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Survival of fittest for commodities shipping firms in 2016

Posted on 29 December 2015 by VRS  |  Email |Print

Shipping companies that transport commodities such as coal, iron ore and grain face a painful year ahead, with only the strongest expected to weather a deepening crisis caused by tepid demand and a surplus of vessels for hire.
The predicament facing firms that ship commodities in large unpackaged amounts - known as dry bulk - is partly the result of slower coal and iron ore demand from leading global importer China in the second half of 2015. The Baltic Exchange’s main sea freight index - which tracks rates for ships carrying dry bulk commodities - plunged to an all-time low this month………………………………………..Full Article: Source

Crude Oil Market to Balance Some Time in 2016, Says Saudi Aramco Chairman

Posted on 29 December 2015 by VRS  |  Email |Print

Crude oil markets are likely to balance some time next year as supplies from North America, including U.S. shale, continue to decline significantly, the chairman of Saudi Arabia’s giant oil company said Monday.
“Supply has plateaued in North America and [is] declining by significant amounts. We expect that to continue and perhaps accelerate in 2016,” Khalid al-Falih, chairman of Saudi Arabian Oil Co., known as Saudi Aramco, said in a news conference in Riyadh. “We see the market balancing some time in 2016. We see demand ultimately exceeding supply…Prices in due course will respond,” he said………………………………………..Full Article: Source

Will Gold Come Back In 2016?

Posted on 29 December 2015 by VRS  |  Email |Print

As of Thursday, December 24, the price of gold is down more than $100 per ounce in 2016. Gold peaked at just over $1300 in the first month of the year. Since then, the price has made lower highs and lower lows throughout the year, disappointing those who believe that gold is the ultimate currency, real money and the only hard asset that really is a true store of value in the world.
Gold outdates all fiat currencies in existence today. In the wake of the financial crisis that swept across the globe in 2008, interest rates have moved to the lowest levels of our lifetimes. Although the Fed raised rates by 25 basis points for the first time in nine years this month, they were at zero before the action………………………………………..Full Article: Source

Will 2016 herald recovery, consolidation of commodities?

Posted on 28 December 2015 by VRS  |  Email |Print

If 2015 was the year in which the growing oversupply of key commodities led to a rout in prices, will 2016 bring the point of capitulation, leading to consolidation and the start of recovery? That would certainly be the hope of many beleaguered commodity producers, be they members of OPEC, shale gas drillers in North America or the big companies that bet their futures on what they thought would be China’s endless appetite for coal, iron ore, copper and liquefied natural gas (LNG).
But the problem with hoping for a rationalisation of supply is that everybody wants someone else to shut down or cut production. Everywhere in commodity markets, producers are still following the tactics that have largely failed for the past few years………………………………………..Full Article: Source

The commodity roller-coaster ride is not over yet

Posted on 28 December 2015 by VRS  |  Email |Print

The global commodity supercycle is hardly a new phenomenon. Though the details vary, primary commodity exporters tend to act out the same story, and economic outcomes tend to follow recognisable patterns. But the element of predictability in the path of the commodity-price cycle, like that in the course of a roller coaster, does not make its twists and turns any easier to stomach.
Since the late 18th century, there have been seven or eight booms in non-oil commodity prices, relative to the price of manufactured goods. (The exact number depends on how peaks and troughs are defined.)……………………………………….Full Article: Source

After a brutal 2015, what’s on tap for commodities?

Posted on 28 December 2015 by VRS  |  Email |Print

Commodities are suffering from their worst year since 2008. Industrial commodities, in particular, are seeing outsize losses, but it isn’t going to be all gloom and doom for the sector in the new year. Sentiment in the commodities market has been downbeat for the bulk of 2015, with iron ore, platinum. copper and coal among those seeing the biggest losses.
The Bloomberg Commodity Index BCOM, +0.49% a broadly diversified commodity-price index, has fallen more than 26% in 2015. It is headed for its fifth straight losing year and its worst yearly drop since 2008. The index stands around its lowest level since 1999………………………………………..Full Article: Source

Indian gold investors cashed out in 2015

Posted on 28 December 2015 by VRS  |  Email |Print

The year 2015 was a washout year for commodities, but precious metals weathered it with less damage. Gold prices dropped by about 9 per cent in the international market. In the domestic market, investors who bet on gold suffered a loss of 7 per cent.
This being the third straight year of losses on gold investments, many investors cashed out. The total holding of all gold-backed exchange traded funds in India dropped to 25 tonnes — a three-year low. Goldman Sachs gold ETF, the largest gold-backed exchange traded fund in India, holds about 678 kg of gold, a decline of about 12 per cent from last year………………………………………..Full Article: Source

El Nino Batters Pacific Rim Agriculture

Posted on 28 December 2015 by VRS  |  Email |Print

While the climate phenomenon called El Niño has brought near-ideal growing conditions for many farmers throughout North America and South America in 2015, it has wreaked havoc on the agriculture of other countries around the Pacific Rim. From dry cattle pastures in Australia to struggling coffee farms in Vietnam, El Niño has struck several nations in the Asia-Pacific region hard this year, the Wall Street Journal reported.
The world has been experiencing the effects of the most impactful El Niño since the 1990s, meteorologists said. El Niño is associated with an increase in ocean temperatures, which can lead to droughts in some areas and floods in others. Such changes in weather can have major consequences for agriculture either way………………………………………..Full Article: Source

2016 will be a year of living dangerously for the global economy

Posted on 28 December 2015 by VRS  |  Email |Print

Economic forecasting is a mug’s game. One thing that has been learned from the financial crisis and Great Recession is that even those equipped with the most sophisticated models get it wrong, sometimes spectacularly. So it is with both humility and trepidation that I will try to fulfil a promise made last week and make predictions for what is going to happen in 2016. In all honesty, the future is unknowable and anybody who says otherwise is lying.
So, with that caveat, here’s what I think might happen. At some point, a recovery built on booming asset prices, weak growth in earnings and rising personal debt is going to lead to another huge financial crisis - but not in the next 12 months………………………………………..Full Article: Source

No ‘D’ light on horizon as commodities face downturn

Posted on 21 December 2015 by VRS  |  Email |Print

Destocking, divestment and desperation — that’s the outlook for commodities in 2016, says Macquarie Wealth Management. No sign of one other “D” — demand — but plenty of disinflation being shipped out of China. Oh boy.
Then the International Energy Agency piled on the agony with an especially gloomy (and widely reported) outlook for coal, with growth in demand disappearing from everywhere save India. Australia seems to be running out of Plans B, C and D………………………………………..Full Article: Source

Gold Won’t Take Gold in Metals Race

Posted on 21 December 2015 by VRS  |  Email |Print

Which metal has the most mettle? While they are all looking awfully brittle these days, the surprising answer is gold. In the past year and a half, the traditional store of value has lost a mere 16%—a smaller decline than seven other widely traded metals. Iron ore, for instance, is down 57%.
The reason that is odd is gold’s appeal, or lack thereof, in the current financial environment. When interest rates were zero, the opportunity cost of owning an unproductive lump of yellow stuff was low since returns on cash were minuscule………………………………………..Full Article: Source

After a three-year lull, gold set to regain lustre

Posted on 18 December 2015 by VRS  |  Email |Print

Gold has lost its mojo over the last three years, losing about half its value since 2012. But action in the yellow metal is set to return. Trouble is brewing for gold bears. The metal is already up by about 2 per cent from its six-year low of $1,046/ounce recorded in early-December.
On Thursday, after the news of the Fed rate hike, gold dropped just 0.3 per cent. Gold may not deliver double-digit returns, but surely 2016 will be a better year than 2015. The US Federal Reserve on Thursday increased the short-term rate by 25 basis points, taking it up from a near-zero level since 2009………………………………………..Full Article: Source

Commodities on track for recovery: Van Eck

Posted on 16 December 2015 by VRS  |  Email |Print

Van Eck Global’s commodity strategist, Roland Morris, said financial markets remain focused on weak demand for commodities, not taking into account relevant supply adjustments that could lead to a sector-wide recovery. Morris gave the example of US oil production, which peaked at 9.6 million barrels in 2011. He said production today is down to nine million barrels and is likely to fall below this in 2016.
“Not only has production on existing rigs been scaled back, but new deep water and oil sands projects that could have delivered between six and seven million barrels have been cancelled or pushed out beyond 2020,” he said………………………………………..Full Article: Source

Don’t Expect Another China Commodity Super Cycle (Audio)

Posted on 16 December 2015 by VRS  |  Email |Print

“They (commodities producers) just don’t get this. They want China to go back to the old way, they think the slowdown is temporary, the government will stimulate it… and it will be back to the commodity super cycle again; that’s not going to happen,” says Stephen Roach, former non-executive chairman for Morgan Stanley in Asia.
He sat down with Bloomberg’s Bryan Curtis and Doug Krizner on First Word Asia to talk about the Fed and China’s changing economic landscape………………………………………..Full Article: Source

Gold investors sold the rumor of higher U.S. rates - will they buy the fact?

Posted on 16 December 2015 by VRS  |  Email |Print

Gold bulls hoping an anticipated rise in U.S. interest rates will paradoxically boost the metal’s price might just be disappointed, as the wider environment offers little to justify a rebound. Gold has fallen 10 percent so far in 2015, hitting its lowest in nearly six years largely on speculation that monetary policy will tighten.
In theory, higher interest rates weigh on bullion by lifting the opportunity cost of holding such a non-yielding asset. While expectations of a rate rise have driven selling, some bulls say it is so well priced into gold that the reality of any slow and gradual rise from record lows after this week’s forecast increase could reinvigorate investment………………………………………..Full Article: Source

Industrial metals drop as commodities seen extending declines

Posted on 16 December 2015 by VRS  |  Email |Print

Industrial metals dropped with zinc and copper leading losses on concerns commodities risk extended declines on slowing demand from China, the world’s biggest user.
Zinc in London fell as much as 1.6% and traded at $1 532 a metric ton at 4:25pm in Shanghai, while copper fell as much as 1.2%. Raw materials have sunk to the lowest level since 1999 as China’s slowest expansion in a quarter of a century cuts demand. Chinese metals companies have announced reductions in supply or plans to rein in capacity growth to stem the price rout………………………………………..Full Article: Source

Commodity price slump of 2015 another reminder to go global

Posted on 14 December 2015 by VRS  |  Email |Print

A worse than expected global commodity price slump has dampened local sharemarket returns, prompting superannuation funds to switch money into international shares and alternative assets. “Lots of investors re-positioned themselves this time last year ahead of an expected continued downturn in iron ore, coal and oil prices but even many of them have been surprised by how hard the sell-off has been,” NAB Asset Management portfolio adviser John Owen said.
“Global equities have significantly outperformed over the past three years and offer more opportunities for diversification away from the local market that is dominated by banks and miners.”……………………………………….Full Article: Source

How low can oil prices go? Opec and El Niño take a bite out of crude’s cost

Posted on 14 December 2015 by VRS  |  Email |Print

As the price of crude plummets to its lowest level in nearly a decade, analysts point to Opec’s recent ‘disarray’ and a warming weather pattern as the main culprits – and think we have yet to see the bottom. Crude oil prices fell to their lowest levels since the 2007-08 global financial crisis this week, and further losses could be in the cards as the factors that led to lower values remain in force.
Following the decision on 4 December by the Organization for Petroleum Exporting Countries (Opec) to continue its strategy to seek market share rather than support prices, US crude oil values broke under $40 a barrel………………………………………..Full Article: Source

Wall Street is searching for a bottom in the oil price ? and getting ready to pile in

Posted on 14 December 2015 by VRS  |  Email |Print

It’s already bad in the energy sector. And it may get worse. Some of Wall Street’s top names are trying to figure out how low the oil price could go. Speaking on CNBC’s “Fast Money Halftime Report” on Friday, billionaire investor Carl Icahn said that the oil price could fall further because it started to pick up again.
“I don’t think anybody thought it would be this bad because you obviously have the Middle East, Saudi Arabia just keep pumping and pumping and pumping oil,” he said. “And that’s a secular change that you can’t do anything about. It’s a political thing also.”……………………………………….Full Article: Source

Paris Climate Accords, Shale and Implications for OPEC

Posted on 14 December 2015 by VRS  |  Email |Print

Since the 1980s, the Organization of Petroleum Exporting Countries (OPEC) has operated from the assumption that someday in the future (for years, viewed as by the 2010s), the industrialized world would use up its “easy” oil and become increasingly dependent on OPEC and in particular the vast reserves of the Middle East. In this world, OPEC’s petro-power would increase over time and therefore all the oil cartel really needed to do was wait it out for that day to come.
An econometrics study by New York University economist Dermot Gately in 2004 confirmed the view within OPEC that “the (revenue) payoffs to OPEC are relatively insensitive to faster output growth.” Through the 2000s and up until last year, OPEC took a revenues oriented strategy, believing that the “2010” world had arrived and its oil was more valuable under the ground than out in the market………………………………………..Full Article: Source

UN: World economy stumbled in 2015 with drop in oil and commodities and 2.4 per cent growth

Posted on 11 December 2015 by VRS  |  Email |Print

The United Nations says the world economy stumbled in 2015, with growth estimated at just 2.4 per cent and developing countries and the former Soviet bloc among the regions hardest-hit. The report on the World Economic Situation and Prospects cited a nearly 60 per cent drop in oil prices and over 20 per cent fall in global commodity prices in the last 18 months.
The report launched Thursday does cite one positive statistic with potential implications for efforts to combat climate change: There was no growth in energy-related carbon emissions in 2014 for the first time in 20 years, with the exception of 2009 when the global economy contracted………………………………………..Full Article: Source

Gloomy mood prevails despite calmer commodities

Posted on 10 December 2015 by VRS  |  Email |Print

Commodity prices caught a break from a bruising sell-off on Wednesday, helping to put global equities on a slightly steadier footing after a rough week driven by fears over global demand. The mood was far from euphoric, though, with European markets underperforming and U.S. equity futures edging down.
Traders warned that markets were likely to give up their gains throughout the day and investors were preparing portfolios for year-end rather than making major new reallocations. Economic data offered little to cheer about. China’s consumer inflation picked up but remained under the government’s 2015 price target of 3 percent. The ripple effects of China’s slowdown was evident in Europe, where German imports fell in October and exports also weakened………………………………………..Full Article: Source

Global warming a threat to commodities such as cocoa and coffee, businesses warn

Posted on 10 December 2015 by VRS  |  Email |Print

Common commodities such as cocoa and coffee are under threat from global warming, businesses have warned as they backed a strong climate deal at international talks in Paris. Barry Parkin, global sustainability director at Mars, said the company sourced much of its supply chain of products, from cocoa to sugar, mint and vanilla, from smallholder farmers who are threatened by rising temperatures.
He said: “We’re a food company, based on agriculture, and when you look at agriculture, we buy from the equivalent of about a million farmers, and most of those farmers, large numbers of them, are smallholder family farmers in the developing world, who are often subsistence farming, and they are the most vulnerable.”……………………………………….Full Article: Source

Commodities: Material revolution

Posted on 09 December 2015 by VRS  |  Email |Print

As the prices for traditional commodities such as oil, steel and coal languish at multiyear lows, the raw materials used in smartphones, electric cars and 3D printers — among them lithium, graphite and cobalt for use in batteries — are set to experience increased demand. That is prompting some analysts to declare the advent of a new resource era driven by technology.
Goldman Sachs describes lithium as potentially the “new gasoline”. It forecasts that demand for its use in electric vehicles could grow 11-fold to more than 300,000 tonnes by 2025. The opportunity is clear — hybrid and electric car batteries contain between 40kg and 80kg of lithium………………………………………..Full Article: Source

Oil recovery by 2017? Not likely

Posted on 09 December 2015 by VRS  |  Email |Print

Energy analysts are confidently predicting that oil prices will rebound by 2017, as global supply and demand come back into balance. “Buy for the long run” is once again Wall Street’s over-used mantra. Economists John Maynard Keynes once notably remarked, “in the long run, we are all dead.”
This long-run thinking defies the logic of the oil markets. Not only has oil been among the most volatile commodities in modern economic history, it also has a tendency to spike, crash and then remain depressed for years on end………………………………………..Full Article: Source

How far away are commodities from their bottom?

Posted on 08 December 2015 by VRS  |  Email |Print

By nature, speculators in commodities live on the edge. At any point, they will put their bets based as much on trend analysis as on gut feeling - a combination of logic and emotion. Many of them have begun arguing commodities from oil to coal and steel to copper that are trading at multi-year lows may annually now be closing to the bottom and, therefore, the time is ripe to take long positions.
Their logic is not to be faulted in normal circumstances. However, the reality since the 2008-09 financial crisis has undergone fundamental changes, with growing moderation of China’s till-recently voracious appetite for industrial and energy commodities. China growing at a double-digit rate annually is well in the past………………………………………..Full Article: Source

Commodities Slump Hammers Sector’s Junk Bonds

Posted on 07 December 2015 by VRS  |  Email |Print

Deep losses on bonds from junk-rated U.S. energy and mining firms are rattling even seasoned investors, underscoring the challenges facing these companies amid a prolonged slump in commodity prices. Many bond prices are down 60% or more this year. Oil prices are still low due to a global supply glut, and metals prices are declining as China’s economic growth slows.
The moves are prompting worries that defaults could increase in the coming months, potentially sparking a fresh bout of selling that could spread to other parts of the junk-bond market. Among this year’s worst performers: some Linn Energy LLC bonds have fallen nearly 80%, Penn Virginia Corp. bonds are down 75% and Chesapeake Energy Corp. bonds are down 60%, according to figures from MarketAxess Holdings Inc. All three firms produce oil and natural gas in the U.S………………………………………..Full Article: Source

Are commodities poised for a recovery in 2016?

Posted on 03 December 2015 by VRS  |  Email |Print

By any measure, this has been a terrible year for commodity prices and commodity producers. Citigroup analysts said 2015 is shaping up to be an even worse year in this space than 2008, when the global economy collapsed.
But they actually think a “modest” recovery could be coming in 2016. Slowing economic growth in China remains a major headwind, but they said the “accelerated postponement” of new investments and closures of existing operations should eliminate much of the oversupply in the market. They also expect U.S. dollar appreciation to slow down, which is positive for commodities………………………………………..Full Article: Source

Crash in Commodities Just Started

Posted on 03 December 2015 by VRS  |  Email |Print

It certainly hasn’t been a good year for commodity investors. Unfortunately if you’re a resource punter, it won’t get any easier any time soon. Resource Speculator readers are well prepared for what lays ahead. After I turned bearish on commodities in November 2014, I’ve been preparing them for the ongoing destruction all year.
They know we’re not at the bottom. Yet, they understand when commodities should see a turnaround. They also know why. It comes down to a mix of base metal supply cuts, maximum pessimism and rising geopolitical conflict………………………………………..Full Article: Source

Understanding the new global oil economy

Posted on 02 December 2015 by VRS  |  Email |Print

Why have oil prices fallen? Is this a temporary phenomenon or does it reflect a structural shift in global oil markets? If it is structural, it will have significant implications for the world economy, geopolitics and our ability to manage climate change.
With US consumer prices as deflator, real prices fell by more than half between June 2014 and October 2015. In the latter month, real oil prices were 17 per cent lower than their average since 1970, though they were well above levels in the early 1970s and between 1986 and the early 2000s………………………………………..Full Article: Source

More commodity price uncertainty ahead in 2016, Citi forecast says

Posted on 01 December 2015 by VRS  |  Email |Print

Next year promises to be transitional for the routed commodities market, with “W-shaped” price adjustments lying in wait in 2016, Citi’s annual commodities outlook says. Subtitled Down but not out – On the road to modest recovery, the study said it was difficult to say whether key commodity prices had reached their bottom or whether there was more downside to come.
“As many commodities trade close to production cost levels, it’s tempting to look for a bottom,” the outlook said. “That looks fine for a number of sectors, but should not work across the complex,” Citi’s global commodities team wrote in the paper………………………………………..Full Article: Source

The Economic Loss From the Global Commodities Slump (Video)

Posted on 01 December 2015 by VRS  |  Email |Print

Carl Weinberg, chief economist at High Frequency Economics, Gemma Godfrey, founder and chief executive officer at Moo.la, and Jonathan Fenby, co-founder at Trusted Sources, discuss the negative global economic impact of lower commodities prices. They speak on “Bloomberg Surveillance.”.………………………………………Full Article: Source

November’s Worst Commodity Nightmare

Posted on 01 December 2015 by VRS  |  Email |Print

Unfortunately for commodities, there’s no waking up from this nightmare. It’s real. Since 1970, the S&P GSCI has never seen a Nov. with as many as 21 negative commodities. After a glimmer of hope in Oct., only 3 commodities, sugar, cotton and cocoa are on track to be positive in Nov. In other words, for every one commodity that is positive, seven are negative in Nov., 2015.
Moreover, Nov. 2015 is the 5th worst Nov. on record since 1970, only behind 1997, 1998, 2008 and 2014. Year-to-date, the index is also on pace to be the 5th worst year with 1998, 2001, 2008 and 2014 losing more. Though YTD through Nov. 2014, the index was in better shape than the index is through this Nov………………………………………..Full Article: Source

Get set for a commodity crunch

Posted on 30 November 2015 by VRS  |  Email |Print

Markets are betting that China’s currency is headed for another fall with commodity markets likely to suffer collateral damage. The International Monetary Fund board meets today to consider whether to include the yuan in the basket of currencies that makes up the fund’s benchmark currency called Special Drawing Rights.
It is expected to award it the status that the People’s Bank of China has been seeking, symbolising China’s emer­gence as a global financial power. The PBOC vice-governor Yi Gang commented last week that the currency would remain stable after its inclusion in the IMF basket, implying that the central bank is prepared to intervene to make sure that is the case………………………………………..Full Article: Source

Rio Tinto And Vale Killed The Commodities Supercycle, Not China Or The Fed

Posted on 30 November 2015 by VRS  |  Email |Print

That the commodities supercycle is over is obvious: we can see that just by looking at the falling values of pretty much all of the commodities. However, there’s a number of implications of this being bandied about which are wrong. It’s not, for example, slowing growth in China which has killed it, nor will it be the Federal Reserve raising interest rates which gives it the final death blow.
It’s much more accurate to say that the producing companies, like say Rio Tinto or Vale in iron ore, which have killed off the cycle. And as a result of that we can’t quite say that falling commodity prices are symptoms of the global economy about to fall over into depression………………………………………..Full Article: Source

Undone by the commodity rout

Posted on 30 November 2015 by VRS  |  Email |Print

If you put money in India-based global commodity and energy funds, there’s reason to be glum. The three funds in this category — Birla Sun Life Global Commodities Fund, DSP BR World Energy Fund and Mirae Asset Global Commodity Stock Fund — suffered deep cuts last year, losing 16-26 per cent.
These funds essentially bet on global commodities, which have been routed since mid-2014. Crude oil and natural gas have more than halved, while the prices of copper, tin, lead and zinc are down 20-30 per cent. A combination of factors — weak demand from a slowing China, economic troubles in Europe, oversupply of many commodities, and a strong dollar, thanks to impending rate hike in the US — is to blame. No surprise then that the funds’ performances don’t paint a pretty picture………………………………………..Full Article: Source

Maximum pain for commodities. Are we there yet?

Posted on 27 November 2015 by VRS  |  Email |Print

The dominant theme of commodity markets in recent months, in virtually every article or conversation at events, has been how much lower can prices possibly go. The answer is simple, they will stop falling when the point of maximum pain is reached.
With the prices of many commodities at multi-year lows and the broad Bloomberg Commodity Index close to its weakest in more than 16 years, many commodity producers, investors and traders are becoming desperate for any positive signs. But any bottoming of prices, or indeed the start of a rally, requires more than desperation, it needs fundamental re-alignment of the existing supply-demand balances………………………………………..Full Article: Source

China’s march from commodities to cosmetics and karaoke

Posted on 27 November 2015 by VRS  |  Email |Print

There has been great concern regarding the slowdown of growth in China and its impact on commodity demand and, therefore, commodity prices. Crude oil’s price gyrations tend to get the most attention, but China’s share of global oil consumption is about 12%, which is significant but less than that of the United States.
One could argue that Chinese demand patterns likely have played an even greater part in influencing prices of many other commodities where China holds an even larger share of global consumption. China’s share of global grain consumption was around 22% in 20142 and its share of global metal consumption tripled from 13% in 2000 to 47% in 2014………………………………………..Full Article: Source

Few surprises expected from OPEC despite cracks over policy

Posted on 27 November 2015 by VRS  |  Email |Print

With this in mind, it would probably be foolish to rule out some kind of deal between OPEC and non-OPEC producers to manage supply. But, right now, there’s nothing to suggest that any such pact is even a remote possibility, and few OPEC watchers expect the oil producer group to do anything other than rubber-stamp current output policy at talks in Vienna next week.
Leading non-OPEC producer Russia will send its energy minister, Alexander Novak, to OPEC’s ministerial meeting on December 4. And, who knows, Novak and Ali Naimi, oil minister of OPEC powerhouse Saudi Arabia may even sit down together for a chat about the market………………………………………..Full Article: Source

HSBC analyst: China holds the key to an oil rebound

Posted on 27 November 2015 by VRS  |  Email |Print

The jury’s still out on whether last year’s oil slump was a deliberate Saudi move, aimed at killing U.S. shale production. Whatever the case, engineering a rebound won’t be as simple, says HSBC Holding Plc’s Senior Economic Adviser Stephen King.
Oil prices have slumped 40 percent since OPEC embarked on a strategy last November to keep pumping and drive out higher-cost competitors. But cutting production is unlikely to trigger a sustainable recovery because China’s economic growth is slowing, King said in an interview in Dubai on Wednesday………………………………………..Full Article: Source

Gold investors become sellers

Posted on 27 November 2015 by VRS  |  Email |Print

Gold prices continue to fall as the declining cost for oil assuages investors’ fears of inflation. Growing anticipation that U.S. interest rates will start rising soon is also adding to gold’s woes. Venezuela snapped the gold market to attention earlier this year with its liquidation of 6.6 tons of the yellow metal.
Under former President Hugo Chavez, the country’s central bank accumulated gold as a part of its foreign currency reserves. With plunging oil prices knocking the country’s economy for a loop, Venezuela found itself with little ability to earn foreign currencies. So it said goodbye to those 6.6 tons………………………………………..Full Article: Source

If China killed the commodities boom, the Fed is about to bury it

Posted on 26 November 2015 by VRS  |  Email |Print

For commodities, it’s like the 21st century never happened. The last time commodity investor returns were this low, Apple’s best-selling product was a desktop computer, and you could pay for it with francs and deutsche marks.
Bloomberg’s Commodity Index tracking the performance of 22 natural resources has plunged two-thirds from its peak, to the lowest level since 1999. That shows it’s back to square one for the so-called commodity super cycle — a hunger for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade until 2011………………………………………..Full Article: Source

Banks turning their backs on Chinese commodities

Posted on 26 November 2015 by VRS  |  Email |Print

Banks are sceptical of and reluctant to lend to the commodities trade in China, due to the downturn in price and the risk of fraud and default. Over the course of a day-long conference in Beijing, commodity traders, bankers and lawyers all signalled that banks have been forced to re-evaluate their lending practices in China.
While many banks have been scaling back on commodities lending globally, the situation is aggravated in China, where a number of high-profile fraud and document-keeping scandals have ebbed away at trust in the sector. It’s led to consolidation in the market, where banks are focusing on their core business, leaving fewer willing to dabble in perceived higher-risk markets, and leaving producers and traders scrambling for the little finance available to them………………………………………..Full Article: Source

Back to square one for commodity super cycle

Posted on 26 November 2015 by VRS  |  Email |Print

The last time the Bloomberg Commodity Index of investor returns was this low, Apple’s best-selling product was a desktop computer, and you could pay for it with francs and Deutschemarks.
The gauge tracking the performance of 22 natural resources has plunged two-thirds from its peak, to the lowest level since 1999. That shows it is back to square one for the so-called commodity super cycle - a hunger for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade until 2011………………………………………..Full Article: Source

Stronger commodities to help Asian equities open up

Posted on 25 November 2015 by VRS  |  Email |Print

Asian equity markets are expected to open in the green on Wednesday, after Wall Street eked out gains on the back of an uptick in commodity prices. U.S. markets closed mostly higher on Tuesday after oil prices and energy stocks jumped, reversing an earlier decline on news of a downed Russian jet near the Syrian border. The downing was read as a heightening of tensions in the Middle East, which helped support the price of oil.
A Russian warplane was shot down near the Syrian border on Tuesday after Turkey claimed it entered Turkish airspace. The state-run Turkish news service Anadolu Agency said the warplane was engaged by two Turkish F16 jets………………………………………..Full Article: Source

Hedge funds have never been this bearish on commodities

Posted on 24 November 2015 by VRS  |  Email |Print

Large scale futures investors like hedge funds or so-called managed money have entered an unprecedented bearish position towards commodities markets. According to the Commodity Futures Trading Commission’s weekly Commitment of Traders data, five weeks of selling has seen 13 of the 24 commodities tracked pushed into net short positions.
Thos include the major commodities like crude oil, gasoline, gold, copper, soybeans, corn and wheat where speculators are betting that these commodities will be cheaper in future………………………………………..Full Article: Source

Industrial metals and oil most battered in commodities slump

Posted on 24 November 2015 by VRS  |  Email |Print

A slump in commodities deepened, with industrial metals and oil leading losses as the dollar extended gains. Crude extended its drop below US$42 a barrel and copper fell to levels unseen since 2009 as comments from Federal Reserve officials about the prospect of a rate increase next month bolstered the greenback.
Nickel plunged 4.1 per cent and gold declined, helping to send the Bloomberg Commodity Index to a 16-year low. “This is not a really welcoming environment for risk taking,” said Tim Condon, head of Asia research at ING Groep NV in Singapore………………………………………..Full Article: Source

2016 Silver Predictions and Outlook

Posted on 24 November 2015 by VRS  |  Email |Print

It is always tough to make predictions, especially when timing is involved. Still, it is always helpful to analyze where something may be overvalued or undervalued due to factors that the marketplace may not be taking into account.
We can make predictions (educated guesses) without having to be exactly right. And we can adjust our strategy as time goes on and as new information becomes available. Therefore, let’s look at silver and its prospects for 2016. First, it is always good to take a look back to see where we came from………………………………………..Full Article: Source

Metals are getting smashed — nickel, copper and silver are all flirting with multi-year lows

Posted on 24 November 2015 by VRS  |  Email |Print

Commodity prices are getting smashed again on Monday, with several metals either reaching or flirting with their lowest prices in years. Nickel, copper and silver have all traced different paths over recent years, but they have got two things in common — they all plunged in price in 2008-09 as the financial crisis and subsequent recession ripped away demand, and they’re all sliding now.
And Rabobank’s senior FX strategist Jane Foley explained the main drivers of the slump: The strengthening USD continues to contribute to the slump in commodity prices with industrial metals and oil leading the way………………………………………….Full Article: Source

Ed Yardeni: Commodities Free-fall Not a Recession Indicator

Posted on 23 November 2015 by VRS  |  Email |Print

Tumbling commodity prices suggest the global economy is headed toward recession, but the free-fall has more to do with excess capacity than a warning about the world’s economic health, Newsmax Finance Insider, economist and market strategist Ed Yardeni said.
Very high capacity was built in anticipation of a commodity super-cycle, and the free-fall does not indicate pending doom, said Yardeni, founder and president of Yardeni Research Inc, at the Reuters Global Investment Outlook Summit in New York………………………………………..Full Article: Source

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