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Commodities Briefing - Category | Trading more

Why Commodities Are Toast

Posted on 19 March 2015 by VRS  |  Email |Print

The 1970s were much like the previous decade. While, as Mark Twain said, the past doesn’t repeat itself, but it does rhyme, the 1970s and the 2000s had many of the same elements: war in the middle east, commodities boom, market crashes. It’s likely a generational effect.
Commodities are a stand out similarity to me. Commodities soared, resource plays sizzled. Plenty of crazy volatility lit up the various markets attached to commodities. Commodities is the fastest game in town. The volatility and the leverage combine to create a potent cocktail for a dangerous speedball of speculation. Commodity trading is a story of fortunes won and lost………………………………………..Full Article: Source

Will The Oil Markets (And Shale Producers) Capitulate Before Demand Recovers?

Posted on 19 March 2015 by VRS  |  Email |Print

Is the U.S. shale industry at a tipping point? Oil prices fell to a six-week low on Friday after the International Energy Agency warned that the U.S. may soon run out of room to store all the oil being pumped out of shale plays across the country.
As oil starts to back up, the worry is that prices could fall like a rock. But despite this grave warning, bullish oil traders are keeping their cool. They believe that the low prices will ultimately decimate the U.S. shale industry, removing a large chunk of supply from the market indefinitely, similar to what happened during the last major oil price crash 30 years ago………………………………………..Full Article: Source

Commodities Decline Near ‘Exhaustion’ as Hackett Says Buy Rice

Posted on 16 March 2015 by VRS  |  Email |Print

The commodities fall is near “exhaustion” with wheat, rice and coffee set to rebound, according to Shawn Hackett, president of Hackett Financial Advisors in Florida. The Bloomberg Commodity Index of 22 raw materials closed on Friday at the lowest level since August 2002, capping an almost 30 percent decline in the past year.
Wheat dropped 25 percent in the past 12 months and rice fell 30 percent. Arabica coffee slipped 37 percent as Brazil’s weak real currency encouraged exports, adding to supplies. “For speculators wheat and rice are the two markets that are the ones to buy given that both have the lowest supplies relative to global demand,” Hackett said in an e-mailed report on Saturday………………………………………..Full Article: Source

Singapore Fostering Commodity Trade as Clearing Units Expand

Posted on 13 March 2015 by VRS  |  Email |Print

Singapore’s financial regulator will work with commodity exchanges, investors and producers to support the development of the city-state as a trading center, including the expansion of clearing houses in Asia.
The entry of new clearing houses can boost liquidity and encourage the development of products, the Monetary Authority of Singapore said in an e-mailed response to queries. Clearing houses help improve risk management in derivatives markets during Asian hours, the MAS said………………………………………..Full Article: Source

The Case Against Commodities

Posted on 12 March 2015 by VRS  |  Email |Print

Commodity prices can go up, and they can go down. But while volatility is an expected part of investing, the volatility associated with commodities in particular makes this asset class a poor investment for most investors. That’s true whether they’re held in physical form (gold coins) or through vehicles like exchange traded funds (ETFs).
Commodities are fundamentally different from investments like stocks and bonds. Stocks and bonds are financial assets, representing ownership or debt of businesses, respectively, whereas commodities are typically raw materials, such as oil, gold, copper, and corn………………………………………..Full Article: Source

OPEC oil output to go unchanged: Kuwaiti gov

Posted on 12 March 2015 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries may maintain its current oil production of over 30 million barrels a day at its next meeting in June, says Kuwaiti official. Kuwait’s OPEC governor Nawal Al-Fuzaia said Tuesday, “I think so because there is less than two months, removing weekend and summer time, before the next OPEC meeting,” adding, “I don’t think there would be a big change in the oil market supply/demand in this time.”
The cartel’s president and Nigerian Oil Minister Diezani Alison-Madueke had suggested an early meeting could be convened, should oil prices continue to fall, but so far they have not………………………………………..Full Article: Source

Gold sinks to $1,155; dirham at high vs rupee: Buy gold or remit?

Posted on 12 March 2015 by VRS  |  Email |Print

Gold price recently sank to a fresh four-month low of $1,155 per troy ounce yesterday on the back of a strong US jobs data and India’s surprise decision to maintain the import duty on the yellow metal.
Data showed America added 295,000 jobs in February, 55,000 more than economists expected. US unemployment rate is now at 5.5 per cent, the lowest it has been since May 2008. This is fuelling investor confidence in the economy and, therefore, equities, and further reducing gold’s safe haven appeal………………………………………..Full Article: Source

Nasdaq looks to halve energy trading cost

Posted on 12 March 2015 by VRS  |  Email |Print

Nasdaq plans to halve the cost of trading energy with the launch of a new, low-cost futures exchange that executives believe will challenge the current dominance wielded by the CME Group and Intercontinental Exchange.
The US exchange group, best known as a stock market operator, took aim at what it called a “monopoly” as it formally announced the launch of Nasdaq Futures, a commodity market that will list contracts in oil, natural gas and US power………………………………………..Full Article: Source

China Commodities Imports Slow as Lunar New Year Cools Trade

Posted on 10 March 2015 by VRS  |  Email |Print

China’s commodity trade slowed in February as the Lunar New Year holiday crimped imports of oil, iron ore, copper and soybeans while exports of aluminum and steel fell. Inbound shipments of copper tumbled by the most in four years, soybeans to the least since October, while oil and iron ore imports slowed to the weakest in three months, according to customs data released Sunday in Beijing.
Steel exports fell for the first time since August and the country shipped the smallest amount of aluminum products in four months. The slowdown in raw materials trade reflects the impact of the country’s most-important festival, when factories and output slow before and during the weeklong holiday………………………………………..Full Article: Source

5 Commodities Leading The Price Plunge

Posted on 10 March 2015 by VRS  |  Email |Print

The Bloomberg Commodity Index, which tracks the price of 22 different commodity investments, recently traded at its lowest level since 2002. Stocks of commodity-exposed companies have suffered over the past year, but investors with direct stakes in the commodities themselves have been hit hardest.
Here’s a look at five commodities that have lined the downward-spiral path over the past year. 1. Silver - Silver prices have plummeted as investors anticipate money flowing out of precious metals when the Federal Reserve begins raising interest rates. The iShares Silver Trust (ETF) SLV, -0.59% is down nearly 25 percent in the past year………………………………………..Full Article: Source

Commodities Routed as China Cuts Growth

Posted on 09 March 2015 by VRS  |  Email |Print

As China’s top economic officials announced a slower economic growth forecast, the commodities markets are bracing for another rout in 2015. Last Thursday at the National People’s Congress, China Premier Li Keqiang lowered the country’s economic growth forecast to “about 7 percent,” confirming a period of “new normal” of sluggish investments, overcapacity, and slowing infrastructure projects.
It’s a harrowing thought for commodity producers. Since the early 2000s, China’s investment in factories, infrastructure, and real estate has largely driven the commodities boom over the last decade. According to data from Australian bank Macquarie, China last year accounted for more than half of the world’s consumption of iron ore, around half of the global demand for aluminum and nickel, and more than 40 percent of the world’s demand for copper and zinc………………………………………..Full Article: Source

China’s Copper Imports Tumble as Lunar New Year Crimps Demand

Posted on 09 March 2015 by VRS  |  Email |Print

China’s copper imports fell for a second month to the lowest in more than three years as the week-long national Lunar New Year holiday sapped demand for the metal. Inbound shipments in February of unwrought copper and products fell 32 percent from the previous month to 280,000 metric tons, the lowest since May 2011, according to data released by the General Administration of Customs on Sunday. Imports during the first two months of the year are down 24 percent from the same period in 2014.
Demand for the metal slowed as businesses and factories shut before and during the holiday, which ran from Feb. 18-24 this year. Copper rebounded 7.3 percent in London last month after a 13 percent tumble in January as investors weighed slowing economic growth in China against supply disruptions at mines globally………………………………………..Full Article: Source

IME to boost commodity trading

Posted on 09 March 2015 by VRS  |  Email |Print

Commodity exchange plays an important role in generating employment, improving business environment and expanding international relations, said Hossein Panahian, the head of Iran Mercantile Exchange (IME). “The government is determined to organize the commodity market through IME,” he said.
Panahian said both producers and consumers could benefit from IME, as it is regarded a national asset, stressing that no one could take more than 2 percent ownership in the company, Iran Daily reported. The IME chief said the government is confident that the performance of the exchange is transparent………………………………………..Full Article: Source

China February trade surplus hits record $60.6 bn

Posted on 09 March 2015 by VRS  |  Email |Print

China’s monthly trade surplus hit $60.6 billion in February, the government said Sunday, a new record for the world’s second-largest economy. Exports leapt 48.3 percent year-on-year to $169.2 billion while imports fell 20.5 percent to $108.6 billion, Customs said on its website.
The country’s trade surplus, long a source of tensions with its trading partners, rose above a previous all-time monthly high of $60.0 billion recorded in January. The growth in exports last month was well ahead of the median estimate for a 14 percent jump in a Bloomberg survey of economists………………………………………..Full Article: Source

World’s biggest listed commodities trader says 2015 could be a boom year for oil

Posted on 05 March 2015 by VRS  |  Email |Print

Glencore Plc, the world’s biggest listed commodities trader, said 2015 could be a boom year for oil amid the biggest price swings in six years. “It is looking very well structured for oil trading,” Chief Executive Officer Ivan Glasenberg said in a conference call with analysts Tuesday. “If it continues like this, oil could have a blowout year.”
Volatility in Brent crude rose to the highest since 2009 last month, creating bigger gaps between prices that traders need to make a profit. Crude oil plunged 61 percent from June to January because of oversupply, before paring some of that slump. Glencore, based in Baar, Switzerland, and Vitol Group, the largest independent trader, will benefit from bigger price swings in 2015, said Fitch Ratings Ltd., a provider of financial information………………………………………..Full Article: Source

Aluminium trading profits under threat

Posted on 05 March 2015 by VRS  |  Email |Print

The days of easy profits for aluminium traders benefiting from warehouse queues may finally be over as prices fall and new rules seek to change behaviour. When demand for aluminium cratered during the financial crisis, supplies swamped warehouses, where banks and commodity trading houses could borrow at low interest rates, store the metal and sell a futures contract for delivery at higher prices.
It was a trade that took significant amounts of metal off the market. Rather than suffering, producers from Alcoa to Rusal earned handsome profits by satisfying demand from industry as long queues built up at warehouses for metal that subsequently needed to be withdrawn………………………………………..Full Article: Source

India’s Gold Buying to Pick Up After Budget

Posted on 03 March 2015 by VRS  |  Email |Print

Traders are bracing for a short-term bump upward in India’s gold demand after the world’s largest consumer of the precious metal maintained an import duty in a budget unveiled Saturday. In the weeks leading up to the budget announcement, India’s gold imports slowed. Some wholesalers delayed purchases, anticipating that the government would announce a cut in taxes on gold imports.
Imports in January totaled around 39 metric tons, according to Macquarie Group Ltd. That compares with a monthly average of 81 tons in the second half of 2014. Data for February isn’t available, but traders and analysts said imports remained subdued last month………………………………………..Full Article: Source

Regulator plays down impact of rules shake-up on gas traders

Posted on 27 February 2015 by VRS  |  Email |Print

Fewer than four natural gas traders hold positions big enough to breach broad new limits on speculation in the US, a regulator said in comments that played down the impact of a controversial rule proposal.
The disclosure came as the US Commodity Futures Trading Commission held its latest meeting to ponder its proposed “position limits” rule for commodities that would cap the number of futures contracts held by any single trader………………………………………..Full Article: Source

China’s new Shanghai-Hong Kong gold link-up hope to rival Western competition

Posted on 27 February 2015 by VRS  |  Email |Print

China is set to launch a link between gold markets in Shanghai and Hong Kong this year following a landmark stock connect scheme, aiming to enhance its pricing power of gold contracts and ultimately challenge its competitors in the West.
While China is the world’s largest consumer of the precious metal, having surpassed India, daily trading of gold in financial centre Shanghai is small compared with London. The move to develop gold trading comes as more trade flows to Asia and is in line with Beijing’s efforts to open up its domestic markets to foreign investors. China wants more market players to use its yuan currency when settling trade contracts and for making investments………………………………………..Full Article: Source

How Do Commodity Suppliers Go Sustainable?

Posted on 26 February 2015 by VRS  |  Email |Print

Social and environmental responsibilities are rarely at the top of mind when suppliers are racing to the bottom of the price curve. That’s why sustainability is hard to come by in commodity industries. But a small giant in New Zealand is changing all that, at least when it comes to wool.
Dave Maslen is global partnership and sustainability manager at the New Zealand Merino Co. (NZM). In this video interview (after the jump), he shares the story of how Merino brings traceable, sustainably-produced wool to market by working directly with farmers and the value chain………………………………………..Full Article: Source

Gold trade coming back, if you can wait 2 years: BofA

Posted on 26 February 2015 by VRS  |  Email |Print

Gold will come under further pressure over the course of the year as the Federal Reserve moves closer to lifting rates, but prospects for the precious metal looks far more promising in the next few years, according to Bank of America Merrill Lynch.
“Right now, investors are not in the mood for holding gold because they see the Fed raising rates. So, I think in the next three months you’ll see downside risk, $1,100 an ounce is likely,” Francisco Blanch, commodities analyst at Bank of America Merrill Lynch told CNBC. “But if you look out 2-3 years, things are a lot brighter for gold,” he said………………………………………..Full Article: Source

How can options trading gain ground in commodities ?

Posted on 24 February 2015 by VRS  |  Email |Print

The commodities futures market underwent changes in 2003 with many policy reversals. But option-based derivatives are yet to gain ground in commodities. Though the Forward Contract (Regulation) Bill, 2010, has provisions for option trading, its execution requires considerable attention from the regulator, commodity exchanges and market participants.
The government can replace the price support scheme with minimum guaranteed price (MGP). Policy makers are passive on the adoption of option-based trading despite the benefits. Option can be over-the-counter and exchange-traded. Similar to the futures, option requires at least two parties to exercise the contract. Exchange-traded option can help to mitigate counter-party credit risk as the contract will be more standardised in nature………………………………………..Full Article: Source

India’s gold imports set to rise as RBI eases curbs ahead of budget

Posted on 20 February 2015 by VRS  |  Email |Print

Gold imports to top consumer India are set to jump in coming months after the Reserve Bank of India (RBI) eased gold import curbs, ahead of an expected cut in import duty in next week’s budget.
The Reserve Bank of India said on Wednesday banks would again be allowed to import gold on a “consignment basis”, under which they act as intermediaries and don’t pay for the stock until a buyer has been found, which is usually quickly. Trading houses will be allowed to bring in gold with no conditions attached………………………………………..Full Article: Source

India: Banks allowed to import gold on consignment basis

Posted on 19 February 2015 by VRS  |  Email |Print

The Reserve Bank of India (RBI) on Wednesday said nominated banks were now permitted to import gold on consignment basis. “All sale of gold domestically will, however, be against upfront payments,” said the RBI, adding, “Banks are free to grant gold metal loans.”
In a notification to banks, the central bank also said that Star and Premier Trading Houses can “import gold on documents against payment basis as per entitlement without any end use restrictions. While the import of gold coins and medallions will no longer be prohibited, pending further review, the restrictions on banks in selling gold coins and medallions are not being removed, it added………………………………………..Full Article: Source

RBA Cut as China Commodity, Local Consumption Doubts Remain

Posted on 18 February 2015 by VRS  |  Email |Print

The Reserve Bank of Australia said doubts about a pickup in domestic spending and China’s appetite for raw materials prompted this month’s decision to lower interest rates, and reiterated that the Aussie dollar remains too high.
“There was considerable uncertainty around the timing and extent of the expected increase in household consumption growth and non-mining business investment,” it said in minutes of the first meeting of the year, where it debated whether to cut straight away or wait a month. There was also a lack of clarity on “the outlook for the Chinese property market and its implications for Chinese demand for commodities,” it said………………………………………..Full Article: Source

Oil traders celebrate market rout

Posted on 17 February 2015 by VRS  |  Email |Print

For some the lavish party thrown by Socar, the state oil company of Azerbaijan, during International Petroleum Week, was a chance to drown their sorrows and forget about the market. But for others enjoying the hospitality at the Grosvenor House Hotel on London’s Park Lane there were reasons to celebrate.
After several years of flat markets, falling profits and declining margins, oil traders are enjoying the most favourable trading conditions they have seen since the global financial crisis in 2008. For the big players such as Glencore, Gunvor, Mercuria, Trafigura and Vitol, which source, store and transport crude oil and related products, the market rout may be a boon………………………………………..Full Article: Source

Rising Oil Lifts All (Commodity) Boats

Posted on 13 February 2015 by VRS  |  Email |Print

In the commodity markets, a rising price of oil lifts all boats. The 24 commodities in the S&P GSCI index aren’t directly correlated with oil prices, as each raw material moves on its own supply-and-demand dynamics.
But new data from S&P Dow Jones Indices show that when U.S. oil prices are up, it’s hard for other commodities to be down – and vice versa. On average, when oil is up in a month, the index’s 23 other commodities have positive months too, according to an analysis by Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices. When oil is down, 21 other commodities also have down months, on average………………………………………..Full Article: Source

Deutsche Börse connects commodities traders with new platform

Posted on 11 February 2015 by VRS  |  Email |Print

Deutsche Börse has signed a trio of commodities trading entities to use its new M7 trading platform, developed as part of a complete renewal of its trading infrastructure.
Singapore-based regulated futures exchange Cleartrade Exchange, London-based Freight Investor Services Ltd., a broker of freight and commodity derivatives, and Norexeco ASA, a commodities exchange for pulp and paper based in Norway, will start to use M7 in the next few months………………………………………..Full Article: Source

Commodities Are Down—but Hardly Out

Posted on 10 February 2015 by VRS  |  Email |Print

Do commodities still have a place in the average investor’s portfolio? The 2007-09 recession caused everyone to re-evaluate their tolerance for risk, and nowhere was this felt more strongly than in the commodities arena, where anything from a coffee-eating pest to severe drought could cost an investor hundreds of thousands of dollars.
Several years of negative returns for most commodities haven’t endeared the asset class to investors: For the three years through January, the S&P GSCI Commodity Index posted a negative return of 40%. That came after a 52% decline between June 2008 and June 2011………………………………………..Full Article: Source

Tempted by fall in global commodities? Here’s how to trade commodity-based funds

Posted on 10 February 2015 by VRS  |  Email |Print

It’s difficult days for those investors who bet on the global commodities theme. The DSP Blackrock World Mining Fund crashed 24 per cent over the last one year. Its annualised loss for the 2 and 3 year holding period is also placed at 18 per cent and 14 per cent respectively. The country-specific funds, catering to resource-rich nations, have also been affected by the crash in commodity prices.
For example, the annualised losses for 1, 2 and 3 years holding period for HSBC Brazil Fund is 15 cent, 16 per cent and 11 per cent respectively. Here too, the NAV of the growth option is below par. What should investors do with these funds now? Should existing investors book losses and move out or should they hold on to them, hoping for a recovery………………………………………..Full Article: Source

China trade data shows impact of commodity price slump

Posted on 10 February 2015 by VRS  |  Email |Print

China’s January trade data has been viewed as unambiguously weak, and while the softer exports are an obvious concern, the dramatic slump in imports isn’t nearly as bad as it looks.
Exports dropped 3.3 percent from a year earlier, against a median expectation of a 6.3 percent gain, while imports plummeted 19.9 percent, the biggest slide since May 2009, a time when the economy was dealing with the global recession. The problem with looking at the trade numbers in percentage terms is that they are dollar-based, value numbers………………………………………..Full Article: Source

China’s commodity imports slow in January after record December

Posted on 09 February 2015 by VRS  |  Email |Print

China’s imports of key commodities eased in January after the record high set in December, as expected as the earlier heavy purchases to take advantage of weak prices had swollen inventories, preliminary customs data released on Sunday showed.
China’s slowing economy - 7.4 percent growth in 2014 was the weakest in 24 years - has weighed on global markets as it is the world’s biggest buyer of iron ore, coal, copper and soy, and the second-largest crude oil importer after the United States. The sharp falls in commodity imports helped result n a record monthly trade surplus of $60 billion………………………………………..Full Article: Source

China’s SGE January gold withdrawals record 255 tonnes

Posted on 09 February 2015 by VRS  |  Email |Print

With another 53.7 tonnes of gold withdrawn from the SGE in the final week of January, Chinese gold demand appears to match almost exactly total global new mined gold supply. Global new mined gold supply approximately 3,100 tonnes a year or averaging 258 tonnes/month: Shanghai Gold Exchange (SGE) gold withdrawals in January 255 tonnes! The figures speak for themselves.
Forget GFMS China gold consumption figures, we just don’t believe they are even close to reality. Forget the latest Reuters report on Chinese gold demand published here on Mineweb on Friday – it just quoted the same figures although it attributed them to another source………………………………………..Full Article: Source

China’s Copper Ore Imports Slide After Record Smelter Production

Posted on 09 February 2015 by VRS  |  Email |Print

China’s imports of copper ore and concentrate, used to make the refined metal, fell for the first time in three months after smelters in the world’s largest consumer boosted production to a record last year.
Inbound shipments in January fell to 930,000 metric tons, down 20 percent from the previous month, according to General Administration of Customs data released Sunday in Beijing………………………………………..Full Article: Source

Oil spikes in ‘super volatile’ market amid supply gain

Posted on 06 February 2015 by VRS  |  Email |Print

Oil traded at the greatest volatility since April 2009 after U.S. crude supplies rose from the highest level in more than three decades. West Texas Intermediate gained as much as 7.5%, erasing an earlier 2.3% decline. Prices have moved an average of US$1.74 a day this year, up from 92 cents during the first 24 days of 2014.
Crude inventories expanded by 6.33 million barrels to 413.1 million last week, the highest level in weekly records compiled since August 1982, the Energy Information Administration reported Wednesday. Oil’s swings have intensified since the Organization of Petroleum Exporting Countries decided in November to let rival producers deal with a global surplus that Iran’s oil minister pegged at 2 million barrels a day in an interview with state television………………………………………..Full Article: Source

Commodities, Geneva and the Swiss franc

Posted on 30 January 2015 by VRS  |  Email |Print

Bunge, the international agricultural trader, is closing its sugar and ethanol operations in London and moving them to Geneva, the home of its grain trading hub. Its decision is counterintuitive, especially at a time when the jump in the currency after the Swiss ditched their franc cap has pushed.
Bunge says the move will “improve efficiency and further integrate with our core trading businesses”, and there are worse places in the world to work. Commodities traders have a long history in Switzerland, especially in Geneva. Easy access to finance, low taxes and relatively light regulation have made it a good place to do business………………………………………..Full Article: Source

Who will clean up global commerce?

Posted on 30 January 2015 by VRS  |  Email |Print

Few play the system better than big business. Whether it’s getting the lowest prices from suppliers, convincing us to buy their stuff or keeping the taxman at bay, corporations reign supreme. But what happens when the system starts playing them? Corporate capitalism is getting closer and closer to finding out.
By putting profits first and the planet second (at best), businesses are helping accelerate many of the most concerning “megatrends” of our age. Corporations might not be overly concerned about climate change, resource scarcity, food insecurity and so on today, but you can bet they will be tomorrow when these planetary problems set their profits plummeting………………………………………..Full Article: Source

Why Hasn’t Silver Completely Broken Out?

Posted on 28 January 2015 by VRS  |  Email |Print

Whenever central banks engage in stimulus schemes that flood financial markets with cheap liquidity, attention almost always turns to investments that can store value. Obviously, when a central bank works to actively devalue its currency, it is a good idea to start shoring up, or preserving the value of a currency by tying it to a commodity.
Gold and silver are the natural safe havens of investors who are spooked by the prospect of cheap liquidity. This is exactly what played out with the recent appreciation in gold and silver prices. However, silver prices may not hold up that well over the midterm. Why? Silver is both an investment commodity and an industrial commodity. In fact, there is still a lot of silver being produced every year for industrial purposes………………………………………..Full Article: Source

Will Global Commodities Reverse the Crunch of 2014 Final Quarter?

Posted on 27 January 2015 by VRS  |  Email |Print

In analyzing the global fourth quarter crash of the commodity markets, it has become quite obvious that the bulk of the un-natural depth of the slump was caused by a desperate attempt by Saudi Arabia to undercut the incredible growth of America’s hydraulic fracturing, which had added a million barrels a day throughout 2014.
While $100 per barrel had become a stable target for most of 2013 and the first eight months of 2014, the sudden crash right after Labor Day was no coincidence. Although a $30 per barrel low of crude oil for both foreign Brent crude and domestic West Texas Intermediate (WTI) had been expected in the depths of the great financial recession in March 2009, this was a far cry from the relatively moderate supply/demand imbalance that ostensibly caused the “halving” of oil prices in 2014’s last four months………………………………………..Full Article: Source

Commodities, Currency Commotion Brings Volatility

Posted on 21 January 2015 by VRS  |  Email |Print

Traders return from a long holiday weekend already riding a slippery slope of volatility greased by international events and uncertainty heading into the depths of earnings season. In fact, volatility is higher across many asset classes.
For starters, the CBOE Volatility Index (VIX), which tracks the implied volatility priced into S&P 500 Index (SPX) options, hit a three-week high of 23.43 Friday as the SPX was at risk of a six-day losing skid. But true to Freaky Friday form, the broader market rebounded late in the day. SPX support now lies at 2000, with resistance hovering at 2022………………………………………..Full Article: Source

China funds become new force in global commodity trade

Posted on 21 January 2015 by VRS  |  Email |Print

China’s Shanghai Chaos investment fund is named after the pioneer of chaos theory Edward Norton Lorenz, who coined the term “butterfly effect” to describe seemingly random yet connected events. That may be an apt description for the global metals markets, where moves made by hedge funds in China are increasingly felt across the globe.
“Over 40 years ago US meteorologist Edward Lorenz definitely could not have known that his theories would change a Chinese person’s investment ideas, and allow him to make money,” Shanghai Chaos founder Ge Weidong said in a 2009 interview with Chinese media, explaining why he chose the name of his fund………………………………………..Full Article: Source

Why commodity exporters may get a tailwind

Posted on 19 January 2015 by VRS  |  Email |Print

Conventional wisdom suggests commodity exporters will take price declines on the chin, but Morgan Stanley expects they’ll benefit most. It’s all about curing the Dutch Disease, Morgan Stanley said in a note last week, referring to the negative economic impact of increasing natural resources investment at the expense of other sectors.
“If left uncured, the net effect is usually a decline in productivity that tends to hurt growth over longer periods,” the bank said. “Commodity exporters face a difficult transition, some a recession, and even after that, a few could lapse back into mediocre growth and low productivity,” it said………………………………………..Full Article: Source

Warning: China may trigger fresh rout in commodities

Posted on 16 January 2015 by VRS  |  Email |Print

Commodities just can’t catch a break – and China’s upcoming gross domestic product (GDP) release on January 20 could throw another punch at the beleaguered asset class should it underperform expectations, warn analysts.
“We are days from the release of China’s Q4 GDP and copper is the best barometer of growth. The rout gives me reason to believe China’s growth is not only moderating but is slowing faster than estimated,” Evan Lucas, market strategist at IG wrote in a note. “If China disappoints next Tuesday, brace for a real rout in commodities,” he said………………………………………..Full Article: Source

Commodities traders’ costs soar with Swiss franc’s leap

Posted on 16 January 2015 by VRS  |  Email |Print

A dramatic rise in the value of the Swiss franc sent costs soaring for the country’s commodity trading houses on Thursday, adding to pressures from tax and regulatory uncertainty that has already pushed many abroad.
The Swiss National Bank shocked financial markets on Thursday by scrapping a three-year-old cap on the franc, sending the safe-haven currency soaring against the euro and stocks plunging………………………………………..Full Article: Source

Commodities Sink To 12-Year Low as Copper, Oil Slump

Posted on 15 January 2015 by VRS  |  Email |Print

Commodities slumped to a 12-year low, led by the biggest plunge in copper since 2011, after a report from the World Bank fanned concerns of a global economic slowdown.
Copper futures for March delivery tumbled five percent to $2.5125 a pound as of 11:45 a.m. in New York, set for a fourth day of losses. Nickel erased more than 2 percent, while oil reversed earlier declines, with West Texas Intermediate trading little changed at $45.88 a barrel……………………………………….Full Article: Source

China Commodity Imports Surge on Low Prices

Posted on 14 January 2015 by VRS  |  Email |Print

China imported record volumes of commodities last year, taking advantage of lower prices to maintain its position as a massive buyer of global resources despite a slowdown in its broader economy.
Import volumes of iron ore, crude oil, copper and soybeans hit an all-time-high in 2014, according to official data released Tuesday. Imports of iron ore, crude oil and soybeans for the month of December alone also reached record volumes in a late-year surge of shipments………………………………………..Full Article: Source

Why the extremes in the commodities complex?

Posted on 14 January 2015 by VRS  |  Email |Print

Another morning of extremes, at least in the Treasury and commodity complexes. 10-year bond yields are at 18-month lows. Gold touched a 12-week high. Oil plumbed a nearly 6-year low. Copper is down another 2.5 percent at a 5.5-year low, with similar weakness in Nickel and Zinc. Aluminum has also fallen 1.4 percent.
The drop in copper comes despite good news out of China, where December exports rose 9.7 percent year over year and imports contracted 2.4 percent, both better than expected. However, total Chinese trade increased only 3.4 percent in 2014, well short of the 7.5 percent goal. China should release its annual GDP figure for 2014 next week………………………………………..Full Article: Source

OPEC price war in Asia intensifies as oil falls below $50

Posted on 13 January 2015 by VRS  |  Email |Print

Even as Saudi Arabia and its Gulf OPEC allies appear united in their refusal to cut output to boost global oil prices, they are becoming locked in an increasingly fierce battle to secure market share in Asia.
Oil prices have slumped below $50 a barrel, the weakest since 2009, triggering a price war between producers to secure customers in Asia. And the price outlook remains grim with Goldman Sachs slashing its three-month benchmark crude forecasts to just above $40………………………………………..Full Article: Source

Commodities may trade flat in 2015, steady upturn in 2016: SMC Global

Posted on 12 January 2015 by VRS  |  Email |Print

Commodities are expected to trade flat in 2015 but in 2016 it should take slow but steady upturn on expected positive growth in world economy, according to an annual report by SMC Global. In the coming days, deflation is the bigger global risk. Though the latest fall in commodities curb the import bill of many countries, any further growth in economy may assist commodities to build base at current levels, the report said.
IMF has forecast for 2015 global growth to 3.2%. As regards, U.S is expected to rise from 2% GDP growth in 2014 to 3.2% by 2016, while the Eurozone is expected to stabilize at 1% growth in 2015 and 2016. Japan’s GDP is forecast to rise to 1.6% growth by 2016, while India is expected to post a rapid pickup, to 7.7% by 2016………………………………………..Full Article: Source

Demoralized oil traders give up betting on how low prices can go

Posted on 09 January 2015 by VRS  |  Email |Print

Crude oil’s freefall from $100 a barrel to under $50 has struck at the heart of a core belief in the markets: that Saudi Arabia would always ride to the rescue. Oil traders can agree on only one thing about when the second-biggest price rout on record will be over: not yet.
Crude oil’s freefall from more than $100 a barrel last summer to a near six-year low under $50 a barrel has been unrelenting, shocking traders and baffling analysts who have all but given up trying to pinpoint the bottom of the market. The scale of the uncertainty reflects a market stripped of a core belief that has underpinned prices for the past decade: that top oil exporter Saudi Arabia would always ride to the rescue………………………………………..Full Article: Source

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