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Commodities: No Relief

Posted on 04 September 2015 by VRS  |  Email |Print

Commodities tend to run in long cycles. The huge run-up in their prices, which peaked in 2011, has now degenerated into a rout. People who think that this situation will stabilize and turn around anytime soon are kidding themselves. China’s pell-mell growth was the stimulus for the so-called commodity super-cycle , which began around 2002.
But the huge nation’s expansion couldn’t go on forever at a double-digit clip. China’s deceleration to a 7% rate, while pretty good by Western standards (the U.S. grows at a 2% pace), is enough to squelch the commodity boom, and keep it squelched for a good long while. Not to mention, plunge stocks into correction territory , as we’ve seen lately………………………………………..Full Article: Source

Will El Nino Give a Boost to Commodities?

Posted on 04 September 2015 by VRS  |  Email |Print

The National Oceanic and Atmospheric Administration’s (NOAA) latest El Niño update, released Monday, put the chance that El Niño conditions will continue through the winter at 90% and into early spring at 85%. The destruction a severe El Niño can wreak is staggering. A prolonged episode from 1789-1793 has been blamed for a famine in India that killed 600,000.
Between 1997 and 1998, an especially severe El Niño caused an estimated 23,000 deaths and $35 billion in damage worldwide. Given the sheer destructive potential of El Niño, it should come as little surprise that it can have a significant economic impact, particularly on commodity prices………………………………………..Full Article: Source

Saxo Bank’s commodities market forecast until end 2015

Posted on 03 September 2015 by VRS  |  Email |Print

A broad basket of commodities has fallen to the lowest level in 16 years thereby wiping out all the gains that were made during the Chinese boom years during the first decade of this millennium. “The main trigger for this weakness has not been due to slowing demand but more due to increased supply at a time where demand growth has failed to keep up,” Ole Sloth Hansen, Head of Commodity Strategy, said.
“Rising production of key commodities from oil to corn and iron ore are currently not finding the demand needed and, as a result, new lower levels are being sought in order for the market to find a proper balance between supply and demand. Financial as well as physical investors in gold have increasingly been looking elsewhere for investment opportunities,” he said………………………………………..Full Article: Source

Moody’s cuts 2016 global economic forecast; no commodities rebound in near future

Posted on 02 September 2015 by VRS  |  Email |Print

It was a surprise move from the firm, coming just 12 days since its last forecasts. It put average growth in the top 20 world economies at 2.8% on average, versus the 3% it had forecast previously. It said the fresh cut reflected information that had become available since the earlier forecasts were published.
China, Japan and Korea’s growth saw downgrades partly due to expectations of more muted exports. Emerging markets Turkey and South Africa had their forecasts reduced too………………………………………..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

Oil price slump hits Islamic financial services

Posted on 31 August 2015 by VRS  |  Email |Print

The decline in global oil prices and the weak oil price outlook for 2015 and 2016 are already seen a taking toll on both Islamic banking and the Islamic financial services sector, according to analysts. Rating agency Fitch has warned that the global Islamic financial services industry could face further pressure in terms of low demand for sukuk issuance due to a combination of factors such as fall in oil prices, potential rise in global interest rates and contraction across global emerging markets.
Fitch Ratings said in a recent report that total new bonds and sukuk (with a maturity of more than 18 months) from the GCC, Malaysia, Indonesia, Turkey, Singapore, Pakistan, Sri Lanka, and Taiwan (GCC+7) declined 27 per cent in the first half of 2015 from a year ago………………………………………..Full Article: Source

Copper slump continues amid waning Chinese demand

Posted on 31 August 2015 by VRS  |  Email |Print

Copper used to be considered one of the relatively bright spots in the recent downturn of commodity prices. But now it is becoming yet another victim of China’s slowing economy, and the future looks bleak. “There was always this belief that the deceleration in the Chinese manufacturing sector was going to not just stabilize, but there was this hope that we would see a modest reacceleration,” said John Mothersole, a research director with consultancy IHS, who specializes in metal price analysis and forecasting.
“Markets are coming to realize that those expectations were falsely held,” he said. Copper, like other commodities, has been on a decline since 2011. This year, the red metal is down 20 per cent………………………………………..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

Commodities in Africa: How natural resources breed violence

Posted on 28 August 2015 by VRS  |  Email |Print

Africa is home to a tenth of the planet’s oil, a third of its mineral reserves and produces two-thirds of its diamonds. High prices may pep up the continent’s short-term economic growth, but scholars have long suspected that its plentiful natural resources also breed instability and violence. Politicians and their cronies cannot resist skimming off some of the huge profits, the theory goes, which enrages those who are left out.
Struggles over these wealths have played a part in many African troubles, from militias in the Democratic Republic of Congo to Sudanese civil wars. However, identifying a systematic link between natural resources and violence in Africa has proven tricky for economists, who must usually work with small or insufficiently detailed datasets………………………………………..Full Article: Source

Is Natural Gas the New Gold?

Posted on 28 August 2015 by VRS  |  Email |Print

When the market is shaky, seek safety in … natural gas. Wait – what? Citigroup Inc. is touting natural gas – a commodity so notorious for volatility that its most renown bet is called the “widow maker” – as a possible haven for investors weary of the market’s wild swings.
A sluggish global economy, a staggering China and plummeting oil prices have sent commodity, currency and stock markets spiraling this summer. But they mean very little for U.S. gas futures, which have been stable for more than two months and even briefly entered a bull market in the late spring………………………………………..Full Article: Source

Gold price: is the rally ‘over and done’?

Posted on 28 August 2015 by VRS  |  Email |Print

Gold has recovered slightly after hitting a one-week low overnight as expectations of a US rate hike in September were lowered – but after a sharp decline some analysts are now saying the recent rally is “over”.
As US stocks surged on the back of a huge injection of stimulus by Chinese authorities to support its ailing markets, the safe haven of gold lost out to a move by investors to take on more risk and touched a low of $1,117 an ounce at one point. This, Reuters notes [1], was its lowest level for a week and marked a 1.3 per cent decline for the day, the steepest fall since 20 July………………………………………..Full Article: Source

Why the oil price could be depressed for a generation

Posted on 27 August 2015 by VRS  |  Email |Print

The oil price may have fallen to its lowest level since the financial crisis, but Chris Taylor believes it will get cheaper. The oil price has been one of the major casualties of the downturn in global markets over the last few weeks, tumbling to levels not seen since the depths of the financial crisis.
A barrel of Brent crude oil now costs $43.67, and fell as low as $42.23 during the Black Monday sell-off. It is down 62% since its most recent peak, of nearly $115, set in June last year. Chris Taylor, head of research at fund group Neptune, believes oil has further to fall, and thinks its price could remain in the doldrums for a generation. He argues that investors are still failing to appreciate the implications of fracking, and the shale oil it produces………………………………………..Full Article: Source

OPEC Unable to Control Oil Production in Member States

Posted on 27 August 2015 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries (OPEC) is irrelevant because it can’t control oil production volumes within it’s own member-countries, the president of PKVerleger LLC, an US energy consulting firm, told Sputnik. “OPEC is irrelevant today. Producing countries set their levels of production… Prices will probably fluctuate between 30 and 50 [dollars per barrel]. OPEC <…> has no power,” Dr. Philip K. Verleger said.
Global oil prices have significantly dropped compared to summer 2014, falling from $100 to $43 per barrel for Brent crude, primarily a result of worldwide oversupply. According to the International Energy Agency (IEA), global oil prices will fall further in 2016 in response to decreased demand. ……………………………………….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

Commodities: The Chinese curse

Posted on 26 August 2015 by VRS  |  Email |Print

An ancient Chinese curse translates as “May you live in interesting times”. We are doing that, thanks to the bursting of the Chinese stock market bubble. The collapse of Chinese equity markets has triggered big selloffs in other markets and underlined the weakness in demand for a range of basic commodities.
Metals, fuels, cotton and plastics have all gone South. There has also been turmoil in the forex market, with Emerging Market currencies down in the wake of heavy FII selling. The Indian stock market indices have been badly hit. There is an additional complication in that this is settlement week………………………………………..Full Article: Source

The 21 commodities that say China isn’t the problem: Russell

Posted on 26 August 2015 by VRS  |  Email |Print

One of the reasons advanced for the plunge in commodity prices is concern over the outlook for Chinese demand for raw materials as growth slows in the world’s second-largest economy. But these are fears not necessarily in evidence, as can be seen by trawling through the detailed customs data for July.
There were at least 21 commodities that showed increases in imports greater than 20 percent in July this year, compared to the same month in 2014. While it’s true that many of these commodities are minor, there are some fairly major ones showing strong growth as well, led by crude oil, which saw imports jump 29.3 percent in July from the same month a year earlier………………………………………..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

Goldman: Don’t freak out about a global recession

Posted on 26 August 2015 by VRS  |  Email |Print

Carnage in financial and commodity markets may be painting a doomsday picture for the world economy, but the threat of a global recession is low, says Goldman Sachs, which advocates remaining overweight developed market equities over the next six to 12 months.
“Despite the recent escalation of market concerns, our economics team cautions against taking too big a global growth signal away from the weakness in China and its impact on commodity market weakness,” Goldman Sachs’ strategists led by Peter Oppenheimer wrote in a note late Monday………………………………………..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

The oil bottom is in when the handcuffs come out

Posted on 21 August 2015 by VRS  |  Email |Print

As vicious as it’s already been, the oil-price collapse probably ain’t over just yet. These boom-bust cycles—whether in tech, housing, or commodities—are so powerful they tend to overwhelm most traditional market mechanisms and follow a path of their own. Sometimes those cycles end with drama, bankruptcies and arrests.
The good news for investors is that these cycles do tend to follow a general pattern. The trouble, particularly for those desperate to find a bottom in oil or other hard-hit commodities, is that this particular cycle hasn’t yet seemed to reach its nadir………………………………………..Full Article: Source

Going Against the Grain: Risks and Opportunities in Agricultural Commodities

Posted on 20 August 2015 by VRS  |  Email |Print

With this year’s market momentum largely being driven by growth sectors such as health care and technology, smart investors are looking for ways to diversify away some of the risks associated with those high flying areas should the market pull back. Prices of agricultural commodities have been sliding thus far in 2015 due to a variety of factors, among them the strong dollar, weak demand in China, and most importantly, excess supplies due to major innovations in crop yields.
However, history suggests that commodity prices do not go down forever, so playing a rebound in these prices seems like a good way to add a non-correlated asset to one’s portfolio. Positions with low or even negative statistical correlation, like commodities, can act as a hedge for a portfolio and help smooth out the recent volatility that we have seen in the stock market………………………………………..Full Article: Source

Indian commodities fall in tandem with global metals

Posted on 20 August 2015 by VRS  |  Email |Print

As global metal prices continue to slide, the cost of these commodities in the Indian market have fallen in tandem, ensuring that end users of commodities in India benefit from the price falls.
While global prices tend to set the direction, domestic metal prices are also driven by growth in the local economy, particularly in sectors such as infrastructure and real estate. This time, sluggish growth in these sectors in India has meant that price falls in India and globally are comparable………………………………………..Full Article: Source

Saudi Arabia tumbles after China depresses commodities

Posted on 19 August 2015 by VRS  |  Email |Print

Saudi Arabia’s stock market fell sharply on Tuesday after U.S. oil prices dropped near six-year lows and equities in China tumbled. Chinese stock prices sank 6 percent as the yuan weakened against the dollar, raising fears that Beijing might further devalue its currency, which could decrease its consumption and imports of oil and other commodities.
The main Saudi stock index tumbled 3.6 percent by mid-afternoon to a seven-month low of 8,134 points with nearly all stocks deep in negative territory. The index plunged this week below technical support around 8,500 points, where it had bottomed in March and April; that triggered a double top formed by the March and April peaks and pointing down to December’s low of 7,226 points in coming months. ……………………………………….Full Article: Source

OPEC’s ‘Fragile Five’ Face Rising Cost in the Fight for Oil Market Share

Posted on 19 August 2015 by VRS  |  Email |Print

The costs of OPEC’s plan to protect members’ share of the oil market by out-producing rivals are mounting. As oil prices slump to six-year lows, the risks of worsening political turmoil are rising in the organization’s most vulnerable nations. This includes Algeria, Iraq, Libya, Nigeria and Venezuela, a group dubbed the `Fragile Five’ by RBC Capital Markets Ltd.
The pain doesn’t end there. With even Saudi Arabia facing its biggest budget deficit in almost three decades, consultant Petromatrix GmbH says the plan to produce at full throttle was a “strategic mistake.” Oil prices slumped to near $40 a barrel in New York on Aug. 14 as a global surplus endures almost nine months after the Organization of Petroleum Exporting Countries unveiled its plan to squeeze rivals led by U.S. shale drillers. American production has stubbornly refused to buckle………………………………………..Full Article: Source

China is the new Greece, say fund managers

Posted on 19 August 2015 by VRS  |  Email |Print

Fund managers are focused on avoiding the contagion from falling Chinese markets, as they turn their back on Greece worries, finds a new survey. While Greece dominated concerns in previous months, China recession is now the number one tail risk for managers, finds the Bank of American Merrill Lynch fund manager survey for August. More than half of fund managers are ranking China as the top concern.
Investors are “avoiding anything exposed to China or commodities,” says James Barty, head of European equity strategy. Following the People’s Bank of China devaluation of the yuan last week, investors began to get more jitterish, says Valentijn van Nieuwenhuijzen, head of multi-asset at NN Investment Partners, formerly ING Investment Management………………………………………..Full Article: Source

Stumbling dragon, crumbling commodities

Posted on 18 August 2015 by VRS  |  Email |Print

Commodity prices fell sharply last week as China devalued the yuan. But a depreciation of 3-4% is unlikely to affect the demand for commodities in China. Instead, the way to look at it is that both yuan depreciation and low commodity prices are the outcome of low Chinese growth. What matters for commodity prices is, therefore, the outlook on Chinese growth.
Clues about that are available from the International Monetary Fund’s (IMF’s) annual consultations with the Chinese authorities, the report on which was made available last Friday. The IMF forecasts a slowing down of Chinese growth, with its gross domestic product, or GDP, predicted to increase 6.8% this year, 6.3% in 2016 and 6% in 2017. This is substantially below the consensus estimates for 2016 and 2017……………………………………….Full Article: Source

Global Gold Demand Drops 12% in Second Quarter

Posted on 14 August 2015 by VRS  |  Email |Print

Global demand for gold plummeted 12% to a six-year low in the second quarter, as vital buyers in Asia lost their appetite for the metal, the World Gold Council said Thursday. Demand for the precious metal weighed in at 914.9 tons between March and June of this year, down from 1,038 tons during the same period in 2014, according to the industry body’s latest Gold Demand Trends report.
The price of gold for immediate delivery has been under pressure since it hit a peak of $1,920.94 a troy ounce in September 2011, falling more than 40% as production outstripped demand and inflation stayed mainly low, taking away a usual prop for the precious metal, among other factors. Gold prices ended the quarter down 3%………………………………………..Full Article: Source

Lower gold prices may bolster Indian demand in H2 - WGC

Posted on 14 August 2015 by VRS  |  Email |Print

India’s gold demand in the second half of 2015 could rise by more than a quarter from a year before as lower prices encourage buying during the peak festival season towards the year-end, the World Gold Council (WGC) said on Thursday.
Stronger demand from the world’s second-biggest gold consumer could support the global bullion price, which hit its lowest in 5-1/2 years below $1,100 an ounce last month. But growth in demand could be lower if monsoon rains turned out to be weak, Somasundaram PR, managing director of the WGC’s Indian operations, told Reuters………………………………………..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

Oil wars: OPEC is winning

Posted on 13 August 2015 by VRS  |  Email |Print

OPEC’s strategy to pump like crazy despite collapsing oil prices seems to be finally paying off: The U.S. oil industry is showing cracks. Oil supply from non-OPEC countries is set to slow dramatically next year and slip into its first contraction since 2008, the International Energy Agency said Wednesday in its monthly oil market report.
And the IEA said the U.S. will be the hardest hit, as more oil producers rethink their priorities and cut production. “While some producers might be successful in lifting output in the short-run, we expect the majority will struggle to sustain higher rates over longer periods due to steep spending curbs,” the report said. The IEA monitors energy market trends for the world’s richest nations………………………………………..Full Article: Source

Commodities Investors Get Relief After July’s Drubbing

Posted on 11 August 2015 by VRS  |  Email |Print

Commodity bulls are finally getting some relief after suffering through the worst price plunge in almost four years. The Bloomberg Commodity Index that tracks 22 raw materials had its biggest gain since February on Monday amid increased Chinese crude-oil imports, supply disruptions at copper mines and worsening crop conditions for corn.
The gauge last month had its worst performance since September 2011 amid a stronger U.S. dollar, expanding gluts in many raw materials and signs of a slowing economy in China. Money managers cut their net-long positions in commodities by 67 percent in the past year, according to U.S. government data released Friday………………………………………..Full Article: Source

Paulsen: ‘Excellent chance’ of commodity climb if dollar falls

Posted on 11 August 2015 by VRS  |  Email |Print

Commodity prices and related stocks rebounded Monday, and while it’s too soon to call a bottom following a rout in the commodity complex, closely followed market watcher James Paulsen said Monday the outlook could look brighter within a year.
The biggest factor in a commodities turnaround will be the dollar, the Wells Capital Management chief investment strategist said. If it continues to go higher, commodities will remain under pressure. However, Paulsen said he believes the greenback has been in “peaking mode” since March………………………………………..Full Article: Source

Who will survive and who will thrive when the oil price war is over?

Posted on 11 August 2015 by VRS  |  Email |Print

The trouble with price wars is that they almost never turn out the way the participants hope they are going to. It is too late for OPEC to stop the shale revolution. The cartel faces the prospect of surging U.S. output whenever oil prices rise, says Ambrose Evans Pritchard. For example, when Rupert Murdoch slashed the price of The Times of London newspaper in 1993, it sparked a price war with the Daily Telegraph that lasted a decade and roped in other “quality” papers in the U.K.
In the end, nobody really won, and perhaps least of all the Times. Its circulation increased over the decade, but it spent gobs to acquire those readers while other factors were overtaking the newspaper industry — such as declining advertising revenue — which eventually helped make low, low prices unsustainable………………………………………..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

Investors Lose Faith in Commodity Hedge Funds

Posted on 10 August 2015 by VRS  |  Email |Print

July has been another bad month for commodities. Not only have markets taken a battering, with gold and oil leading the fall, but some well-known hedge funds told investors they were closing their doors. Black River Asset Management, owned by agricultural trader Cargill, closed its commodities fund, along with three other funds, and Armajaro Asset Management said it would shut its $450 million commodities hedge fund after losing 11% in the first half.
Meanwhile, private equity group Carlyle parted ways with the founders of its Vermillion commodities firm after assets dwindled. It is another blow for the sector, which has faced weak returns since 2011. Investors have left in droves, seeking better returns elsewhere. HFR, a hedge fund research group, reports net outflows from the sector of $3.4 billion in 2014………………………………………..Full Article: Source

Worst-Hit Commodity Investments? Not Commodities

Posted on 07 August 2015 by VRS  |  Email |Print

What is falling harder than commodity prices? Some exchange-traded funds that seek to track the companies that dig and drill for raw materials and fuel. It is no small feat to overshadow recent declines in industrial materials such as oil and metals. The Bloomberg Commodity Index, which tracks the prices of 22 raw materials, this week hit a 13-year low and is down 13% this year.
For 2015, copper prices have slumped 17%, oil prices have dropped 16% and gold prices have fallen 8%. Exchange-traded funds that track these commodities are down by a similar percentage. But some exchange-traded funds that invest in and aim to track the share prices of commodity-producing companies are doing much worse………………………………………..Full Article: Source

El Niño Tests How Soft Commodities Weather the Storm

Posted on 07 August 2015 by VRS  |  Email |Print

Investors in soft commodities are used to being slaves to the weather’s twists and turns. With prices now in a depression and the El Niño weather pattern looming, the forecast looks more unsettled than normal.
The possibility that the Federal Reserve will raise interest rates later this year, coupled with a strong U.S. dollar as a result, have weighed on prices of commodities already under pressure thanks to slowing growth in the key Chinese market. Soft commodities haven’t been spared, with sugar trading around six-year lows, dairy at 13-year lows and palm oil down around 13% so far this year………………………………………..Full Article: Source

Saudis Cede China Oil Market Share to Russia as Iran Risk Looms

Posted on 07 August 2015 by VRS  |  Email |Print

Saudi Arabia has a challenge in Asia as it battles to maintain market share: The Russians are coming and other OPEC members want a bigger slice. It’s a market the Saudis have vowed to defend, leading the decision by the Organization of Petroleum Exporting Countries to sustain output as surging U.S. production crippled prices and pushed cargoes to Asia.
While the origins of this competitive shift started with the American shale boom, the return of Iranian exports poses another test for the kingdom. “No other region needs more oil in the future than the Asia Pacific,” Sushant Gupta, the head of Asia downstream research at Wood Mackenzie in Singapore, said by phone. “It’s an absolutely important market for Saudi Arabia.”……………………………………….Full Article: Source

Gold: what next?

Posted on 06 August 2015 by VRS  |  Email |Print

Gold has been going through a rough patch, to say the least. At the end of July, the gold price fell below $1,100 per fine troy ounce. The metal was last at this price in January 2010 and had been as high as $1,900. Many investors had profited from the rise in the price of gold and other commodities after the Global Financial Crisis of 2008, but those who remained invested have seen their investment fall dramatically.
UK investors have seen the sterling value of their gold drop 40% since the 2011 high, and more than 7% this week alone. Remember past performance should not be seen as a guide to future returns………………………………………..Full Article: Source

The Weakness In Commodities Continues

Posted on 06 August 2015 by VRS  |  Email |Print

Unfortunately, the hopes of many commodity traders for an end-of-summer rally appear to be fleeting. As you can see from the chart of the United States Commodity Index Fund (USCI), which is a common product that is used by active traders for gaining exposure to a broad basket of commodities, the recent break below the dotted support level is a technical sign of continued downward momentum.
Many bearish traders will also use the failed attempt to move back above the trendline as conformation that the short-term momentum is in their favor and they will likely look to protect short positions by placing stop-loss orders above the nearby 50-day moving average (blue line), which is currently trading at $45.88………………………………………..Full Article: Source

Poor commodities: An asset without a central bank backer

Posted on 05 August 2015 by VRS  |  Email |Print

Commodity investors stung by the four-year bear market made one simple mistake: investing in an asset class not backed by a central bank. Whereas equities and bonds have benefited from very meaningful support, direct and indirect, from central bank asset-purchase programs, commodities have not.
That may or may not be good policy; certainly you can argue that the current downdraft in commodities prices reflects a singular lack of inflation risk in the global economy. That might argue for more quantitative easing, but given that what we’ve had so far has neither generated much inflation or kindled demand for raw materials, it would be hard to be too sure that more central bank buying of financial assets would help commodities prices………………………………………..Full Article: Source

Can commodities recover? Four factors to watch

Posted on 05 August 2015 by VRS  |  Email |Print

The renewed decline in commodity prices since the end of June has pushed broad commodity indices to mid-2009 levels on a spot-price basis and to 2002 levels in terms of total returns. Most commodity prices should prove a challenge to high-cost producers. While this suggests to us that commodity prices have room to recover in the long run as supply consolidates, risks in the second half of this year are high.
For investors looking for a turning point, we suggest watching four factors over the next three to six months: Crude oil supply, Chinese growth, the trajectory for Fed rates, and supply prospects for grains………………………………………..Full Article: Source

China concerns drive commodities lower

Posted on 04 August 2015 by VRS  |  Email |Print

Renewed concerns about the health of the Chinese economy helped drive industrial commodity prices down sharply while Treasury bond yields hit two-month lows after the release of weak manufacturing figures in the US. Equity headlines were dominated by a steep slide for the Greek market after it reopened following a five-week shutdown, although the rest of Europe paid little heed as earnings from the likes of Heineken and Commerzbank lifted the mood.
However, mining and energy stocks came under pressure as Brent oil fell back below the $50 a barrel mark — also hurt by worries about signs of increasing Opec output — and the price of copper touched a fresh six-year low in London………………………………………..Full Article: Source

Commodities swing from bad to worse as China data sinks

Posted on 04 August 2015 by VRS  |  Email |Print

The bad news keeps mounting for commodities after the under pressure sector was dealt a further blow with weaker than expected Chinese factory output revealed for July as iron ore prices head downward again. China’s manufacturers cut production at the fastest rate since 2011 according to the Caixin China Manufacturing Purchasing Managers’ Index, which used to be a survey sponsored by HSBC.
The final result for July came in at 47.8 points on Monday, down from 49.4 points in June. The result was concerning because the revised outcome was considerably worse than the “flash” PMI reading, which less than two weeks ago indicated a better result of 48.2 points………………………………………..Full Article: Source

Don’t enter commodities market for quick bucks: Sebi to investors

Posted on 03 August 2015 by VRS  |  Email |Print

Ready to regulate commodity trading, Sebi has cautioned small investors against entering this market for quick gains through speculation, which is “risky” and requires a lot of technical expertise. “People will come and tell you that with a small margin, you can make a lot of money. Do not fall into the trap,” Sebi Chairman U K Sinha said.
He asserted that the capital markets watchdog was fully prepared to begin regulating commodities trading and all necessary safeguards would be put in place to keep scamsters and manipulators at bay. Sebi, which expects the merger of commodities market regulator FMC with it to be completed by next month, will soon put in place a new set of regulations for this segment and the restrictions, including for trading lot sizes, would also be implemented to ensure safety of small investors………………………………………..Full Article: Source

How China is Driving the Commodity Rout (Video)

Posted on 31 July 2015 by VRS  |  Email |Print

Michael Haigh, global head of commodities research at Societe Generale, discusses the factors dragging down commodities prices, why he sees a buying opportunity created by the drop and which commodities might be the best long-term bet. He speaks on “Market Makers.”.………………………………………Full Article: Source

Investors fret over falling commodities

Posted on 29 July 2015 by VRS  |  Email |Print

Investors’ expectations are for more falls in commodity prices amid worries about the Chinese economy and interest rates. Speculators have confirmed what everyone else has been thinking: expect more falls in commodities, as worries about China and higher interest rates combine with waning sentiment to suggest markets are heading further south.
But while more losses are certain, their scope could be limited because many speculators have already made bets that prices will fall. Commodities from iron ore, to oil, grains and gold have shed value as the current extended price boom or “super-cycle” wanes………………………………………..Full Article: Source

CTAs lead hedge fund recovery as commodities slump

Posted on 29 July 2015 by VRS  |  Email |Print

Hedge funds are on track to deliver solid returns in July, up 1.4% month to date (0.4% of as end July 21). CTAs and global macro managers outperformed other hedge fund strategies, said Lyxor Asset Management.
In its Weekly Briefing, Lyxor said that CTAs bounced back last week, recouping part of the losses generated earlier this year. They benefited from their sizeable short positions in precious metals and energy as gold and energy prices dropped. Fixed income and equity buckets added to the gains, albeit to a lesser extent as CTA managers recently cut the risk on both asset classes………………………………………..Full Article: Source

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