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Commodities Briefing 31.Aug 2016

Posted on 31 August 2016 by VRS |  Email |Print

Africa’s two largest economies are stalling amid slumping commodity prices and political infighting that’s hampering decision making. A government report on Wednesday will probably show Nigeria contracted for a second consecutive quarter in the three months through June as the price and output of oil, its main source of revenue, were squeezed.
While South Africa may have avoided falling into a recession, according to the median estimate of five economists surveyed by Bloomberg, the continent’s most-industrialized economy will not grow this year, the nation’s central bank said last month……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

The current scene in the commodity market can best be termed as a bit bullish. Production is rising in response to a certain surge in demand. Good monsoon is likely to enliven the agriculture sector and with that the increase in rural income is to translate into higher growth in demand for consumer goods and houses.
The commodity prices are indeed moving up, but not uniformly across all products. From the next month onwards with the additional income in the hands of government employees, the boost in demand for household goods, real estate, automobile and travel would benefit these segments a great deal. The incoming festive seasons would only contribute positively……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

Analysts at ANZ explained that commodities struggled as a stronger USD and weak fundamentals saw investor appetite wane. Oil declined as doubts emerged that producers will agree to a production freeze.
“The UAE oil minister hinted that the oil market should achieve stability soon. According to reports on Bloomberg, Iran also reiterated it wouldn’t participate in a freeze in output until it regained its share of OPEC production seen three years ago. The physical iron ore market remained quiet, with prices relatively unchanged……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

Global oil markets could see an increased risk of another major jolt if prices continue to remain at current levels, Tom Albanese, the chief executive of Vedanta Resources told CNBC Tuesday. Recent reports show that discoveries of new oil reserves have dropped to their lowest level for more than 60 years.
The chief of one of the world’s largest diversified natural resources companies implied that this could potentially cause supply shortages. “People are saying there’s no such thing as $100 oil coming again but the longer the prices stay low for this period of time you could see increased risk of a price shock coming in the future,” Albanese said……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

The dollar strengthened and stocks in Europe and Asia mostly gained as investors continued to digest recent comments from Federal Reserve officials on the prospects for a U.S. interest rate increase this year.
The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, rose 0.2% Tuesday, putting it on track for its third consecutive session of gains. Higher interest rates tend to make a currency more attractive to investors seeking returns……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

Crude markets will continue to be plagued by volatility in the short and medium term after suffering the biggest downturn in a generation over the past two years, according to oil-company executives gathering for one of the industry’s biggest conferences in Norway.
Oil declined on Monday amid doubts producers will agree on a deal to stabilise the market when suppliers meet next month for informal talks. Iran’s plan to continue boosting crude output until it regains its pre-sanctions Opec market share is dimming prospects of collective action, according to Patrick Allman-Ward, the chief executive of Sharjah’s Dana Gas, at the ONS conference in Stavangar, Norway……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

India will be hit by an economic crisis if crude oil price crosses USD 60 per barrel, BJP MP Subramanian Swamy said. “Given the state of our economy, if crude oil price per barrel rises above $60 then we will be hit by an economic crisis,” he tweeted.
US benchmark West Texas Intermediate is trading around $47 per barrel while Brent is at $49 currently. The slump in oil prices last year is one of the factors that helped Indian economy notch up big gains by cutting its import bill and reining in inflation……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

Iraq would support a decision by OPEC to freeze oil output to prop up prices, Iraqi Prime Minister Haider al-Abadi told a news conference in Baghdad on Tuesday. “We are with freezing production at the OPEC meeting,” he said, in the clearest indication yet about the position Iraq will support when the oil exporters’ group meets next month.
Members of the Organization of the Petroleum Exporting Countries are due to meet informally in Algeria on the sidelines of the International Energy Forum (IEF) on Sept. 26-28……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

The biggest owners of gold are tiring of the metal. Central banks — holders of about 32,900 metric tons of bullion — cut their purchases by 40 percent during the three months through June, compared with the same period a year earlier, to the lowest since 2011, World Gold Council figures compiled by Bloomberg show. It was the third-straight quarterly drop, the longest such streak in at least five years.
Buying declined in 2016 as prices were rallying for their biggest first-half gain in 40 years……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

US government debt should exceed $20 trillion next year. Domestic infrastructure is falling apart and more spending (debt) is badly needed. The Federal Reserve will not be able to significantly raise interest rates due to a systemically weak US economy which is likely to stay “weaker for longer.”
Low and even negative interest rates mean the cost of buying and holding gold is negligible. Long term, gold is going much, much higher. Many goldbugs and analysts watch the price of gold very closely and try to time trades based on the latest economic data or Federal Reserve statements……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

Gold futures still have room to climb this year even as the Federal Reserve seesaws between a dovish and hawkish stance on monetary policy. Prices for the yellow metal may make “another try” at the $1,400-an-ounce level later this year, George Milling-Stanley, head of gold investment strategy at State Street Global Advisors, said.
He said he can’t guarantee a rate increase at all, with the Fed appearing to be “dovish one day and hawish another” day. He expects gold to see muted trading for the rest of the year but despite that, prices may still see another $50, $60 or $70 rise. Also on CNBC, Tom McClellan, editor of The McClellan Market Report, said next year and 2018 should be “hugely bullish” for gold……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

The demand for gold investments reached a record 1,064 tonnes in 1H. This is the highest 1H demand since 2009, when the financial market was reeling from the global financial crisis. Are gold investors preparing for the next crisis?
The demand from gold comes from four main sources: jewellery, technology, investment, and reserve asset management. Of the four, jewellery demand accounted over half of total gold demand. But anaemic jewellery demand amid high prices has eroded the demand share since 2006……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

Base metals were under selling pressure last week with the exception of zinc and tin, which managed to set fresh year-to-date highs. Copper fell the most, down nearly four percent week-on-week, amid tangible signs of fundamental weakness combined with an unfriendly macro.
Precious metals also were weaker last week, with gold dropping the most, down 1.5 percent week-on-week, largely attributable to hawkish statements from Fed members and encouraging US macro data releases, prompting the market to reprice upwardly the path of Fed funds rates……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

For eight years, TTT Moneycorp Ltd. regularly took Dariusz Suchicki to dinner and soccer matches, all while selling him, as the head of finance of a U.K.-based importer of Polish foods, a series of complex currency derivatives.
When the pound started moving sharply against the zloty, those instruments became toxic: They began costing Suchicki’s company, Best Foods, tens of thousands of pounds a month, the company said in court filings last year……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

With Japan’s economy struggling to escape its deflationary torpor, the economic-revitalization plan that Prime Minister Shinzo Abe launched in 2012 has come under growing scrutiny. But Japan’s current travails, which have brought a concomitant decline in Japan’s stock market, stem from the yen’s appreciation — 24 percent over the last year — against major currencies.
Abenomics — which included substantial monetary and fiscal expansion — has nothing to do with it. Since Abenomics was introduced, Japan’s labor market has improved considerably: 1.5 million new jobs have been created, and the unemployment rate has fallen to just over 3 percent……………………………………….Full Article: Source

Posted on 31 August 2016 by VRS |  Email |Print

As the Australian Parliament reconvenes, it’s timely to reassess the scope for Australia to establish a clear, enduring path to efficiently meet its current and future carbon targets. This week, the Energy Networks Association (ENA) released a final report by Jacobs analysing alternate options for carbon policy in Australia.
The analysis has informed ENA’s publication, Enabling Australia’s Cleaner Energy Transition, which proposes seven steps to smarter carbon policy. The Jacobs analysis evaluated three different policy settings for achieving the current Australian abatement target (26 to 28% below 2005 levels by 2030)………………………………………Full Article: Source

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