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Is a global economic recession coming? Copper price say ‘yes’

Posted on 15 January 2015 by VRS  |  Email |Print

The market for copper, a metal that two years ago was being stolen by thieves looking for big profits, is crashing – the latest in a string of commodities nosedives that have experts worried about the broader implications for the global economy. The copper market crashed overnight to its lowest level since the middle of the financial crisis in 2008, fueling fears that the global economy is slowing more sharply than many experts had anticipated.
Wednesday’s drop is the sixth consecutive decline in copper prices. Currently trading at around $5,560 a ton, the prices are causing significant pain to mining companies like Glencore, whose stock responded to the copper crash by hitting a record low………………………………………..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

Oil Prices And The Significant, Long-Lasting Impact On The Economy

Posted on 14 January 2015 by VRS  |  Email |Print

In 2014, a number of events will go down in history as major, market-moving events. From an economic viewpoint, though, perhaps no other event will have a more significant and long-lasting impact than the collapse of oil prices. At this time last year, oil was trading well above $100 per barrel. Last week, the price of a barrel of West Texas Intermediate oil traded at less than $50.
Over the years, oil prices have fluctuated. The last two major oil price declines were driven by central bank policy errors – monetary contractions which led to global economic recessions. During an economic recession, the world economic activity contracts and demand for oil declines. When demand for any commodity contracts, prices decline………………………………………..Full Article: Source

Market doomsayer Marc Faber: Gold will rally 30% in 2015

Posted on 14 January 2015 by VRS  |  Email |Print

Gold has absorbed its fair share of the commodities-market blows in recent years, but now is the time to move back into the precious metal, according to superbear Marc Faber. “I’m positive [that] gold GCG5, -0.03% will go up substantially [in 2015] — say 30%,” Faber, whose investment letter is called the Gloom Boom Doom Report, said at Société Générale’s global strategy presentation in London on Tuesday.
“My belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”……………………………………….Full Article: Source

The Economic Impact Of Falling Oil Prices: ‘Expansionary Disinflation’

Posted on 13 January 2015 by VRS  |  Email |Print

Forget about the “secular stagnation” theory of an ailing U.S. economy. Accordingly to the Labor Department, payrolls grew at a seasonally adjusted increase of 242,000 in December adding to the soaring U.S. job growth of 2014 which represents the strongest annual job creation since 1999. The unemployment rate also fell to 5.6% in December, down from 7% a year earlier and far below predictions made by economists at the beginning of 2014.
In addition, the past 2 quarters of GDP growth have been well above an annualized 4%. What complicates this rosy picture however for the Federal Reserve and its dual mandate is that core CPI inflation has fallen to 1.3%, well below the Fed’s 2% target and will likely continue to fall given the recent significant decline in the price of crude oil, an input to several products included in core inflation………………………………………..Full Article: Source

Why Africa is becoming less dependent on commodities

Posted on 12 January 2015 by VRS  |  Email |Print

For decades commodities have shaped Africa’s economic growth. When prices were high, growth was good; when prices dipped, so did the continent. But that is slowly changing. Despite big commodity-price falls this year—oil is down by 50%—the continent will probably grow by 5% in 2015 (and more in the following years). While lots of African currencies lost value in 2014, they have performed much better than during other periods when commodity prices were falling.
Few African countries will fall into recession in 2015—unlike other commodity exporters such as Russia and Venezuela. Why is Africa doing better than many expected? Two reasons stand out. First, the continent’s economic growth is coming from other places. Governments have worked hard to make life easy for investors. Second, many African governments are better at managing the inevitable booms and busts of commodity markets………………………………………..Full Article: Source

Commodities Fall as Stockpiles Mount Up

Posted on 12 January 2015 by VRS  |  Email |Print

Two years ago, Daniel Nilsson ’s family bought a hotel in the town of Pajala, Sweden, some 50 miles above the Arctic Circle. The nearby Kaunisvaara iron-ore mine had just started production, and the Nilssons installed new meeting facilities and revamped the nightclub. “We wanted to give the locals and the people working in the mines a great hotel to come to,” said Mr. Nilsson, its 28-year-old manager. “That’s why we bought it—we saw a future for it.”
But the price of iron ore sank last year, and with it the Lapland River Hotel’s fortunes. In October, the mine’s owner, Northland Resources , stopped operations. Two months later, Northland filed for bankruptcy………………………………………..Full Article: Source

Commodity prices face more pressure as China’s growth to fall

Posted on 12 January 2015 by VRS  |  Email |Print

Prices for iron ore and other commodities exposed to China’s building sector will remain under pressure this year as construction falls and the Chinese government holds firm in its push to become a more services-orientated economy, a leading economist has warned.
Ahead of UBS’s annual conference beginning in Shanghai today, the bank’s chief economist for China, Wang Tao, said the ­nation’s property construction “adjustment” would continue this year as developers lighten inventories to improve cashflow………………………………………..Full Article: Source

Most developing countries will benefit from oil price slump

Posted on 12 January 2015 by VRS  |  Email |Print

Gains from low oil prices can be substantial for developing-country importers if supported by stronger global growth, says a World Bank Group analysis of the oil price decline, contained in the latest edition of Global Economic Prospects.
The decline in oil prices reflects a confluence of factors, including several years of upward surprises in oil supply and downward surprises in demand, receding geopolitical risks in some areas of the world, a significant change in policy objectives of the Organization of the Petroleum Exporting Countries (OPEC), and appreciation of the U.S. dollar. Although the relative strength of the forces driving the recent plunge in prices remains uncertain, supply related factors appear to have played a dominant role………………………………………..Full Article: Source

Ten things to watch in commodities in 2015

Posted on 09 January 2015 by VRS  |  Email |Print

From Opec to Glencore, the outlook for the year ahead. Commodities as an asset class: Making long-only investments in commodity futures came into vogue about a decade ago, based on the premise that they offered inflation protection and equity-like returns without being correlated to stock markets.
On that score, this premise has certainly held true: with inflation modest, the Bloomberg Commodity Index has dropped 27 per cent in the past five years in an unflattering lack of correlation with soaring equities. Watch for more portfolio managers throwing in the towel on commodity indices and virtual silence in world capitals about problems caused by speculators………………………………………..Full Article: Source

Dependency on commodities

Posted on 09 January 2015 by VRS  |  Email |Print

Commodities are sirens: alluring, yet dangerous. When prices are high, politicians in commodity-exporting countries rejoice. Proceeds from the export of oil, gas and metals fill state coffers. Foreign cash floods in and well-paid jobs are created. Such countries’ governments often neglect other parts of the economy, believing that the good times will never end. But they always do.
As commodity prices tumble, many countries are learning what happens when an economy is too reliant on natural resources. Venezuela, with the world’s largest oil reserves, is on the verge of defaulting. Brazil and Norway, two other big oil exporters, have seen their growth forecasts cut. The Russian president, Vladimir Putin, will watch his economy shrink by 5% in 2015, according to central-bank estimates. His government’s debt is likely to be downgraded to “junk” status………………………………………..Full Article: Source

The long shadow of the commodity bust

Posted on 08 January 2015 by VRS  |  Email |Print

The commodity boom of the past decade had all the hallmarks of a typical bubble: massive retail participation (through ETFs, mutual funds etc…), large pension fund involvement, a widespread belief that ‘this time, things were different’ and that a ‘commodity super-cycle’ was unfolding.
But like all bubbles, this one too has come to an end. There were plenty of potential triggers in the shape of (i) the Federal Reserve’s decision to stop printing money; (ii) China’s slowdown and associated anti-corruption drive which means that managers at state firms have no incentive to bid up commodity-producing assets;……………………………………….Full Article: Source

Australia trade deficit widens as commodities drop

Posted on 07 January 2015 by VRS  |  Email |Print

Australia’s trade deficit widened in November from October as falling prices for key resources such as iron ore overshadowed rising commodity export volumes as mining companies continued to ramp up production.
The seasonally adjusted trade deficit widened to A$0.93 billion from a revised A$0.88 billion in October, according to the Australian Bureau of Statistics. It is the eighth trade deficit in a row. Economists had been expecting a shortfall of A$1.6 billion in November………………………………………..Full Article: Source

Not just oil: Are lower commodity prices here to stay?

Posted on 07 January 2015 by VRS  |  Email |Print

Oil isn’t the only commodity that’s gotten cheaper. From nickel to soybean oil, plywood to sugar, global commodity prices have been on a steady decline as the world’s economy has lost momentum. That lower demand helps explain, in part, why nearly everything from crude oil to cotton has been getting cheaper.
Sure, some commodity prices are rising. Local supply constraints have pushed prices higher in some parts of the world; transportation costs can also have a big impact on local prices. In the U.S., for example, a drought in California caused the price of vegetables and other food products to spike last year………………………………………..Full Article: Source

Why China couldn’t corner the market on high-tech metals

Posted on 07 January 2015 by VRS  |  Email |Print

Despite controlling some 70% of production, China has quietly conceded its inability to control the market for rare earth elements, which are used in a variety of high-tech devices and manufacturing processes.
China’s announcement that it will end export quotas on the elements comes after an August WTO finding that the limits violated global trade rules. But the real nail in the coffin was the power of the market: China didn’t appeal the decision because the quotas did little to affect the market for the metals………………………………………..Full Article: Source

Commodities fall biggest since 2008

Posted on 06 January 2015 by VRS  |  Email |Print

Commodity prices suffered their greatest fall in six years in 2014 and dealt a hit to the Australian economy, but there is scope for optimism. Multinational bank HSBC has calculated that commodity prices fell 30 per cent in 2014, with oil’s plunge the biggest driver. The price falls are reducing Australia’s export earnings by tens of billions of dollars.
The news is not all bad, with HSBC predicting a slight recovery this year for iron ore, the nation’s most valuable export, and extra income from the ramp up in natural gas exports………………………………………..Full Article: Source

Industrial Metals Looking Up Amid Some Worry

Posted on 06 January 2015 by VRS  |  Email |Print

Industrial metals are used in a wide variety of applications, including numerous construction and manufacturing businesses. The rise in global population, growth in the Chinese economy and increasing requirements from the developed countries had created an unprecedented demand for minerals and metals.
However, over the last couple of months, a stronger greenback, falling oil prices and a slowdown in the Chinese economy have emerged as major headwinds for the global metal industry………………………………………..Full Article: Source

Another challenging year for commodities

Posted on 05 January 2015 by VRS  |  Email |Print

Investors in commodities should brace themselves for another challenging year in 2015, a Credit Suisse Private Banking report has warned. Commodity markets are still facing oversupply owing to “excessive” capital expenditure over the past few years, said commodity strategy analyst Stefan Graber.
Since demand for commodities does not seem to be picking up, prices will have to fall further until production declines, he said. “As commodity projects have long lead times, this process will take time.” This subdued forecast comes after a tough year for commodities investors, with the biggest drag coming from oil………………………………………..Full Article: Source

Top Five Factors Affecting Oil Prices In 2015

Posted on 05 January 2015 by VRS  |  Email |Print

As we ring in the New Year, let’s take stock of where we are at with the oil markets. 2014 proved to be a momentous one for the oil markets, having seen prices cut in half in just six months. The big question is what oil prices will do in 2015. Oil prices are unsustainably low right now – many high-cost oil producers and oil-producing regions are currently operating in the red.
That may work in the short-term, but over the medium and long-term, companies will be forced out of the market, precipitating a price rise. The big question is when they will rise, and by how much. So, what does that mean for oil prices in 2015? It is anybody’s guess, but here are the top five variables that will determine the trajectory of oil prices over the next 12 months, in no particular order………………………………………..Full Article: Source

Gold outlook: Prices could recover in 2015

Posted on 05 January 2015 by VRS  |  Email |Print

The fundamentals of the global gold market could point to modestly higher prices in 2015, according to a commodities analyst. Victor Thianpiriya, commodity strategist at ANZ Bank, expects gold prices to average around $1,238 per ounce for 2015, an increase of over 3.5% from 2 January’s spot price, which hovered at $1,194.10 at midday.
Thianpiriya, in ANZ’s 2015 outlook report, published last month, also said the Australian bank expects Chinese demand for physical gold to remain consistent in 2015, but that prices needed to move up to attract new buyers to the market place………………………………………..Full Article: Source

Commodities will continue to struggle in 2015: Credit Suisse

Posted on 02 January 2015 by VRS  |  Email |Print

Commodities have had a bad run last year and their losing streak could linger on into 2015, Credit Suisse Private Banking said in a report. Commodity prices fell this year and markets are still facing oversupply, commodity strategy analyst Stefan Graber noted.
He said that the oversuppy was due to “excessive” capital expenditure over the past few years. Since demand for commodities does not seem to be picking up, prices will have to fall further until production declines, he said, adding: “As commodity projects have long lead times, this process will take time.”……………………………………….Full Article: Source

Heed These Commodity Market Lessons in 2015

Posted on 02 January 2015 by VRS  |  Email |Print

It might seem counterintuitive, but the start of a new year is the perfect time to reflect on lessons learned in commodity marketing. Analysts say several fundamental messages become apparent for crop and livestock producers during 2014.
For row-crop producers, lessons stem from basic principles of risk management. “Watch your volatility,” advises Bill Biedermann, Allendale, Inc. “Try to manage around that.” Referencing the dramatic downturn in crop prices, Angie Maguire of Citizens LLC says 2014 proved to be “the same as ’12, just the opposite” from a price perspective………………………………………..Full Article: Source

What’s next for OPEC as lower oil prices extend into 2015?

Posted on 02 January 2015 by VRS  |  Email |Print

The oil price decline of 2014 upended the geopolitical chessboard. Worth watching in 2015 will be who can recover and dominate play — OPEC, Vladimir Putin or U.S. shale drillers.
Oil’s international benchmark price dropped as much as 49 percent in 2014. Those looking for a quick rebound may be disappointed, as world consumption growth slowed to the least since 2009, U.S. companies pumped more than they have since the 1980s and a price war broke out among members of the Organization of Petroleum Exporting Countries………………………………………..Full Article: Source

Commodities outlook 2015: Economic prospects

Posted on 23 December 2014 by VRS  |  Email |Print

Following a number of years of sluggish performance, the UK economy finally seems to be heading in the right direction. But consumers continue to feel the pinch on spending, and with the European economy still depressed, selling into both domestic and export markets remains challenging, says Richard King, head of Andersons’ business research.
UK GDP growth improved to an estimated 3% in 2014 – and is forecast at 2.6% in 2015. “While this growth is good news, it may prove problematic to agriculture in the form of a stronger pound and bank base rate increases,” says Mr King………………………………………..Full Article: Source

Saudis See Oil Recovery as U.A.E. Urges Non-OPEC Cuts

Posted on 23 December 2014 by VRS  |  Email |Print

Saudi Arabia and the United Arab Emirates reiterated pledges to keep pumping the same amount of crude, blaming non-OPEC producers for the glut of oil that’s driven prices to the lowest in five years.
Suppliers from outside the Organization of Petroleum Exporting Countries should cut “irresponsible” output, U.A.E. Energy Minister Suhail Al Mazrouei said in Abu Dhabi yesterday. Even if non-OPEC producers were to offer cuts, OPEC probably wouldn’t follow suit, Saudi Oil Minister Ali Al-Naimi said. The two countries account for about 40 percent of OPEC supply………………………………………..Full Article: Source

Global economy growth likely to be weaker than 2014: QNB

Posted on 23 December 2014 by VRS  |  Email |Print

As 2014 comes to an end, the global economy shows signs of weakness with significant downside risks. Some of these risks are likely to materialise next year, leaving the global economy in worse shape than in 2014, QNB said in its Economic Commentary yesterday. It made five predictions that will expected to shape the global economic outlook for 2015 and beyond.
“Looking back, our expectations for 2014 were for a moderate recovery in the world economy that would enable an orderly exit from US Quantitative Easing (QE) and a resumption of global growth to its pre-crisis levels. The reality turned out to be quite different,” the Economic Commentary said………………………………………..Full Article: Source

Amid gloom, some commodities show mettle

Posted on 22 December 2014 by VRS  |  Email |Print

The year 2014 has been a forgettable one for most commodities with many such as crude oil, copper, steel, rubber and cotton seeing their prices head relentlessly south. China cutting back on commodity imports, Europe and Japan slipping again on growth, and the US Fed rolling back its easy money policy affected all commodities. But amidst all the gloom, a few bucked the trend.
From being among the worst performing metals last year, nickel, used mainly for making stainless steel, emerged as one of the top gainers of 2014. Following the Indonesian government’s ban in January on export of unprocessed nickel ore, supplies from the world’s largest producer shrank drastically………………………………………..Full Article: Source

A falling oil price is good for the world economy

Posted on 22 December 2014 by VRS  |  Email |Print

Lower oil prices are not a good thing for Vladimir Putin, Russia’s president: that much is clear. But what about for everyone else? The sharp fall in crude over the past three months has produced an unusual amount of concern that, with inflation already dangerously low across much of the developed world, cheaper oil will worsen the problem.
Such fears are misplaced. To think that lower oil prices are a net negative for the world economy, and particularly for the advanced economies, is to misunderstand the problem with deflation and the cures for it………………………………………..Full Article: Source

Price of Silver in 2015: Why It Could Bounce Higher

Posted on 22 December 2014 by VRS  |  Email |Print

In 2014, silver once again suffered a substantial loss, following up a 36% crash in prices during 2013 with more double-digit percentage declines. Yet even though investors have had to live through a crushing precious-metals market environment during the past two years, many investors now believe that the price of silver in 2015 could finally bounce higher and give bullion owners some long-awaited relief.
Let’s look more closely at what’s moving silver prices, and how those factors are likely to affect silver prices in 2015 and beyond. Can the price of silver in 2015 really rise? Silver offers a unique mix of attributes of both precious and industrial metals. On one hand, silver has traditionally moved closely with gold, given the two metals’ historical use in monetary systems around the world………………………………………..Full Article: Source

Why Gold Could Continue To Fall

Posted on 22 December 2014 by VRS  |  Email |Print

Gold prices remain under selling pressure. Receding U.S. inflation could continue in 2015. As the dollar strengthens, and disinflation begins, expect gold to sell-off further. The price of gold could continue to decline as inflation expectations fall, alongside a stronger dollar and interest rate hike expectations. SPDR Gold Shares is down 14% since March.
The initial fear is that gold could continue to decline as inflation pressures remain subdued, with the dollar rising, and interest rate hikes taking place. On Friday, Minneapolis Federal Reserve Bank President Narayana Kocherlakota stated that he feared a premature rise in interest rates, prior to inflation growth, could do real damage to the economy………………………………………..Full Article: Source

All’s not lost: Commodities ex-oil stage comeback

Posted on 19 December 2014 by VRS  |  Email |Print

Focus may be on volatile oil prices right now, but investors shouldn’t overlook the strong performance in other commodities, one expert warns. Ten commodities were in backwardation this month, a sign that markets outside of oil are recovering, according to a recent note from S&P Dow Jones Indices: copper, corn, cocoa, silver, coffee, live cattle, feeder cattle, heating oil, Kansas wheat, and lean hogs.
Backwardation occurs when the present spot price of a commodity is higher than the futures price, typically signaling a surge in demand and shortages in supply………………………………………..Full Article: Source

Commodity markets limp into 2015

Posted on 19 December 2014 by VRS  |  Email |Print

A freefall in commodity prices has come to a head at the end of 2014 as crude oil, iron ore and coal prices, among others, took a significant tumble and served to bring one global giant – Russia, the world’s ninth-largest economy – to its knees.
The problem facing most resources is that high levels of production have seen supply outstrip global demand, resulting in low commodity prices. Resource giants with low production costs will weather the storm until supply tapers and prices pick up again. High cost producers will probably fall over. The commodity fall can largely be attributed to slowed demand from China which is switching from an investment-focused economy to a consumer-oriented one………………………………………..Full Article: Source

Oil price shockwave ripples across world markets

Posted on 18 December 2014 by VRS  |  Email |Print

The financial turmoil engulfing Russia is a symptom of a wider world markets earthquake that has its epicenter in oil’s collapse and Western disinflation but is now rippling far and wide across investors’ portfolios.
Not unlike other bouts of global financial contagion in the late 1990s and again in 2008-09, the growing interdependency of world finance means seismic activity in one area can often lead to a chain reaction of seemingly random events…………………………………….Full Article: Source

Oil price shockwave ripples across world markets

Posted on 18 December 2014 by VRS  |  Email |Print

The financial turmoil engulfing Russia is a symptom of a wider world markets earthquake that has its epicenter in oil’s collapse and Western disinflation but is now rippling far and wide across investors’ portfolios.
Not unlike other bouts of global financial contagion in the late 1990s and again in 2008-09, the growing interdependency of world finance means seismic activity in one area can often lead to a chain reaction of seemingly random events…………………………………….Full Article: Source

PGMs Seen Gaining Upward Momentum By End Of 2015; More Supply Deficits Expected

Posted on 18 December 2014 by VRS  |  Email |Print

Platinum group metals might start slowly but eventually should gain upside momentum in 2015, with most analysts expecting rises for the year. Large existing above-ground stockpiles, potential for higher U.S. interest rates and a stronger U.S. dollar are expected to provide obstacles in the early part of 2015. But eventually, further supply/demand deficits are expected to help the market tick higher.
Platinum could remain under pressure early in the year, said Bart Melek, head of commodity strategy with TD Securities. While the market is already in a supply/demand deficit, there are nevertheless considerable inventories already built up. Further, Europe’s economy remains soft, especially important to platinum since it is required for auto catalysts in the diesel-powered vehicles popular on the continent…………………………………….Full Article: Source

Commodities Still Getting Trashed

Posted on 17 December 2014 by VRS  |  Email |Print

A slowdown in Chinese manufacturing and a sustained effort by OPEC to make shale oil extraction unprofitable have been just two of the factors which have been crushing commodities prices. On December 12, China’s National Bureau of Statistics reported that industrial production increased only 7.2 percent in November, on a year-over-year basis.
While that might be acceptable elsewhere in the world, the reading fell short of economists’ expectations of a 7.5 percent increase. China’s government had been anticipating that economic expansion during 2014 would remain at 7.5 percent. More recently, the People’s Bank of China has lowered its sights to 7.4 percent expansion for this year, followed by a slowdown to 7.1 percent growth in 2015……………………………………..Full Article: Source

Gold and Silver Outlook for 2015

Posted on 17 December 2014 by VRS  |  Email |Print

In the past 12 months, gold has traded as high as around $1,380 an ounce and as low as about $1,140 an ounce. From its starting point at around $1,220, though, the change is just $10 an ounce at the current price around $1,210. Since June, when oil prices started falling and the dollar began strengthening, gold has lost about $100 an ounce.
Silver is down about $5 an ounce, from around $21 to around $16 since June. From their June prices, then, gold is down about 8% and silver is down about 25%. The story is significantly different for gold and silver mining companies. Rising mining costs and low prices have plagued the miners for more than two years, and share prices have dropped by 50% to 75% over that time for the firms we are looking at now…………………………………….Full Article: Source

BRICS countries lead global capital flight-report

Posted on 16 December 2014 by VRS  |  Email |Print

The BRICS grouping of emerging market nations is leading the flight of illicit capital from the developing world, according to data in a new report released this week. In its annual estimate of illegal capital flows, Washington-based think-tank Global Financial Integrity (GFI) said it a record $991 billion was siphoned in 2012 from the world’s developing economies, an increase of almost 5 percent from 2011.
Illicit capital incorporates such things as misinvoicing of trade whereby exports and imports are booked at different values to avoid taxes or to hide large transfers of money……………………………………..Full Article: Source

Commodities Go From Hoard to Floored

Posted on 15 December 2014 by VRS  |  Email |Print

In understanding the latest commodities selloff centered on oil, consider a raw material lurking in your kitchen: rice. Economists think stockpiling plays a big role in commodity bubbles, but are only now getting the evidence needed to understand exactly how it works. One implication of what they are learning: Prices haven’t bottomed yet.
A standard theory of how commodity bubbles form begins with an imbalance between supply and demand. This raises prices and prompts some stockpiling, due either to worries about having enough or hopes of selling for more in the future. This curbs supply further, pushing prices higher still. Cautionary stockpiling morphs into hoarding, and the bubble inflates………………………………………..Full Article: Source

Commodities Set Up For A Continued Move Lower

Posted on 12 December 2014 by VRS  |  Email |Print

There have been few places to hide for bullish commodity traders since the end of the summer. As you can see from the chart of the iShares S&P GSCI Commodity-Indexed Trust (GSG) shown below, the bears have sent the price lower by more than 28% over the past six months. It’s only natural that many traders are left wondering when the commodities markets will rebound.
The aforementioned exchange-traded fund is a popular choice amongst commodity traders because it represents broad exposure to a wide range of futures contracts across sectors such as energy, precious metals and agriculture. We’ll take a look at the underlying commodity markets to see if we can gain a better idea of when prices may set to rebound………………………………………..Full Article: Source

Oil’s Drop Spills Into Other Assets

Posted on 12 December 2014 by VRS  |  Email |Print

The benchmark U.S. oil price tumbled below $60 a barrel for the first time in five years, intensifying the pain across financial markets and jolting the central banks of some oil-dependent economies into action.
The decline in oil weighed on U.S. stocks on Thursday. The Dow Jones Industrial Average was up as much as 225 points on strong U.S. economic data before paring gains amid a renewed descent in crude. The blue-chip index ended up 63.19 points, or 0.4%, to 17596.34………………………………………..Full Article: Source

Oil and Gold Warning Signs

Posted on 11 December 2014 by VRS  |  Email |Print

A big spike in gold prices and continued weakness in oil is sending warning signs about the health of the global economy. As China reported Tuesday its consumer price index rose only 1.4% last month — the slowest pace in five years — global deflation fears are mounting. In Greece, a snap election is causing turmoil in the Greek bond market as they try to negotiate their debt financing and independence away from its European bailout strictures.
OPEC is reporting the demand for its oil will be at the lowest level in 12 years. So if deflation is the fear, than the spike in gold yesterday is very troubling. Safe haven buying in US bonds and metals signal fears that the globe is on the verge of a downward deflationary spiral………………………………………..Full Article: Source

The silent crash in commodities—a warning sign

Posted on 10 December 2014 by VRS  |  Email |Print

If the commodity markets were followed as widely as the stock market, the financial world would be buzzing with the news of a crash that has taken place in the value of “stuff.” While the plunging prices of oil, natural gas and gasoline are making headlines every day, thanks to the benefits accruing to consumers of energy products, the message of the commodity markets, in many ways, is hardly a reassuring one when it comes to the outlook for global economic growth.
Basic materials prices for the likes of copper, nickel, iron ore, and other industrial commodities, have collapsed, both in advance of, and now coincident with, weakening economies from Madrid to Moscow and from Berlin to Beijing. This is not good news for the global economy………………………………………..Full Article: Source

The Economic Consequences of Global Oil Deflation

Posted on 09 December 2014 by VRS  |  Email |Print

A new wild card has just been introduced into an already increasingly unstable global economy: a growing world glut of oil and consequent oil price deflation. Since June 2014, the price of high grade (ICE Brent) crude oil has fallen more than 40 percent, declining from around USD$115 a barrel, in January 2014, to just USD$67 a barrel at the end of November.
That’s the lowest since the bottom of the 2009 recession. The price decline has not only been deeper than expected in a normal cyclical correction, but also appears more than just a temporary event. Some predict global oil prices will fall below USD$60 a barrel in 2015, and could potentially fall as low as the USD$40 a barrel collapse that occurred during the 2008-09 recession………………………………………..Full Article: Source

Is this the beginning of the end for OPEC?

Posted on 09 December 2014 by VRS  |  Email |Print

Forty one years ago OPEC, the global oil cartel, boldly asserted its power with an export embargo that drove the price of crude from $3 per barrel to $12 in just six months. Through subsequent oil shocks of 1978, 1990, and 2008, voices on the left — and a few on the right — have used the specter of $200 per barrel oil to justify reams of subsidies for wind and solar (“just another few years, and they’ll be able to stand on their own — really”), ethanol (“imagine how much we’ll save when oil is $300 per barrel”), and even hydrogen cars ($2 billion spent and still counting). The parade of grants, loans, and tax benefits all rode in the name of securing our “energy independence.”
Last week, the West Texas benchmark hit $67 per barrel — a five-year low — and with that milestone the doomsayers’ predictions came crashing down, as well………………………………………..Full Article: Source

Commodities take a breather after torrid November

Posted on 08 December 2014 by VRS  |  Email |Print

Commodities have fallen to a five-year low, leaving producers of most raw materials with little to cheer about during the past month (and especially during the last week). Most notable was the accelerated selling that hit the energy market following the recent OPEC meeting.
The organization’s unwillingness to cut production — thereby signalling a “battle” for market share against other, non-OPEC producers — was the final straw, and it triggered a slump in oil prices to a new five-year low. A monthly collapse of this magnitude in Brent crude has only been seen on four occasions since 1988………………………………………..Full Article: Source

Global gluts hurting commodity prices

Posted on 05 December 2014 by VRS  |  Email |Print

It’s been an annus horribilis for the oil and iron ore industries, and 2015 is unlikely to be much better as producers engage in epic games of chicken. Quite simply, a recent ramp up in output across both sectors means there’s more oil and iron ore being produced than needed but no one wants to be the one to cut back.
Iron ore prices have slumped 46 per cent in the past year while oil prices have dropped 30 per cent since July as both industries grapple with an oversupplied market. In the case of iron ore, global giants Rio Tinto and BHP Billiton have embarked on a controversial strategy to increase production even as prices continue to dive………………………………………..Full Article: Source

What To Watch Out For As We Head Into 2015

Posted on 05 December 2014 by VRS  |  Email |Print

Who would have predicted oil prices in the sixty-dollar range a year ago? Something is not right about these markets. Our take: don’t get burned when markets add fuel to the fire. Here’s what to watch out for as we head into 2015; ignore at your own peril.
The world isn’t running out of oil, but rather out of cheap oil. Therefore the fundamentals don’t support oil trading in the $60s. As oil prices have plunged from over $100 to just over $60 a barrel, it appears to us the market is driven by a combination of the following: The global economy is experiencing a severe slowdown; Major liquidity providers have left the market; and/or Technicals rather than fundamentals are in charge……………………………………….Full Article: Source

While Commodity Hedge Funds Falter, Algo Funds Trading Commodities Outperform

Posted on 05 December 2014 by VRS  |  Email |Print

Fundamental commodity player Armajaro Commodities has been hard hit by oil and trades in less liquid markets, including Cocoa and Coffee, are interesting and appear to be contributing to negative performance. The positions that Armajaro has taken appear to be, in some cases, a mirror opposite of the algorithmic hedge funds trading commodities.
Armajaro’s oil loss come at a time when those trading a momentum strategy in the commodity markets have been feasting on the oil trade. Covenant Capital Management, for instance, will be releasing its November numbers in days and based on a preview of the results given to ValueWalk, Oil was a major factor in the fund’s success………………………………………..Full Article: Source

Australian economy slugged by commodity rout, rates under pressure

Posted on 04 December 2014 by VRS  |  Email |Print

Australia’s economic growth unexpectedly slowed last quarter as sliding export prices took a heavy toll on national income, and the outlook is even darker given the rout in global commodity prices of recent weeks.
The Australian dollar AUD=D4 dived to four-year lows at $0.8392 and markets narrowed the odds of another cut in interest rates after gross domestic product (GDP) rose just 0.3 percent in the third quarter. That was less than half the pace analysts expected, and the smallest increase since early 2013………………………………………..Full Article: Source

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