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Commodities Briefing - Category | Trading more

Riding out the commodities storm

Posted on 30 March 2016 by VRS  |  Email |Print

The era of oil shocks is far from over. In the past two years, oil prices have been in a free-fall, tumbling from US$100 (RM401.5) a barrel to around US$30. Frighteningly, nobody knows for sure where the bottom is. The International Energy Agency optimistically predicts a rebound to US$80 a barrel in 2020.
Calculation by the Federal Reserve Bank at St Louis proposes oil prices could drop all the way to zero by mid-2019. This by no means suggests that oil will be offered for free. The conclusion is based on a model that combines inflation expectations with oil prices. What the study does point to is the contradiction of economic data and the roller-coaster nature of the oil market………………………………………..Full Article: Source

Why Commodities Are The Trade Of The Year

Posted on 29 March 2016 by VRS  |  Email |Print

We talked last week about the weakness in the Chinese economy, which has been compounded by the weak-yen policies in Japan (which threatens China’s king-of-exports throne). And we know, based on history, Chinese policymakers won’t sit back and let weak global demand and a currency war from Japan undo the path of their economy.
They’ve already reversed course on their currency policy of the past decade, as they’ve begun taking back some of the appreciation of the yuan of the past 10 years. And they’ve already responded with more rate cuts and bank stimulus. But with growth running at recession-like levels in China (even at 6%), expect them to do more, maybe a lot more………………………………………..Full Article: Source

China and India Rewrite the Rules of the Oil and Gas Game

Posted on 29 March 2016 by VRS  |  Email |Print

As the current oil price crisis leads to some game-changing upheavals in the global energy market, Asia’s two powerhouses, China and India, are taking advantage of the supply glut to rewrite the long-established rules of business.
India and China have seen exponential growth in oil demand over the past 25 years. Combined, they consume 16 percent of the world’s oil—second only to the U.S. at 20 percent. And analysts expect that by 2040, these two growing economies will double their combined consumption to 30 percent. These are game-changing numbers that have all major producers seeking inroads to this territory………………………………………..Full Article: Source

Commodities rebound outruns fundamentals

Posted on 24 March 2016 by VRS  |  Email |Print

Commodities have always been cyclical, but already this year we have seen two distinct mini-cycles — down in January, recovering in February and March. Of course, fundamentals do not change that quickly, but sentiment certainly can. In particular, Chinese sentiment has turned around sharply — from the lowest point in the history of Macquarie’s China steel and copper surveys in January into positive territory.
So how should we view what has happened recently? Have fundamentals improved? Yes, from an extremely low base in December and January there has undoubtedly been a demand recovery………………………………………..Full Article: Source

Chinese commodity imports are rising but they don’t signal a quick turnaround

Posted on 24 March 2016 by VRS  |  Email |Print

The improved sentiment surrounding the outlook for China’s demand for natural resources is being reflected by rising imports for some major commodities, but as usual it pays to be wary when interpreting the numbers.
Customs data released this week shows strong import growth in the first two months of the year in copper and crude oil, a more modest expansion in iron ore and a surge in imports of alumina and bauxite, the main raw materials used to make aluminium………………………………………..Full Article: Source

Rally to gather pace for industrial commodities

Posted on 24 March 2016 by VRS  |  Email |Print

Will the recovery in industrial commodity prices be sustained, asks Julian Jessop, chief global economist at Capital Economics.
The London-based research boutique, which for several months has been bullish on the sector, thinks that though “the foundations of the recovery still look a little shaky and some temporary pullbacks may be inevitable . . . the conditions for additional gains over the remainder of this year and next are gradually falling into place”………………………………………..Full Article: Source

Iraq oil exports, OPEC’s fastest growing in 2015, hold steady in March

Posted on 24 March 2016 by VRS  |  Email |Print

Iraq’s oil exports have held steady so far in March, according to loading data and industry sources, halting for now the rapid supply growth that has increased downward pressure on prices. Baghdad has given verbal support to an initiative by the Organization of the Petroleum Exporting Countries and outside producers to freeze output in an effort to boost prices.
Producers are due to meet on April 17 to discuss the plan. The lack of export growth is partly involuntary as it reflects disruptions on Iraq’s northern pipeline, offsetting near-record southern exports. Still, coupled with outages in other producers, it has supported a price rise this year………………………………………..Full Article: Source

Asian exchanges still lag in gold; Shanghai out to change that

Posted on 22 March 2016 by VRS  |  Email |Print

Asian exchanges, relative newcomers to the gold-trading market, are finding themselves far overshadowed by their powerful and well-established counterparts in London and New York. That said, the gold trade is still brisk in Tokyo, and Shanghai has cooked up plans to rival London as a price-setting giant.
The trading volume for gold is exactly zero at the Singapore Exchange. The exchange entered the gold futures market in autumn 2014 in the hope of tapping growing demand in Asia. But even at the time of the launch, trading was thin. Today, it is nonexistent………………………………………..Full Article: Source

Are all commodities heading higher?

Posted on 21 March 2016 by VRS  |  Email |Print

A massive run-up in several groups of raw materials has traders, speculators, and the producers of commodities wondering if our U.S. economy has finally turned the corner. Instead of focusing on fears of deflation, the focus has shifted to the opposite investment debacle – how to adjust and invest as prices rise.
The value of gold, the world’s benchmark for inflation, is up a whopping $200 per ounce since mid-December with the rise in silver and copper not far behind. Crude oil, the foundation of most of the Western world’s economies, bottomed around $26 per barrel in January and exploded over 50 percent in value as of Friday at $40………………………………………..Full Article: Source

Kenya moves away from commodities

Posted on 21 March 2016 by VRS  |  Email |Print

Africa is the most commodity-dependent continent on earth, but in the East African Community, Kenya is the least dependent. Africa’s economies increasingly need to create a hospitable environment for companies in the manufacturing and services sectors, Michael Armstrong, the Regional Director, Institute of Chartered Accountants in England and Wales (ICAEW) for Middle East, Africa and South Asia said last week.
He said this will drive growth, as the old models of growth driven by exports of raw materials are out-dated. Within the East Africa Region, Kenya’s economy should expand by around 6% during the 2017 to 2020 period thanks to its relatively diversified economy and comparatively low commodity dependence bonding well with the country’s economic growth outlook………………………………………..Full Article: Source

Commodities rally, dollar dives

Posted on 18 March 2016 by VRS  |  Email |Print

Wall St moved higher on Thursday, pushing the Dow Jones industrial average into positive territory for the year, as commodity prices rose on the back of a weaker U.S. dollar to boost shares in the energy and materials sectors.
The Dow’s move into positive territory came a day after the U.S. Federal Reserve took a dovish stance that weighed on the dollar. “It was a weak dollar rally,” said John Augustine, chief investment officer at Huntington National Bank. “It took up groups associated with a weaker dollar.”……………………………………….Full Article: Source

Currency Traders Baffle Norway’s Top Central Banker and Others

Posted on 18 March 2016 by VRS  |  Email |Print

The only central bank in Europe to cut rates on Thursday was met by a sudden currency appreciation that left economists and policy makers scratching their heads.
Here’s what happened: Norges Bank delivered a quarter-point rate cut to 0.5 percent, in line with almost all analyst estimates. It signaled readiness to deliver further easing, adding that negative rates were not to be ruled out. It even cut its economic outlook. Currency traders responded by sending the krone up more than 1 percent against the euro, only to think better of the move a few hours later, when they sent the krone lower……………………………………….Full Article: Source

Australia: Commodities boom to bust: are we there yet?

Posted on 17 March 2016 by VRS  |  Email |Print

The end could be in sight for the crash in commodities, but there is still the potential for downside to mining capital expenditure (capex) and more jobs losses to come. Up to 40,000 jobs might still go in the shakeout that has been a drag on incomes, spending and employment for several years, said Commonwealth Bank (CBA) chief economist Michael Blythe in a note.
The boom-bust commodity story is central to understanding the Australian economy over the past decade, the “boom” ending with commodity prices at record highs in 2011 and mining capex at 150-year highs in 2012………………………………………..Full Article: Source

Getting past the all-or-nothing mentality in gold trading

Posted on 17 March 2016 by VRS  |  Email |Print

Panicking over volatile equity markets, investors have poured roughly $7.5 billion into precious metals exchange-traded funds (ETFs) year-to-date, mostly chasing the gold trade. The SPDR Gold Shares (GLD) ETF is up more than 16 percent and has taken in 77 percent of the money, or $5.6 billion. The iShares Gold Trust (IAU) ETF has seen inflows of $1.5 billion, according to XTF.com.
After such a long downturn in gold, the rebound has been remarkable, said Matt Hougan, chief executive officer of Inside ETFs. “For the sector to turn around in such a short period of time and lead all ETFs, it’s pretty incredible,” he said………………………………………..Full Article: Source

Global oil demand growth for 2016 remains unchanged at around 1.25 mb/d to average 94.23 mb/d-OPEC

Posted on 16 March 2016 by VRS  |  Email |Print

The OPEC Reference Basket recovered in February for the first time in three months, gaining 8.4% or $2.22 to reach $28.72/b. Crude oil futures were mixed, with ICE Brent ending up $1.60 to reach $33.53/b, while Nymex WTI fell by $1.16 to stand at $30.62/b. The Brent-WTI spread halted its narrowing trend, widening by $2.76 to $2.91/b.
World oil demand growth for 2015 stands at 1.54 mb/d to average 92.98 mb/d, in line with the previous report. Global oil demand growth for 2016 also remains unchanged at around 1.25 mb/d to average 94.23 mb/d according to the OPEC Monthly Oil Market Report………………………………………..Full Article: Source

Commodities retreat weighs on miners

Posted on 16 March 2016 by VRS  |  Email |Print

Iron ore and industrial metals fell on Tuesday, weighing heavily on debt-laden mining stocks, as analysts said the recent recovery in prices could not be sustained without a pick-up in Chinese demand.
Commodities have rallied sharply since the middle of January when concerns about growth in China, the world’s biggest consumer of raw materials, reached near panic levels. Iron ore, the key ingredient in steelmaking, has risen 31 per cent, while copper has gained 15 per cent and zinc 20 per cent………………………………………..Full Article: Source

Have Commodities Backed The Fed Into A Corner?

Posted on 15 March 2016 by VRS  |  Email |Print

We have recently witnessed some subtle changes in the prices of assets that most investors pay little attention to. Many people are not even aware of their significance in world markets. However, when trying to understand the path of the stock market and the relative strength of the global economy, raw material prices often provide amazing clues to those who watch and understand their role and importance.
When I first took a job in the commodities business, the attraction was the global nature of raw material trading. While friends and schoolmates went to law school or medical school, pursued professional endeavors or took jobs in other sectors of the financial markets, it was the commodities market that was a magnetic force for me………………………………………..Full Article: Source

Is Palladium starting to play catch-up?

Posted on 15 March 2016 by VRS  |  Email |Print

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

Commodities Speculation Doesn’t Increase Food Prices

Posted on 11 March 2016 by VRS  |  Email |Print

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

Iran plays hardball with European oil buyers, slowing exports

Posted on 11 March 2016 by VRS  |  Email |Print

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

Sell gold if it hits this level

Posted on 11 March 2016 by VRS  |  Email |Print

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

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

Posted on 10 March 2016 by VRS  |  Email |Print

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

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

Posted on 09 March 2016 by VRS  |  Email |Print

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

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

Posted on 08 March 2016 by VRS  |  Email |Print

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

Iranian Oil Lands in Europe for First Time Since Sanctions Ended

Posted on 07 March 2016 by VRS  |  Email |Print

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

Canadian Premiers Agree on `Urgency’ of Commodity Transportation

Posted on 04 March 2016 by VRS  |  Email |Print

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

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

Posted on 04 March 2016 by VRS  |  Email |Print

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

Buoyant zinc rallies 25% after falling in January

Posted on 04 March 2016 by VRS  |  Email |Print

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

China’s Commodities Trade Thrives as Uncertainty Spurs Wagers

Posted on 03 March 2016 by VRS  |  Email |Print

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

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

Posted on 01 March 2016 by VRS  |  Email |Print

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

Here’s how to play gold: Technician

Posted on 29 February 2016 by VRS  |  Email |Print

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

Lawmakers Urge Commodities Agency to Keep Plan to Limit Futures Contracts

Posted on 26 February 2016 by VRS  |  Email |Print

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

Amid Commodities Gloom, a Few Bright Spots Emerge

Posted on 24 February 2016 by VRS  |  Email |Print

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

Why the Recent Rally in Commodities Will Come to an End

Posted on 24 February 2016 by VRS  |  Email |Print

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

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

Posted on 23 February 2016 by VRS  |  Email |Print

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

Commodity Slump Puts Dry-Bulk Shipping on Hold

Posted on 22 February 2016 by VRS  |  Email |Print

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

Commodities update: Gold ready to roar, crude looks up

Posted on 19 February 2016 by VRS  |  Email |Print

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

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

Posted on 18 February 2016 by VRS  |  Email |Print

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

Russian trade hit by sanctions and commodity crisis

Posted on 15 February 2016 by VRS  |  Email |Print

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

Negotiating the Commodity Tightrope

Posted on 10 February 2016 by VRS  |  Email |Print

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

China’s ‘zombie commodities’ haunt the market

Posted on 09 February 2016 by VRS  |  Email |Print

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

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

Posted on 09 February 2016 by VRS  |  Email |Print

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

Commodities rout rolls through Australia Inc

Posted on 05 February 2016 by VRS  |  Email |Print

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

A contrarian view on soft commodities

Posted on 05 February 2016 by VRS  |  Email |Print

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

Commodity Bull Cycle Seen Rising From Ashes as Oil Bottoming

Posted on 04 February 2016 by VRS  |  Email |Print

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

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

Posted on 02 February 2016 by VRS  |  Email |Print

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

Japan Trading Houses Facing $13 Billion Hit on Commodity Misfire

Posted on 02 February 2016 by VRS  |  Email |Print

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

How Is China Driving Down Commodities?

Posted on 01 February 2016 by VRS  |  Email |Print

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

World Bank slashes outlook for 80% of commodity prices

Posted on 27 January 2016 by VRS  |  Email |Print

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

An argument for commodities

Posted on 22 January 2016 by VRS  |  Email |Print

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

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