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OPEC’s Pain Is Only Getting Worse As Revenues Continue To Fall

Posted on 28 June 2016 by VRS  |  Email |Print

OPEC lost $349 billion in revenue last year because of low oil prices, cutting revenues almost in half from the year before. A report from the EIA in mid-June estimated 2015 revenues for OPEC countries at $404 billion, down 46 percent from the $753 billion the member countries earned in 2014. Revenues last year fell to their lowest level in eleven years.
Worse still for OPEC is the fact that revenues could fall even further this year, as low oil prices sank to new depths, particularly in the first quarter of 2016. The EIA projects OPEC revenues this year to drop to $341 billion. That will result in per capita oil export revenues in OPEC countries falling from $606 in 2015 to $503 this year………………………………………..Full Article: Source

OPEC oil revenues slump to 10-year low

Posted on 24 June 2016 by VRS  |  Email |Print

OPEC’s 13 member countries saw oil export revenues slump to their lowest level in a decade last year. Crude revenues fell nearly 46% to $518 billion in 2015, according to OPEC’s annual bulletin published Wednesday.
Collapsing world oil prices also meant that OPEC countries spent more importing goods than they raised from exports for the first time in 17 years. The cartel posted a combined current account deficit of just under $100 billion in 2015, compared with a surplus of $238 billion in 2014………………………………………..Full Article: Source

OPEC Registers First Collective Deficit Since 1998

Posted on 23 June 2016 by VRS  |  Email |Print

OPEC member countries last year registered their first collective budget deficit since 1998, the group said Wednesday, the result of an oil-price slump that dropped government petroleum-export revenue to a 10-year low.
In its annual statistical report, the Organization of the Petroleum Exporting Countries illustrated how an oil rout that has cut prices in half since 2014 has weighed on the economies of crude-dependent states. OPEC members ran a combined deficit of $99.6 billion in 2015, compared with a surplus of $238.1 billion in 2014………………………………………..Full Article: Source

OPEC Says Its Oil Revenue Plunges $438 Billion to 10-Year Low

Posted on 23 June 2016 by VRS  |  Email |Print

OPEC said its oil revenue plunged by $438 billion to a 10-year low last year, as an increase in export volumes failed to compensate for the collapse in prices. The Organization of Petroleum Exporting Countries earned $518.2 billion in 2015 from the sale of crude and refined fuels, the lowest figure since 2005, the group’s Vienna-based secretariat said in its Annual Statistical Bulletin.
It boosted exports by 1.7 percent to 23.6 million barrels a day, maintaining its share of global markets, as Iraq increased output and Saudi Arabia pressed on with a policy to squeeze rivals………………………………………..Full Article: Source

World waits for global commodity bubble to deflate

Posted on 17 June 2016 by VRS  |  Email |Print

When the Federal Reserve raised rates in December, it thought the fallout would be minimal. It had telegraphed the increase for a year and it was, after all, just a quarter of a percentage point. Yet since then both the US and, even more so, the global economies have slowed. The reason isn’t because a quarter-point rate increase by itself represents a stringent tightening of monetary policy.
Rather, it brought to an end seven years of unprecedented monetary ease that had helped fuel a global commodity bubble. That bubble began deflating in 2014 and the effects are now being felt around the world and washing back on the US………………………………………..Full Article: Source

Opec revenue seen down for 3rd straight year

Posted on 17 June 2016 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries (Opec’s) full-year 2016 oil export revenues will probably fall 15 per cent, down for the third straight year and possibly the lowest in more than a decade before rising in 2017, the US Energy Information Administration (EIA) said.
Members of Opec, including Iran, will likely earn about $341 billion in 2016, about 15 per cent below 2015 levels, based on projections of global oil prices and the group’s production levels, the US government’s EIA said in a report. The last time Opec’s export revenues fell for three years straight was 1983-86………………………………………..Full Article: Source

Commodities making a comeback as best performing asset class

Posted on 16 June 2016 by VRS  |  Email |Print

Commodities have performed strongly so far this year, returning 14.0%, outperforming Bonds at 6.6% and Equities at 0.5%. Nitesh Shah, Director – Commodities Strategist, ETF Securities, identifies an improved outlook for global growth, and signs of a commodity supply deficit, as key stimulants of the comeback.
“Sustained central bank interest in keeping interest rates low in an effort to stimulate the economy is providing further support for commodities. And investor sentiment has come off near decade lows as investor realise that commodity oversupply is ending in many areas.”……………………………………….Full Article: Source

Opec Oil Revenues Fell By $350bn Last Year, Says EIA

Posted on 16 June 2016 by VRS  |  Email |Print

Members of the Organization of the Petroleum Exporting Countries (Opec) saw their revenues from oil sales fall by $349bn last year, according to new analysis by the US Energy Information Administration (EIA).
The EIA estimates that the 13 countries of the oil cartel earned $404bn last year from oil exports, 46% less than the $753bn they earned the year before. It was the bloc’s lowest earnings since 2004. Lower export volumes played a role in the decline, but it was mainly due to the sharp fall in the price of oil which began in late 2014………………………………………..Full Article: Source

Charting the lowest interest rates in 5,000 years, worst commodity returns in 80 years

Posted on 15 June 2016 by VRS  |  Email |Print

Looking to dazzle friends and family at the next summer barbecue? Well, drop this little fact on them: global interest rates are at their lowest in 5,000 years. Not only that, you can tell the acquaintance who brags about his gold bars in the bank vault that returns on commodities are the worst since 1933. Sounds crazy you may say, but that’s just the kind of history Bank of America Merrill Lynch rolled out in the third edition of “Longest Pictures” note.
The assembly of more than 100 charts illustrates the long-term history of returns, volatility, valuation and ownership of financial assets. Pushing aside the mindblowers listed above, they also found corporate bond returns have never been higher going all the way back to 1915………………………………………..Full Article: Source

Commodities are the best performing asset class.

Posted on 07 June 2016 by VRS  |  Email |Print

After years of disappointment, evidence that some investors are again seeking broad exposure. Here’s an unfamiliar phrase: commodities are the best performing asset class. Yes, it’s true. In the year 2016, total returns from the Bloomberg Commodity Index are over 11 per cent. Compare that to global bonds, at about 6 per cent, and global equities at just over 2 per cent.
The index has pushed higher thanks to components such as oil, gold, soyabeans and zinc. On Monday, the benchmark was up 21 per cent from its January low, entering a bull market. It is the strongest start to any year since the notorious commodities price spike of 2008………………………………………..Full Article: Source

How an Interest Rate Hike Could Affect Commodities

Posted on 06 June 2016 by VRS  |  Email |Print

Commodities tend to move lower when real interest rates rise, as supply increases and capital flows into higher yielding assets. For instance, commodity prices soared in the 1970s as real interest rates moved into negative territory. Commodity prices then fell in the 1980s when Paul Volcker raised interest rates to fight inflation and real interest rates reached all-time highs.
There is a very strong inverse relationship between real interest rates and commodity prices over time. In recent years, both nominal and real interest rates have been very low due to central bank monetary easing policies and low inflation expectations. These dynamics helped commodity prices move substantially higher following the 2008 economic crisis………………………………………..Full Article: Source

Rebound in distressed debt boosts investors

Posted on 06 June 2016 by VRS  |  Email |Print

Robust gains mainly reflects valuations for energy bonds rebounding with a higher oil price. Distressed debt investors have experienced their best returns since the financial crisis, providing a rare boost for specialist players after disappointing results in recent years.
In the wake of two straight years of 20 per cent plus losses, this highly volatile style of investing has rebounded strongly, with gains between March and May approaching 30 per cent, the best three-month stretch since the US emerged from recession in July 2009………………………………………..Full Article: Source

As U.S. Banks Exit Commodities, an Australian Rival Takes Over

Posted on 06 June 2016 by VRS  |  Email |Print

After the Federal Reserve pledged to crack down on banks engaged in the lucrative business of commodities trading, most big Wall Street firms got out. Macquarie Group Ltd. took the opposite approach. Australia’s largest investment bank has been buying and selling increasing amounts of oil, natural gas and fuel in the U.S., taking advantage of the opening as its competitors backed away.
It now is North America’s third-largest trader of physical gas, trailing only industry giants BP PLC and Royal Dutch Shell PLC, according to industry publications Platts and Natural Gas Intelligence………………………………………..Full Article: Source

Global commodity assets rise to $220 billion in April: Barclays

Posted on 02 June 2016 by VRS  |  Email |Print

The total value of commodity assets held by fund managers globally rose in April to $220 billion, up 14 percent from the month before to reach the highest level in a year, analysts at Barclays said in a note.
Precious metals accounted for 50 percent of total assets under management (AUM) at $110 billion, followed by energy at $58 billion, said the note published on Tuesday, which cited an analysis of data from financial information suppliers including Reuters as well as Barclays’ own research. ……………………………………….Full Article: Source

The banks where the commodities rout will hurt most

Posted on 31 May 2016 by VRS  |  Email |Print

When it comes to souring commodity-related loans putting pressure on banks, the credit ratings of lenders in Singapore, South Korea and Mongolia are the most at risk. That’s the verdict from Moody’s Investors Service, which highlighted the three countries as areas of particular concern, even though the ratings agency does not expect negative bank rating actions for most of Asia Pacific despite the prolonged commodities rout.
However “pressure on the quality of commodity-related loans could be a contributing factor behind possible negative bank rating actions in Singapore, Korea and Mongolia over the next 12-18 months, as reflected in our negative outlooks on many banks in these systems,” the ratings agency said………………………………………..Full Article: Source

Indian banks to hurt from weakness in metals, mining: Moody’s

Posted on 31 May 2016 by VRS  |  Email |Print

Global rating agency Moody’s expects banks in the Asia-Pacific region (excluding Japan) to feel the ripple effects of the problems in commodities-related sector. The asset quality and profitability of banks in Mongolia, Singapore, Korea, Indonesia and India are exposed to the more vulnerable parts of the energy/commodity sectors, such as oil services, offshore marine, shipping and shipbuilders, and metals & mining and steel, says the Moody’s report.
“For metals and mining, banks in Mongolia, India, Indonesia and China are more exposed,” says the report. Moody’s expects 2016 to be another challenging year for metals and mining firms, leading to higher problem loans and weak recoveries for existing problem and restructured loans. ……………………………………….Full Article: Source

Banks see worst Q1 in a decade in commodities

Posted on 25 May 2016 by VRS  |  Email |Print

Commodities revenue at the largest banks had the worst start to a year in more than a decade amid a pullback in financing of raw materials. Income at Goldman Sachs Group, Morgan Stanley and 10 other top banks slid by a combined 40 per cent year on year in the three months to March to US$1.1 billion (S$1.5 billion), according to analytics firm Coalition, which tracks commodities activities, including power and gas, oil, metals, coal and agriculture.
Revenue shrank as banks scaled back hedging and financing deals and their hedge-fund clients pulled out of commodities, said Mr Amrit Shahani, a research director at Coalition………………………………………..Full Article: Source

Defaults Have Already Spread Outside Commodities

Posted on 24 May 2016 by VRS  |  Email |Print

Bond investors appear to have placed their faith in commodities exceptionalism, with many positing that the recent pick-up in U.S. default rates will defy historical trends and remain confined to that industry.
New research from Deutsche Bank AG pours cold water on that idea, arguing that there are already signs of contagion in junk-rated debt outside of the commodities space. A look at previous peaks in default rates shows the potential for more pervasive corporate stress………………………………………..Full Article: Source

Gold miners net cash by 2018 as Goldmans ups price deck

Posted on 13 May 2016 by VRS  |  Email |Print

Analysts are throwing their weight behind a stronger gold market in the medium term with Goldman Sachs upgrading its dollar gold price deck by 10% to 15% for the next three years.JP Morgan was also positive on the medium term outlook for precious metals but diverging views on the platinum group metal (PGM) market could spell trouble in the short term for the normally robust gold stock, Sibanye Gold.
In a note published this morning, Goldman Sachs said the mines held in Rustenburg Platinum Mines, the entity Sibanye Gold is buying from Anglo American Platinum (Amplats), were not generating cash at current PGM prices………………………………………..Full Article: Source

The 15 Biggest Oil Bankruptcies (So Far)

Posted on 10 May 2016 by VRS  |  Email |Print

The pace of oil patch bankruptcies is picking up. According to a new count from Houston law firm Haynes & Boone, April saw 11 bankruptcy filings, the most of any month in the past two years. The headline failures that month were Ultra Petroleum, which buckled under $3.9 billion in debt, and Energy XXI, which carried debt of $2.9 billion.
All told, 69 oil and gas producers with $34.3 billion in cumulative secured and unsecured debt have gone under. Since share prices peaked in 2014, the oil bust has wiped out about $1 trillion in equity, with the Dow Jones U.S. Oil & Gas Index off 40%………………………………………..Full Article: Source

Asset class pushes higher on sustained demand from investors

Posted on 09 May 2016 by VRS  |  Email |Print

Commodities markets were awash in green at the end of the week despite another small gain for the US dollar, as data showed that investors were continuing to pile into the asset class. Gold was among the strongest performers, with the June 2016 COMEX contract up by 1.71% to $1,294.00/oz. by the closing bell.
Commodity funds had another week of inflows, the 17th so far this year, pushing year-to-date inflows to almost $6bn, analysts at Bank of America-Merrill Lynch said citing figures from EPFR Global………………………………………..Full Article: Source

Commodities boom “damaged” Australia

Posted on 05 May 2016 by VRS  |  Email |Print

Australia’s unprecedented commodities boom caused “considerable damage” to its economic relationship with East Asia, according to a senior economist.
Tom Taylor, the head of international economics at the National Australia Bank (NAB), says that the boom sent the Australian dollar so high, it helped hollow out other areas of the economy, which became uncompetitive as a result………………………………………..Full Article: Source

Record oil and gas companies in US file for bankruptcy

Posted on 05 May 2016 by VRS  |  Email |Print

The rout in crude prices is snowballing into one of the biggest avalanches in the history of corporate America, with 59 oil and gas companies now bankrupt after this week’s filings for creditor protection by Midstates Petroleum and Ultra Petroleum.
The number of US energy bankruptcies is closing in on the staggering 68 filings seen during the depths of the telecom bust of 2002 and 2003, according to Reuters data, the law firm Haynes & Boone and bankruptcydata.com. Charles Gibbs, a restructuring partner at Akin Gump in Texas, said the US oil industry is not even halfway through its wave of bankruptcies………………………………………..Full Article: Source

Falling Commodity Prices Leave India With Huge Subsidy Bill

Posted on 03 May 2016 by VRS  |  Email |Print

The nose-dive in global commodity prices has had an unexpected repercussion in India: a giant new subsidy bill as New Delhi spends billions to mop up wheat, rice, sugar and cotton at government-fixed prices.
India guarantees minimum prices for certain crucial crops to protect its large population of poor farmers. When prices plunge, it has to buy more. It usually sells the commodities it collects at a loss—some to India’s needy and some on global markets. Some of the stockpile just rots in government warehouses………………………………………..Full Article: Source

Chinese Commodity Speculators Drop Out After $261 Billion Binge

Posted on 29 April 2016 by VRS  |  Email |Print

The speculators that traded $261 billion in Chinese commodities in a single day last week are retreating as regulators prepare to step up control of the market.
The value of futures traded across China’s three biggest commodity exchanges has shrunk 42 percent since investors spent 1.7 trillion yuan last Thursday on everything from steel bars to eggs. The amount that changed hands was on a par with the entire U.S. equities market on the same day………………………………………..Full Article: Source

Commodity hedge funds outshine other hedge funds

Posted on 29 April 2016 by VRS  |  Email |Print

The commodities market has a very positive sentiment now and the commodity hedge funds are doing better than other hedge funds. Commodities hedge funds have given negative returns for the past three years.
But according to Peter Laurelli, vice-president, research, eVestment, the current year has started on a positve note for commodities as investors start reallocating for better gains. The commodities market has a very positive sentiment now and the commodity hedge funds are doing better than other hedge funds………………………………………..Full Article: Source

Citigroup’s commodity trading gross profit rises 50%

Posted on 25 April 2016 by VRS  |  Email |Print

Citigroup has reaped the benefits of investing in its commodities business as rivals pull back, cementing its position as one of the leading investment banks that generate hundreds of millions of dollars from trading raw materials.
Citi generated $850m in gross profit from commodities trading last year, up by about 50 per cent compared to 2014, according to three people familiar with the situation, on the back of volatile markets and the oil price rout………………………………………..Full Article: Source

Gold is the spectre haunting our monetary system

Posted on 18 April 2016 by VRS  |  Email |Print

For a century, elites have worked to eliminate monetary gold, both physically and ideologically. This began in 1914, with the UK’s entry into the First World War. The Bank of England wanted to suspend convertibility of bank notes into gold. Keynes counselled wisely that the bank should not do so. Gold was finite, but credit elastic.
By staying on gold, the UK could maintain its credit, and finance the war effort. This transpired. The House of Morgan organised massive credits for the UK, and none for Germany. This finance was crucial, and sustained the UK until the US abandoned neutrality and tipped the military balance against Germany………………………………………..Full Article: Source

Negative interest rates spark 2016 gold rush - but can German buyers push prices even higher?

Posted on 30 March 2016 by VRS  |  Email |Print

Almost a quarter of world GDP lies in economies whose central banks now have negative interest rates of some form. This experimental policy – used variously to weaken strengthening currencies and attempt to stimulate growth – has its fans, but investors have not been among them.
“There’s a sense that central banks are running out of ways that they can stimulate the economy,” says Chris Beauchamp of IG. As Deloitte economist Ian Stewart, among others, has pointed out, while in theory negative rates should encourage banks to lend and consumers to spend, in practice, they could just prompt individuals and companies to hold physical cash instead………………………………………..Full Article: Source

The commodities slump won’t undermine Australia’s banks

Posted on 29 March 2016 by VRS  |  Email |Print

Australians hate a tall poppy, which means the country’s richly valued banks are liable to get cut down at the first hint of bad news. So when Australia & New Zealand Banking Group admitted last week that it would have to take higher bad-debt charges due to the slump in commodity prices the shares fell as much as 6 per cent, the biggest drop in more than seven months.
Overvalued banks, rising defaults, troubled mining companies: What’s not to dislike about that picture? Sadly for the dwindling band still shorting the country’s big four banks, there’s little evidence such problems will pose more than a temporary speed-bump to their earnings. ……………………………………….Full Article: Source

Bondholders suffer $150bn oil price hit

Posted on 22 March 2016 by VRS  |  Email |Print

Investors have suffered losses of at least $150bn in the value of oil and gas company bonds, as the slump in crude prices since the summer of 2014 has fuelled fears of a wave of defaults in the US and emerging markets.
The 300 largest global oil and gas companies have also seen $2.3tn sliced from their stock market value over the same period, a 39 per cent slide since oil began its decline, an analysis by the Financial Times has found………………………………………..Full Article: Source

Shale Patch Pain Sees Speculators Boost Bets on Oil Price Rise

Posted on 14 March 2016 by VRS  |  Email |Print

Hedge funds are the most bullish on oil in almost a year as the U.S. shale boom unravels and demand for gasoline strengthens. Signs that producers won’t be able to sustain a supply glut are intensifying, with the International Energy Agency calling a bottom for the price rout.
U.S. output is near a 15-month low as companies from Anadarko Petroleum Corp. to Chesapeake Energy Corp. cut jobs and park rigs to conserve cash, while several missed debt payments. Meantime, U.S. gasoline consumption rose to the highest on record for this time of the year………………………………………..Full Article: Source

Miners seek fresh financing options, backed by resurgent gold

Posted on 09 March 2016 by VRS  |  Email |Print

This year’s double-digit gold rally is opening opportunities for smaller miners to sell future output or tap markets for finance, aimed at paying back debt and strengthening balance sheets. Miners have been hit hard by plummeting commodities prices, forcing them to cut jobs, capital expenditure and dividends.
However, bullion has risen nearly 20 percent so far in 2016 to a 13-month high around $1,280 an ounce on concern about financial and economic turmoil and a weaker dollar as markets adjust to the prospect of deferred U.S. interest rate rises………………………………………..Full Article: Source

While market debates commodities bottom, inflation warnings rise

Posted on 08 March 2016 by VRS  |  Email |Print

Some traders have been ringing the bell for the bottom of the commodities collapse, just as markets are sniffing out the earliest signs of inflation. That’s important since a turn in commodities prices could mean a pickup in inflation, which is already starting to materialize, and that could get the Fed moving faster on interest rate hikes.
Fed funds futures on Monday began to price in a full rate increase for December, for the first time since late January. Futures had been pointing to the first rate hike in March 2017. “Services inflation has remained steady for a while. All you needed was commodities prices to stop going down and that changed the inflation calculation here,” said Peter Boockvar, chief market analyst at The Lindsey Group………………………………………..Full Article: Source

India: A welcome Budget for commodity market

Posted on 01 March 2016 by VRS  |  Email |Print

There were many announcements in the Budget that were favourable for the commodity market. The Finance Minister also announced a common e-platform for farmers for 585 wholesale markets. For commodity traders, the icing on the cake came in the form of the proposal to announce new commodity derivatives by SEBI.
The Indian commodity market is currently in shambles. The National Spot Exchange fiasco, the slow developments after the SEBI-FMC merger and the continued distress of farmers due to poor supply chain infrastructure have all added to the problems. The clean-up in the commodity market is finally happening. With the regulator SEBI being asked to introduce new instruments soon, the market will see its liquidity improve………………………………………..Full Article: Source

Goldman Sachs Says 40% of Its Oil, Gas Lending to Junk Firms

Posted on 23 February 2016 by VRS  |  Email |Print

Goldman Sachs Group Inc. said about 40 percent of its oil and gas loans and lending commitments are to junk-rated firms. The figure, which counts both loans made and future promises to lend, accounted for $4.2 billion of a total $10.6 billion as of the end of December, the New York-based bank said Monday in its annual regulatory filing.
Goldman Sachs has $1.5 billion in loans to energy companies rated below investment grade and $2.7 billion in unfunded commitments. The total exposure jumps $1.9 billion counting derivatives and other receivables, which were “primarily” to investment-grade firms, Goldman Sachs said. ……………………………………….Full Article: Source

How the commodities crash is wiping out corporate promises on dividends

Posted on 22 February 2016 by VRS  |  Email |Print

The whole idea of “progressive” dividends – the corporate promise to keep dividends intact or, better yet, boost them every year – was always a risky idea, but one that still seduced income-craving investors. They piled into dividend-heavy shares and rode the wave. Now they’re paying the price. Dividends doled out by the big resources companies are getting slaughtered as prices for everything from oil to copper sink.
More dividends are to be sent to the knacker’s yard. The dividend yield of BHP Billiton, the world’s biggest mining company, is a lofty 11 per cent, the result of a 50 per cent fall in the share price in the last year. How much longer can BHP’s payout last? Not long, is the market’s guess, as the “stronger for longer” theory that had convinced investors commodity prices would stay high forever proves a myth………………………………………..Full Article: Source

Biggest Banks’ Commodity Revenue Slid to Lowest in Over a Decade

Posted on 22 February 2016 by VRS  |  Email |Print

Revenue from commodities at the largest investment banks sank to the weakest in more than a decade last year, laid low by a rout in prices for everything from metals to gas. Income at Goldman Sachs Group Inc., Morgan Stanley and the 10 other top banks slid by a combined 18 percent to $4.6 billion, according to analytics firm Coalition Ltd.
That was the worst performance since the London-based company began tracking the data 11 years ago, and a slump of about two-thirds from the banks’ moneymaking peak in 2008. Revenues are unlikely to return to the heights of $14.1 billion seen at the top of the market, according to George Kuznetsov, head of research at Coalition………………………………………..Full Article: Source

Copper Skeptics Boost Bearish Wagers, Defying Rally for Prices

Posted on 22 February 2016 by VRS  |  Email |Print

While copper prices have rallied in four of the past five weeks on the prospect of improved industrial demand in China, hedge funds are skeptical that recovery will last. The funds and other large speculators have bet on declines for the metal since October. Last week, the net-short position in copper holdings grew for the first time since mid-January, even as the metal advanced.
Doubts over a sustained rebound echo the outlook of Goldman Sachs Group Inc., where analysts predict that the metal will drop at least 10 percent by the end of the year………………………………………..Full Article: Source

India’s GDP to grow at 7.5% in 2016, 2017: Moody’s

Posted on 19 February 2016 by VRS  |  Email |Print

Indian economy will grow at 7.5% in 2016 and 2017 as it is relatively less exposed to external headwinds, like China slowdown, and will benefit from lower commodity prices, Moody’s Investors Service said.
The firm, however, warned that the generally robust economic environment is constrained by “banks’ balance sheet repair and elevated corporate debt” and corporate pricing power being limited by the impact on food price inflation and households budgets of two consecutive droughts………………………………………..Full Article: Source

Commodity Price Crunch Puts Pressure on Credit Lines

Posted on 19 February 2016 by VRS  |  Email |Print

Energy, mining and related manufacturing companies are renegotiating revolving credit lines to avoid defaulting on their loans. That’s leading to tighter terms and shrinking borrowing capacity. Bankers and analysts expect to see the trend accelerate amid tumbling prices for oil and gas and other commodities.
Joy Global Inc., a Milwaukee, Wisc.-based mining equipment maker, late last year approached its syndicate of banks, led by Bank of America Merrill Lynch, to avoid breaking terms on its $1 billion revolving credit line. Company executives were worried they could breach a debt covenant that restricted Joy’s ratio of net debt to ebitda to under three times………………………………………..Full Article: Source

As Commodities Plummet, Banks Edge Towards Undercapitalization

Posted on 19 February 2016 by VRS  |  Email |Print

Analysts from Bernstein Research state that European investment banks and US brokers are in general still undercapitalized, despite 6 years of spending aimed at remedying the situation. According to the analysts, Deutsche Bank’s tangible equity is just 2.7% of its tangible assets.
This is when we exclude the deferred tax assets. The only bank that has it worse is Credit Agricole with 2.3%. A little better is Credit Suisse with 3.0%. Standard Chartered looks good for now (7.3%) but it’s being heavily pushed by the markets that bank with commodity exposure………………………………………..Full Article: Source

Gold Posts Slight Gains as Bargain Hunters “Buy The Dip”

Posted on 18 February 2016 by VRS  |  Email |Print

Gold prices ended the U.S. day session with slight gains Wednesday, as traders “bought the dip” in prices that occurred earlier this week. However, increased trader and investor risk appetite in the marketplace so far this week is a bearish element working against the safe-haven gold market.
April Comex gold was last up $1.20 at $1,209.40 an ounce. March Comex silver was last up $0.006 at $15.34 an ounce. Most global stock markets are seeing gains this week, on ideas crude oil prices may have bottomed out and can work sideways to higher in the coming weeks. Equity markets have been closely tracking daily movements in the crude oil market recently………………………………………..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

U.S. Farm Income Will Drop for Third Year in Commodity Slump

Posted on 10 February 2016 by VRS  |  Email |Print

The U.S. Department of Agriculture forecast that farmers will face a drop in profit for the third straight year as persistent surpluses depress crop and livestock prices. Farm net income will be $54.8 billion in 2016, the USDA said Tuesday in a report on its website, 2.8 percent less than the $56.4 billion estimated for 2015.
The hard times follow an era of record profit that peaked at $123.3 billion in 2013, when rising global demand combined with a domestic drought that crimped supplies of corn and cattle, while a virus devastated hog herds. Direct government farm-program payments are forecast to rise 31 percent to $13.9 billion in 2016 with the 2014 Farm Bill’s price-loss and risk coverage accounting for almost two-thirds of the total………………………………………..Full Article: Source

Iran wants euro payment for new, outstanding oil sales

Posted on 08 February 2016 by VRS  |  Email |Print

Iran wants to recover tens of billions of dollars it is owed by India and other buyers of its oil in euros and is billing new crude sales in euros, too, looking to reduce its dependence on the U.S. dollar following last month’s sanctions relief.
A source at state-owned National Iranian Oil Co (NIOC) told Reuters that Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total, Spanish refiner Cepsa and Litasco, the trading arm of Russia’s Lukoil………………………………………..Full Article: Source

S&P turns negative on 20 oil and gas companies

Posted on 04 February 2016 by VRS  |  Email |Print

Standard and Poor’s said Tuesday it had cut or was considering cutting the investment-grade credit ratings at 20 oil and gas giants, including Chevron Corp. and Exxon Mobil Corp. The ratings actions, which spanned integrated and independent producers, are an acknowledgement that $30 oil could shake the creditworthiness of even the largest oil and gas companies.
Chevron’s credit rating was cut one notch from AA to AA-. Exxon Mobil, which remains at the agency’s highest credit rating of AAA, was put on notice that its long-term credit rating was up for review………………………………………..Full Article: Source

Investors chase gold bonds in falling stock market

Posted on 29 January 2016 by VRS  |  Email |Print

The second tranche of India’s sovereign gold bond received a better response than the first, a government official said, as a price discount and its safe haven appeal amid a slide in equities attracted investors. The world’s second biggest gold consumer plans to sell 150 billion rupees in bonds linked to the metal in the financial year ending March 31, to wean investors off buying physical gold and stem the outflow of foreign exchange spent on gold imports.
In the second tranche, 316,000 applications were received for 2,790 kg of gold worth 7.26 billion Indian rupees ($106 million), far higher than the 62,169 applications for the first tranche for 915.953 kg of gold in November………………………………………..Full Article: Source

Commodity AUM Reflect Big Q4 Moves: Citi

Posted on 26 January 2016 by VRS  |  Email |Print

Citi’s Aakash Doshi and team take a look at commodity flows in hedge funds, ETFs, and indexes Monday, writing that asset under management estimates for the end of 2015 suggest a “sharp” 18% year over year drop, well below their 2011 highs.
Doshi writes that oil’s big losses in the fourth quarter were behind an $11 billion loss in passive index valuations, a trend he sees continuing this month. “The passive index market, valued at c$125Bn, is now c$100Bn below levels seen during the height of the commodity super cycle.” Meanwhile, market caps of commodity ETFs slid 8% in the fourth quarter, in large part thanks to gold’s decline in the face of an interest rate hike from the Federal Reserve………………………………………..Full Article: Source

China is a $US460 bln a winner from the commodities rout

Posted on 25 January 2016 by VRS  |  Email |Print

The pain from the rout in global commodity prices is sweeping through nations from Brazil to South Africa. The biggest beneficiary? Arguably it’s China, the nation often blamed for driving prices lower due to its slowing economic growth. China’s annual savings from the commodities rout amount to $US460 billion, according to calculations by Kenneth Courtis, former Asia vice chairman at Goldman Sachs Group Inc.
About $US320 billion of that is from cheaper oil, with the rest from other energy, metals, coal and agricultural commodities. Benefits are rippling through the economy, pushing down or steadying prices of everything from home heating and petrol prices to the cost of raw materials at factories. That’s also boosting China’s efforts to recalibrate its economic growth model away from a reliance on heavy industries and investment toward consumption and services………………………………………..Full Article: Source

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