Japan. But with the EU floundering in the swamp of stagnation, caused by austerity; with the US barely growing under massive QE and with Japan trying to shake off two lost decades of economic growth, China’s export growth engine is running in reverse in all three regions………………………………………..Full Article: Source

Maybe the Commodities Supercycle Is Actually Real

Posted on 10 August 2015 by VRS  |  Email |Print

Economic supercycle theories, based on the long-ago musings of Nikolai Kondratiev and Joseph Schumpeter, have always been a little akin to voodoo: It’s hard to believe that there is an underlying pattern to how economic indicators change over the course of decades. The current rout in commodity prices, however, fits in eerily well with the idea.
Almost all commodity markets have taken a severe beating lately. The aggregate Bloomberg Commodities Index is down 61 percent from its 2008 peak and 46 percent from the 2011 post-crisis high:……………………………………….Full Article: Source

Traders Have Disappeared From the Gold Market

Posted on 07 August 2015 by VRS  |  Email |Print

As gold continues to languish near its lowest price in five years, one element seems to be missing: traders. Volume so far in August, already a slow time of year, has dropped about 8 percent from 2014. On Thursday, trading was about 40 percent below the 100-day average.
With fewer participants, the metal’s volatility has tumbled to the lowest in nine months. Gold traders are awaiting a U.S. jobs report due on Friday. A gain for employment could push the Federal Reserve to tighten monetary policy sooner, cutting the appeal of bullion because it doesn’t pay interest………………………………………..Full Article: Source

Global Oil Supply More Fragile Than You Think

Posted on 06 August 2015 by VRS  |  Email |Print

Many oil companies had trimmed their budgets heading into 2015 to deal with lower oil prices. But the rebound in April and May to $60 per barrel from the mid-$40s suggested that the severe drop was merely temporary.
But the collapse of prices in July – owing to the Iran nuclear deal, an ongoing production surplus, and economic and financial concerns in Greece and China – have darkened the mood. Now a prevailing sense that oil prices may stay lower for longer has hit the markets………………………………………..Full Article: Source

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