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Should Investors Fear Global Tensions?

Posted on 20 August 2014 by VRS  |  Email |Print

Over the past few months, geopolitical crises seem to have proliferated. First, in March, long-simmering tension between Russia and the Ukraine metastasized to a full-blown crisis after the government of Ukraine was toppled by a popular revolt.
That then led to the Russian annexation of Crimea, which was followed by sanctions imposed by the Western states, armed conflict between Russian separatists and the Ukrainian government in eastern Ukraine, and even more sanctions. Then, in June, we witnessed the sudden eruption of another brief, intense war between Israel and Hamas-controlled Gaza, which saw daily scenes of bombs and missiles and reports of death and mayhem………………………………………..Full Article: Source

Fracking – another commodity bubble of our times

Posted on 18 August 2014 by VRS  |  Email |Print

Here’s a Dutch phrase for you, Gouden Eeuw. No, nothing to do with the currently controversial topic of cheese, it rather means Golden Age. Nowadays, the Netherlands is best known for “whacky-baccy” and a liberal take on life – it is a significant trading economy but hardly a global leader. However, in the 17th century it was the USA of its day, the foremost economic and maritime power in the world in a time when size did not matter.
Holland did this by being the first European power to gain a foothold in Asia, including a monopoly on trade with Japan through the Dutch East India Company and dominating inter-European trade, fuelled by cheap energy from Windmills. Then everybody went nuts, completely insane actually or “krankzinnig” as they would say themselves………………………………………..Full Article: Source

Gold falls globally on declining investor demand

Posted on 18 August 2014 by VRS  |  Email |Print

Gold fell the most this month on signs of waning investor demand from the US to China. The metal pared losses amid rising tensions in Ukraine. Violent conflicts in the Middle East and Eastern Europe helped boost prices 8.6 per cent this year.
Investors haven’t been enticed by the gains, sending open interest in New York futures and options to the lowest since 2009 and money managers have trimmed their bullish wagers. Demand for the precious metal fell 16 per cent in the second quarter, led by declines in India and China, the World Gold Council said this week………………………………………..Full Article: Source

World Awash in Oil Shields Markets From 2008 Price Shock

Posted on 14 August 2014 by VRS  |  Email |Print

Fighting across Iraq, Libya, Ukraine and Gaza, and an accelerating economy, should mean higher oil prices. Yet crude is falling. Six years ago, oil soared to a record $147 a barrel as tension mounted over Iran’s nuclear program and the world economy had just seen the strongest period of sustained growth since the 1970s.
Now, West Texas Intermediate, the U.S. benchmark price, has traded below $100 for 10 days and Brent, the European equivalent, tumbled to a 13-month low………………………………………..Full Article: Source

Miners Have Already Rallied: Will Metals Follow?

Posted on 14 August 2014 by VRS  |  Email |Print

When one looks at gold and silver prices and their moves yesterday, it might seem that nothing happened in the precious metals market. That’s far from the truth because the real action took place in mining stocks. Several weeks ago, it was miners’ strength that heralded the rally in the whole sector. Will we see one also this time?
Miners moved higher and the volume that accompanied this move was rather average. It was not high enough to confirm the direction of the move by itself, but it was not low enough for us to say that the move was fake………………………………………..Full Article: Source

Calling all nervous investors! The case for commodities

Posted on 13 August 2014 by VRS  |  Email |Print

As geopolitical risk and fears of stock market falls continue to loom large, some investors believe now may be the time to back commodities – despite the woeful returns from the asset class over recent years. Commodities have performed poorly since 2010, with the Bloomberg/UBS Commodity index falling 30% over that period. And while the index rose 7.1% in the first half of 2014, its best start to a year since 2008, a difficult July saw many of those gains evaporate.
But as fears of a market correction gain ground, with some seeing the FTSE 100’s weakness over the last fortnight as a prelude to a further falls, some are taking a shine to commodities, which traditionally have shown a low correlation to broader markets. Their resilience in times of geopolitical stress is adding to their appeal, as tensions persist between Russia and the West and the US conducts air strikes in Iraq………………………………..Full Article: Source

Metals advance: Is China healthy?

Posted on 13 August 2014 by VRS  |  Email |Print

Zinc and nickel paced gains by industrial metals in London amid signs demand is improving in China, the biggest consumer. Aluminum rose to the highest since February 2013. Industrial production in China maintained its pace of growth last month, economists surveyed by Bloomberg said before data due tomorrow.
Zinc trading volumes in Shanghai were more than triple the average today, data compiled by Bloomberg show. Money managers’ long position in zinc came to 28% of the open interest as of Aug. 8, the most among six main metals traded on the London Metal Exchange, data from the bourse showed. Still, that’s down from 30% a week ago………………………………..Full Article: Source

Commodities: Has Their Time Come Again?

Posted on 12 August 2014 by VRS  |  Email |Print

Ever since the Great Recession, it’s been a mixed bag for investors in natural resources. Though driven by the expanding emerging world, prices for commodities — with the exception of energy — haven’t really approached their pre-recession highs. From lower growth in key markets like China to oversupplies of several metals and minerals, commodities as a whole have been a terrible place to park your money over the last three or four years.
That could make them an ideal bargain play. Aside from their diversification benefits, the overall stronger global economy has some of the supply-demand dynamics finally working in investors favor. And after the recent slide in risk assets, the time to buy could be now……………………………………Full Article: Source

Escalating geopolitical discord lifts commodities

Posted on 12 August 2014 by VRS  |  Email |Print

After hitting a sixth month low at the end of July, the broad based Bloomberg Commodity Index (formerly known as DJ-UBS) managed a small comeback this week. Multiple geopolitical worries halted the slide in crude oil and gave precious metals a lift while industrial metals took stock following disappointing economic data from China and Europe.
The agriculture sector was higher as the grain sector returned from the abyss, thereby helping to offset losses in soft commodities, not least coffee and sugar, while livestock fell for a third week……………………………………Full Article: Source

Australia: Economy surviving commodity peak

Posted on 08 August 2014 by VRS  |  Email |Print

The Australian economy typically underperforms in the aftermath of commodity price peaks, but that’s not the reason for the latest rise in unemployment. The tough times typically arrive after the price peaks, when prices are still relatively high.
There have been four major rises in Australia’s export prices in the past 50 years (using the price measure for goods exports from the national accounts, converted into foreign currency values using the RBA’s trade-weighted index of the Australian dollar)………………………………………..Full Article: Source

Africa: Commodities: The Trade Challenge

Posted on 06 August 2014 by VRS  |  Email |Print

With new rules and new markets, African companies are fighting for a bigger stake in the continent’s resource bonanza. At the same time, multinational traders like Glencore are targeting Africa as they seek to control commodity value chains.
For a couple of days in mid-June, as the rest of the world settled down to watch the World Cup, Chad made a rare foray into the global news headlines. Idris Déby Itno, its dapper deal-making president who had paid a call a month earlier at the Elysée Palace to see France’s President François Hollande, announced that Chad’s capital, N’Djamena, was going to be headquarters for the regional campaign against jihadists in Nigeria, Mali and beyond………………………………………..Full Article: Source

Silver to Gain Ground in August on These Factors

Posted on 05 August 2014 by VRS  |  Email |Print

Silver prices may have had an unremarkable July, trading down 3%, but if recent history is any indication, August could help steer prices in the right direction and draw in the bulls. One reason for a rosy silver price forecast for August is that the white metal has finished up every year in this month for the last five years, averaging a return of 10.4%.
In the last 10 years, silver has finished up seven times and averaged a 3.6% month-long return. The last two years have been even better - silver tallied double-digit gains in August, with an astounding 19.3% surge in 2013………………………………………..Full Article: Source

Geopolitical risk fatigue grips commodities market

Posted on 04 August 2014 by VRS  |  Email |Print

Iraqi insurgencies, repeated clashes between Western powers and Russia first over Crimea, then Ukraine, while another bloody conflict raged in Gaza. The cocktail of high explosives for commodities is there, but 2014 has never the less been rather uneventful from a market perspective (so far at least).
Like the Forex market, commodities are struggling to make meaningful moves. Now, as August begins, we’re looking at severely low commodity volatility the like of which has not been seen this side of the millennium. Using the S&P GSCI index to gauge the commodity spectrum, we find that annual volatility is currently running below 10 per cent at 9.3 per cent, less than half the annual average since 2000 at around 22 per cent – even 2013 was more volatile………………………………………..Full Article: Source

China oil demand rises 2.7% vs year ago

Posted on 30 July 2014 by VRS  |  Email |Print

China’s apparent oil demand* in June turned directions from May and climbed 2.7% versus the same month a year ago to 41.94 million metric tons (mt) or an average 10.25 million barrels per day (b/d), according to a just-released Platts analysis of Chinese government data. On a month-over-month basis, apparent oil demand was up 8.6% from May.
“Analysts attributed the June increase to stronger fuel demand by the farming and agricultural sectors for the summer planting season,” said Song Yen Ling, Platts senior writer for China. “It’s also interesting to note that June marked the second month that China’s apparent oil demand crossed the 10 million b/d this year, following February’s 10.62 million b/d.”……………………………………….Full Article: Source

Commodities Trading At Banks: Going, Going, Gone?

Posted on 29 July 2014 by VRS  |  Email |Print

While on a visit to the commodities unit of a major investment bank in New York roughly seven years ago, one was enveloped by a sense of exuberance on the trading floor. No less than three executives claimed their institution was among the “few banks” with separate units dealing in paper crude oil barrels, as well as loading and dispatching the physical stuff on to tankers somewhere off a foreign shipping terminal.
Given that the global financial crisis hadn’t taken hold and the year was 2007, such a claim could well be classified as the market overstatement of the decade then. In actual fact, most major banks were trading derivatives, futures, options and physical commodities at the time. Fast forward to the second half of 2014, and it is a different scenario altogether………………………………………..Full Article: Source

Is gold approaching a tipping point?

Posted on 28 July 2014 by VRS  |  Email |Print

It is a property of physics that action is met by reaction, as a matter of real science. In the world of financial markets, however, that principle may only doubtfully apply, just as in economics cause and effect are very often difficult to disentangle.
That said, there is a fairly clear counterpart to the supposed likelihood of the US dollar rising with the expected onset of rising interest rates, as related last week. That is the impact on gold, responding both to the same underlying force and to the currency’s behaviour itself………………………………………..Full Article: Source

Smart phones, tablets, electric vehicles help Lithium demand soar

Posted on 28 July 2014 by VRS  |  Email |Print

Demand is soaring for lithium, which is used in rechargeable batteries for smartphones, iPads and electric vehicles. Weeks ago I wrote in this article that “Despite the lithium sector being in a correction for six weeks, attention should be paid to this dynamic sector which may be just on the verge of breaking out higher.” The lithium ETF was trading below $13 when that article was written testing the 200 day moving average.
Now the lithium ETF is poised to make a powerful breakout at new 52 week highs at $14. A game changing event occurred last week when Albemarle paid over $6.2 billion to buy the world’s largest publicly traded lithium producer Rockwood Holdings………………………………………..Full Article: Source

IMF cuts global growth outlook, warns of stagnation risk in rich nations

Posted on 25 July 2014 by VRS  |  Email |Print

The International Monetary Fund on Thursday chopped its 2014 forecast for global economic growth to take into account weakness early in the year in the United States and China, the world’s two biggest economies. The IMF warned that only some of the factors leading to the reduction were temporary, and richer nations in particular faced the risk of economic stagnation unless they took steps to foster sustainable growth.
In an update to its World Economic Outlook report, the IMF said the global economy should expand 3.4 percent this year, 0.3 percentage points below what it predicted in April. Growth should still speed up to 4 percent next year, it said, unchanged from what it predicted earlier this year………………………………………..Full Article: Source

Can OPEC Control World Oil Prices

Posted on 25 July 2014 by VRS  |  Email |Print

It is the world’s most famous cartel OPEC that currently controls almost three quarters of the world’s crude oil, a commodity that, as of right now, industrialized nations cannot do without. OPEC is currently an organization comprised of 11 member countries: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.
Formed in 1960 by 5 countries, OPEC clearly dominates world oil as its member countries produce 41% of the world’s oil, and comprise 55% percent of the world’s traded oil. Perhaps the most important statistic is the amount of the world’s oil reserves that OPEC member countries control; they control over 78% of all crude oil reserves………………………………………..Full Article: Source

The Shale Boom is Big and Good (Bad) for the Economy

Posted on 25 July 2014 by VRS  |  Email |Print

Hydraulic fracturing (“fracking”) has flipped the global energy discussion on its head. Over the past five years, the world has watched the U.S. shift its focus from fears of peak oil and its level of oil imports to a new reality where domestic oil and gas production are up and imports are down. And, while global greenhouse gas emissions have continued to increase, U.S. emissions have now decreased down to 1994 levels.
As shown in the graphic below from International Energy Agency’s Unconventional Gas Production Forum, shale gas production has dramatically increased in the United States over the past decade – in particular since 2009………………………………………..Full Article: Source

China gold demand falls by a fifth, but output rises

Posted on 25 July 2014 by VRS  |  Email |Print

China’s gold demand fell by nearly a fifth in the first half of 2014 from a year ago as consumer interest in bullion bars and coins waned.
Soaring purchases by retail customers in 2013 helped China overtake India as the world largest gold consumer for the first time. That buying “frenzy”, as the metals consultancy Thomson Reuters GFMS described it, was largely driven by the 28 per cent fall in the gold price last year………………………………………..Full Article: Source

Oil prices near lows, Russia sanctions, Iraq tensions support: PIRA Energy

Posted on 24 July 2014 by VRS  |  Email |Print

NYC-based PIRA Energy Group believes that with both the physical market and financial length bottoming, oil prices are at or near their lows. In the U.S., sharp crude stock reduction is offset by a product build. In Japan, crude stocks posted a large draw. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Sharp U.S. Crude stock reduction offset by product build: Crude stocks fell for the week ending July 11, 2014 while product inventories built, causing an overall inventory build. This inventory pattern fits with record crude runs. Last year for the same week, inventories were down slightly so the year-on-year inventory excess widened. Crude oil and other products are up on last year while the four major product inventories are down………………………………………..Full Article: Source

Bank Exodus From Commodities Could Hurt Liquidity Short Term

Posted on 23 July 2014 by VRS  |  Email |Print

The trend of major banks leaving the commodities business could hurt liquidity in the short term, but eventually other trading firms will fill the void, say veterans of the commodities business. Most do not look for a major impact on the price trend of commodities in general; after all, speculators can establish either long or short positions. Nevertheless, some pointed out that past moves by banks to exit happened to coincide with a bottoming in commodities prices.
Credit Suisse said Tuesday it plans to wind down its commodities trading to focus on other areas of its business. Previously, Deutsche Bank, JPMorgan and Barclays also said they are either scaling back or exiting the commodities arena………………………………………..Full Article: Source

World events prompt buying in commodities markets

Posted on 21 July 2014 by VRS  |  Email |Print

Midday Thursday, a Malaysia Airlines flight crashed in Eastern Ukraine, killing all 298 people aboard. Initial fears that the plane had been shot down were supported by intelligence agencies, sparking concerns that the crash could signal a deepening of the conflict between Ukraine and pro-Russian separatists. As global investors processed the news, they sold off stocks and bought commodities that could be in short supply if sanctions or increased military conflict followed the plane crash.
The primary issue on commodities traders’ watch list is whether pro-Russian forces will be implicated in the plane crash, which could lead to a fresh round of Western sanctions against Russia. If trade between Russia and the West suffers, one of the worst-hit markets could be palladium, since Russia mines nearly 40 percent of the world’s supply………………………………………..Full Article: Source

The Effect of Geopolitical Events on Commodities (Video)

Posted on 21 July 2014 by VRS  |  Email |Print

Bloomberg’s Isaac Arnsdorf discusses the effect of events in Ukraine and Russia on commodity prices with Alix Steel on “Street Smart.”.………………………………………Full Article: Source

Amid Global Turmoil, Oil Prices Surprisingly Stable

Posted on 21 July 2014 by VRS  |  Email |Print

The world has entered a zone of maximum upheaval. From the Atlas Mountains of North Africa to the Hindu Kush, in Afghanistan, the Middle East is in flames. The destruction of a Malaysian airline over Ukraine, almost certainly shot down by Russian-backed separatist rebels, threatens war in the Black Sea region.
Libya is being torn apart by competing militias, while parts of Iraq are under assault by the murderous Islamist force known as ISIS. Syria remains a bloody horror show, and Israeli troops have launched a ground invasion of Gaza. At no time since the terror attacks of 2001 has the world seen such conflict and instability………………………………………..Full Article: Source

Commodities rally is unlikely to continue

Posted on 17 July 2014 by VRS  |  Email |Print

A small allocation to commodities is justified based on their diversifying properties, but this year’s strong performance is unlikely to continue, Schroders’ multi-asset team has claimed. Alastair Baker and Patrick Brenner, two managers on the team, said many investors had moved underweight or eliminated commodities from their portfolios, based on extreme underperformance since 2011 and a high correlation with equities.
More recently, however, commodities, as measured by the Dow Jones-UBS Commodity index, have enjoyed a stronger 2014, outperforming equities and bonds in the first half of the year………………………………………..Full Article: Source

Gold demand to rise?

Posted on 17 July 2014 by VRS  |  Email |Print

Gold held above a one-month low on speculation the biggest decline this year may spur demand as holdings in the largest exchange-traded product backed by the metal expanded to the highest level since April.
Holdings in the SPDR Gold Trust climbed this year, rebounding from a 41 percent contraction in 2013, even as the Federal Reserve pressed on with cuts to stimulus. The assets rose 8.68 metric tons to 808.73 tons yesterday, the biggest tonnage gain since October 2012, data from the company’s website showed. Fed Chair Janet Yellen testifies to lawmakers today and may offer clues on the timing of rate increases………………………………………..Full Article: Source

Commodities luring investors

Posted on 14 July 2014 by VRS  |  Email |Print

Investors are being lured back to commodities after war and drought helped make raw materials the surprise best-performing major asset class in the first half. About $5.9 billion was added to raw materials investments this year, compared with a record $50 billion withdrawn in 2013, Citigroup Inc. estimates. Assets under management of about $360 billion at the end of last year rose to $365 billion through May and probably increased again in June, the bank said Monday.
While Citigroup and Goldman Sachs Group Inc. forecast in January that prices would fall or remain steady this year, Middle East unrest and pledges by central banks to keep interest rates low sent gold up 11 percent and boosted oil to a nine-month high. Lack of rain in Brazil lifted coffee 58 percent, helping commodities record the best first half since 2008………………………………………..Full Article: Source

OPEC Sees U.S. Fueling Acceleration in Global Oil Demand Next Year

Posted on 11 July 2014 by VRS  |  Email |Print

Rising U.S. oil consumption will reverse a four-year demand decline in rich nations and drive a pick up world-wide next year, the Organization of the Petroleum Exporting Countries said Thursday. The assessment—the first given for 2015 by the oil producers’ group—shows the U.S. is scooping more of its own oil amid a production boom just as OPEC’s role continues to decrease.
In its monthly oil market report, OPEC said global oil demand growth will pick up next year amid robust economic growth. World consumption will increase by 1.21 million barrels a day in 2015, compared with a rise of 1.13 million barrels a day this year, the group said………………………………………..Full Article: Source

Big Commodity Traders Gain Clout

Posted on 10 July 2014 by VRS  |  Email |Print

A handful of giant commodity traders such as Netherlands-based Trafigura Beheer BV and Vitol Group are increasingly taking a central role in global commodity markets. These once-obscure firms aren’t just betting on prices or arranging product shipments. They are taking on oil companies, miners and major Wall Street banks by sinking billions of dollars into refineries, power plants, ports and other assets.
The four biggest traders—Vitol, Glencore, Cargill Inc. and Trafigura—each boast annual revenue of more than $100 billion, putting them in the ranks of household names such as Apple Inc. and Chevron Corp………………………………………..Full Article: Source

Future of Oil Hangs on Iraqi Politics

Posted on 10 July 2014 by VRS  |  Email |Print

Fears that events in Iraq will send global oil prices soaring have abated. Yet, the crisis has potentially huge implications for oil. Under any conceivable outcome to the current situation, oil production from Iraq will fail to meet recent expectations. The reason for this dire prognosis is that politics – not security or logistics – will be the biggest determinant of Iraq’s oil trajectory in the years ahead.
In 2012, the International Energy Agency forecast that Iraq would account for 45 percent of the growth in global oil supply from 2012 to 2035. In its projection, the IEA anticipated that Iraq would move to producing more than 6 million barrels a day in the next five and a half years, from 3.3 million barrels a day………………………………………..Full Article: Source

Good returns bring investors back to commodity ETFs

Posted on 09 July 2014 by VRS  |  Email |Print

The best commodities performance in years has rekindled interest in exchange traded funds that allow investors to trade the price of energy, metals and grains on stock markets. At one time, some ETFs were so large that critics contended they distorted wholesale markets for food and energy. Assets held in many of the biggest funds have shrunk from their peaks.
But new figures show investors began to creep back into commodity ETF products as the benchmark Bloomberg Commodity Index rose 7.1 per cent in the first half of the year. The direction of flows varied by geography and sector, however……………………………………Full Article: Source

EIA bumps up oil, gasoline and natural gas price predictions

Posted on 09 July 2014 by VRS  |  Email |Print

The U.S. Energy Information Administration raised its 2014 and 2015 average price estimates for crude oil, gasoline and natural gas, according to a monthly report released Tuesday. “The escalating conflict in Iraq, continued record-high levels of Chinese crude oil imports in 2014, and ongoing delays to Libyan oil exports have contributed to upward price pressure,” the government agency said.
For 2014, the EIA forecast average prices of $100.98 a barrel for West Texas Intermediate crude oil , up from an estimate of $98.67 in the previous monthly report. It estimates an average 2015 price of $95.17, up from $90.92……………………………………Full Article: Source

What To Expect Next in Precious Metals

Posted on 09 July 2014 by VRS  |  Email |Print

Since 2008, we have seen evidence of a consistent economic recovery both in the US and around the world. These positive trends have some drastic implications for investors and those that are considering gaining exposure in precious metals. In areas like stocks, the central benchmarks have risen to new record highs and those that are not already long equity markets might find it difficult to navigate the current market.
“It is not easy to buy into stocks at such elevated levels,” said Vlad Karpel, options analyst at TradeSpoon, “so more traders have started to consider buying gold as a way to profit from the market valuations that are present now.” And when we look at the most likely trends that will be seen through the rest of this decade, there is a strong case that can be made for why increased inflationary pressures could bring the price of gold back closer to its 2011 highs……………………………………Full Article: Source

Banks could lose monopoly on gold fix

Posted on 08 July 2014 by VRS  |  Email |Print

Other industry groups such as miners may join process of setting crucial benchmark following allegations that process is open to rigging. Banks could lose sole responsibility for setting the gold price benchmark under new rules proposed by the industry.
Other parties such as miners and refiners may enter the London gold fix, which has been controlled by banks for almost a century but has come under scrutiny following allegations that the system is open to manipulation. At a summit held by the World Gold Council (WGC) on Monday, regulators, banks and investors convened to discuss options for the fix, the gold price benchmark that influences trading in the precious metal……………………………………..Full Article: Source

Oil and gas cyber security

Posted on 08 July 2014 by VRS  |  Email |Print

In the past, most operational technology (OT) networks were isolated (air gaped) from the internet and office networks and operated independently, using proprietary hardware, software and communications protocols.
However, in recent years, demand for business insight, requirements for remote network access and the spread of hardware and software from traditional IT (e.g. TCP/IP networking, Windows based platforms) caused many oil and gas companies to integrate control systems and their enterprise IT systems……………………………………..Full Article: Source

Commodities Obsolete in Models Yielding to Fed, ECB

Posted on 07 July 2014 by VRS  |  Email |Print

Commodities are getting a demotion from foreign-exchange strategists. Banks from JPMorgan Chase & Co. to Citigroup Inc. are reducing the weighting given to exports in their currency forecasting models as policy makers tighten their grip on financial markets.
Traditional commodity currencies, such as those of Canada, Australia, New Zealand and Norway, have become decoupled from exports by the most in as much as 13 years. “The breakdown in correlations has been significant,” Niall O’Connor, an analyst at JPMorgan in New York who specializes in tracking trends in trading patterns, said. “It’s central-bank talk that’s really become the catalyst for price action.”……………………………………….Full Article: Source

Opec output slips in June over Iraq crisis

Posted on 03 July 2014 by VRS  |  Email |Print

Opec’s oil output has fallen in June from May’s three-month high, a survey found on Monday, as fighting in Iraq closed its largest oil refinery and technical problems slowed its southern exports.
The slight decline underlines how unrest and outages in the Middle East and Africa are taking their toll on Opec supply, just as the International Energy Agency is highlighting a greater need for Opec oil in the rest of the year………………………………………..Full Article: Source

Australia’s dependency on China commodity appetite rises

Posted on 01 July 2014 by VRS  |  Email |Print

Australia still has the Union Jack on its flag and the British queen on its coins, and was once described as the US “deputy sheriff” in Asia, but the real dependency relationship is with China. Nowhere is this reality made more clear than in the quarterly outlook by the Bureau for Resources and Energy Economics (BREE), the government agency responsible for commodity exports and other forecasts.
In the 2002-03 fiscal year, the biggest buyer of Australian resource and energy exports was Japan, which took 15% and 39% of the respective totals, according to BREE’s Resources and Energy Quarterly published June 25………………………………………..Full Article: Source

Commodities Prices: Why Do They Shoot Up And Then Collapse?

Posted on 27 June 2014 by VRS  |  Email |Print

Commodity prices are much more volatile than overall inflation, as I noted in an earlier post, “Commodity Prices: Basics For Businesses That Buy, Sell or Use Basic Materials.” In this article I explain why that is. The “why” will help you figure out other questions, such as “How high?” and “For how long?” and “How deep a collapse?”
Begin with a textbook example, shown on the left panel of the chart. (If you have no recollection of supply and demand charts, scroll down for the “Supply and Demand Chart Explanation.”)……………………………………….Full Article: Source

Rising Commodity Prices Could Hit Consumers’ Wallets

Posted on 27 June 2014 by VRS  |  Email |Print

Get ready to pay more for your Independence Day barbecues this year. Both hog and cattle prices were up this month, with hog futures closing in on an all-time high after paring back gains in April and May. Hog prices have skyrocketed more than 30% over the past year due to a virus that trimmed the U.S. herd by roughly 10%.
Cattle futures are set to close the month at an all-time high on reports of tight supplies heading into the Fourth of July holiday, the most popular day for Americans to grill outdoors, according to the Hearth, Patio and Barbecue Association………………………………………..Full Article: Source

Two Key Issues That Will Determine Next Year’s Oil Prices

Posted on 26 June 2014 by VRS  |  Email |Print

Rising oil production in the US and slowing oil demand growth in the rest of the world were expected to bring Brent oil prices below $100 a barrel, but supply disruptions in the Middle East and North Africa have kept them from happening.
Now that ISIS is holding substantial territory in Iraq, Raymond James analysts have increased their estimates for 2014 and 2015, but they also warn that there is a huge range of possible prices depending on how Mideast conflicts and US politics play out………………………………………..Full Article: Source

Commodity hedge funds out of favor, launches head for 8-year low

Posted on 25 June 2014 by VRS  |  Email |Print

Commodity fund launches have slowed dramatically, heading for an eight-year low, data from industry tracker Preqin showed, after years of weak returns and some high-profile fund failures in the commodities sector.
In the year through May, some 34 commodity funds were launched, the fewest since the first half of 2006. Last year, there were 89 commodity funds launched worldwide in the first half, Preqin’s data showed………………………………………..Full Article: Source

Interest increases for commodities

Posted on 24 June 2014 by VRS  |  Email |Print

Investor inflows into exchange traded products can broadly be divided into two camps: those that look to use mainly ETFs in specific equity and bonds markets for some tactical asset allocation plays, and those that are looking for exposure to specific and niche areas of the market, particularly commodities.
David Patterson, head of UK wholesale distribution for passive investment products at DeAWM, notes: “Once equity markets bottomed out after the 2008 crash, the recovery has seen US equities in particular show tremendous growth. Anyone holding an ETF tracking the S&P 500 for the past five years would have done extremely well – the index is up almost 200 per cent since the market bottomed out………………………………………..Full Article: Source

Will This Be the Next Chinese-Led Commodity Boom?

Posted on 24 June 2014 by VRS  |  Email |Print

Growing food is more about math and science than you might believe. That’s why increasing meat consumption in China has such vast implications for the world. A little simple math shows that companies like Potash and Mosaic are in the right business to take advantage of this Chinese trend, so long as the fertilizer industry is careful about supply and demand.
An example of China’s impact: If you want to see how big Chinese demand for key materials can be, look no further than the coal industry. Between 2000 and 2012, China’s use of coal increased from 1.5 billion tons to roughly 4 billion tons. Industrialization, economic development, and urbanization all backstopped that increase. That 2.5 billion tons, however, turned the coal market on its head, with rising prices drawing in new producers that eventually flooded the market with supply………………………………………..Full Article: Source

The downtrend in gold is under threat

Posted on 24 June 2014 by VRS  |  Email |Print

The rally in COMEX gold prices from $1,250 has gold bulls excited. After more than 2 years of falling prices is this finally the turnaround that gold bulls have been hoping for?
The gold chart doesn’t give a clear answer but it sets key trigger points that allow traders to make a better decision. Let’s start with the bearish view and look at features that suggest the rally is temporary and the downtrend will likely continue. There are three resistance features that can limit the rally………………………………………..Full Article: Source

Barings survey shows uptick in commodity demand

Posted on 19 June 2014 by VRS  |  Email |Print

Advisers are increasingly willing to recommend natural resources and commodities funds to their clients, according to a survey by Baring Asset Management. Nearly two in five (38 per cent) of intermediaries suggested they would recommend an increase in their exposure to the sectors, up from a quarter in the previous Barometer survey and the highest for nearly three years.
The research found one in six (16 per cent) were ‘very favourable’ towards natural resources/commodities from just 6 per cent in the previous Barometer. More than half (53 per cent) said they were currently ‘favourable’ towards global resources and commodities…………………………………..Full Article: Source

Global trends for commodities prices is positive

Posted on 17 June 2014 by VRS  |  Email |Print

For the last fortnight, global market sentiments were largely positive in the start of fortnight owing to number of factors. Major factors like US unemployment rate been seen below the US Federal Reserve target of 6.5 percent along with European Central Bank (ECB) cutting the minimum bid rates to 0.15 per cent supported an upside in the markets.
The ECB became the first central bank in the world to charge banks if they holding money which acted as a positive factor. However, in the later part of the fortnight markets began to take correction after unrest in Iraq which threatened to oil supplies………………………………………..Full Article: Source

Commodities Waking Up Because Of Events In Iraq?

Posted on 17 June 2014 by VRS  |  Email |Print

Markets have been quite complacent as of late, proven by incredibly low volatility across all asset classes (chart here and here). However, volatility could now start picking up with a potential crisis flaring up in the Middle East. On Saturday, the Guardian reported recent US reactions toward the Iraq Crisis.
The US is sending an aircraft carrier and two guided missile ships into the Persian Gulf, bolstering sea and airpower before a possible US strike on the jihadist army in Iraq in the coming days………………………………………..Full Article: Source

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