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Commodities Briefing 01.Aug 2014

Posted on 01 August 2014 by VRS |  Email |Print

Commodities had the worst monthly performance in more than two years, led by losses for crops including soybeans and wheat on signs of bigger supplies. The Bloomberg Commodity Index of 22 raw materials fell 5 percent in July to 127.91, the biggest loss since May 2012. Corn had the largest drop since 2011, and cotton posted for the longest losing streak in three years.
The U.S. Department of Agriculture raised its estimates on global stockpiles for cotton, corn, soybeans last month, signaling a growing glut. Bigger crops are helping to keep world food inflation in check, with the United Nations reporting a third monthly drop for prices in June………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Commodity price moves are making headlines again after a relatively quiet period earlier this year. The intensifying crisis in Iraq is fuelling the rise in crude oil prices, the six-month long miners’ strike in South African has pushed platinum and palladium prices higher and gold is also attractive again as a safe-haven buy.
For many investors exchange-traded products (ETPs) are becoming the financial instrument of choice when it comes to commodities as they are easy to trade, they bypass some of the regulatory restrictions linked to futures and they come with relatively low fees………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

GlobalData has said that global oil demand in 2014 is forecast to increase by approximately 1.2 million bpd compared to levels last year, while non-OPEC members’ production will grow by approximately 1.6 million bpd which will reduce the call for OPEC production. GlobalData’s research has also said that a significant increase in non-OPEC production is forecast to occur, particularly in North America, where crude oil and condensate production will increase by approximately 1.3 million bpd.
Carmine Rositano, Managing Analyst, Downstream Oil & Gas, GlobalData, said, ‘crude oil production increases are also expected in South America, the Former Soviet Union and from the greater use of biofuels. This will more than offset slightly lower production anticipated in the North Sea and Mexico………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

OPEC’s oil production rose in July from June, a Reuters survey found, as a fragile recovery in Libyan supply outweighed fighting in Iraq and reduced output from Angola.Saudi Arabia raised supply modestly, in part because of a greater need for crude in domestic power plants, industry sources said. Some sources said exports had increased.
Despite the increase, unrest in Africa and the Middle East is still weighing on supply. That could hinder OPEC’s ability to boost output later in the year, when the International Energy Agency expects demand for OPEC crude to rise………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

For all the sanctions Western leaders can throw at Russia, the biggest threat to President Vladimir Putin’s ability to back separatists in east Ukraine is something beyond his or their control: the price of oil. With Russia’s $2 trillion economy heavily dependent on crude exports, oil prices are always closely monitored by the Kremlin, but the government is particularly wary now as tensions with the West mount and sanctions ratchet up.
Such conflicts often push up crude prices, but as long as oil, which accounts for 40 percent of state revenues, remains above the average $104 per barrel written into the 2014 budget, Moscow has little immediate need to worry………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

The rising tide of political instability around the world is negatively affecting the some of the oil industry’s largest companies, and several are considering withdrawing their investments in risky areas. Violence, government turmoil, sabotage, and economic sanctions are presenting serious challenges to the oil majors, after years of expanding deeper and deeper into some of the least developed parts of the world.
The Wall Street Journal wrote on July 27 about several companies that are pivoting away from troubled regions, and moving towards industrialized countries — willing to assume the higher cost of operating in richer nations as the price for a more stable investment climate………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Exxon Mobil Corp, the world’s largest publicly traded oil company, reported a stronger-than-expected quarterly profit on Thursday as higher prices for its crude and natural gas offset a 6 percent drop in production.
Exxon has struggled in recent quarters to replenish its reserves quickly, investing in massive new projects in Russia and Papua New Guinea that take years to develop. Meanwhile, many of its smaller, more-nimble peers have aggressively developed shale formations around North America, fueling massive production and exciting Wall Street………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Gold investors who pulled money out of U.S. exchange-traded products through the first half of 2014 rushed back in July, just as prices resumed a decline that Barclays Plc and Goldman Sachs Group Inc. say will get worse.
ETPs backed by precious metals took in $540.7 million this month through yesterday, a 1 percent gain for funds that saw a net outflow of $319 million in six months through June, data compiled by Bloomberg show. This month’s 3 percent drop in futures left prices down 7.9 percent from a 2014 peak in March………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Step away from monetary-policy details and you’ll see that the Fed is in a conundrum. Economic data is improving. Policy is still ultra-loose. How does the Federal Reserve get from post-crisis mode to something more conventional?
Judging by the attached chart, the gold-price reaction to this morning’s 8:30 a.m. economic data suggests the question is top of mind for at least some traders. If it weren’t, gold’s price might be expected to be on the rise amid Thursday’s tone of worry. Dow futures are falling 118 points. Argentina is on the brink of default. European markets fell by a good 1% nearly across the board………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

The world of precious metals price setting was once again in the spotlight Thursday on the back of news that The London Platinum and Palladium Fixing Company Limited is looking for a third party to administrate the daily London platinum and palladium fixes.
The news came hot on the heels of an announcement Tuesday that The London Gold Market Fixing Limited and the London Bullion Market Association are seeking proposals from third parties to “assume administration” of the future London gold fix. The entire London “fixing” process has been in the spotlight for many months on the back of increased regulatory scrutiny………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

What is hard about investing? It’s not the simple mechanics of investing. Nowadays if you have the money, it’s easy to open an online trading account and start trading. You don’t even have to talk to anyone usually, just mail in a check to the broker and off you go. So the how or mechanics of investing is not hard.
Is finding what to trade hard? This is an interesting question. I would submit that finding what to trade is not the hard part about investing either. Studies have shown that selecting stocks at random, a.k.a. monkeys throwing darts at a dartboard, have outperformed market averages in a wide variety of years. But this is only because stocks as an asset class tend to move in the same direction, creating bull and bear market trends over time………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

After a brutal reckoning, the base metals sector is starting to generate some cautious optimism amid early indications of an uptrend. While any optimism for mining stocks has generally been punished over the past three years, the demoted sector now features some discount valuations. And now that many fears over China have eased, and the U.S. economy is perking up, base metals prices have begun to advance, drawing some renewed investor attention.
“This is an industry that was absolutely savaged. It’s not unlike what happened with American banks,” said Terry Shaunessy, president and portfolio manager at Shaunessy Investment Counsel………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

If you can’t beat ‘em, join ‘em. That’s the philosophy behind the new Direxion iBillionaire Index ETF (IBLN). The exchange-traded fund tracks the stock holdings of some of the richest and most successful investors, such as Warren Buffett, David Einhorn and Carl Icahn.
The index uses the billionaires lists produced by both Bloomberg and Forbes to identify 20 or so U.S.-based billionaire investors. (So no Bill Gates or Walton family members.) It then picks the top 10 billionaires by performance………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

If you haven’t been attending ETF.com’s ETF University webinar series, you’re missing out. We’ve been walking through the ins and outs week after week of how ETFs really work, and Tuesday’s fixed-income session was fantastic.
One of my favorite parts of work like that is the kind of feedback we get from attendees, and here’s a great question we were asked: “I recall hearing about difficulties in the muni fixed income ETF space last year and I believe it stemmed from AP [authorized participant] unwillingness to take delivery in kind and/or PM [portfolio manager] unwillingness to sell bonds at a fire-sale price………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Brazilian mining company Vale SA reported lower-than-expected net profit in the second quarter as prices for iron ore fell to a four-year low and the company continued to write off assets it acquired during the last decade’s commodity boom.
Vale, the world’s biggest iron-ore producer, said Thursday its second-quarter net profit was $1.43 billion. That was up from a year earlier, when a currency depreciation distorted Vale’s financial results, but less than the $2.08 billion median estimate of 11 analysts surveyed by FactSet………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Bonds backed by loans made by BNP Paribas SA (BNP) to commodity traders will be repaid early because there’s a shortage of borrowers seeking to finance new shipments amid conflict in the Ukraine, according to Fitch Ratings.
The $131.6 million Lighthouse Trade Finance Issuer I Ltd. notes will be redeemed because of “the shortage of commodity transactions” originated by BNP Paribas’s Geneva office, which focuses on energy commodities sourced from eastern Europe, including Russia, Fitch said in a statement………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

To most investors, investing in commodities seems hopelessly complicated and treacherous. My first visit to the commodity trading pit of the Chicago Mercantile Exchange (CME) was memorable. The swirling, bright-colored jackets and the shouting, jostling, and rapid hand signals were captivating and reminded me of a wrestling ring rather than a business setting.
It was also the polar opposite of my later visit to the currency trading floor of JP Morgan at 23 Wall Street: row after row of white shirts hunched over flickering computer screens………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Foreign-exchange funds lost 1 percent in June as reports cast doubt on the strength of the U.S. economic recovery, according to Parker Global Strategies LLC.
Of the 34 funds that reported results, 24 had losses, the company said in a statement today. Money managers’ performance ranged from losing as much as 7.1 percent to a return of 2.4 percent, the Stamford, Connecticut, company said in statement. The company’s index is down 4.4 percent for the past 12 months………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

After a little girl asked President Obama why there aren’t any women on U.S. Currency, he said Wednesday that adding some female faces to our cash sounded like a “pretty good idea.” Almost immediately, all of our fantasies came alive on the web. What would, let’s say, Ruth Bader Ginsberg look like on a $20 bill? Where would we spend our Beyonce $10 dollar bill first? Will our grandmas give us a Susan B. Anthony $5 bill on our birthdays and tell us not to spend it all at once?
But then we remembered: because of the wage gap, a dollar for a woman is not the same as a dollar for a man. Although the true extent of the gender pay gap is widely disputed even among feminists, President Obama said in the 2014 State of the Union that women make only 77 cents for every dollar a man makes………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Many U.S. businesses that sell their goods overseas have it easy. Their distant customers and suppliers are happy or at least willing to trade in U.S. dollars.
But is the dominance of the US dollar coming to an end–or fading–as the spending power of China’s growing middle class increases? And does that mean U.S. businesses will have to become more open to accepting other currencies. A recent study by HSBC raises some questions worth pondering………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

Manufacturers in the European Union want clear assurances they will be insulated from costs of complying with emissions regulations before lawmakers agree reforms to the bloc’s carbon market, industry lobby group IFIEC Europe said on Thursday.
The European Commission admits the EU Emissions Trading System (ETS) is failing to drive low carbon investment and wants to reform it with a reserve to set aside surplus permits………………………………………..Full Article: Source

Posted on 01 August 2014 by VRS |  Email |Print

The Chinese carbon market regulator has approved 33 new projects that could yield up to 6 million offset credits per year, equivalent to around half the number of permits traded so far and piling pressure on already shaky carbon prices.
The roughly 2,000 companies facing caps on their greenhouse gas emissions under China’s seven pilot carbon markets can use the offset credits, known as Chinese Certified Emissions Reductions, to cover for 5-10 percent of their annual emissions………………………………………..Full Article: Source

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