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Commodities Briefing 09.Feb 2016

Posted on 09 February 2016 by VRS |  Email |Print

China has a record-breaking stockpile of farm commodities that has been languishing in warehouses for years, declining in value. Officials are afraid to let the crops out, fearing the havoc they could cause if released. The towering stockpiles result from a numbers-based approach to food security and a declining trend in crop prices that officials were slow to understand.
To make this concrete, let’s review how China created an unwanted stockpile of rice. Five years ago, Chinese officials were worried that farmers were producing only one crop of rice a year instead of two………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Russia commands an interesting position in the world these days. On one hand, Vladimir Putin’s star has risen on the international scene. Alliances with Iran and China mean that the Russian leader continues to be a powerful and influential force with on the international scene.
The sanctions on his nation remain because of Russian aid to rebel forces in Ukraine but we have not heard much about that recently. What we have seen is Putin’s presence in Syria, his participation in the war against terrorism and his role as a conduit to the government in Iran. As Iran’s status in the Middle East grows so does Russian influence in the region………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Global commodities trader Vitol has said the oil market will struggle to break above the $50 per barrel mark and may never reach the $100 price last seen in 2014. Vitol boss Ian Taylor poured doubt on hopes that the market may rebalance later this year, telling Bloomberg that prices would take far longer to recover.
Growing supply and more efficient use of fuel could change the market to the extent that it may never seen $100/b oil again, he added. “UK consumption of oil is going down; not much, but it’s going down. Efficiency in cars is going up tremendously, as it is in aeroplanes. You have to believe that there is a possibility that you will not necessarily go back above $100, you know, ever,” Taylor said………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

With oil prices at their lowest point, nations relying on oil are suffering - and it’s not just Russia and Venezuela. Even OPEC members are in trouble, despite having the power to change the balance on the market. But they have been unable to reach such an agreement - at least up until now.
With rumors of OPEC finally deciding to cut production, will the oil market rise again? And why are Saudi Arabia and the Gulf nations, now being forced to cut spending, persisting in their position on the issue? We ask international an oil economist and a World Bank consultant. Dr. Mamdouh G. Salameh is on Sophie&Co………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Opec needs to increase production by 4.1mn barrels per day (mbpd) in the next five years to “balance the market”, according to Bank of America Merrill Lynch (BAML). Moreover, the structural shift toward a lower price environment will have “profound and long-lasting consequences” for non-Opec production, BAML said in its latest report.
Highlighting that with the US, the only country able to ramp up its production materially in non-Opec by 2020, it said Opec (Organisation of Petroleum Exporting Countries) may have to provide the incremental barrels as demand will grow by 5.9 mbpd in 2015-20. “With the market oversupply of 1.8 mbpd in 2015, we estimate that Opec needs to increase production by 4.1 mbpd in the next five years to balance the market”, it said………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

As oil and gas companies cut ever-deeper into the bone to weather their worst downturn in decades, boards have adopted contrasting strategies to lead them out of the crisis. Crude prices have tumbled around 70% over the past 18 months to around $35 a barrel, leading to five of the world’s top oil companies reporting sharp declines in profits in recent days.
Executives at energy firms face a tough balancing act: they must cut spending to stay financially afloat while preserving the production infrastructure and capacity that will allow them to compete and grow when the market recovers………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

As oil and gas companies cut ever-deeper into the bone to weather their worst downturn in decades, boards have adopted contrasting strategies to lead them out of the crisis. Crude prices have tumbled around 70 percent over the past 18 months to around $35 a barrel, leading to five of the world’s top oil companies reporting sharp declines in profits in recent days.
Executives at energy firms face a tough balancing act: they must cut spending to stay financially afloat while preserving the production infrastructure and capacity that will allow them to compete and grow when the market recovers………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Gold prices posted the biggest one-day gain in more than 14 months on Monday, as the continued tumult in global financial markets boosted the metal’s lure as a haven asset. In recent trade, gold futures jumped 3.5% to close at $1,197.90 a troy ounce–the highest settlement since June 19–on the New York Mercantile Exchange.
It represented gold’s largest percentage gain since November 2014. Gold has risen 13% since the start of the year amid turmoil in global markets and weak economic data signals, particularly from China………………………………………..Full Article: Source

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

Posted on 09 February 2016 by VRS |  Email |Print

Gold prices are climbing quickly, bolstered by a troubled economic outlook in the U.S. and the Bank of Japan’s decision to adopt negative interest rates, in conjunction with financial market turbulence. Benchmark New York gold futures traded around $1,175 per troy ounce in premarket trading Monday, up $130 from a low around two months earlier. The price is the highest since late October.
Lackluster U.S. employment data released late last week raised concerns of trouble ahead, spurring buying of the metal as a substitute for dollars. Hedge funds moved to unwind short positions on gold, expecting that further hikes to U.S. interest rates will be postponed………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Amid carnage in most markets, traders have found a safe haven again in Gold. Gold mining companies and the underlying commodity have been sharply outperforming the broader market as the recession drumbeat grows louder and worries about global banks and credit markets reemerge. As an example, SPDR Gold Shares, the flagship ETF that tracks gold bullion, is up nearly 13% year-to-date.
The move in gold is somewhat counter-intuitive - in a raising rate environment the dollar should strengthen thereby weakening gold. However, this has not been the case, which suggests speculators are betting on ‘one and done’ from Fed Chairman Janet Yellen………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Silver prices have been through a roller coaster ride for the past few months. However, the new year brought some direction for silver. It continued to gain steadily. Silver rose by 7.7% on a year-to-date basis. It closed at $14.85 per ounce on February 4, 2016, after touching a high of $14.93.
Silver couldn’t reach the $15 mark. The boost for precious metals was likely due to the fall in the US dollar. The US dollar fell by 3% during the past five trading days. As the US dollar gets cheaper compared to other currencies, dollar-denominated assets become more affordable for foreign currency investors. Demand could rise. This would increase the prices………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

China, the biggest consumer of many such metals, was out to celebrate its Lunar New Year. Base metals took a breather Monday, with prices for tin, lead and zinc all trading higher on a day when the dollar was weakening, global equity markets were bleeding, and China, the biggest consumer of many such metals, was out to celebrate its Lunar New Year.
At the London Metal Exchanges, prices for three-month contracts of tin, lead and zinc all gained about 3%. Aluminum and nickel were both up, too. Copper was the only laggard among all the industrial metals, down 0.6% to settle at $2.0915 a pound at the Commodity Exchange division of the New York Mercantile Exchange………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Another day, another landmark low for the nickel price. London Metal Exchange (LME) three-month nickel traded down to $7,900 per ton on Monday morning. Forget the troughs of the Global Financial Crisis in 2008. Nickel is now trading at levels last seen in April 2003.
And there may be worse to come. Might the price of nickel fall below that of copper, which is currently trading on the LME around $4,600 per ton? “Not an inconceivable prospect by any means,” according to one analyst, Leon Westgate of ICBC Standard Bank………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

The value of cash held by London Stock Exchange-listed mining companies fell by £1.1bn in the last year, according to research released today by Banc De Binary. The findings show a fall in cash reserves across all LSE-listed mining companies from £24.3bn to £23.2bn over the last 12 months. A drop of £780m was recorded in FTSE 100 mining companies.
Banc De Binary, a binary options trading platform, has said weak global demand for raw materials and falling commodity prices affecting mining profitability have prompted the turn towards available cash reserves. It stresses that, although the fall in cash reserves may appear modest, it is significant that a noticeable reduction in cash balances has begun………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Despite difficult market conditions, the global ETF/ETP industry gathered net inflows of US$13.1 billion in net new assets (NNA) in January 2016, according to preliminary data from ETFGI’s January 2016 global ETF and ETP industry insights report. ETFs/ETPs listed globally have now gathered net inflows for 24 consecutive months.
At the end of January 2016, the global ETF/ETP industry had 6,180 ETFs/ETPs, with 11,895 listings, assets of US$2,853 Bn, from 277 providers on 64 exchanges. In January 2016, 43 new ETFs/ETPs were launched by 17 different providers………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Investors pulled more than $1 billion out of U.S. exchange traded funds that invest in emerging markets last week, leaving the ETFs in the longest losing streak since September.
Redemptions from emerging-market ETFs that invest across developing nations as well as those that target specific countries totaled $1.16 billion last week, compared with withdrawals of $272 million in the previous period, according to data compiled by Bloomberg. Losses so far this year total $5.29 billion………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Hedge funds returned to a net short position in the main US-traded agricultural commodities, driven by a record swing bearish on sugar – which has begun to appear misjudged, given a revival in prices.
Managed money, a proxy for speculators, returned to a net short holding, of 11,654 lots, in the week to last Tuesday in futures and options in the top 13 US-traded agricultural commodities, according to data from the Commodity Futures Trading Commission………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Russia’s ruble and Mexico’s peso recently hit all-time lows against the dollar. The currencies of Colombia, Argentina and Brazil are all down 28% or more in the past 12 months. Turkey and South Africa have also fallen by double digits over that time.
Weak currencies are often a sign of an economic slowdown. China posted its worst growth last year in a quarter century, and Brazil is in its longest recession since the 1930s. These huge currency shifts have also created opportunities and challenges………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Money is leaving China at an unprecedented rate. An increasing number of wealthy Chinese individuals and firms are trying to get their money out of the world’s second biggest economy as growth slows to its lowest level in a quarter of a century.
China has enormous foreign currency reserves. Should we even be worried that they are shrinking? China is flush with foreign currency. By the latest count, the nation’s cash pile still amounts to around US$3.2 trillion, the largest reserve in the world. But the cash mountain is declining fast and that has markets worried………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Instead of changing our economic system to make it fit within the natural limits of the planet, we are redefining nature so that it fits within the economic system. Until recently terms like “carbon accounting,” “carbon footprint,” and “carbon offsetting” would have raised some quizzical eyebrows among the general public. Today, such carbon-based metrics are everywhere, but are they helpful or unhelpful in motivating the necessary action on climate change?
Although the case for metrics may seem incontrovertible, what is measured is always a political choice, and such choices favor certain interests and approaches over others. In that sense the trajectory of global environmental policy over the last 30 years is a history of forgotten alternatives………………………………………..Full Article: Source

Posted on 09 February 2016 by VRS |  Email |Print

Taiwan has pledged to make all-out efforts to reduce greenhouse gas emissions, and will only consider emissions trading, or flexible mechanisms, five years from now, according to Environmental Protection Administration Minister Wei Kuo-yen.
Taiwan over the past 20 years has created high growth in greenhouse gas emissions as a result of its economic growth, made possible mostly by high energy-consuming industrialization. Statistics show that Taiwan’s total greenhouse gas emission increased by 98.1 percent between 1990 and 2012 — from 136.7 million tonnes of carbon dioxide equivalents (MMTCDE) to 270.7 million MMTCDE………………………………………..Full Article: Source

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