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Investment Keeps Eluding Australia as Commodities Rout Endures

Posted on 18 February 2016 by VRS  |  Email |Print

Australian policy makers have been scouring economic data every three months for signs of a pick up in investment outside the mining industry. Three years on, and with a 30 percent depreciation in the currency and record-low interest rates, it remains as elusive as ever.
“It has felt a lot like waiting for Godot,” said Gareth Aird, a senior economist at Commonwealth Bank of Australia, the nation’s largest lender by market value. “A lift in non-mining investment remains the missing ingredient in the Australian economic growth transition story.”……………………………………….Full Article: Source

Oil prices get boost as Iran praises Saudi plan to freeze output

Posted on 18 February 2016 by VRS  |  Email |Print

Iran has given a significant boost to oil prices by unexpectedly praising a plan put forward by Saudi Arabia and Russia to freeze production. The cost of Brent crude soared by 6.7% to $34.35 as Iran gave its verbal support for a production ceiling, even though it avoided making any immediate commitment to rein in its own growing output.
“Iran backs any measures which help stabilise the market and improve the price of crude oil,” said Bijan Zanganeh, the Iranian oil minister, after meeting his counterparts from Iraq, Qatar and Venezuela………………………………………..Full Article: Source

Commodities rout fails to slow urban explosion in Africa

Posted on 17 February 2016 by VRS  |  Email |Print

Africa’s biggest economies have been hammered by the collapse in commodity prices over the past 18 months but there are still investment bright spots to be found. In cities such as Lagos, Nairobi, Accra, Kinshasa and Johannesburg, growth remains robust and investors are prospering in the retail, financial services, technology and construction sectors.
This means investors can now readjust their strategy for Africa. Instead of taking a view on the continent as a whole, or choosing one country over another, they can seize opportunities city by city. Sub-Saharan Africa is urbanising faster than anywhere else in the world and city dwellers have more money to spend………………………………………..Full Article: Source

How Australia Is Weathering the Commodities Rout

Posted on 15 February 2016 by VRS  |  Email |Print

As Australia’s economy has slowed alongside the commodities rout, one surprising consensus is emerging: It isn’t nearly as bad as it should be. Other big resource exporters like Brazil and Canada have been slammed far worse by the falling commodities trade over the past year and a half that was sparked by China’s deceleration.
Australia, in contrast, seems already to have passed its nadir and is set to recover over the next two years, the government and many economists say. “The economy is continuing to grow at a modest pace, in the face of considerable adjustment challenges,” Glenn Stevens, governor of the Reserve Bank of Australia, told parliament on Friday………………………………………..Full Article: Source

OPEC members increasingly keen to end oil glut

Posted on 15 February 2016 by VRS  |  Email |Print

The mood inside the Organization of the Petroleum Exporting Countries (OPEC) is shifting from mistrust to a growing consensus that a decision must be reached on how to end the global oil price rout, Nigeria’s oil minister told Reuters.
Oil prices have slumped by more than 70 percent to near $30 a barrel over the past 18 months as OPEC, led by top producer Saudi Arabia, sought to drive higher-cost producers out of the market by refusing to cut production despite a supply glut………………………………………..Full Article: Source

The Commodities Bubble: History Repeats Itself

Posted on 12 February 2016 by VRS  |  Email |Print

All bubbles share similar characteristics. It all starts with strong demand for some object, whether it’s stocks, homes, commodities or tulips. In commodities, a bubble formed on hopes that China’s rapid growth would feed an ever-expanding appetite for raw materials.
Moreover, in 2008, China launched a huge $586 billion economic stimulus plan, leading to higher demand for commodities and, therefore, rising prices. But prices weren’t reflecting real growth, either. They were inflated as fake demand was created on the construction of excessively extravagant government buildings and uninhabited “ghost cities” in China………………………………………..Full Article: Source

Was Resource Boom A Boom For Commodities Exporters?

Posted on 12 February 2016 by VRS  |  Email |Print

While everyone is running around with the collapsed oil prices, economists with an eye for cycles and history are starting to digest the aftermath of the passed commodities price boom that started around the beginning of the century and lasted until 2011-2012.
The issues relating to that boom are non-trivial. Commodities prices are cyclical and just as the boom turns to bust, so will the bust turn to boom. Therefore, one should really try to understand what exactly happens in both………………………………………..Full Article: Source

UK production slumps as commodities take a hammering

Posted on 11 February 2016 by VRS  |  Email |Print

UK production slumped dramatically in December as resource companies took a hammering from the global commodity price crash. Overall production dropped 1.1% over the period, far outstripping expectations of a 0.1% decline. While manufacturing was little changed, mining and quarrying output led the index lower, down 4%.
A relatively mild winter also took a toll on energy generation, with output falling 5.4% month-on-month. Looking ahead, energy supply output should spring back, but the shake-out of excess production in the oil sector has further to run, noted Samuel Tombs of Pantheon Macroeconomics………………………………………..Full Article: Source

Silver market supply and demand trends for 2016

Posted on 11 February 2016 by VRS  |  Email |Print

Silver is prized for its dual role as a monetary asset as well as an important industrial metal used in a range of existing and growing applications. Factors driving the silver market include supply and demand fundamentals, global economic performance, geopolitical issues, interest rates, currency fluctuations and investor sentiment, among others.
Against this backdrop, the Silver Institute offers the following thoughts on this year’s silver market trends. Silver industrial demand, the largest component of total silver off-take, is set to increase its share of total demand in 2016. Silver is incorporated into a variety of industrial applications and is generally price-insensitive, given the small quantities that are used in some applications and its critical contribution to these applications’ functionality………………………………………..Full Article: Source

Private-Plane Purchases Drop 3.1% as Commodities Market Tumbles

Posted on 11 February 2016 by VRS  |  Email |Print

Spending on business aircraft fell 3.1 percent last year as a commodities downturn crimped demand for long-range jets in emerging markets. Companies and wealthy individuals spent $18.7 billion on private jets, according to the General Aviation Manufacturers Association. The report is adjusted because Bombardier Inc. hasn’t reported fourth-quarter results yet.
Sales of large-cabin planes, such as Bombardier’s Global 5000, were pinched by Brazil’s recession, sanctions against Russia and a stronger U.S. dollar that made aircraft more expensive for foreigners, said Peter Arment, an analyst at Sterne Agee CRT. Some non-U.S. manufacturers price aircraft in dollars………………………………………..Full Article: Source

Negotiating the Commodity Tightrope

Posted on 10 February 2016 by VRS  |  Email |Print

A cocktail of the ‘4Cs’ – Currency headwinds, China headwinds, Contango headwinds, and Cost deflation headwinds – that has driven commodity investor returns into negative territory is not about to change.
Commodities have been caught in a “negative feedback loop” between excess production capacity, US dollar appreciation and weaker emerging market economic growth – what Goldman Sachs term the 3D’s of macro – Deflation (excess production capacity and rising productivity), Divergence (stronger US dollar and weaker EM currencies) and Deleveraging (significant EM credit and macro imbalances)………………………………………..Full Article: Source

IEA warns of ‘false dawn’ in oil prices with market ‘awash’

Posted on 10 February 2016 by VRS  |  Email |Print

Oil stockpiles are forecast to keep swelling this year, meaning the recent uptick in prices could be a “false dawn”, the world’s leading energy body said on Tuesday. In its monthly oil market report the International Energy Agency said the the surplus of supply over demand at the start of 2016 is “even greater” than initially expected.
“With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term,” it said. “In these conditions the short term risk to the downside has increased.”……………………………………….Full Article: Source

Haven buying spurs gold to 8-month peak

Posted on 09 February 2016 by VRS  |  Email |Print

Gold climbed to an eight-month high as a weaker dollar and lower oil prices spurred haven buying and inflows from exchange traded funds. The precious metal rallied to $1,198.70 a troy ounce, the highest level since June last year.
Gold has risen 13 per cent since the start of the year, making it one of the top commodity performers so far in 2016. Brent, the international crude oil benchmark, is down 11 per cent, copper for three-month delivery on the London Metal Exchange is down 2 per cent, and CBOT corn is up 1.4 per cent year-to-date………………………………………..Full Article: Source

China’s gold output dips on lower prices

Posted on 08 February 2016 by VRS  |  Email |Print

China’s annual gold output fell for the first time in 2015 due to lower prices in the global gold market, according to latest industry figures. The country produced 450 tonnes of gold last year, down 0.39 percent year on year, the China Gold Association said on its website.
International gold prices have shed nearly 40 percent since April 2013, squeezing producers’ profits and affecting output, the association said. However, China remained the world’s largest gold producer for a ninth year running and saw gold consumption recovering last year, the association said………………………………………..Full Article: Source

Commodities rout rolls through Australia Inc

Posted on 05 February 2016 by VRS  |  Email |Print

Two of Australia’s biggest companies are slashing costs further and writing down the value of their resources businesses amid a deepening rout in commodities prices. South32, the diversified mining group spun out of BHP Billiton last year, on Thursday outlined plans to book a US$1.7bn writedown on the value of its manganese, coal and alumina assets stretching from Australia to South Africa and Brazil.
The group said it would cut 620 jobs at its manganese joint venture in South Africa and would detail further job cuts in its results statement later in February………………………………………..Full Article: Source

Russia and the Saudis: A 10-billion barrel game of oil bluff

Posted on 05 February 2016 by VRS  |  Email |Print

As oil prices continue to cause market uncertainty, and with low fuel prices wreaking havoc on some countries’ economies, notably Russia’s, the world’s top oil producer has been at the forefront of trying to figure out whether or not a production cut should be implemented in order to support and stabilize prices.
An Organization of the Petroleum Exporting Countries (OPEC) delegate recently said, “It is all in the hands of the Russians now.” Oil production in Russia hit a post-Soviet high in January, which means Russia is adding fuel to the oversupplied oil market fire. Russia itself is sending mixed signals as to how much it’s willing to cooperate with geopolitical foes, like Saudi Arabia………………………………………..Full Article: Source

Commodity Bull Cycle Seen Rising From Ashes as Oil Bottoming

Posted on 04 February 2016 by VRS  |  Email |Print

Europe’s largest publicly traded asset manager is calling the bottom for oil and sees a rebound in prices as one of the spurs that may start a new bull cycle in commodities. Schroders Plc says the oil price could rally almost two-thirds to as high as $50 a barrel in a few months as a slump to a 12-year low means producers will have to cut output.
That should encourage a wave of retail investors to return to raw materials, according to Geoff Blanning, head of commodities at Schroders, where he helps oversee about $2 billion. “In the past three-to-six months, supply growth has been sagging as a direct result of the lower price, but now it looks like a strong bet that supply is actually going to fall, and fall sharply,” he wrote in an internal note to staff on Jan. 21 seen by Bloomberg News………………………………………..Full Article: Source

Africa – No respite from a ‘commodities winter’

Posted on 04 February 2016 by VRS  |  Email |Print

Each February, the Investing in African Mining Indaba in Cape Town gives an opportunity for many to escape the northern hemisphere winter. Unfortunately, the attendees this year will not be able to escape the harsh reality of the global “commodities winter”.
The past year has seen a relentless stream of bad news for commodity markets, driven by faltering Chinese demand and ongoing over-supply for the major commodities. Truly “Antarctic weather” and not “Cape Town weather” prevails. Africa had been seen as a major beneficiary from the two biggest booming hard-commodity markets - iron ore and copper. ……………………………………….Full Article: Source

Commodities Crash Washes Up In Korea

Posted on 03 February 2016 by VRS  |  Email |Print

Two of Korea’s biggest companies, Samsung and Posco, are feeling the pain of the commodities-price crash which has devastated the mining and oil industries. Samsung, a broadly diversified industrial business, has been hit by a loss associated with building an iron ore mine in Australia.
Posco, a steel maker, from being an investor in the same mine. The project causing problems for the Korean corporate giants is Roy Hill, a mine controlled by one of Australia’s richest people, Gina Rinehart………………………………………..Full Article: Source

Investors concerned about commodities, energy: Moody’s

Posted on 02 February 2016 by VRS  |  Email |Print

Major investors listed the credit quality of the commodities and energy sectors as their biggest worry this year, as oil oversupply combines with reduced demand from China to drive energy prices sharply lower, said ratings agency Moody’s Investors Service in a report.
The finding on the most exposed sectors to downside risks in 2016 — the result of polling the region’s largest investors, intermediaries and debt issuers based in Singapore and Hong Kong — was consistent with Moody’s view that rated Asian corporates with commodity exposure remain in a precarious position………………………………………..Full Article: Source

The US bet big on American oil and now the whole global economy is paying the price

Posted on 02 February 2016 by VRS  |  Email |Print

Oil has wrong-footed our leading experts—again. At the beginning of 2014, the world was marveling in surprise as the US returned as a petroleum superpower, a role it had relinquished in the early 1970s. It was pumping so much oil and gas that experts foresaw a new American industrial renaissance, with trillions of dollars in investment and millions of new jobs.
Two years later, faces are aghast as the same oil has instead unleashed world-class havoc: Just a month into the new year, the Dow Jones Industrial Average is down 5.5%. Japan’s Nikkei has dropped 8%, and the Stoxx Europe 600 is 6.4% lower. The blood on the floor even includes fuel-dependent industries that logic suggests should be prospering, such as airlines………………………………………..Full Article: Source

Gold lifts on growth fears

Posted on 02 February 2016 by VRS  |  Email |Print

Gold has risen to a three-month high, extending its recent rally on worries about global economic growth and hopes for easier monetary policy after weak factory data in Asia and Europe. China’s official measure of manufacturing in January fell to the lowest since mid-2012, while factory growth across the eurozone slowed.
“That China data was disappointing, very weak in both manufacturing and non-manufacturing, which coupled with the ongoing turmoil on global markets and uncertainties about growth going forwards have helped gold to get above the $US1,115/20 resistance level,” said Robin Bhar, head of metals research at Societe Generale in London………………………………………..Full Article: Source

Commodities: The fall and beyond…

Posted on 01 February 2016 by VRS  |  Email |Print

Commodities are at the vortex of the ongoing turmoil in the global financial markets. Stung by the strong dollar and worries over slowing Chinese appetite, commodity prices have plummeted and investors’ losses have piled up in the last few years. The world is now into its sixth year of a bear market in commodities. Will 2016 see the dust settle down?
To answer this question, we need to understand the events that led to the current meltdown. It was the greed to make the most of a bull market in commodities that led to the creation of excessive supply in many metals in the early 2000s. Then, with a slowdown in China and rest of the world, the demand-supply mismatch in commodities increased………………………………………..Full Article: Source

How Is China Driving Down Commodities?

Posted on 01 February 2016 by VRS  |  Email |Print

Commodities right now are certainly the place not to be. Commodity markets today are characterized by a triple whammy of overcapacity, overleverage and low profitability. Prices have reflected as much, tanking across the board in the last year, with much of the blame attributed to China’s slowdown as well as the supply glut.
China has proven to be one of (if not the) most important driver of commodities today. As China soared in the early 2000s on the back of rapid industrialization, so did commodities. Construction projects began rolling out to modernize infrastructure and urbanize, which drove demand for metals such as copper and steel. So began the new phase of the commodity supercycle………………………………………..Full Article: Source

Miners still digging for victory

Posted on 29 January 2016 by VRS  |  Email |Print

Demand growth changed dramatically across metals and bulk commodities last year. It slowed in aluminium and nickel, was flat in copper and contracted in iron ore and steel. Thermal coal was a notable exception, where growth continued unabated.
As such, 2015 will be remembered as the year when long-term growth prospects were challenged with “China peak consumption” predictions brought forward for many raw materials………………………………………..Full Article: Source

Commodities slump hurting already poor African countries (Video)

Posted on 28 January 2016 by VRS  |  Email |Print

Falling commodity prices have hit African mining countries like Mauritania, Guinea and Liberia hard. Softening demand from China isn’t making things easier.……………………………………….Full Article: Source

BRICS unlikely to drive commodities demand

Posted on 25 January 2016 by VRS  |  Email |Print

“Another day, another record high in commodity prices,” wrote Goldman Sachs analysts in a May 2006 report in which they said the BRICs – Brazil, Russia, India and China – would continue to fuel demand for a wide range of commodities.
Almost ten years later, the commodities super-cycle is over, the BRICS economies – now including South Africa – are in trouble and the demand prospects for commodities appear bleak. Much of the commodity markets woes are being blamed on slowing growth in China and an oversupply driven by some of the large mining companies’ rush to capitalise on the country’s economic heydays………………………………………..Full Article: Source

Commodities Recovery Seen in 2017, Says Billionaire Agarwal

Posted on 25 January 2016 by VRS  |  Email |Print

The billionaire chairman of Vedanta Resources Plc, India’s biggest metals producer, says commodities markets will recover next year after a spell of consolidation in 2016. “This year will be a settling-down time, in 2017 you’ll see things will be different,” Anil Agarwal told Bloomberg TV’s Francine Lacqua and Jonathan Ferro in Davos. “Zinc will recover the fastest and aluminium will be next.”
The firm he founded is the country’s biggest producer of zinc, copper and aluminum, all of which have been battered as China’s appetite for raw materials slowed………………………………………..Full Article: Source

Gold Is Back in Fashion After a $15 Trillion Global Selloff

Posted on 25 January 2016 by VRS  |  Email |Print

The $15 trillion rout in global equity markets since May is reawakening the lure of gold for investors seeking safety. Hedge funds more than doubled their net-long position in bullion last week, just three weeks after they were the most-bearish ever. Investor holdings of gold through exchange-traded products are expanding at the fastest pace in a year, and the value of the ETPs has jumped by $3 billion in 2016.
Bullion has seen a revival of its appeal as a haven after being mainly ignored last year in the face of the Paris terror attacks in November and the Greek bailout negotiations in July………………………………………..Full Article: Source

Commodities explained: Iran’s return to the global oil market

Posted on 22 January 2016 by VRS  |  Email |Print

The prospect of Iranian crude oil returning to the market has heaped further pressure on prices this week. Brent, the international oil benchmark, sank to 2003 lows of less than $28 a barrel. But just how quickly can these additional Iranian barrels make their way to customers?
Once the second-largest producer in Opec, Iran’s output has averaged 2.8m barrels a day — from 3.6m b/d in 2011 — as a result of the western sanctions aimed at reining in the country’s nuclear activities. Iranian officials have vowed in recent months to increase output by 500,000b/d immediately after the lifting of restrictions and a further 500,000b/d within seven months………………………………………..Full Article: Source

Commodities Crash Boosts China’s New Silk Road

Posted on 21 January 2016 by VRS  |  Email |Print

While commodities producers grapple with the lowest prices in more than a decade, the slump could prove a blessing for President Xi Jinping’s signature initiative to build an intercontinental web of infrastructure and trade links with China at the center.
The New Silk Road program announced by Xi more than two years ago is finally gathering steam just as the prices of oil, steel, concrete and other building materials sink. That’s making it easier for China to sell its ambitious vision to build roads, railways, pipelines and ports from Xian to Athens, diversifying the country’s trade options and exporting the excess industrial capacity that’s dragging down its own economy………………………………………..Full Article: Source

Australia not ditching commodities: FinMin

Posted on 21 January 2016 by VRS  |  Email |Print

Despite the sharp plunge in commodity prices around the world, Australia’s finance minister told CNBC that the economy was not ready to give up on a key pillar of the country’s economic model – resources – altogether. “The Australian economy is clearly an economy in transition from resource investment-driven growth to broader drivers of growth,” Mathias Cormann told CNBC on Wednesday.
“(But) we’re not diversifying away from resources. Part of the reason the economy continues to grow strongly is that our export volumes in terms of resources have actually increased very strongly and that is on the back of significant resource investment in recent years,” he said………………………………………..Full Article: Source

Everyone hates commodities

Posted on 20 January 2016 by VRS  |  Email |Print

Commodities have no friends at the moment. From energy to softs to base and precious metals, prices have been hammered almost unilaterally across the board, weighed down by a combination of a strengthening US dollar, increased supply, tepid demand and, as a consequence, mounting disinflationary pressures.
The paragraph below, from Macquarie Bank’s commodity analyst team, is reflective of the broader investor mood when it comes to commodity markets - they hate them. The world simply hates commodities at the moment. Prices keep on falling, producers are in a battle for survival and, more worryingly, demand isn’t reacting that positively as of yet………………………………………..Full Article: Source

Is 2016 the Year for Sweet Commodities?

Posted on 19 January 2016 by VRS  |  Email |Print

2015 was a disaster for commodity markets as the S&P GSCI, an index that tracks commodities, fell 32%. The 2016 outlook for commodity markets is not much better, except for cocoa and sugar, two commodities that yielded positive returns in 2015. In fact, cocoa was the best performing commodity last year with prices up 10%.
The increase in price is partly linked to the surge in chocolate consumption in India and China. According to Euromonitor International, chocolate demand in India has been growing 17% a year since 2010, faster than any other country in the world. In China, demand has been rising nearly 9% per year over the same period………………………………………..Full Article: Source

Deals to be had in commodities rout

Posted on 19 January 2016 by VRS  |  Email |Print

The hottest deals in mining in 2016 will be the buying and restructuring of companies out of insolvencies, and picking up assets miners are selling to help fix balance sheets, advisers say. And the dire market for initial public offerings in mining, which produced only two floats on the ASX in 2015, could be the “new normal”, at least for 2016, Perth-based adviser Liam Twigger told The Australian Financial Review.
Charles Fear, chief executive of Perth-based corporate advisory firm Argonaut, said the market for most commodities was bouncing along the bottom, and mergers and acquisitions typically led a recovery, as assets were picked out of distressed companies at reasonable prices………………………………………..Full Article: Source

More pain ahead for commodities, hedge funds bet

Posted on 19 January 2016 by VRS  |  Email |Print

The commodity meltdown that pushed oil to a 12-year low and copper to the cheapest since 2009 isn’t over yet. At least, that’s how hedge funds see it. Money managers increased their combined net-bearish position across 18 raw materials to the biggest ever, doubling the negative bets in just two weeks.
A measure of returns on commodities last week slid to the lowest in at least 25 years. Metals, crops and energy futures all slumped amid supply gluts and an anemic outlook for the global economy………………………………………..Full Article: Source

To Divine Chinese Commodity Demand, Keep Eye on Credit

Posted on 19 January 2016 by VRS  |  Email |Print

When China slows, commodities crash. If only it were that simple. Understanding the real cause and effect relationship between the two takes a bit more homework. Much of the weakness in global commodities isn’t China’s fault—at least not directly.
Oil at $30 and the attendant tumble in prices of iron ore, coal, copper and soybeans is as much a function of too much supply as slack Chinese demand. But China exerts powerful direct effects, and they are especially worth watching with the nation’s industrial economy in such a precarious position………………………………………..Full Article: Source

Falling oil prices: How are countries being affected?

Posted on 19 January 2016 by VRS  |  Email |Print

Oil prices have fallen to their lowest level since 2003, sinking below $28 a barrel before recovering slightly on Monday. Analysts say the drop has been driven by oversupply, coupled with a fall in demand because of a slowdown in economic growth in China and Europe.
There are fears that the lifting of Western sanctions on Iran could worsen the existing problem, as the country prepares to pump more oil into the market. The effects of falling prices are being felt by economies around the world………………………………………..Full Article: Source

Why the falling oil price may not lead to boom

Posted on 18 January 2016 by VRS  |  Email |Print

An economic boom usually follows a big drop in the oil price but this time maybe different – indicative not of oversupply but weakness in demand. There was a time when Blue Monday meant a song by New Order. These days it is the third Monday in January, allegedly the most depressing day of the year.
Whether there is any scientific basis for this claim is debatable, but for what it’s worth the argument is that people feel miserable because Christmas is over, the credit card bills are arriving, it’s dark when you go to work in the morning and it’s dark when you head home………………………………………..Full Article: Source

Will China and commodities spring back in 2016?

Posted on 15 January 2016 by VRS  |  Email |Print

Reading others on 2016 it sounds as if it will be a re-run of 2015. It’s often safest and easiest to forecast little change. A trend is a trend, after all, until it reverses. Calling major turning points is never easy — it usually means standing out against the herd of other commentators. The quiet life is to predict more of the same, and more of the same is what often happens.
Last year, many were writing that inflation would stay low, interest rates would stay lower for longer, and shares should do better than bonds. They did for a bit in China, they did all year in Japan, and just about did better in parts of the EU and the US………………………………………..Full Article: Source

How Commodities and Regions Perform During the El Niño Effect

Posted on 15 January 2016 by VRS  |  Email |Print

Financial markets are notoriously fickle and events ranging from geopolitical crises to weather patterns can impact them dramatically. Right now, the El Niño weather phenomenon is in effect and is estimated to stick around until around the second quarter of this year, and it’s already having an impact on certain market sectors and commodities.
Some effects of El Niño can be predicted in advance, such as California receiving precipitation after its long drought spell and Southeast Asia seeing just the opposite with less rainfall. The severity of the current El Niño effect is one of the strongest on record and many scientists have attributed the wave of intensifying weather to changing global climates. Whatever the cause, the effect it’s having on the global economy is significant………………………………………..Full Article: Source

Commodities slide triggers ‘freight recession’ on US rails

Posted on 15 January 2016 by VRS  |  Email |Print

On the railways criss-crossing the western US farm belt, grain trains are so abundant you can’t give one away. Big agricultural commodity traders have been offering as much as $200 per covered hopper car to anyone willing to sublet their 110-car shuttle trains.
“You actually have to pay someone to take your cars,” says Dan Mack, vice-president of agricultural transportation and terminals at CHS, a large US grain merchant. Spare capacity in the US freight rail system underlines the breadth of a commodities rout that just entered its sixth year………………………………………..Full Article: Source

How to Tell When the Oil Market Is Throwing in the Towel

Posted on 15 January 2016 by VRS  |  Email |Print

Oil: Is there no bottom? Of course there is. But, while producers might quibble, the price of crude isn’t nearly at the kind of irrational levels that would signal a nadir. For that to be the case, price would be no object for a related but far-less-quoted asset.
Oil storage certainly is at a premium as inventories reach record levels around the world, reflecting a continuing glut. In fact, the price of the most expensive potential form of storage, gigantic crude tankers, remains relatively expensive………………………………………..Full Article: Source

China commodities imports jump, but 2016 outlook mixed

Posted on 14 January 2016 by VRS  |  Email |Print

China’s commodity imports surged in December as tumbling prices spurred opportunistic buying, but shipments of some commodities are expected to start tapering off this year as slower economic growth checks demand.
For calendar year 2015, imports of oil, iron ore and soybeans all hit record volumes, while copper was steady, customs data showed on Wednesday. Coal was the exception, with imports plummeting as a domestic glut slashed local prices and demand fell. China’s total trade in December shrank much less than expected, but still likely consigned the economy to its weakest annual growth in 25 years………………………………………..Full Article: Source

Commodities: How low can you go? - ANZ

Posted on 13 January 2016 by VRS  |  Email |Print

Research Team at ANZ, suggests that the aggressive broad-based declines since mid-2014 means commodity prices are now at levels that are loss-making, or at best only marginally profitable, for many globally traded hard and soft commodities.
“This means many producers are scratching their heads and saying surely things can’t get too much worse. However, you don’t have to look too far back in the history archives to see international prices could well move lower yet in 2016. Indeed even at the low point mid last year for our ANZ commodity price index it was still a third higher than the depths of the GFC………………………………………..Full Article: Source

The Commodity Crisis Worsens; Barclays Lowers Forecasts As Bears Dig In

Posted on 12 January 2016 by VRS  |  Email |Print

Blame the strong dollar. Barclays Capital has gone totally bearish on commodities and that does not bode well for commodity producer nations like Russia, and Brazil, let alone commodity producing parts of the United States like oil and gas drillers, and even some American farmers.
Recent price declines for major commodities are now greater than in any crisis of the past 30 years and speculative short selling positioning is greater than it was in the depths of the 2008-09 financial crisis, Barclays Capital analysts led by Kevin Norrish noted on Monday………………………………………..Full Article: Source

The Commodity Bust: Those Who Don’t Know Economics Are Doomed To Repeat History

Posted on 12 January 2016 by VRS  |  Email |Print

Energy experts like myself have long sighed to hear the various explanations for oil price collapses, including manipulation by commodity traders, geopolitical warfare (Reagan tells Saudis to crash oil prices to defeat the Soviet Union, Saudis punish Iranians with lower oil prices, etc.), OPEC’s battle with competing resources and producers, and even big oil (sorry, BIG OIL) raising prices to gouge consumers and lowering prices to hurt their competitors.
These theories tend to be embraced by people in small companies, who lack the resources and expertise to understand market fundamentals………………………………………..Full Article: Source

Hedge funds have never been this bearish on commodities

Posted on 12 January 2016 by VRS  |  Email |Print

Gold is the big exception with managed money futures investors slashing bearish bets on the gold price by 44% After a nice run at the beginning of the new trading year, on Monday on the Comex market in New York, gold futures with February delivery retreated as worries about the global economy and geopolitics overwhelmed financial and commodity markets.
In afternoon trade gold was exchanging hands for $1,095.50 an ounce, down $2.30 compared to Friday’s close. Last week the metal reached a two-month high on the back of safe-haven buying, but with a fresh plunge in oil and copper prices and continuing weakness on global stock markets, bulls were in retreat everywhere………………………………………..Full Article: Source

Commodity exposure in 2016 requires care

Posted on 11 January 2016 by VRS  |  Email |Print

Having serially disappointed investors for a while, commodities could well offer investors one of the most compelling investment opportunities in 2016. The sector’s attractiveness is likely to increase as the year proceeds, offering multiple entry points for potentially attractive medium-term return opportunities. Exploiting them will require emphasis on portfolio construction, with the design of the right investment vehicles as important as careful asset selection.
To say that 2015 was a difficult year for commodities would be an understatement. While oil grabbed most of the headlines with its volatile drop of one-third in price to seven-year lows, the damage was widespread with copper, corn, platinum and sugar also falling significantly………………………………………..Full Article: Source

Gold Is Turmoil’s Beneficiary as Soros Reminded of Market Crisis

Posted on 08 January 2016 by VRS  |  Email |Print

Gold is dusting off its credentials as the go-to commodity in troubled times and its producers are reaping the benefits. Futures rallied above $1,100 an ounce to a two-month high, after a sell-off in Chinese shares forced the country’s stock exchanges to shut for a second time this week, spurring demand for a haven.
Global markets are facing a crisis and investors need to be very cautious, billionaire George Soros said. Shares of bullion miners including Barrick Gold Corp. are climbing, even as the 80-member Bloomberg World Mining Index slides to the lowest in more than a decade………………………………………..Full Article: Source

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